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Customer satisfaction and expectations of service quality in luxury car in Singapore

  1. Introduction

Service quality is a prerequisite for a successful business. Observably, competition is this modern era is stiff. Rival firms are doing what it takes to eliminate each other in the market. One of the ways the competitors are using to outdo each other is by improving service quality. Ekinci & Dawes (2009) have defined service quality as the patterned process that is aimed at making sure that there is maximum customer satisfaction. Marković & Raspor Janković (2013) as the tendency of a business to meet psychological and emotional demands of the clients, on the other hand, has defined customer satisfaction. The importance of achieving customer satisfaction has been said by to bring about the formation of loyalty. Hyun Soon, Zhang, Dae Hyun, Chen, Henderson, Min & Haiyan (2014) attest that a satisfied customer has higher affinity to become loyalty to the business. The loyalty formed is pertinent in improving sales and firms’ reputation. Another importance of service quality is that it makes a firm to gain a competitive advantage. Acquiring and maintaining a competitive advantage (edge) is important because it enables a firm deal with customer turnover, and increase the attention of the customers (Ekinci & Dawes, 2009). Therefore, being aware of the needs of the customers and achieving them has been important in ensuring that a firm has a future incentive to deal with competitors.

    1. The luxury car market in Singapore

The luxury car market in Singapore is highly competitive. Price wars have stooped to be used as one of the competing strategy in the luxury car market in Singapore. This is because the business involving luxury a cars revolves around the high purchase (Lee & Lim, 2002). Those customers purchasing the luxury cars in Singapore are perceived to have much money. Therefore, price wars can be irrelevant in gaining a competitive advantage. Therefore, the rival firms have adopted a new strategy to outdo each other. Service quality has become the widespread used tool to gain competitive advantage (Dharmaraj & Sudhahar, 2010). Car dealers such as Mercedes, BMW, and other brands are using service quality as a tool to market their brand. More people are increasingly becoming interested in purchasing the luxury cars, not because of the prices given, but because of the service given by the provider. Brand wars are prevalent in the Singapore car market. For example, Mercedes inaugurated its S-Class model. On the other hand, Toyota introduced Lexus. For these brands to capture a significant market share, service quality is enhanced to ensure the projected sales of the brands are realized. These dealers are also fighting alongside repairing car of their customers. Rover, for instance, recorded high-profit margins in 2012 when it started repairing luxury cars of their clients (Kum, Bergkvist, Lee & Leong, 2012). This motivated other buyers at buying luxury cars from Ford. Warrants are also other competing tools in the luxury car market in Singapore. It is observed that car dealers such as Mercedes and Ford are looking for ways in which they will increase the warranty period. Therefore, customers will not fear losing their money after their car broke down a short warranty period expires.

Thus, car deals in the luxury market in Singapore will need to focus on service quality as one of the competitive ways to achieve competitive advantage. This will take the form of improvising various ways that determine service quality in the luxury car market in Singapore (Hudders, Pandelaere & Vyncke, 2013).

It has been found that the methods used by the dealers in the luxury car market in Singapore have not yet utilized the methods to bring maximum quality to the customers. This is because customers have developed the habit of transferring loyalty from one brand to another. Therefore, it indicates that the brand established do not have the tendency to retain the captured market. It was observed in 2010 that consumers from Mercedes changed their loyalty from Mercedes upon introduction of the Lexus by the Toyota (Stiehler & Tinson, 2015). Notably, later that year, a significant number of customers developed a taste for Mercedes products when Mercedes S-Class was introduced. This behaviour has been introduced to the tendency of the competitor’s inability to utilize effectively factors that affect service quality.

    1. The importance of service quality in the luxury car market in Singapore

The importance of service quality in the luxury car market in Singapore is varied. One of the values of service quality is that it has led to increased profits for the car dealers. For instance, Mercedes dealers have been recording a high profit turnover because of the recent effort to improve quality. Mercedes had resulted to make payment for buyers convenient by allowing them to pay for their services at the comfort of their homes (Dharmaraj & Sudhahar, 2010). Thereof, many car customers are leaving for the Mercedes because the firms they have been purchasing form allows them to make payment at the stores or in the banks. Another pertinence related to the service quality of luxury car market in Singapore is product differentiation. The competitions in the luxury car market in Singapore are fighting alongside empathy, responsiveness, assurance, as well as reliability. Ford Company, for instance, has demonstrated the increase in profits because it has initiated a social media platform that is used to answer queries from their clients. In addition, Ford Company has been the social media to give product information to the customers in the Singapore market (Kum, Bergkvist, Lee & Leong, 2012). Since a person purchasing the luxury are ought to have bought car previously, he or she has a good attitude towards the product. These attitudes can be motivated for another purchase by contacting the buyer and asked her of the driving experience, he or she gets from the current car. Therefore, the customer appreciates, and would buy another luxury car from the same dealer again.

    1. Objectives of the study

The goals are as follows:

  1. To identify the key factors that influence service quality of the luxury car.

  2. To provide recommendations for the improvement of service quality to attract and satisfy the customers in the luxury car market

  1. Literature review

    1. Role of customer service

The importance of customer service is that it leads to boosted profits. Most organizations who have excellent customer service record a high profit turnover because of the recent effort to improve quality (Hudders, Pandelaere & Vyncke, 2013). Another pertinence related to customer service is that it complements tangibles, empathy, responsiveness, assurance, as well as reliability. Another importance of customer service is that it leads to customer loyalty. This loyalty is important in enabling a firm to gain a competitive advantage against other firms who lack customer service that is effective. The other importance related to customer service is that it allows an organization to gauge performance when handling customers. In another dimension, customer service is important to ensure that firm is focused to its vision and missions. Every organization in the world has a provision in its vision statement to bring about customer satisfaction. Hudders, Pandelaere & Vyncke (2013) argue that customer service is important in enriching the brand of an organization. Branding in the modern world has been made to alongside customer service. Firms no longer compete on prices, but they do so based on the level of customer service.

    1. Measurement of Service Quality in the car luxury in Singapore

The Measurement of Service Quality model can be used to measure the quality of service in the car luxury market in Singapore ( Kaura, Durga Prasad & Sharma 2015). This involves looking at such parameters as reliability, tangibles, responsiveness, assurance, and empathy. The Gap Model can be integrated with the SERVQUAL Model to identify the gaps between the level s of service quality o the respective market. One of the factors that most car companies fail to address when improving service quality is feedback (responsiveness). The service quality theory gives that a responsive service quality achieves maximum customer satisfaction. Lee, Jeong & Choi (2014) argue that an effective firm is the one that has an effective response system. This is what is experienced in the luxury car market in Singapore. Each car company present in the market makes sure that it aims to achieve the maximum responsiveness to its customers. Liang (2012) adds that failure to respond to clients’ queries and suggestions in time leads to dissatisfaction. The call to improve the response methodologies has been because of customers arguing that their concerns have been either ignored or addressed when it is too late. The luxury car market is rampant with unresponsiveness cases. For instance, most car companies lack a follow-up strategy after customers buy cars from them. However, Marković & Raspor Janković (2013) disagree that responsiveness is a crucial factor to consider in improving service quality. The authors argued that responsiveness should be concentrated on those who are interested in buying products from certain dealers (Kuo, Chang, Cheng & Lai 2013). This is because continuous follow-up to the customers makes a bother that gets them bored. Therefore, they end up switching loyalty to the firm that does not bother them after purchasing the cars. However, Najib, Ariffin & Rahman (2015) who argued that responsiveness should be enhanced during emergencies, contradicts the above point. Nevertheless, Lee, Jeong & Choi (2014) attest that responsiveness should be made a daily routine to ensure there is the close relationship between the customers and the luxury car company.

Papaioannou, Assimakopoulos, Sarmaniotis & Georgiadis (2013) enter into this discussion attesting that responsiveness has no bigger effect of customer satisfaction than empathy. The authors argue that empathy has a more personal appealing than other factors of service quality. Empathy has been defined by Po-Hsuan, Ching-Yuan & Cheng-Kai (2014) as the feeling of closeness that is established when two people relate to each other. These authors argue that the luxury car market lacks empathy. The car companies in the market have excelled in making available the products the customers want. However, the customers still go home thinking that the respective companies do not care for them. The absence of empathy is mostly observed immediately a customer has bought a car (Roy, Eshghi & Quazi, (2014). The earlier compassion the dealer had when luring the customer to buy a certain car model dries up once the purchase is being made. Stiehler & Tinson (2015) argue this bring customer dissatisfaction. It is observed that since the purchasers of the luxury cars are rich and respectable peoples, the sales people are unable to provide empathy in the sale. Therefore, the customer goes home confirming to himself or herself that he or she will never buy another car from the respective place. However, the authors argue that empathy should not be stressed as a factor to improve customer satisfaction in the luxury car market. The way the abnormal demand ours in this particular market, the same way it should act on empathy. This is because empathy is not a crucial factor as it is in the food market (Sunayna, 2013). Therefore, Sunayna (2013) concluded that empathy is not the crucial factor in improving customer satisfaction as far as the luxury industry is concerned.

Thenmozhi (2014) emerges to give the crucial factor that should be emphasized on when improving service quality in the luxury car market. The author gives that this factor is reliability. Thenmozhi (2014) as the tendency of an organization/company to accomplish what they promise has defined reliability. Sunayna. (2013) argues that reliability has been a rare concept in the luxury car market in Singapore. This is because the companies have been focusing on proving shiny cars and flashy accessories that aims at improving the physical part of their product, however, despite all these efforts, there is still reduced customer satisfaction the respective market. This is because the car companies are not able to find what the customers value in them. Hudders, Pandelaere & Vyncke (2013) argue that the car companies in Singapore have been confusing reliability to product features. The car companies have been thinking that having the product increase its reliability. However, this is not true for reliability and product features are two different concepts. The customer might continue to purchase the same car model if it was reliable even if the respective model does not change.

When the aspects of empathy, responsiveness, and reliability seemed inadequate for explaining how service quality can be improved in the luxury car market.

Hudders, L Pandelaere & Vyncke (2013) give that assurance defeats them in improving customer satisfaction. Marković & Raspor Janković (2013) define assurance as the ability to deliver a product skilfully and effectively. Dharmaraj & Sudhahar (2010) admits that it is compulsory for the service provider to be the experts of the service they offer. This is not experienced in the luxury car market in Singapore. This is because a large number of salespeople lack the technical skills to handle customers. One way the lack of skills is witnessed in the luxury car market in Singapore is ineffective communication that is seen during car shows. The failure of the salesperson to demonstrate professionalism, the customer will not have the negative attitude towards the salesperson, but also to the product. Therefore, the salesperson has to make sure that the customer sees skills in her or him. However, this point is contradicted by Marković & Raspor Janković (2013) who argue assurance has a small significance in improving customer satisfaction. This critic points out that customers in the luxury car market are selective because mainly of their orientation. Therefore, they may evaluate professionalism exhibited by the salesperson based on other factors such as colour, race, and physical appearance.

    1. The Gap Model

The Gap Model has been influential in assisting an organization become aware of the existing problems in its structure. Many organizations have the tendency of amassing efforts together to try and attract more customers to their pool. However, they end up incurring many costs without any significant progress. This is because the organization fails to notice and address the aspects of service quality. The Gap Model enables a firm to critically assess each stage of development such that any problem is identified and remedied thoroughly. For instance, many firms ignore the aspect of allowing the customer indicate what they want handled. The organization designs means on how to handle customer without involving the customer themselves. This is gap because the efforts of the organization will not match the expectations of the consumers. One of the pros of the Gap model is that it assists an organization to identify the gaps with its service quality. This enables an organization to identify the specific areas to be addressed. In addition, the Gap Model assist enables firm to evaluate the necessary tactics that can be used to avert issues that limit its service quality (Dharmaraj & Sudhahar, 2010). However, the Gap Model has the con of not being punctual. An organization can address a gap that actually widens the existing gap with the service quality offered to the customers.

    1. Multilevel model

Apart from the Gap Model and SERVQUAL model, Multilevel Model can be combined with the two models above to address service quality in car luxury market in Singapore in three dimensions (Hudders, Pandelaere & Vyncke, 2013). These dimensions include primary dimensions, overall perceptions of service quality, and sub dimensions. This model is important because it takes the importance of price and environment in its evaluation. The multilevel model is important because it is able to identify gaps in customer service. The model is also important in that it addresses a phenomenon singlehandedly. For instance, it identify where empathy lacks in the customer service. It then provides mechanisms to deal with the gap issues. The other factors such as responsiveness are addressed separately .the importance of such approach is that a single problem is addressed wholesomely. One pro of this model is that it enables a firm to deal with a problem holistically without coming back again to it. In addition, the approach is systematic such that more optimism in the future is given. However, the model has a shortcoming in that it is too detailed. Therefore, it is time-consuming. Dealing with issues one at a time brings a situation whereby much time and money are used.

SERVQUAL Model to Measuring Service Quality

In conclusion, the literature has found that empathy, reliability, assurance, and responsiveness are crucial factors of service quality in achieving maximum customer satisfaction. These are the components of SERVQUAL Model in measuring service quality (Dharmaraj & Sudhahar 2010). This model is important because it deals with more personalized elements of service quality. Dharmaraj & Sudhahar (2010) argues that understanding the abstract factors of the clients is important because they are easily modified and improved for one advantage. One pro of this model is that personalized feelings of a client are nurtured. Capturing and understanding the feelings of a customer is an effective step towards building and strengthening of a relationship with the client. This relationship is important in ensuring that loyalty is achieved through achieving maximum customer satisfaction. The other pro is that time is saved when improving the feelings of the clients. However, Hudders, Pandelaere & Vyncke (2013) argue that this model is cumbersome since human feelings fluctuate now and then.

The study utilise this tool to observe how the gaps in service quality can be affected in the car luxury market in Singapore. All the models indicate that reliability, responsiveness, tangibles, assurance, and an emphasis has to be placed on an emphasis when considering service quality in car luxury market in Singapore.

  1. Research methodology

Research Design

The study will be exclusively a survey. Quantitative methods will be utilized to accomplish its objectives (Archibald, Radil, Xiaozhou & Hanson, 2015). Quantitative data will be required for the study. This is because the study wants to capture concrete data about how which factors on the luxury car market in Singapore improves customer satisfaction. McCusker & Gunaydin (2015) argue that quantitative methods involve the collection of numerical data, and mathematical models are mostly used for data analysis. The quantitative methods were used because the study wanted to test a theory based on the findings, it ought to get from the research. The quantitative design used is questionnaires.

Research strategy

The study was both exploratory and descriptive, and it drew the picture theme and explained the phenomenon characteristics in its current state, namely factors that determine service quality in the luxury car market in Singapore. The research also sought to determine the relevant phenomenon attributes to provide solutions to what and how to question. McCusker & Gunaydin (2015) argue that descriptive research makes use association, observational studies, survey research and developmental studies. The descriptive part was entailed to describe the situation of service quality in the luxury car market in Singapore. Expiatory research, on the hand, also uses correlation to explore a certain phenomenon (Starr, 2014). The exploratory part was geared to explore various dimensions of quality service customers in the luxury car market have been looking for them to be maximally satisfied. To accomplish the above objectives questionnaires were used.

Sample design

A sample design deals with two significant issues comprising the number of population elements and their approach of selection. The determination of sample size is fundamental and hard in planning. A sample refers to a division of the element of the population (McCusker & Gunaydin, 2015). The main motivation for determining the sample size was because to the complicatedness of addressing the entire population in the study. Although the method used in this study would require a large sample size, a very large as the whole population would have resulted in the consumption of time, resources, and money (Starr, 2014). The researcher visited various car companies’ customer records and got their phone numbers. The researcher then called them to ask their indulgence in the study. A sample size of 800 was planned to be gotten from the population in the luxury car market in Singapore. However, only 300 respondents were got. The respondents were to be studied using the questionnaires.

Sampling Design

The researcher used non-random sampling for the research. The sampling was judgmental or purposive (Poth & Onwuegbuzie, 2015). Although the design failed to evaluate the reliability of the expert and had a higher bias rate, it became the best for the study, as the population sample was small. The method was time-effective and cost saving mainly in the data collection.

Research Process

The customers in the study were interviewed through the telephones. The sample to be studied using questionnaires was sent the consent forms through emails whereby the participants signed and returned signed forms. All the participants were to concede that they were informed before the study (Claasen, Covic, Idsardi, Sandham, Gildenhuys & Lemke, 2015. Participants were allowed to request for clarifications on any query. The questionnaires had the open-ended question. The use of open-ended questions was to make sure that the researcher captures more of the explanation regarding service quality in the luxury car market in Singapore (Poth & Onwuegbuzie, 2015). As the study ended, the researcher thanked all the participants for their enthusiasm and time to participate in the study.

Research questions

  1. What are the key factors that influence service quality of the luxury car?

  2. What are the recommendations for the improvement of service quality to attract and satisfy the customers in the luxury car?


H1- The effect of empathy on service quality in improving customer satisfaction

H2- The effect of reliability of service quality in improving customer satisfaction

H3- The effect of responsiveness on service quality in improving customer satisfaction

H4- The effect of assurance on service quality in improving customer satisfaction

Data collection

The study immersed to gather both primary and secondary data. In the study, the collection of primary data was done in agreement with the design of the research phenomenon and the researcher (Spillman, 2014). The Researchers investigated the position of service quality in car luxury in Singapore. The collection of information was made using interactive questionnaires with the customers in the respective market (Guetterman, Fetters & Creswell, 2015). This is because the respondents are busy people and have the limitation in allocating time to attend face-face interviews. The questionnaires will have a smooth course, since the respondent will have enough time to fill them when they want.

  1. Ethical statement

Privacy of the respondents will be taken as a priority. The data provided by the respondents will be kept confidential. This is because the study will research rich and affluent people who can be difficult to deal with if their information is found to have been breached. To ensure that the information is kept confidential, data will be stored in locked safes to avoid the wrong hands accessing it (Green, Duan, Gibbons, Hoagwood, Palinkas, & Wisdom, 2015). Since the interviews will be done through telephone, the information will only be heard by the researcher. Therefore, the rooms for the study will be made soundproof to ensure that outsiders do not hear the communication in the study (McCusker & Gunaydin, 2015. Above all, all the respondents will be required to sign consent forms to indicate they are willing to engage freely in the study.

  1. Project Timelines

The project was positioned to commence on 20th August 2015 to 8th October 2015. The researcher did not work on weekends, and such days were removed from the timeline. The project plan was as indicated below.Research Proposal

Table 1:
Project Plan
(Creswell, 2014)

The study presented the findings by the make use of tables. Tables were more suitable for this project as the researcher demonstrated the results better through visual presentations as opposed to tables of figures.

Research Proposal 1

Molina Azorín & Cameron, 2010)Figure 1: Gant chart indicating the project plan and timeline


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