How to Improve Brand Preference

What is the mystery behind why we, as consumers, prefer one brand over another? And what moves us to make that brand purchase? The reasons are many but as marketers, the answer comes down to appealing to what’s inside each of us and what we deem as most important in our lives.

Two oposing photos of BMW and Mercedes-Benz hood ornaments, with the text "VS" between them

In our first installment for this series, we did what any self-respecting consultancy does. We started at the beginning answering five questions about How to Improve Brand Awareness.

As opposed to knowing about, or simply being aware of, or moreover, liking a product, Brand Preference is all about the customer’s approach to choosing one product or service over another when conditions such as price or availability are perceived as equal. It’s about the consumer decision-making process and what drives the transformation necessary to take action. As marketers, our job is to effectively influence a consumer or an entire market toward brand awareness first and, ideally, if we deliver consistently, to propel brand preference. Doing so requires fluency in the language of consumer behavior with the ability to untether the unique dialects between consumer psychology and marketing strategy. We’ll unpack that.

Getting to the Heart:

In short, the underlying question is: What compels a buyer to choose any comparable brand over another? And particularly between two brands that share similar attributes?

We will again ask five important questions, but this time, we’ll do so within a single consumer category (e.g., car brands). And we’ll consider what moves the buyer to prefer (at times, with great enthusiasm) one “luxury” automobile over another: Mercedes-Benz over BMW.

So why did we delve into these brands? Well, for many consumers, the two brands represent related or similar attributes: Luxury, performance, comfort, prestige, safety, and innovation. For most, however, the underlying differences, as well as how the buyer aligns her self-perception with each brand, can feel like miles apart.

Within our own office, for example, some appreciate what both of these leading brands bring to the table. But what, at its very core, is it that each brand represents and how do we see ourselves as aligned with one brand and, in some instances, opposed to the other?

Some of us are simply BMW people, while others feel a particular kinship with Mercedes. A few of us have owned both brands. So again, what is it that divides us? It seems there isn’t a straightforward answer, but like the larger buying market, the “unlock” comes down to recognizing the realities and contrasts of the art and science of preference. It’s about embracing emotion and logic and defining our sense of self and the boundaries or conditions governing our respective lifestyles. We determine our brand preference based on how squarely that brand aligns with our own values.

Question One:
What do buyers value in a brand like ours?

Why do values matter? Let’s use that last proposition (sustainability) as a hypothetical for aligning the automotive consumer with the values that define a brand. Let’s think about the prototypical Ram Trucks buyer and ask: Is sustainability THE core value driver in choosing the Ram brand (formerly known as Dodge)? Instinctively, you probably know the answer. Not yet. Instead, Ram’s real value likely lives elsewhere: the available power the truck offers, its aggressive styling, or Ram’s legendary towing capacity. These attributes are so deeply baked into the legacy of Ram that they’re synonymous with the brand and they align with what is essential to most Ram customers today. So while that can change with time, a watchful market isn’t so sure. Altering core values is a pain point for brands. Ram CEO Mike Koval, Jr. put it plainly. “You don’t abandon your core.” It’s an essential rule for all brands to remember.

The value question should track back to the origins of the brand as well as understanding the type of customer that defines it. Then the brand must honestly evaluate its current state and be equipped to clearly project where the brand is pointed. If we do so, we may conclude that if Ram is aiming to grow its customer market, conventional wisdom (and scores of research) would suggest the brand should play to its values and heritage as a rugged and powerful machine for getting work done. Their customer finds lasting value in these attributes. And if it’s going to attempt to change the value proposition, Ram will face a long and arduous battle as it works to change the perceptions in their customers’ minds and reset the values that matter to them. The same is true of BMW and Mercedes. Or any brand. You don’t abandon your core. Or your core values.

Consumers are who they think they are. And who they aspire to be.

It’s also true that customers’ circumstances change over time and with them, so will particular preferences. The reasons are many: Economic circumstances, familial obligations, and geographic realities are but a few. For our rural colleagues, a pickup truck has a functional purpose. By contrast, for our urban residents, a sportier performance vehicle may offer an escape from the realities of the city. It’s certainly easier to park. And it’s fun! Purpose is a determining factor here, too. But even among the buyers who prefer their “pickup truck” to all else, brand preference is considerably more segmented—a Ram owner and a Toyota Tacoma owner likely have very different feelings about how and why their personality aligns with their truck. Emotion and logic are at play. And maybe secretly, one driver just longs for change.

To Mercedes or BMW? That is the question!

For purposes of our comparative, it is important to note that neither the Mercedes buyer nor the BMW buyer (nor the brand itself) should be approached as a singular persona or archetype. Each brand offers considerable diversity across its model line and caters to varying preferences. In BMW, for example, the sheer performance found in the M Series is more notably forward than the luxury offered in its 7 Series sedans or its sustainability-minded i Models. In fact, they all abound in their dynamic speed, agility, and luxury. And the same can be said with Mercedes. But in the case of every status-focused automobile brand, the badge is an ever-defining element for its owner. There is little question that there are recognizable attributes that differentiate both: the brands and the people who buy them. But what are they?

The Mercedes-Benz Position: Legacy and comfort, personified

In terms of brand positioning, Mercedes remains the world’s most valuable luxury automotive brand, and for the past seven years, has retained its position as the only European brand and only luxury automotive brand in the top 10 of the 100 Best Global Brands. Its running mantra: “The Best Or Nothing” illustrates Mercedes’ positioning as the premium offering in comfort and quality. By extension, the brand represents a sort of perceived status for its owner.

In short, it’s how the Mercedes-Benz customer sees themself and what they value.

In 1886, Carl Benz applied for a patent for what is largely viewed as the “birth certificate of the automobile”. It may have appeared more like a three-wheeled bicycle, but its high-speed, single-cylinder, four-stroke gasoline motor spurred an approach to combustion engines that is still used in vehicles today. That spirit of innovation is important to many who choose Mercedes-Benz, but it’s not likely the first thing that leaves their lips when telling others what they love about their car.

Old bicycle-style machine

Of course, the Mercedes-Benz reputation for producing high-end, well-crafted luxury vehicles often overshadows its commitment to performance and engineering. For those not driving Mercedes, the brand can appear stuffy and off-putting; a brand for old, rich people. And yet their performance-focused AMG lines and long-standing dominance in F1 racing would challenge those perceptions of stodginess. The data garnered on the track has led to breakthroughs in fuel economy, technology, and safety innovations across the automotive industry. Like Volvo and, more recently, Tesla, Mercedes-Benz is nearly always awarded for safety and retains an IIHS Top Safety Pick+ designation for many of its models. Then there’s the reputation for discerning service and reliability. Customers regularly cite Mercedes’ care for the customer and dealer experiences and high resale values as contributing reasons for purchase.

Evolution of BMW logo badge designs

The BMW Position: Providing the ultimate driving experience

Founded in 1916, the Flugmaschinenfabrik Gustav Otto Company and Bayerische Flugzeug-Werke AG (BFW) merged and later acquired both the company and the brand names of engine constructor Bayerische Motoren Werke GmbH (BMW) in 1918. The BMW company story winds through multiple acquisitions and reconfigurations, and yet, from the earliest days, performance and excitement have been at the core of BMW’s DNA. Their motorcycles, which debuted at the Berlin Motor Show in 1923, changed the world and became a showcase for its transverse-mounted Boxer engine, the esteemed power plant for some of BMW’s most storied vehicles. BMW built its first compact car under license in 1929, and today, the company also owns MINI and Rolls-Royce, two of the most beloved (and diametrically different) auto brands in history. BMW clearly understands the power of branding.

The BMW 501 was the company’s first post-war effort and, in many ways, appeared much like the Mercedes-Benz of the time. More luxurious than exciting, the 501 struggled to find a customer base, and with it, so too did the company. That is until 1961’s compact, sporty (and still four-doored) 1500 hit the Frankfurt Motor Show. It revolutionized the market and reignited BMW’s position as a brand dedicated to providing an exhilarating driving experience.

What followed—in models from the iconic 2002 and CSL badges of the 70s and throughout its Z and M series offerings—redefined how drivers perceived BMW and in turn, how the brand reflected their own values. It cemented BMW’s reputation for performance both on the road and in its customers’ own perceptions of themselves. BMW is often perceived as a brand for younger people. It’s a brand epitomizing serious fun and excitement.

What happened was that the awareness of both companies and their market perceptions of their products led to strong brand preference based on the evolving values exhibited by the brand.

Question Two:
How does our brand perform in light of those criteria?

If success in the market is any indication (and it is) Mercedes and BMW have proven their brands exist at a level all their own. They are market definers. Yes, the companies have roots in the automotive category but their brands also transcend the limits of conventional transportation. In fact, they have shaped and moved the minds of customers worldwide.

We say it all the time at OVO: Brand is defined by the customer’s perception. As marketers, we work to influence that perception, but perception of the brand’s actual performance is what defines it. In other words, it’s not what marketers tell us about their brands but rather what customers tell their friends, their families, and ultimately themselves about the value of one brand over the next. Brand performance drives brand preference.

Brand performance is measured by many metrics and despite the value or position of any global brand, certain metrics will ebb and flow. And lack of performance in any area also influences brand perception. For example, Statista reported Mercedes-Benz’s global brand value actually decreased by more than 20 percent in 2023; ranking 71st on the 2022 most valuable brands worldwide, below Toyota and above BMW. One might surmise that the post-pandemic economy, record interest rates and inflation fueled the decline. Not so. The same report said that in 2022, customer satisfaction in Mercedes-Benz marked the lowest since 2006, barely cracking the top ten in satisfaction among all automotive brands. It was a rude wake-up call for Mercedes that dramatically affected brand preference among consumers.

By contrast, BMW realized a significant increase in brand equity in 2022, which takes into account multiple factors, including brand awareness, perceived quality, and purchase consideration. The Harris Poll reports BMW experienced an increase in overall brand equity and an even larger jump in purchase consideration and stuffed its sales conversion funnel during the final quarter of 2022. They cited innovation, driving enjoyment, and reliability; the latter underscored by the Consumer Reports study on reliability that moved BMW ten spots forward to third on their list. Meanwhile, Mercedes landed dead last.

All are critical brand performance markers. As they are for any brand. Among the many brand choices available to customers, it’s critical that the brand performs at the level of the criteria that drive it. It’s a universal truth.

As purchasing power shifts among demographics, so does brand perception and the values that influence it. A competitive market must do its best to acknowledge these ever-changing values. How we share our thoughts and experiences hints at one reason BMW is gaining on Mercedes and the industry as a whole. Of course, this will likely change over time.

Knowledge is power. Understanding is fuel. Brand performance drives brand preference.

Question Three:
Which competitors pose the biggest threat and why?

Competitive threats are always concerning. But they also can create tremendous opportunities for proactive brands.

In our earliest phases of Brand Discovery at OVO with new and recurring clientele, we make it a point to learn as much about the brand’s competition as the project parameters allow. For some, that includes deep Quantitative and Qualitative Research. For others, it’s a Brand Audit process that fuels competitive analysis. Ideally, it’s all of those activities

Where the client’s brand differentiates itself from its competitors is vital in defining its position. SWOT analysis is one early first step in collectively identifying Strengths, Weaknesses, Opportunities, and Threats in the market. All must be evaluated through a lens relative to the competition but to also be aware of those threats that seem otherwise unrelated. They’re the sneaky ones.

What’s an example of a seemingly unrelated threat? Let’s consider a local professional basketball team. In our neck of the woods, it’s the Portland Trail Blazers. It would stand to reason that competition for the consumer’s attention and dollars would primarily consist of the other professional teams in the market: Timbers soccer, maybe. Or the city’s professional hockey or baseball teams. But in Portland, it’s outdoor recreation, public performance (live music, theater, and art), and its vibrant food culture that arguably pose greater threats to selling Blazers tickets. The city’s comparable lack of corporate funding and famed rainy weather, coupled with its entrepreneurial spirit and relatively cheap digital access are all factors for how a family in Portland prioritizes an evening out. We should also note that Portland is a relatively small market, even with its big ideas.

The point is that threats come from every direction. For the auto industry, the threats are myriad and often they’re outside the industry: Global inflation, fuel price volatility, and recession are but a few. In the case of our archrival market leaders—BMW and Mercedes-Benz—the “luxury” automobile market is as extensive as it is varied. From Rolls-Royce or Bentley to value brands’ offshoots such as Genesis from Hyundai, all pose direct competitive threats, as do Acura, Lexus, Volvo, Porsche, Lincoln, Cadillac, Audi, and Jaguar. And they’re all gunning for that valued place in the consumer’s mind.

Evolving consumer priorities are another threat. EV brands like Tesla and Polestar have challenged the traditional combustion engine with innovative electric and hybrid platforms, and so too have they shaken the market. In this day and age, consumer interest in EV options has proven to be one of the most significant threats to the industry and with it, the EV introduces its own set of looming threats—from chip shortages and cybersecurity issues, inequality and sustainability antithetics, to autonomous driving and the consumption of rare earth resources for battery manufacture. Even with current lagging sales in EVs, customers are demanding these innovations move forward. Every brand has responded with its own answer to sustainable offerings (yeah, we see you, Ram). Each is racing in its own way to assume a new market dominance.

Learning from example: In the case of Mercedes and BMW, their future approach to their respective brand strategies will move the needle, regardless of the storied legacy of either brand. As such, they are continuously aware of what’s in the rearview mirror and continually tweaking operations and marketing in response. They watch. They adapt. They own the message.

It’s a question of future-proofing and organizational readiness, as well as the brand’s appetite for change, whether they position themselves as a leader or merely a responder.

So it is for any brand.

Question Four:
Are our product attributes aligned with our brand communications?

At OVO we define brand delivery as occurring at the intersection of marketing and operations.

By that reasoning, we mean to say that the customer experience is predicated on the promises we make as marketers and how effectively operations will deliver on those promises. Not once, but each and every time.

What this means is that the act of “branding” only begins with what we say as a brand but it is verified by what others say about us. It’s how consistent and honest we are with our efforts at messaging and how these messages are received and shared. Does the market believe us? Because the most critical elements that propel a brand forward—pinpoint alignment with corporate and customer value(s), familiarity in the market, perceived quality, purchase consideration, and perceived momentum— must align with each tenuous step in the customer journey. And our most vocal advocates must also be equipped to share our message.

Brand preference is fueled by perception. Until it’s reality.

The fact is, most brands struggle with aligning their communications with their brand attributes or, as importantly, their brand values. A recent Forrester Consulting study revealed that only 25% of brands say they are effective at managing brand values, particularly across digital channels. The same study also reports that seven out of 10 businesses believe their shareholders care about their corporate brand values. This is notable.

Tone and voice align the product story

Mercedes and BMW are in a league of their own in this regard and consistently deliver masterclasses in aligning what they say about their product’s attributes with how they align with the values of their respective target audiences. They do it at every touchpoint; be it the web or social media accounts, their spokespeople and influencers, through to their advertising, and along each step in the buying process. From showroom to sales to maintenance, their communications from start to finish seamlessly align with the attributes of the product.

“Today Mercedes-Benz designers are designing the cars of the future, reconciling traditional and modern aspects as they go along. Sensual purity as a definition of modern luxury is at the core of what they do. It succinctly describes a pivotal aspect of the brand – the bipolarity of intelligence and emotion.”—Design Philosophy: Mercedes-Benz Group

Of course, not every brand has the resources, the story, or the institutional alignment of BMW or Mercedes-Benz. But the lessons to be learned from each brand are entirely applicable to any brand. They are an inspirational blueprint for how to apply best practices in highly differentiated ways. So what are those shared foundations?

  1. Both brands are abundantly clear about why they exist: So should yours. Brands must first meet the needs and desires of their customers. They can be logical or emotional, and in communications, should convey an intelligent mix of both.
  2. Both brands recognize and celebrate their storied identity: Visual and verbal identities are the face of any brand and the first impression is lasting. Whether an upstart or a legacy brand, ask: Is your identity (its logo, product design, service model) so consistent that it drives home the “why” of your product or service and the “why” your customers want or need your brand? If you can’t answer, it may be time to consider a change in strategy or a brand refresh.
  3. Both brands weave a thread that stitches past, present and future: The brand stories of Mercedes and BMW seamlessly herald their proud heritage: They convey how the brands came to be, their stories of challenge and triumph, and a seemingly unshakable obsession with luxury, innovation, performance, and emotion. Each with the promise of much more to come.

Then they execute!

Question Five:
Are our people properly equipped?

The ability to answer this final question is imperative. All too often, brands believe an issue in performance is with the product or service the brand is offering. Sometimes, it is, but it could also be about the access to or the quality of the resources.

To be clear, resources are most often defined as human or financial. But in equipping (and truly fulfilling) both, it’s equally about the tools and training. Great brands like Ritz-Carlton are famous for providing the tools and training that enable employees to deliver exceptional experiences and they share their techniques in training programs around the world. Ritz-Carlton has built the very core of the brand upon a gold standard of service. Service is a value promise that they deliver upon in every interaction.

Within the automotive industry, Mercedes and BMW are both shining examples of how to keep their people engaged and aligned. And they publish their strategies publicly so that information is accessible and their people are accountable. The examples feel endless.

For every brand, further equipping people and effectively managing brand activities and execution, tools such as Brand Guidelines help inform the work of staff, external agencies, and production vendors alike. Brand maintenance requires continued analysis and the consistent deployment of all techniques utilized to maximize the value of the brand over time.

Through continuous reference to the strategic objectives of the organization and by on-going research, the brand that empowers and enables its people is best equipped to ensure the quality of the customer journey. A process is necessary that measures and adjusts strategies, resources and metrics so that the people behind the brand are equipped to perform now and into the future.

Bringing it All Together

It’s these elements—ensuring brand values align with what the customer values, being honest about how the brand performs, recognizing competitive threats and being prepared to adjust, aligning brand communications with our ability to deliver, and equipping people to succeed—that pave the way to building brand preference among customers.

An appealing brand leads to awareness, engagement leads to preference, and preference leads to brand loyalty—the topic of our next installment in this series.

So you might be left thinking? Is there an easier way to build brand preference? In a word? No. It takes time and perseverance. And a great brand partner.

And as for the other question: Am I a Mercedes or a BMW? That’s a question for you to determine if you don’t already know. But we’d guess you do. For our part, we’ll just say that while we might lean one way, both brands hold great appeal.

In the meantime, we’ll just stay focused on how well they deliver on the values we hold most dear.

OVO mark