Case Study: Buying an electric car.

Humanity is currently facing the challenge of the Great Transformation, a transition from the current fossil fuel-based economy towards a sustainable society within planetary boundaries. One highly important aspect of this transformation is the reduction of CO2 emissions to mitigate climate change, which requires major changes in many areas.

One of the most important of these areas is the transport sector, which is responsible for 24% of global CO2 emissions. Energy demand for mobility is rapidly growing, creating a need for immediate energy-saving actions on all possible levels. This encompasses both an overall reduction in individual motorized transport as well as increased energy efficiency and use of renewable energies in motorized vehicles that are still being used.

One important contribution to the latter is a shift from combustion engine cars to alternative-fuel cars. A promising technology in this regard is the electric car, defined as a car that is solely powered by a battery. Electric cars can contribute to mitigating CO2 emissions from car travel – especially when production and usage are powered with renewable energies. However, in most countries, electric car adoption rates are still low compared to combustion engine cars.

One such car is Nissan LEAF. Carbon Tax was introduced in the same year the original Nissan LEAF battery-electric vehicle was launched in Australia. Seven years on and the second-generation LEAF arrived in 2019; cleaner, greener, and palpably improved. The price of the new Nissan LEAF is $49,990 before on-road costs. A Toyota Corolla hybrid can be had for $25,870, a top-spec bells-and-whistles 2.5-liter Mazda3 for $36,990, and an all-wheel-drive Mercedes-Benz A-Class for $49,500 (all plus on-roads of course). So the LEAF doesn’t have price equivalency against Nissan’s usual competitors when they are powered by internal combustion engines (ICE). Instead, it is up there with the premium brands.

When it was released, Nissan fulfilled the promise to deliver the LEAF (40 kWh version) to Singapore, which is one of several new markets in Asia and Oceania. Taking into consideration the price – $161,800 SGD with Certificate of Entitlement (≈$118,250 USD) – and size of the market, Singapore probably will not be a noticeable market for the LEAF, but this enables Singapore to get a taste of the best-selling EV (in terms of over 400,000 cumulative sales).

In this paper, we investigate possible reasons for low electric car adoption rates from the perspective of consumer behavior. The context of our investigation was Germany. We focus on households as an important target group owning the vast majority of passenger cars.

The public debate on the reasons for low adoption rates in Germany has strongly emphasized the role of financial and technological constraints. For households, the adoption of an electric car involves a higher purchase price than a combustion engine car, as well as the need to adapt to new characteristics of an innovative technological system (e.g., lower driving range, unfamiliarity with the charging system).

From a psychological point of view, assuming that these aspects are crucial to understanding low electric car diffusion rates implies emphasizing the role of rationality in energy-related investment decisions. Household members might perceive certain benefits or disadvantages (e.g., for their household, themselves, or both) and weigh these aspects against one another in order to identify the most suitable investment object from a rational perspective.

For example, we can assume that individuals are concerned about having a solid financial situation and a lifestyle that suits their personal comfort needs. Some rational motives underlying energy-related investment behavior (e.g., the desire to save money) may support the uptake of energy-saving investment objects, while others (e.g., desire for comfort) may be in conflict with such actions.

Empirical research on predictors of energy-related investment decisions often focuses on the perception of economic and technical features of investment objects and has provided strong evidence that rational motives play an important role in decision-making processes.

While households might certainly have rational motives for engaging in energy-saving actions, consumer psychology also highlights the role of norm-directed motives. Norms can be defined as shared expectations of appropriate behavior and are commonly differentiated into a moral and a social dimension. The moral dimension also referred to as the personal norm, reflects an individual’s own rules or expectations.

The social dimension also referred to as social norms, involves (perceived) group rules or expectations. Regarding the moral dimension, climate change has fatal consequences for people who live in less privileged conditions, future generations, long-existing ecosystems, and endangered species. Household members might feel morally obligated to contribute to mitigating climate change in order to reduce these consequences.

Thus, moral motives should generally support the uptake of energy-saving investment objects. In some cases, moral motives might suggest the same behavior as rational motives, such as when energy-saving behavior also saves money. In other cases, moral motives might contradict rational motives.

For example, in Germany, the total cost of ownership for an electric car was higher than that of a combustion engine car for the average household. Furthermore, the two kinds of motives are not necessarily mutually exclusive when it comes to mitigating climate change – for example, safeguarding natural resources, preventing future extreme weather conditions, or preventing future economic crises certainly imply strong rational incentives for a household to engage in energy-saving behavior.

Regarding the social dimension, research has provided evidence for two main roles of social norms: First, they provide orientation, as they communicate information about the social standard of behavior (informational role). Second, they can lead to social pressure, in which individuals think about others’ reactions to their own behavior.

Thus, social norms may either support or be in conflict with the uptake of energy-saving investment objects, depending on the characteristics of the individual household, its social surroundings, and the diffusion of the investment object.

Empirical studies of energy-related investment decisions less often focus on investigating norm directed motives. Moreover, some findings are ambiguous and more research is needed to further

clarify the importance of norm-directed motives in different decision domains. However, enough studies have found significant effects to conclude that these motives have at least some relevance. In sum, prior research suggests the relevance of both rational and redirected motives in the context of energy-related investment decisions in households.

The general trends and findings described above are also reflected in the specific decision context of electric car adoption. A huge body of research focuses on rational adoption motives, emphasizing the relevance of individuals’ financial and technological evaluations of electric cars.

Much less research has explored the role of norm-directed motives in more depth. These studies indicate at least some relevance of moral and social motives in this decision context as well.

However, it is unclear to what degree different types of motives influence electric car adoption and how these motives interact, i.e. whether or not these motives mutually reinforce or interfere with one another.

In consumer psychology, there is a longstanding controversy as to whether moral motives are undermined by other motives (such as rational motives) in the context of behaviors involving high financial costs and/or a high amount of effort. In the context of electric car adoption, some studies building on work on different motives for car use explores these questions in more depth. These studies indicate that the influence of norm-directed motives on adoption intention is relatively equal to that of rational motives and that the two kinds of motives are highly correlated.

However, more research is needed to confirm these findings and further clarify the interplay between different kinds of motives. Action models are a particularly suitable approach for systematically investigating the relevance
and interplay of motives underlying behavior. They have at least two important advantages:

First, from a theoretical perspective, they allow for comprehensive investigations, enabling researchers to compare the relevance of different types of predictors while simultaneously investigating complex interactions between them. Second, from a practical perspective, insights from action models are very helpful for developing suitable political support schemes. Integrated action models with several types of motives have proven especially useful in terms of a comprehensive investigation.

In a recent example, applied three action models from different research traditions to explain the adoption of solar photovoltaic systems. They could demonstrate that both rational and norm-directed motives play an important role and that an integrative model with both rational and norm-related predictors explained the most variance. However, action models have rarely been applied in research on electric car adoption as well as research on energy-related investment decisions in general.

QUESTION ONE

Question 1A

Briefly explain the 3 types of reference group influences. Which type is most suited to promote electric cars? Why? (2.5 marks).

Question 1B

Using the information from the case, compare rational choice vs. norm-directed behavior. Which one would you use to promote Nissan LEAF in Singapore? Why?

Question 1C

Other than baby boomers, identify any generational cohort you studied in this course. Then, using three stimulus factors, develop an electric car (any brand) print advertising copy to target this cohort.

Question 1D

Amongst Maslow’s hierarchy of needs, which need is most appropriate for developing marketing strategies of electric cars. Explain why. (2.5 marks).

Question 1E:

Explain how the concept of “shaping” could be used to promote Nissan LEAF in Singapore. Create your own process of shaping in a diagram to demonstrate your understanding.

QUESTION TWO

QUESTION 2A

Insert the correct answers in the blanks

Question 2A 1

involves knowledge, beliefs, art, laws, morals, custom, and any other capabilities acquired by humans as members of society.

Question 2A 2

Status crystallization involves the degree of consistency on status dimensions such as power, ego, and wealth.

Question 2A 3

According to your notes, which of the following is not a determinant of lifestyle: Social class, emotions, learning, culture.

Question 2A 4
are the features that the consumer believes a product should have, such as a suitable price, brand or ingredients.

Question 2A 5

is developing a unique image for the product or service in the mind of the consumer – an image that will _____________________ the offering from competing ones.

QUESTION 2B

The chief marketing officer of the product/ brand involved in your product review assignment has heard that you successfully completed a project on their brand. She has requested you to write a summary of your project for them to publish in their newsletter that is distributed to their stakeholders. You believe this is a great opportunity to secure an internship position in the company. Write a winning summary report of your project to be published in that newsletter.

QUESTION THREE

The case study discusses the adoption of electric cars. Discuss how electric car adoption could possibly be influenced in the Singapore market. With Nissan LEAF as an example, use some selected concepts you have learned in class – such as diffusion of innovations, categories of innovations, adoption process, diffusion rate, factors affecting innovation, and adoptions of innovation over time – to illustrate your answer.

QUESTION FOUR

The post-purchases process is the last stage of consumer decision-making. Explain the possible post-purchase processes of a hypothetical consumer who belongs to the baby boomer generation in Singapore, who recently bought a Nissan LEAF 2019.

QUESTION FIVE

Explain how marketers can utilize the attitude change strategies to change consumers’ attitudes toward buying electric cars. As part of your answer, create a possible campaign to change attitudes.