Indonesia is now the largest automotive market in Southeast Asia for the past four years (Association of Southeast Asian Nations Automotive Federation, 2020). Toyota’s luxury brand “Lexus” began selling the luxury LM350 multipurpose vehicle (MPV) in Indonesia starting June 2020. The presence of the LM350 has become new ammunition for Lexus in Indonesia to spur its sales. Data compiled by the Association of Indonesian Automotive Industries (Gaikindo) shows, between January–May 2020, Lexus Indonesia’s total retail sales were 351 units (www.motoris.id). The huge market potential in Indonesia has made the global players in the automotive industry such as Honda, Yamaha, Toyota and Daihatsu continue to compete for a bigger market share in the automotive industry in Indonesia. Of late, even the premium-class automotive brands such as Mercedez-Benz, BMW, Audi and Lexus are also competing to become major players in the automotive industry within its class in Indonesia.
In the luxury car segment, the market potential is quite large given the growing number of upper and middle-class populations in Indonesian society. Despite this, the share of the luxury car segment is still small at around 1.0% of the total national automotive market. Interestingly, the premium class car market which has been dominated by the European and German carmakers, has a new competitor, namely, Lexus which is a premium brand made in Japan. Toyota, which is a major player in the upper-middle market, has introduced Lexus as a premium class luxury car brand that is now able to compete with the European made luxury cars such as Mercedez-Benz and BMW. Ever since its introduction to Indonesia’s car market in 2007, Lexus currently ranks third in total sales after Mercedez-Benz and BMW. In terms of sales growth. New entrants into the car market such as Lexus are expected to face stiff competition, especially from the existing players who have got a long presence and are more well-known among the customers. New companies must be able to position themselves and form strong and positive brand associations in the minds of consumers.
As stated by Ratnasari et al. (2019a, 2019b) and Ratnasari and Rahmandani, 2020), customers are the controller of the performance produced by the service or product provider. The brand association that is formed is then evaluated as a whole by consumers through three components that shape consumer attitudes, namely, cognitive component, affective component and behavioral component. The cognitive component is in the form of consumer knowledge and confidence in a brand. The more positive the consumer’s knowledge and confidence in a brand or product, the easier it will be for the consumers to recall that brand. The affective component represents the reaction of emotions and feelings of consumers to a brand, while the behavioral component represents the clarity of individual behavior toward a brand (Aaker, 1996). Brand attributions, benefits and attitudes are important sub-factors of brand association influencing brand self-identification. Brand association affects corporate brand loyalty through the mediation of brand self-identification. Brand attitude as a sub-factor of brand association exerts a more powerful effect on self-identification than on other factors. The application of Islamic teachings is certainly different depending on the level of religious knowledge possessed by each Muslim individual. The level of religious knowledge in question is the extent to which a person knows, understands and applies the teachings of his religion in the daily life of at least knowing the basic things about the basis of faith or beliefs, scriptures and certain activities regarding religious teachings (Ancok and Nashori Suroso, 1994). Muslim consumer perceptions are born from Islamic teachings (Ratnasari et al., 2019a, 2019b). The attitude of Muslim consumers toward a product or brand in the form of a tendency to like or dislike is a manifestation of their faith and belief as a Muslim. Thus, the stronger and more positive brand associations that are embedded in the minds of Muslim consumers, the more positive are their attitudes to a particular product or brand.
Perceived brand globalness is a distinctiveness cue. In countries with a non-Caucasian majority, Association of Southeast Asian Nations economic community (AEC) is decoded as a globalness cue and, hence, preferred to advertising with local models for a luxury car brand. The higher perceived suitability of ll-Caucasian models as a reference group for luxury car buyers in these countries renders AEC the better distinctiveness cue. As a consequence, consumers in China and Japan still prefer the more conventional “Western globalness” to a newer “Multi-Ethnic Globalness” for a luxury car brand with a perceived Western origin (Strebinger et al., 2018). Yang et al. (2018) found that global identity is positively related to purchase intention of luxury products, mediated by the perceived functional, individual and social value of luxury. Tjahjono (2014), in his study on “Religiosity and Intention to Buy Luxury Goods among Young Indonesian Muslims,” highlighted that although Muslim consumers’ responses are different, religious factors and religious knowledge are two aspects that cannot be ignored, especially for a Muslim consumer. Some consumers think that as a Muslim, they should live a simple lifestyle despite having a high economic capability, while some others consider that having premium goods is something that is permissible and does not conflict with religious values.
This study is using a quantitative research approach on primary data collected in several cities in Indonesia, the study adopts the partial least square as a method of analysis. The sampling technique used in this study is a combination of incidental sampling and purposive sampling. The intended incidental sampling is a sampling technique based on coincidences whereby in this condition, anyone who accidentally or incidentally meets with the researcher can be used as a research sample if the person who happens to meet matches the data source (Sugiyono, 2012). While purposive sampling is samples taken with a specific purpose and objective, meaning that someone or something has the information needed for the researcher. – A sample of 159 respondents was taken from a population of Muslim consumers who live in Java province, Indonesia, and who have not had Lexus luxury car but have had other cars before. To analyze the aforementioned hypotheses, this study used a quantitative approach, with partial least square (PLS) used as the analysis technique. In addition, PLS can be used as a confirmation of theory which is used to build relationships that do not yet have a theoretical basis or for testing propositions (Dagu, 1998).
The results obtained from this study show that the majority of luxury car enthusiasts are male with an age range of over 46 years who hold a postgraduate degree. Based on their jobs, the majority work is a private employee with an expenditure rate of more than 9 million per month. The intention to buy a luxury car is a necessity for the family’s comfort and to get a more spacious vehicle. The study shows that brand association positively and significantly influences Muslim consumers’ attitudes on luxury cars, in this case, the Lexus brand. More importantly, the level of religious knowledge among Muslim consumers is shown to significantly weaken the influence of consumer attitudes toward purchase intention on luxury cars. The study also shows that brand association has a significant influence on Muslim consumers’ purchase intention on luxury cars. Luxury car manufacturer should give priority on evaluating the causes of luxury car resale prices fall drastically which affect the customers’ intention to purchase it. Thus, the risk of after-sales that will be experienced by luxury car consumers is inevitable. Luxury car manufacturers should show and highlight different characters in representing each variant or each type so that these characters can also represent the personalities of consumers who use a luxury car and not only show the impression of it, for example, the classic characters, the sporty one and others.
The results of the study also showed that the marketers of luxury cars should take into account the characteristics of Muslim consumers. Hence, companies of luxury cars can undertake strategies on how to attract Muslim consumers since most Muslim consumers do not intend to buy a luxury brand because they feel they do not need luxury since it is not a priority, and living a modest lifestyle is most proposed by the religion. Although consumers have medium and high-income levels, they do not always intend to buy luxury cars, and this is due to the role of religiosity that directs consumers whether they need and buy luxury cars without a high degree of urgency. By understanding these factors among the customers, it would help the industry player to plan and strategize on diversifying and promoting luxury cars among their existing and potential customers, especially market segments based on certain religions that have guidelines for consuming a product.
Author: Dr. Ririn Tri Ratnasari, SE., M.Si.
Details of the research available at:
Ratnasari, R. T., Prajasari, A. C., & Kassim, S. (2022). Does religious knowledge level affect brand association and purchase intention of luxury cars? Case of the Lexus cars in Indonesia. Journal of Islamic Marketing.
