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The Development of Competitive Advantages of Brand in ihe Automotive Industry (Case Study: Pars Khodro Co)

Akbar Forghani Bonab*

Master of Business Administration, Islamic Azad University, Iran

*Corresponding Author:
Mbamalu ON
Master of Business Administration
Islamic Azad University, Iran
Tel: +9821256149
E-mail: [email protected]

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Achieving competitive advantage in the automobile manufacturing companies in the world to remain stable in the current atmosphere in consideration of complex and competitive environment of today's markets is considered as one of the critical issues in manufacturing companies. The main problem in this research is to identify the competitive advantages of brand and model their competitive advantage in the automotive industry. In this regard, the study of theoretical foundations of research in the field of competitive advantages of brand, components have been identified and by using Delphi techniques and structures final interviews added to Inventory and native competitive advantages of brand models in the automotive industry has been identified. Data were analyzed using SPSS and Smart PLS software. The results of data analysis totally indicated in the answer to this question could be deduced that in the final version is extracted using Smart PLS software, was observed that due to the three outcome measures 0.01, 0.25 and 0.36, as quantities of weak, medium and strong for GOF, of the 0.60 show is a fitting strong model that indicates that fitted the pattern of competitive advantage brand.


Brand; Competitive Advantage; Brand Advantage; Pars Khodro Co; Partial Least Squares Techniques


The world is changing and every day this unstable situation affecting the business environment [1]. Today's business world is highlighted by intense competition between domestic and foreign competitors. As a result, businesses that fail to deal with external changes certainly lose significant market share and their profits. Find a suitable place in today's competitive environment for long-term profitability and survival of a business is very important that this is achieved only through building and sustaining competitive advantage is available [2]. Competitive advantage is a moral and legal practice to overcome competitors. Competitive advantage when two similar companies of different actions to stay ahead of the market [3]. Bobillo et al. [4] have introduced the so-called competitive advantage as "a set of features that makes it the better performance of a company from its competitors" [4]. According to Porter argues, there are three ways to achieve competitive advantage, cost leadership, focus and create product differentiation. He believes that managers in the business environment should think about how to enter the market and then attempt to create and maintain a competitive position for him [5]. Competitive advantage discussion traditionally the most important issues involved in the management and strategic management theory.

Competitive advantages enhance and maintain market share and achieve market leadership. And this is important. In the automotive industry six main ways that a company can excel over other competitors, including the cost, quality, service, brand, innovation and comfort [6]. The car companies in the world, companies implement different strategies to gain competitive advantage. The main strategy of Ford Motor Company is in product development and effective leadership. They are focused on a strategy to help reduce the cost advantages pricing for consumers. General Motors runs a focus on innovation and excellent quality products using decentralized control of decision-making as their main strategy. Toyota is distinctive both in quality and product [7]. In the meantime, competitive advantage brand is a new concept in recent studies. In fact, the brand created a unique and distinctive position in a company among its competitors [8]. According to America Marketing Association (AMA) brand is a name, term, symbol, design or a combination of these is the expression of the true nature and existence of a product or a service company. First and foremost, the brand is a commitment and tells you which name you know and trust to its commitment. Trust is the main purpose of brand. David Aaker says the brand is a symbol that is associated with many mental assets and liabilities [9].

Today, brands are many roles to play in improving the lives of consumers and increase the value for the Company. Brands identify the basis and the main building of a product and allow natural or legal consumers to demand from producers or suppliers; responsiveness and responsibility that customers sometimes may be two similar product branding are based on the valuation of their way to be different. The more that people's lives will be faced with more complexes and more crowded and the lack of time, brand equity due to a buying decision easier and reduce the risk of buying goes up. They provide a signal of quality, easy buying decision. Brand in product quality assessment, depending on the type of product can be helpful. Quality diagnostic products such as tires require much time or work in services like insurance and health care, quality of service can be distinguished from brand. According to Philip Kotler [10] brand can be regarded as a name, term, sign, symbol, design or a combination of them which is defined as a vendor to define and distinguish goods and services from other vendors that are distinguishing them from other competitors [11]. Brand existence, reduces the customer's perceived risk when buying services [12]. Among the advantages of branding for the company include: 1. Increase customer loyalty; 2. Increase profitability; 3. Preventing the entry of new competitors; 4. Reduce vulnerability to competitors and 5. Reduce the cost of advertising. Strong brands provides a series of advantages for companies such as loyalty and resistance in critical condition, margins strong brand the company provides a series of advantages such as loyalty and resistance in critical condition, margins. A powerful brand, leads to many advantages for service organizations. Of these, it can be noted in areas such as customer loyalty, increase organizational capacity in critical condition, profit margins further, more customers respond to price changes, advantages and development opportunities license to use the name of the brand [13]. Creating a powerful brand in the market, the goal of many organizations. Financial experts believe that the brand could be worth more than the conventional value. Today, the brand is not only an efficient tool in the hands of administrators. The brand is a strategic imperative that organizations in order to create more value for customers and also help them to create sustainable competitive advantages [13].

Successful brands increased confidence in the products and services are intangible and customers are able to visualize and identify which services are better. The high level of brand equity, increase customer satisfaction, intention to repurchase and loyalty levels [14]. Increasing competition in services markets has forced many companies to look at your brand seen as a competitive advantage sometimes is separate from product marketing, marketing services; this is true about the brand and its management. A major portion of a company's reputation and brand in customers' minds depends on the name of the company [15]. Much research has been done on brand. The competitive advantages of brand have been branded as one of the major advantages. Keller [13] has identified some of the characteristics of a successful brand. DeChernatony and McDonald [15] have also examined two types of competitive advantage and value-added brands as cost driver. Thus, according to the perceived importance of achieving competitive advantage, the importance of developing competitive advantage promotion strategy has been very important in organizations that according to a study literature research are to identify and rank the main purpose of their competitive advantage in the automotive industry.

Research Literature

In the global market, where products with the same performance of a wide range of suppliers are available, the brand has become a means of differentiation (distinction) to provide value and quality to customers. Marketing and branding are the subject of much attention from researchers in recent years has been, and is, as far as Marketing Science Institute announced in 2002 the brand, branding and brand management knows as important topics between 2002 and 2004. This is because successful brands that allow competitive advantages to marketers, provide opportunities for success in brand extension, against pressures, competitors are expanding creating resilience and are able to create barriers to entry. Today the world's top brands such as Microsoft, IBM, Nokia and globally recognized brand value more than other brands.

Today, the brand is considered as strategic need efficient tools in the hands of managers and helps organizations to create more value for customers and sustainable competitive advantage. The only advantage the company than competitors cannot imitate, is the brand. Due to the competitive nature are present in almost all industries will advantage from the advantages of their products. Improve product branding take advantage of a series of advantages to creating a strong brand and brand equity. Companies use brand strategy for the introduction and development of products and services.

The creation of an important part of creating brand equity. Brand equity, customer loyalty and switching costs increases and can lead to long-term advantages for the company. The problem facing today's managers are trying to balance the intensity of competition and company characteristics. The task of achieving harmony between company executives and external environment for increased efficiency and brand performance. However, in most studies, the performance has been measured at the macro level, just another approach to performance measurement in the brand's level. Brand performance illustrates the success of a brand in the market, about 70% of revenues attributable to the brand. Brand performance shows the strength of the company's brand in the market.

The Concept of Competitive Advantage

Competitiveness is a process that every organization strives to act in this way better than the other overtaken it. Competitive capabilities in the world today have become one of the main challenges of different countries at the international level. The competitive advantage of the company's proposals charm compared with competitors from customers. Competitive factors, the difference in the characteristics or aspects of any company that enables it to provide better service than competitors to customers. In general, the components of the concept of competitive advantage include value creation, marketing, customer satisfaction, recognizing the potential, the actual moving, stimulating, skill-building, reasonable price, responsiveness and innovation.

Strategies to Gain Competitive Advantage

There are various strategies to gain competitive advantage that organizations should adopt to enable them to achieve export-oriented business to profitability. In general, the following strategies can be achieved with a competitive advantage for the organization.

1. Create Competitive Intelligence: One way to gain competitive advantage and prosperity of the business inside and out is creating competitive intelligence. For competitive advantage, organizations need an institutional figure is based on competitive intelligence.

2. The implementation of driving for the competitors: Competitive advantage is that it is one of the mechanisms for the competitors, as appropriate, to design and implement appropriate strategies.

3. The mechanism of strategic alliance: One of the important mechanisms of competitive advantage and a strategic alliance to conquer the domestic and foreign markets. Strategic Alliance is a cooperative agreement between two or more organizations that wish to gain competitive success and improve the way their performance through shared resources. Strategic Alliance in the following areas will gain competitive advantage. The joint venture, an alliance of mutual service; licensing agreements; participation in the value chain. Strategic alliances at national and international level will create a new market inside and outside borders so, to create internal consistency and to create a strong base of strategic alliance will initially be implemented at local level and then with practice and addressing vulnerabilities addressed to strategic alliances at the international level.

Brand Advantages for Company

Increase loyalty: Top brand causes an increase in attitudinal and behavioral loyalty of existing customers. The reason for this confidence of customers to the brand, in this case increases customer loyalty.

Reduce advertising costs: Although advertising and other marketing communications undeniable role in the branding and strengthen it, but if established brand, advertising costs be reduced.

Increase profitability: The brand has made in reducing the price sensitivity of customers and the possibility of increasing the price of the company's brand to the extent possible. These two things together cause an increase in profitability.

Reduce vulnerability to competitors: Competitors have sought to attract customers with other companies. If there is a good brand, customers are loyal to the brand and promotional messages and actions against competitors' absorbers are insensitive.

Prevent the entry of new competitors: Always a newcomer companies are seeking to enter the industry and gain market share for themselves. If high availability is loyalty to brands, attracting existing clients to the new companies is difficult and costly. Thus, brand loyalty largely prevents the entry of new firms to the industry.

Existing views in competitive advantage brand: There are three major theories about competitive advantage profile: Industrial organization theory, theory source circuit and Schumpeterian theory. Fashion industry organization focused on the behavior of a fascinating industry, RBV focuses on attractive resource groups and their behavior and Schumpeterian theory of the existence of uncertainty and the need for continuous innovation with the help of organization. Thus, each of these theories has its own characteristics and conditions. However, the shortcomings of the theory of competitive advantage are the new orientation. So that now, the theory of competitive advantage insists on combining views and due to both external and internal factors for business success. In general, the competitive advantages of brand benefits into three categories: Divided into functional, experimental advantage and symbolic advantages.

A) Functional advantages: including is needed in order to solve the problems associated with the use or service. In other words, these advantages refer to the intrinsic benefits of consumer products and services and most of them are related to traits associated with the product or service [16] and also are more relevant to the needs of low-level (on Maslow's hierarchy of needs).

Experimental advantages: they are willing to create a brand that emotional pleasures, diversity, or cognitive motivation (9). The advantage with customers when consumer sentiment was related goods and services and may be derived from related or unrelated to the characteristics of goods and services [16] (Table 1).

Table 1: general classes of functional, symbolic and practical advantages of brand.

Kind of advantage Identified classes
Functional profitable
Functional Financial aspects
Experimental Enjoy (good business)
Experimental Features related to appearance
Experimental Spirit
Sublimation Providing the features associated with persons
Sublimation Facilitate traits associated with Interoperability
Sublimation Show
Sublimation Highlight the successes
Sublimation Symbolize personal stories
Sublimation Office

Symbolic advantages: Including tend to brand that satisfy internal needs of the relationship with panache, stabilizing role, belonging to a group, or your knowledge. The needs and benefits associated with traits often not relevant to the product.

According to Barney brand in the carpet due to a series of important features and advantages. Because in the mind of consumers, brands have been undertaken in the form of a set of advantages. Jarsky, Park and Mckenzie is considered generally beneficial to fifteen floors but Campbell in his research by taking advantage of the new classification model has the advantage of providing.

Research Conducted Inside and Outside the Country

So far, the research has been done in the field of brand and competitive advantages in the world, which we will refer to them below:

1. Hosseinizadeh Shahri [8] conducted a study entitled Effectiveness of multi-brand strategy in trade companies. In this paper, a three-dimensional model for assessing the effectiveness of corporate brand strategy is a strategic decision for an organization that includes trust of shareholders, the financial and strategic position. Their research showed that brand is influential in these three areas.

2. Denoue and Saykiewicz [17] conducted a study entitled loyalty to the brand as a tool to achieve competitive advantage. Their research showed that brand loyalty has a positive impact on competitive advantage and brand loyalty has a positive impact on increasing market share, higher return on capital and is also a tool to prevent the entry of new competitors.

3. Chernatony and McDonald [15] conducted a study as to create a strong brand names that they paid the two brand as a driver of competitive advantage and value added cost.

4. Mansor and Ahmad [18] conducted a study with a competitive advantage as the relationship between brand and customer satisfaction that the findings showed them the competitive advantage of the brand as a tool to achieve customer satisfaction.

5. Camelia [19] conducted a study entitled the role of brand to obtain competitive advantages that the brand introduced their research as a tool to achieve competitive advantage.

6. Kushwaha [20] conducted a study as an extension of the brand: a strategy for competitive advantage that they have found in their research to develop the brand's positive role in achieving competitive advantage.

Research Methodology

The method of research is based on applied research goal is, in terms of the nature and method used in research as a reason, because it pays to discover the cause or causes of an event at Pars Khodro Co. In this regard, the partial least squares technique is basically to explore the causal relationship between the variables concerned, is used. In this study population, is experts of Pars Khodro Co. On this basis, and given the characteristics of the study population cluster sampling is chosen where 150 questionnaires were distributed and 101 valid questionnaires have been received and the final analysis was performed on this number. There are several ways to determine the number of samples. Due to the fact that community members are limited to 150 people refrain from sampling and the entire community is selected as examples. In this study, using a standard questionnaire, a questionnaire to assess the validity has been surveyed by experts of Pars Khodro Co and comments you have regarding their breeding. Therefore, an appropriate questionnaire was used to gather valid data for this research. To measure the reliability of an index called the coefficient of reliability we use. In order to test questionnaires were distributed among 31 individuals of the sample. In this study, Cronbach's alpha coefficient was used to assess the validity of the questionnaire. Using SPSS software, Cronbach's alpha coefficient was calculated that Cronbach's alpha values obtained for questionnaires 0.882 which indicates that the questionnaire has high reputation.

Conceptual Model and Hypotheses

According to the literature the following conceptual model is proposed (Figure 1):


Figure 1: Conceptual model.

Data Analysis

The software of Partial Least Squares (PLS) is the software that is used to estimate and test the design of structural equation models. This software uses the correlation and covariance between the variables measured, can estimate or infer the factor loadings, variances and errors and latent variables, and it can be used to carry out exploratory factor analysis, second order factor analysis, confirmatory factor analysis and path analysis (causal modeling with latent variables) can be used. The use of this method because of small sample size or the data is abnormal. For analysis of the models in partial least squares method interpretive structural modeling approach, there are two main steps, including the model and hypothesis testing. Examining evaluation model which is measured three models, structural models and the overall model.

Measurement Models

Measurement model that the review will explain how to reveal hidden variables by variables (question) concerned. In fact, the measure is part of a general model that contains a variable with questions related to the variable for reviewing measurement model used to examine four cases, the coefficients of factor loadings, reliability index, reliability, convergent validity and divergent validity.

Factor Loadings Coefficients

Factor loadings are calculated by calculating the correlation value indicators (question) a structure with the structure if this amount is equal to or greater than 0.4, corroborates the notion that the variance between the structure and its index is higher than the measurement error variance structures (Figure 2).


Figure 2: Path coefficient.


Cronbach's alpha: Classical criteria are considered for evaluation and appropriate measures for evaluating internal stability. One of the things that used structural equation modeling approach to assess the reliability of internal consistency (internal consistency) measurement models. Internal consistency indicates the correlation between the structure and its corresponding index. The amount of variance explained among structures and indicators in the measurement error associated with each indicator, results in high internal consistency. Cronbach's alpha values greater than 0.7 indicate acceptable reliability. Some scholars regard to a small number of questions, have introduced a threshold value of 0.6 as Cronbach's alpha coefficient (Table 2).

Table 2: Cronbach's alpha coefficients.

  Cronbach's Alpha
Attracting customer 0.806557
Increasing market share 0.802397
Return of capital cause 0.78249
Customer retention 0.793735
Preventing the entry of new competitors 0.779619
Competitive advantages of brand 0.766382

Composite reliability (CR): Since the Cronbach's alpha is a measure of the traditional criteria for determining the reliability of structures, PLS method used to measure more modern than alpha composite reliability and its superiority to Cronbach's alpha is not construct validity is calculated in absolute terms but also according to their structural correlation with each other. As a result, to better assess the reliability of PLS method, both of these criteria are used. The amount of composite reliability of a structure of a ratio can be achieved if this fraction, comes variance between a construct its index to add value measurement error. If the value of CR for any structure is above 0.7, indicating that the internal stability suitable for the measurement model and shows a lack of reliability of less than 0.6 (Table 3).

Table 3: Composite reliability.

  Composite Reliability
Attracting customer 0.98774
Increasing market share 0.89764
Return of capital cause 0.99854
Customer retention 1.00000
Preventing the entry of new competitors 1.00000
Competitive advantages of brand 0.77647

Convergent Validity

Convergent validity is second criterion which is used for measurement models in PLS method. AVE criterion indicates the average variance shared is between each structure, with their indices. AVE indicates your level of correlation with the index of a structure that whatever the relationship is, the more fit. AVE value above of 0.5 indicates acceptable concurrent validity. Some researchers have considered the minimum acceptable value of 0.4 (Table 4).

Table 4: Convergent validity.

Attracting customer 0.79875
Increasing market share 0.64789
Return of capital cause 0.77647
Customer retention 0.64789
Preventing the entry of new competitors 0.65997
Competitive advantages of brand 0.65478

Fitness of Structural Model

The structural model shows how the latent variables are linked to each other and not against business models measuring the questions. Two criteria are used to evaluate the structural model include: 1) Significant coefficients Z (t-values values), 2) R Squares or R2 criteria.

Significant coefficients Z (t-values values): To examine the structural models, several criteria are used that the first criterion, MT standard model for measuring relationship between structures in significant numbers t or t-values values and the numbers must be greater than 1.96 to be confirmed by making a 95% accuracy of the relationship between structural and research hypotheses. It should be noted that the numbers show that t can not only be measured accuracy and intensity of relationships between structures with them (Figure 3).


Figure 3: Model drawn with significant coefficients Z (t-values).

Fitness of the Final Model

GOF criterion is related to the general structural equation models that by this measure, the researcher can control the overall fit after checking the fit of the measure and the general model structure their research. To examine fitting in a general model, only one criterion called GOF. Three values of 0.01, 0.25, 0.36, is introduced as the values of weak, medium and strong for GOF [21-26]. This measure is calculated by the following formula (Table 5):


Table 5: GOF criteria.

  Communality R Square
Attracting customer 0.708045 0.901986
Increasing market share 0.588245 0.042185
Return of capital cause 0.545561 0.944858
Customer retention 0.668745 0.654778
Preventing the entry of new competitors 0.508672 0.142134
Competitive advantages of brand 0.584203 0.667061

As a result Equation is 0.81. According to R2 values in the table above as a result R2 is equal to 0.59

Thus, GOF value is calculated as follows:


According to the three values of 0.01, 0.25 and 0.36 as values of weak, medium and strong for GOF, 0.60 latest shows is the result of the strong fit of the model.


In the global market, where products with the same performance of a wide range of suppliers are available, the brand has become a means of differentiation (distinction) to provide value and quality to customers. Brand and branding, concern for many marketing researchers in recent years as far as marketing science institute announced in 2002 that recognizes the brand marketing, branding and brand management as an important topic between 2002 and 2004. This is because successful brands allow competitive advantages possibility to marketers, provide opportunities for successful brand extension, provide resilience in the face of pressure from growing competition and are able to create obstacles to enter the competitions. Today the world's top brands such as Microsoft, IBM, Nokia recognized worldwide and the brand value more than other brands.

In the past decades, marketing emphasis on the physical aspects of products and services such as benefits, price, availability and quality of production; but today, marketing researchers emphasize on the fact that marketing must change your focus and focus on elements such as relationship management and value. A key element that needs to be managed in the current environment, experience. According to the findings, provide competitive advantages of brand development pattern were measured at Pars Khodro Co. The results of the data collected represent most of the hypothesis is confirmed. The research hypotheses were analyzed using Smart PLS software that we refer below to the results of these assumptions:

1. Path coefficient in a significant competitive advantage for the customer acquisition and brand value obtained 16.72 since that is outside of the range +1.96 and -1.96 that it can be concluded that this path is significant.

2. Path coefficient in significance to the increase in market share and competitive advantages of brand value obtained 11.83 since that +1.96 and -1.96 located outside of the range that it can be concluded that this path is significant.

3. Path coefficient in a significant competitive advantage for the return of capital cause and brand value obtained 15.45 since that is outside of the range +1.96 and -1.96 that it can be concluded that this path is significant.

4. Path coefficient in a significant competitive advantage for the customer retention and brand value obtained 10.83 since that is outside of the range +1.96 and -1.96 that it can be concluded that this path is significant.

5. Path coefficient in a significant competitive advantage for the track to prevent the entry of new competitors and their number obtained 9.40 since that is outside of the range +1.96 and -1.96 that it can be concluded that this path is significant.

Suggestions for Future Researches

1. Developing other model of competitive advantage of brand in the automotive industry.

2. A review of the research in other industries such as dairy production such as Kalleh or famous department stores in the country and comparing the obtained results.

3. A review of factors that influence the competitive advantage of the brand.

4. A review of the impact of brand personality on communicational consequences.

Evaluating each of investigated components in this research in different societies and reviewing their status.