Effects of corporate social responsibility advertising on private labels' consumer-based brand equity : a case in the supermarket retailing sector

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Master’s thesis

Effects of Corporate Social Responsibility

advertising on private labels’ consumer-based

brand equity: a case in the supermarket

retailing sector

Andrea Ranieri Palma - 11375698

University of Amsterdam

Faculty of Economics and Business

MSc in Business Administration

Specialization: Digital business

Academic year: 2016-2017

Supervisor: dr. Kristopher O. Keller

Submission date: 23rd of June 2017, Draft version

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Statement of originality

This document is written by Student Andrea Ranieri Palma who declares to take full responsibility for the contents of this document.

I declare that the text and the work presented in this document is original and that no sources other than those mentioned in the text and its references have been used in creating it. The Faculty of Economics and Business is responsible solely for the supervision of completion of the work, not for the contents.

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List of tables and figures

 Figure 1 (conceptual framework) p. 9

 Figure 2 (survey flow diagram) p. 14

 Figure 3 (interaction plot) p. 23

 Table 1 (factor analysis for consumer-based brand equity) p. 20

 Table 2 (means, correlations and reliability analysis) p. 21

 Table 3 (results of regression analysis) p. 22

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Abstract

Private labels represent an important resource for retailers’ profitability. Therefore, retailers strive to increase their brand equity, fostering marketing efforts to improve consumers’ perception of private labels’ product attributes. Moreover, since consumers are becoming more aware of socially responsible behaviours undertaken by companies, companies are now increasingly engaging into CSR-related communications, rarely adopting a traditional

marketing communications’ setting, in favor of a compliance duty approach. In this research, the author proposes to adopt corporate social responsibility as an in-store advertising cue, in order to observe effects on consumers’ perception of private labels’ key attributes, and how such effects differ for stand-alone PLs and store-banner PLs. A 2x2 true experimental setting, followed by a survey, has been adopted to empirically test hypotheses formulated. Findings show that CSR has potential to be implemented as an advertising cue for in-store marketing communications. Moreover, it has been found to be particularly beneficial for stand-alone branded PLs, rather than for store-banner branded ones, in terms of increasing consumer-based brand equity. Thereby, it can be concluded that CSR advertising does have a positive effect on consumers’ evaltuation of PLs, but at the same time, retailers’ initial brand equity still plays a crucial role in determining consumers’ evaluation of PLs belonging to the latter.

Keywords: corporate social responsibility, consumer-based brand equity, private label,

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1. Introduction

A private label is a brand owned by a retailer that offers products manufactured by a third-party contractor. Therefore a private label can be considered as a retailer’s brand extension, and, as such, it leverages directly retailers’ brand equity, and affects it indirectly (Dwivedi et al., 2009). In this study brand equity will be intended as consumer-based brand equity, defined as the differential effect of brand knowledge on consumers’ response to the marketing actions of a brand (Keller, 1993).

Private labels are brands themselves. Those have their own associative network which enables them to have brand equity. The latter can be expanded and nurtured through appropriate marketing mix strategies. Considering that private labels belong, for the vast majority to low-involvement frequently purchased product categories, as such, those are often subject to switching purchasing behaviours, due to intrinsically motivated variety-seeking behaviours (Van Trijp et al., 1996). Therefore branding efforts aimed to establish unique selling points, are crucial to influence customer attitudes towards a private label, in order to influence “strength of preference” (Punj and Hyller, 2004), and in return affect retailer brand equity, increasing store loyalty. (Ailawadi & Keller, 2008). Moreover, private labeled products represent a crucial resource for retailers. Making competition tougher on the shelves has several benefits for the retailer in the end: it reduces other brands bargaining power, and, at the same time provides additional revenues, because of greater margins that come with them (Olbrich & Grewe, 2012; Schnittka, 2015). Therefore, it is important for retailers to coordinate marketing mix efforts in order to improve private labels’ positioning and sales performances.

In the last years, European Union decided to adopt a more strict approach on Corporate Social Responsiblity compliance, making it mandatory for large companies to report on it,

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due to their large economic and environmental impact on society (Chaplier, 2014). Nevertheless, CSR may reveal itself not exclusively as a tool to clear compliance duties, but also have an impact on other firm areas, rather than only auditing. McWilliams (2006) and Melo & Garrido -Morgado (2012), indeed, stated that, approaching CSR initiatives from a resource-based view perspective, those should be considered as strategic investments, even if not directly correlated with any economic activity, because “fostering hard-to-copy

competitive advantage based on reputation building, in order to implement differentiation strategies” (McWilliams, 2006) and increase external stakeholders’ satisfaction, such as

consumers. (Pivato et al., 2008; Hsu, 2012) (Bhattacharya and Sen, 2006). Hence, advertising CSR iniatives, could be a powerful and overlooked marketing tool able to “create, develop and sustain differentiated names” (Girod & Michael, 2003), thus enhancing brand equity. Indeed, consumers are increasingly more aware of socially responsible behaviours undertaken by companies (Bhattacharya & Sen, 2004), due to the empowerment internet communications conferred to them (Fournier & Avery, 2011), and obviously, this has an impact on consideration they have of those brands (Smith, 2003; Loussaief et al., 2013; Mejri & Bhatli, 2013; Bhattacharya & Sen, 2004), since “consumers are increasingly likely to reward responsible companies” (Du et al., 2010). Thus, communicating to consumers responsible approaches relative to manifacturing and commercialization practices is relevant to enhance retailers image and differentiate a brand from those who do not. Moreover, such ì informations may generate strong and favourable associations related to relevant product attributes, such as quality, from a consumer point of view. Hence, advertising CSR initiatives would increase private labels’ CBBE, thus being beneficial to retailers in order to improve brand positioning and consumer attitudes towards it.

Although, effectiveness of CSR advertising tools implemented by a retailer may be conditioned by adopted branding strategies regarding to its private labels. As associative

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network theory suggests, a brand extension bearing a similar, or equal, name as the parent brand, is more likely to be connected, in consumers minds, to the parent brand associative network, so that associations present in that network can travel easier from one entity (parent brand - retailer) to the other (brand extension - PL) (Dwivedi et al., 2009). Therefore, branding decision between store-banner and stand-alone branding is crucial to determine whether private labels’ CBBE can benefit of those associations generated by CSR-focused advertising. This is particularly relevant when it comes to quality and expertise associations furnished by an established brand, as the retailer may be.

Therefore, the research question object of this study is as follows: Do Corporate Social

Responsibility advertising positively influence consumer-based brand equity of a private label and how does branding decision about private label moderate this effect?

Lai et al. (2010), Hsu (2012), Perez et al. (2012), Du et al. (2007), have all addressed impact of self-reported CSR investments on brand image, brand reputation and customer satisfaction, in different industries and economic contexts. They noticed overall positive effects, although all of them analyzed contexts in which product attributes themselves are not considered crucial for consumers in order to evaluate a brand. Rather, building a trustworthy reputation to strengthen relationships with principal stakeholders (Bhattacharya & Sen, 2006), matters more than actual product attributes. Indeed, most of the existing literature focuses on context-specific examples of CSR effectivenes towards determined stakeholder groups (Perez et al., 2012). Therefore, it is still to be shown whether those assumptions may be valid in the retailing sector, where product and store experiences are the first encounters upon which consumers base their opinion of a brand. (Ailawadi & Keller, 2008).

Pivato et al. (2008), instead, assessed CSR impact on retailers’ brand equity using organic products sold by different european retailers, to test whether those influenced consumers’

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trust into retailers, so that a relevant price-premium can be applied to them, and, thus affect positively retailers’ bottom-line performances. They found that consumers positively evaluate environmental friendly initiatives, and this evaluation, in return, has a positive effect on trust consumers put in a brand’s product attributes, which is translated in an increased willingness-to-pay substantial price-premiums applied to organic products. In this way, authors assessed CSR impact on bottom-line performances, showing how consumers’ attitudes and purchase intentions towards organic products were positively affected by it. Nevertheless, authors payed less attention to the impact of CSR on other private labels’ CBBE components such as brand awareness, perceived quality and brand image.

On the other hand, many studies have showed that consumers actively consider socially responsible actions entrailed by brands (Bhattacharya & Sen, 2003, 2004; Loussaief et al., 2013; Mejri & Bhatli, 2013; Du et al., 2010), affecting brand awareness and brand image, likely to affect purchase intentions (Schramm-Klein et al., 2008; Bhattacharya & Sen, 2004). But, what emerges so far from the literature is that none of these studies assessed CSR-focused advertising’s effectiveness as a marketing tool able to affect positively different aspects of private labels’ consumer-based brand equity, in the retailing industry.

Therefore, this study aims to expand current literature stream about effects that advertising CSR initiatives have on private labels CBBE, and analyze about how this effect differently affects private labels bearing retailers’ brand names and those who do not. This kind of contribution would be particularly relevant for managers since it would ascertain the validity of CSR investments as an overlooked marketing tool which may have a consistent impact on customers relationship, thus affecting CBBE, rather than exclusively self-reporting them as part of clearing compliance duties. Moreover, despite considerable investments necessary for CSR policies implementation, it could be possible to leverage them, marketing wise, without any significant additional expenditure. So that those investments may be turned in a source of

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competitive advantage, if communicated through appropriate settings specifically targeted at consumers. Hence, this study will offer academic contributions about the effects of marketing communications, having as object CSR initiatives, on different dimensions of CBBE, which has not been assessed yet outside the area of cause related marketing efforts (Vanhamme et al., 2012), and offer a brief definition of what advertising CSR means, based on previous literature about marketing communications and corporate social responsibility. This research adopts a 2 (CSR advertising) x 2(PL branding decision) between subject experimental design, in order to investigate whether a causal relationship between CSR and increases in CBBE exists or not, and what are the implications deriving from interactions taking place among those variables. Data about private labels’ CBBE were gathered by means of a survey in order to be suitable for empirical tests.

(Figure 1)

2. Hypotheses

2.1 CSR (Corporate Social Responsibility) advertising

Van Marrewijk (2003) defines CSR as “all companies activities demonstrating the inclusion of social and environmental concerns in business operations, and interactions with stakeholders”. (Perez et al., 2012). McWilliams (2006), then, distinguishes between

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informative and persuasive forms of reporting CSR initiatives and their respective effects. Persuasive reporting tries to influence consumer towards product with CSR attributes, as it is the case for organic food products. Informative reporting, instead, simply provides information about CSR initiatives a firm undertakes. Although, this definition may be considered shallow for this research, because more suitable for CSR self-reporting auditing duties, and not tailored specifically for a certain stakeholder group. Hence, there is a need to define what are the principles underlying how CSR investments should be communicated towards consumers. Consumers, indeed, elaborate CSR informations they receive based on the stakeholder at which those investments are targeted (van Herpen et al., 2003; Perez et al., 2013; Sen et al., 2006), so that CSR communications has to be specifically targeted at consumers, in order to be effective within such stakeholders’ group. Therefore building on Keller (2001b) definition of integrated marketing communications, CSR advertising may be defined as “a marketing tool by which a firm attempts to inform, persuade, incite and remind

consumers” about CSR initiatives undertaken. This definition would suit better marketing

communications which content is related to CSR investments entailed by a brand. In advertising settings, CSR could act as an extrinsic quality cue to be leveraged in order to influence consumers perceptions about branded product attributes, and consequently affect attitudes towards them.

2.2 Private labels’ consumer-based brand equity

Different brand equity literature streams have debated for decades about principles underlying its formation, and about techniques to measure it (Datta et al. 2017). This study will adopt main theory streams developed by Keller (1993, 2001a) and Aaker (1991, 1992, 1996), based on a consumer-based approach to assess brand equity.

Keller (1993) sustains that CBBE is formed by two dimensions: Brand awareness and Brand image. The first dimension consist of the consumer’s ability to recall and recognize a given

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brand among others in the same product category, influenced by brand identities and marketing actions. The second one consists of the associations’ set rooted in customers’ minds, which can be linked to experiential factors with the brand itself, or, to secondary associations that may arise from other entities close to it. Those two dimensions contribute to create a brand associative network, that is where “the hearth and the soul of the brand” truly lies (Aaker, 1996) (Till et al., 2011). The intensity and strength of those associations, and the links connecting them one to another, depend on marketing communications program’s consistency, quality and relevance to consumers eyes (Keller 2003; Till et al., 2011).

Brand associations considerably affect brand image as well, contributing to create an abstract meaning rooted in consumers minds (Faircloth et al., 2001). These factors, combined together, determine brand knowledge differential effect on consumer response to products sold by a brand. Although, in the case of private labels, some aspects of brand image are more important than others. Indeed, Girard et al. (2016), building on previous works by Keller (1993, 2001a), Ailawadi & Keller (2004), Glynn & Chen (2009), and Aaker (1991), developed an useful framework to assess main factors influencing a PL brand equity. Besides two main dimensions identified by Keller (1993), (1) brand awareness and (2) brand association (image), authors refer to (3) Perceived quality and (4) Perceived risk as crucial variables pertaining to build a solid PL brand equity.

Those two variables influence deeply consumers’ purchase intentions when it comes to PL products, since those are often considered as standard quality substitutes of national brands, but cheaper. (Cotterill et al., 2000). Purchase decisions between the two products considerably depend on perceived risk level, connected to the level of perceived quality associated with the two products. Those two variable determine products (5) Perceived Value (Girard et al., 2016), which is a reliable predictor of consumer attitudes towards a PL. Therefore, CBBE dimensions taken into account for this research are the following: (1) Brand

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awareness (2) Brand associations (image) (3) Perceived quality (4) Perceived risk (5) Perceived value.

Recent studies by Loussaief et al. (2013) and Mejri & Bhatli (2013), conducted in France and Norway, showed indeed, that consumers’ evaluation of retailers social quality has a positive influence on perceived quality of their private labeled products. This means that consumers’ evaluations of CSR initiative may affect significantly attitudes towards a private label. Advertising CSR initiatives related to products standard quality settings and trade conditions may significantly lower perceived risk and increase perceived quality, either creating positive associations related to quality and favourable product attributes, whether those were not present yet, or making those attributes more accessible to consumers. Indeed, conveying attention towards product attributes, by implementing CSR advertising tools, makes them more accessible for consumers, driving them into a temporary state of associative activation (Bargh, 1997; Kahneman, 2003). Accessible increased levels of perceived quality influence negatively perceived risk attributes, thus generating higher levels of perceived value. Moreover, CSR advertising may help to build more abstract meanings related to a brand, such as distinctive personality traits such as sincerity and competence (Aaker, 1997), contributing to build a trustworthy image (Pivato et al., 2008), in which consumers can identify with (Bhattacharya & Sen, 2003; Dowling, 1986). In this way, consumers ability to recall a PL brand and to include it in their consideration set will be improved, thus affecting brand awareness.

H1. Corporate Social Responsibility advertising positively influences private label’s

consumer-based brand equity.

2.3 Private label branding decision

If a private label is considered as an extension, branding decision implemented by the retailer influences private labels’ CBBE, because it directly affects private labels’ associative

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networks’ structures. Retailers can choose to share the same name with their private label, or implement a branded cue in their name. That is considered a “store-bannering” branding (Keller et al., 2016) decision. On the other hand, a retailer can choose to not explictly link its brand to a PL, choosing a brand new name for it. In this case, it is considered a “stand-alone” branding decision (Keller, 2016). Store-banner branding strategies enable retailers to leverage positive associations entailed in their network, to enhance private labels’ brand equity. Furthermore, Schnittka et al. (2015) found that chain-labelled private labels were significantly easier to categorize into the correct product category, and to recall, than non stand-alone branded ones. So that, private labels’ branding choice can significantly affect brand awareness. Indeed, stand-alone branded private labels were not even linked succesfully to their own retailer in most of the cases, even if private labels were quite popular. Consumer’s correct recognition of a private label as belonging to a specific retailer, is an important prerequisite for private labels and retailers’ success. (Schnittka et al., 2015). That shows branding decision acts as a link between the parent brand (retailer) and its private labels. The latter metaforically resembles a road on which informations attached to nodes being part of a brand associative network, can travel back and forth from one brand to another. The extent to which those informations easily travel is determined, indeed, by the branding decision implemented by the retailer for its private labels. So that, CSR advertising is expected to have a stronger impact on store-banner branded private labels, rather than for stand-alone branded ones, beacuse of the easiness to which product associations and abstract meanings can be transferred from one entity to another.

Indeed, store-banner branding strategies increase the likelihood of cross-category learning effects from one product to another, such that quality associations, made accessible through CSR advertising, are more likely to be transferred across different product categories (Szymanowsky and Gijsbrechts, 2012; Keller, 2016). This also proves that advertising CSR

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initatives can have an impact on private labeled products, even though the latters are not directly linked with advertised CSR initiatives.

H2. Store-banner branding decision moderates positively the effect of CSR advertising on

private label CBBE, compared to stand-alone branding decision.

3. Method

This research aims to explore the nature of CSR advertising effects on private labels’ CBBE, and implications coming with them. In order to achieve that, a quantitative study, adopting factorial experimental design was conducted. Hence, a 2(CSR advertising/No CSR ad) x 2(Store-banner branding/stand-alone branding) between-subjects true experimental setup was designed and implemented for this study. Between-subjects experimental designs are deemed more efficient in establishing such causal effects between variables because of treatments samples independency, which ables researchers to isolate exogenous factors as much as possible (Calder et al., 1981). Hence, these four different treatments were performed online by randomly assigning participants using Qualtrics, as reccommended for true experimental setups. Participants random allocation in different treatment groups can be assessed through survey flow diagram in the figure below.

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In its experimental condition, CSR advertising, consisted of an advertising stimulus. The latter has been administered in the form of an in-store advertising banner, in order to be perceived by consumers as more realistic as possible (see Appendix 2). Beforehand, a succesful pre-test was conducted among students to confirm banner’s content adequacy. Such banner promoted CSR initiatives entailed by the retailer object of the study, Albert Heijn. Advertising text refers to initiatives related to: (1) setting appropriate quality and fair trading standards, under which, their products are commercialized; (2) define waste reduction programmes; (3) sensitize consumers about important environmental themes and correct consumption habits. (Martinuzzi et al., 2011). All of these informations were retrieved from a dedicated section on corporate’s website. In experiment’s control condition (No CSR ad), a neutral stimulus was administered (see Appendix 3). In such condition, researcher’s main purpose was to observe baseline values for private labels CBBE, reflecting consumers natural perceptions of those brands, and then compare those values in order to assess CSR advertising’s impact on CBBE.

The “private label branding decision” moderating variable will consist of two different private labels, both belonging to Albert Heijn, which represent the two branding strategies object of this research. Those two private labels are “Zaanse-Hoeve” and “AH”. Consumers’ recognition of both private labels as such was succesfully pre-tested among students. Product category chosen for comparison is milk, which is particularly suitable to test consumers’ perception manipulation, since quality differences are almost impercetible from a shallow human perspective. Participants were asked to rate only one among those two options, in order to avoid comparison effects that may have influenced detrimently evaluation of both, since those belong to different price tiers and price-quality associations may have possibly triggered biases altering consumers’ evaluation. Cross-sectional data about PL brand equity have been gathered after stimuli treatments, by means of a questionnaire. There was no

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particular need to establish whether participants had sufficient ecounters with the retailer to have an opinion of it, since Albert Heijn is an established brand and market leader in the Netherlands, and accounts for a 35,4% share in dutch retailers market. (IRi, 2017). Moreover, brand presence on the territory is very strong, hence consumers were assumed to be fully aware of such retailer and products sold by it.

3.1 Sample

Population object of interest for this study is general consumers in the Netherlands. This research adopted a non-probability convenience sampling technique, targeting mostly graduate and post-graduate students, 21.6 % was 18-21 years old, 59.8% was 22-25 years old and 18.6% was 25+ years old. Participants were reached by personal e-mails and Facebook. Total sample size was N=201, even though 14 respondents did not complete the survey and therefore excluded from further analysis, as it will be further explained in the next chapter. Therefore, sample eligible for analysis was N=187. General informations such as age, gender, educational level have been asked to participants. In conclusion, since response rate was not easily predictable due to survey distribution through Facebook and student e-mails, researcher tried to reach enough respondents drawing from University of Amsterdam environment. Therefore, a draft lottery was offered to each participants, with the chance to win a Spotify gift card, which economic value is 30€.

4. Analysis

4.1 Variables operazionalization

4.1.1 Corporate Social Responsibility advertising (CSR ad)

This is a categorical variable, hence, it has been dychotomized and manually recoded into two values resembling two experimental conditions, which are: “0”, for the control condition with a neutral stimulus presence, and “1” for experimental condition with CSR advertising

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being present. This procedure made data suitable for conducting statistical analyses such as regression.

4.1.2 Private label branding decision

As previously mentioned for “CSR advertising”, this categorical variable has been dychotomized and manually recoded into two values resembling two differently branded private labels, being part of the experimental setup. Those are: “0” for stand-alone branded private labels and “1” for store-banner branded private labels. This procedure made data suitable for conducting statistical analyses such as regression.

4.1.3 Consumer-based brand equity (CBBE)

In order to measure levels of this continous variable, fifteen validated items from Girard et al. (2016) research, were adopted. CBBE is composed by following dimensions: (1) Brand awareness (e.g. “I know what Great Value products look like”)., (2) Brand association (e.g. “Great Value products are an established brand”) (3) Perceived quality (e.g. “Great Value products are very reliable”) (4) Perceived risk (e.g. “I am concerned that purchasing Great Value products would be a poor use of my money”) (5) Perceived value (e.g. “I believe that Great Value products offer good value for their price”). Although, original items were adapted to the purpose of this study, substituting “Great Value” with the private labels’ names object of current research. Those items were measured on a seven-point likert scale ranging from 1 = strongly disagree to 7 = strongly agree, except for four counter-indicative items that have been re-coded accordingly. Items were originally conceived in English, therefore there was no need to translate them. Nevertheless, original items were adapted to this research’s purpose by substituting original study’s private label brand with those being part of this research. All of the adopted items were validated by the authors following instruction on Hair et al. (2010; 2014), so that scale’s Cronbach’s Alpha was above

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recommended level of 0.7 (Girard et al., 2016), supported by a confirmatory factor analysis that confirmed all items were loading on a single underlying factor.

4.2 Statistical procedure

Experimental data were retrieved by means of Qualtrics, a dedicated online survey software, through which experimental setups can be implemented as well. Experiment started on March 20th 2017 and was concluded one month after, on April 30th. In order to perform statistical analyses, the Statistical software Package for Social Sciences (SPSS) 23rd version was used.

Before performing any statistical analysis, data entries, originated by participants who did not complete the experiment, were marked as missing. As a result of this procedure, 14 entries have been excluded from further analysis, and coded accordingly in order for SPSS to recognize and exclude them from any further step. It was chosen to not replace missing data with means, even though those represented less than 10% of the original dataset. Successively, four counter-indicative items were identified and recoded accordingly, as indicated in Table 1.

After data cleaning and missing data handling procedures were concluded, scale’s mean and reliability analysis for consumer-based brand equity were both computed. Scale Chronbach’s alpha is α=0.77, which is above recommended level of |0.7|, thus showing discrete reliability. Furthermore, items’ correlation coefficients between revealed that all of them were correlated above recommended level of |0.3|. Consequently, variable’s normality distribution was checked plotting data into an istogram graph, comparing it with a bell shaped normal distribution, as it is displayed in figure 2 (Appendix 1). Moreover, a single outlier was identified by means of Cook’s (1977, 1979) distance method (Pena & Castillo, 1984), and consequently excluded from further analyses.

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Hence, a confirmatory factor analysis was conducted on the consumer-based brand equity scale to further test if all items were loading sufficiently onto one underlying factor. Therefore, one factor was retained and rotated with a variance maximization method (Varimax). Assumptions were succesfully tested before examining results: sample size was sufficient enough (N=187), variable was normally distributed, Kaiser-Meyer-Olkin measure revealed that the sample was adequate for the analysis, KMO = 0.905 and Bartlett’s test of sphericity χ² (105) = 1680.039, p<.001 resulted significant, thus validating PAF analysis performed. Eigenvalue for the factor was over Kaiser’s criterion of 1, and factor analysis explained 46% of total variance in the variable. Scree plots confirmed Kaiser’s criterion assumption, thus validating factor extraction. Table 1 shows the factor loadings after rotation. All of the items loaded over |0.4|.

In conclusion, a regression analysis was performed, in order to test both CSR advertising and branding decision’s conditional effects on CBBE (Hayes, 2013). In order to investigate such effects, an SPSS macro from Hayes (2013) was used, specifically adopting model no.1. A bootstrapping resampling procedure was applied and performed by means of previously mentioned SPSS macro, in order to increase reliability of results. Moreover, there was no need to standardize or mean center either independent variable (CSR advertising) nor moderating variable (branding decision) since both of them were dychotomized categorical variables. The following equation describes regression model implemented for this research:

(1) 𝒀𝒀 = 𝒂𝒂𝟎𝟎+ 𝒃𝒃𝟏𝟏𝑿𝑿𝟏𝟏+ 𝒃𝒃𝟐𝟐𝑿𝑿𝟐𝟐+ 𝒃𝒃𝟑𝟑(𝑿𝑿𝟏𝟏∗ 𝑿𝑿𝟐𝟐)

𝑌𝑌 = Consumer-based brand equity 𝑎𝑎0= model intercept

𝑋𝑋1= CSR advertising

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𝑏𝑏1= conditional effect of CSR advertising on CBBE, when 𝑋𝑋2= 0 (stand-alone PLs)

𝑏𝑏2= conditional effect of 𝑋𝑋2 on Y, when 𝑋𝑋1= 0 (No CSR advertising).

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Rotated factor loadings

CBBE

1. I can recognize Great Value products

among other competing products 0.73

2. I am familiar with Great Value products. 0.76 3. I can quickly recognize the symbol or logo

of X products. 0.72

4. X products have a positive image compared

to competing brand of products 0.69

5. I respect people who use X products 0.54

6. I like the image of X products 0.6

7. I am concerned that purchasing X products

would be a poor use of my money (rev.) -0.63 8. When I purchase X products, I am

concerned that they will not be as good

quality as other brands (rev.) -0.59

9. When I buy X products, I worry that these products might not be consistent with my

self-image. (rev.) -0.56

10. X products are very reliable 0.8

11. X products are of poor quality (rev.) 0.69 12. The quality of X products is consistent 0.79 13. I believe that X products offer good value

for their price 0.76

14. Compared to other brands, I consider X

products are a good buy 0.78

15. Considering what I pay for X products. I

get more than my money’s worth. 0.45

Eigenvalue 6.96

% of variance explained 46.345

Table 1: Factor loadings Items

Note: X replaces two private label brands: Zaanse-Hoeve and AH. N= 187. Extraction Method: Principal Component Analysis with a fixed number of factors. Rotation Method: Variance-maximizing (varimax) with Kaiser Normalization.

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4.3 Results

In this section, correlation and regression analysis’ results will be discussed in order to look out whether expected relationships between variables do take place or not, and what are underlying dynamics determining them.

4.3.1 Correlations

In table 2, descriptive statistics, correlations and reliability score are indicated. As it can be noticed, the two dychotomized variables means are not perfectly centered around 0.50, because of missing data exclusion, thereby participants’ distribution across two experimental conditions was not perfectly balanced. Table 5 shows correct allocation of participants across treatments. Biserial correlations’ coefficients revealed a medium effect between branding decision and CBBE (r= 0.43) p<0.01, in line with theory’s expectations that assume store-banner PLs having a greater brand equity’s baseline value than stand-alone branded ones. Furthermore, a relatively small effect of CSR advertising on CBBE (r=0.17) p<0.05, which was expected to be greater assuming that CSR advertising has a concrete influence on private labels CBBE. Nevertheless, correlations’ coefficients can not be easily compared, since those refer to variables measured on different intervals, so that, more accurated and detailed information about these relationships are furnished in next paragraph.

Mean SD 1 2 3

1. CSR 0.49 0.501 (-)

2. Branding decision 0.5 0.501 0.016 (-)

3. CBBE 4.477 0.69 0.17* 0.427** (0.77)

Notes: Reliability on diagonal (in brackets) N= 187 (*) p<0.05 (**) p<0.01

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4.3.2 Regression analysis

Regression analysis’ results are shown in Table 3. Proposed model explained 23% of total variance in dependent variable, R2=0.23, and it was statistically significant, F (3,135) = 15.5746 p<0.01. Looking at regression coefficients, more can be learned about effects taking

place in the model: c1 = 0.78 p<0.01, indicates that in the presence of CSR advertising (1=

CSR advertising) CBBE increases of 0.42 units among stand-alone branded private labels (1= store-banner PL) c2 = 0.4208 p<0.05 indicates that in absence of CSR advertising,

store-banner branded private labels CBBE is greater than stand-alone branded ones by 0.78 units;

c3 = - 0.39 indicates that moderation effect does take place and it is statistically significant

p<0.05. It resembles, indeed, the difference intercurring between two conditional effects. By

probing that such interaction is significant, it can be observed at which condition it does occur. Looking at conditional effects table, it can be noticed that conditional effect is significant only among stand-alone branded private label, e=0.421 p<0.01.

Variables Coefficient SE t Intercept a0 3.97 0.11 36.5** CSR adv. (X1) b1 0.42 0.13 6.04** 0.78 0.15 2.84* -0.39 0.18 2.13* CSR x Stand-alone 0.42 0.15 28.41** CSR x Store-banner 0.032 0.1 0.30# (*) p < 0.05 (**) p < 0.01 (#) p > 0.05 Branding decision (X2) b2 CSR*Branding (X1*X2) b3

Interactions with branding decision

R2= 0.23 F(3,183) = 15.5746**

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Analysis’ results were plotted in Figure 3 to give a clearer visualization of dynamics taking place in this model. What emerges from it so far is that CSR advertising does affect positively private labels CBBE, as confirmed by both c1 and c3, and further supported by

positive slope affecting stand-alone branded line in the interaction plot. A slight, improvement can be noticed in store-banner branded line as well, even though it was not statistically significant (e=0.032 p>0.05), and thus possibly driven by chance. Thus, H1 can be accepted. On the other hand, branding decision’s moderating effect does take place, but not as expected. Indeed, it does take place only among stand-alone branded private labels, and not among store-banner branded ones, as initially expected. Interaction plot further supports this assumption, as it does for H1. Hence, H2 has to be rejected. Nevertheless, these findings furnish arguments for a deeper discussion about dynamics underlying such effect.

3 3,5 4 4,5 5 C BBE No advertising CSR advertising Figure 3: Interaction plot

Stand-alone Store-banner

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5. Discussion

Retailers’ interest to engage in environmental friendly practices has not been fostered by law enforcement alone (Chaplier, 2014). Literature suggests that increased consumers’ interest in such practices represents an important, and often overlooked, advertising cue able to elicit interest in a brand (Smith, 2003) (Bhattacharya & Sen, 2003, 2004) and influence products’ evaluation (Pivato et al., 2008), thus increasing consumer-based brand equity. Therefore, companies are willingly engaging in such practices, in order to increase consumer-based brand equity, but such effects on brand equity may vary depending on the context in which a company operates, and on the products being advertised. Hence, how does CSR advertising affect private labels’ consumer-based brand equity? And how does branding decision interact with such effect? Findings of this study suggest that CSR advertising has a positive influence on consumers’ perceptions of private labels’ attributes, thus fostering an increase in brand equity, especially among stand-alone branded private labels. Furthermore, this study answers to the call made by Loussaief (2014) and Mejri & Bhatli (2013), for further support about their claims in regard to CSR advertising. They found that informing consumers about CSR

Table 4: Summary of findings

CSR advertising (H1)

Branding decision (H1)

CSR adv.* Branding decision (H2)

Variable Results

Private labels' CBBE increases in presence of CSR advertising cues in the environment

Branding decision influences private labels' CBBE in absence of advertising cues. Indeed, store-banner branded PLs do have higher CBBE values than stand-alone branded.

In presence of CSR advertising cues, CBBE increases only among stand-alone branded PLs. Store-banner branded PLs do not significantly benefit from such presence

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initiatives a retailer undertakes, it increases brand equity and improves perception of key product attributes such as perceived quality and perceived value. Moreover, it strengthen relationship between retailer and consumers, through a reputation building process that increases trust consumers put into a brand (Pivato et al., 2008).

5.1 Theoretical implications

Firstly, research’s findings confirm that private labels bearing retailers’ brand name do have an advantage, in terms of consumer-based brand equity, over stand-alone branded ones. Such consideration is in line with previous literature about brand extensions (Dwivedi et al., 2009) (Aaker, 1990). Store-banner branded private labels do benefit from associations linked to such brands, thus explaining higher CBBE baseline values encountered in the control condition (Table 4). Nevertheless, in case stand-alone branded private labels are succesfully linked to their own retailer brand, as happened for the private labels object of this reasearch, CBBE of such private labels benefits from marketing communications entailed by the retailer, as well as inheriting brand equity attributed to retailer’s brand. Fit between a private label tier is indeed a crucial predictor of its performances (Keller, 2016). Such observation leads to some considerations: consumers’ direct experiences with products contribute to create a link between a retailer and a private label brand, such that, the latter is uniquely linked to the retailer. For store-banner branded private labels, instead, such link is implicit, since retailer and private label share the same brand name (Keller, 2015). Hence, when consumers’ direct experiences with a stand-alone private label reach such ideal treshold, they tend to generalize product associations, made accessible by retailer’s marketing communications, to both stand-alone and store-banner branded private labels.

Secondly, private labels which have lower CBBE baseline values, such as stand-alone branded ones, would benefit from CSR advertising more than store-banner branded ones do.

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often associated with poor quality due to their low-price attribute, which usually misleads

consumers’ general perceptions about products’ attributes. Thus, stand-alone branded private

labels have benefited the most from quality associations made accessible by CSR advertising.

Thirdly, CSR advertising drove cross-category learning effects. Such effects, made possible

for consumers to generalize positive associations, made accessible by advertising banner, to

product categories not directly involved in the initiatives mentioned on the advertising

banner. Advertising text, indeed, referred to CSR initiatives affecting different stages of the

supply chain (packaging, commercialization, manifacturing) relative to a specific product category (soy and derivates). Nevertheless, it did not refer to manifacturing and commercialization processes relative to dairy products (both PLs object of the survey were dairy products). Hence, it is very likely that consumers generalized quality associations, evoked by advertising banner, to product categories that were not involved as well, like the dairy one.

Fourthly, previous observations utterly confirm the claim that CSR advertising does have a

positive effect on private labels’ CBBE. In the existing literature, corporate social responsibility initiatives rarely have been considered as valid advertising cues, with the exception of cause-related marketing campaigns (Brønn & Vrioni, 2001) and organic products (Pivato et al., 2008). Findings of this study show that CSR initiatives can be implemented to promote improved product attributes, as well as, a trustworthy image to consumers eyes. Furthermore, it can be concluded that CSR has revealed itself as an useful

cue to be leveraged, since it has a positive impact on consumers evaluation of products’

attributes and it helps building a better image and personality for the brand (Keller, 2001b).

Hence, such efforts should be proactively communicated to consumers, rather than being passively exposed as part of compliance duties procedures.

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5.2 Managerial implications

Budget efficiency. Marketing managers are well-known to be facing, most of the times,

budget constraints and issues related to its allocation. Such issues become more difficult to solve when it comes to design a marketing communication strategy for products that reached the maturity stage in their life-cycle (Low & Mohr, 1998). In such scenario, managers should consider adding to new tools and strategies to their repertory. Findings of this research suggest that the implementation of CSR-related in-store banners is beneficial to retailer brand and to perception consumers have of its private labels. Therefore managers should consider investing a piece of marketing communications’ budget to implement such banners, since those have potential to drive increases in sales in the face of a restrained expenditure.

Effectiveness depends on the context. Nervertheless, choices related to placement of such

in-store banners should be object of cautious decisions. Findings revealed, indeed, that CSR advertising resulted more effective for stand-alone private labels than for store-banner branded ones. Hence, placing such banners, in store areas where stand-alone private labels compete mostly with national brands, could benefit retailers in terms of driving preferences towards private labels, going to the detriment of national brands, and thus, guarantee higher margins on those sales. On the other hand, banner’s placement may possibly be source of a cannibalization phenomenon. Indeed, when it is positioned in areas where both stand-alone and store-banner private labels compete with each other, consumers may prefer the less expensive option (stand-alone) assumed that quality is perceived as similar, thus generating smaller margins from that segment of sales.

Scalability of communications. As previously mentioned in the theoretical implications, CSR

advertising exhibited cross-category effects. Consumers generalized quality associations, triggered by this kind of marketing communications, to product categories not directly related to advertised initiatives. Therefore, CSR advertising results particularly efficient from a

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managerial perspective, since there is no need to tailor the message towards specific product categories in order for it to be effective. Hence, managers should take such properties into considerations when designing an integrated marketing communication for their private labels’ portfolio, since there is potential to drive a consistent impact on bottom line performances, as well as, containing budget expenditures thanks to economies of scales fostered by such communication sinergies.

5.3 Experimental setup implementation

Experimental setup used for this research can be easily implemented in a real-life retailing scenario. In-store banners are well-known to be suitable for simple implementations that do not require extraordinary financial efforts. Hence, managers can consider implementing pilot units in some store, in order to assess real impact of these kind of communications on bottom line performances. anners’ marginal effects can be easily measured by comparing private labels’ sales performances data across the two periods of interest, pre-implementation and post-implementation. If results are sastisfying, managers could consider expanding same strategy across more selling points, as well as increase and diversify the number of media CSR – related communications are sent through.

5.4 Limitations

This study suffers from some limitations, which may be used to find directions for future researches. In the first place, this experiment was conducted in an online artificial setting, participants were completely focused on doing tasks required to complete it, presumably without external influences. Therefore, it may suffer of external validity in a real retail environment. It is possible, indeed, that expectations about banners’ effectiveness could be neglected due to coexistence of different advertising cues in the store environment. Such cues

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may interfere with consumers’ focus towards CSR advertising banners, thus possibly compromising its contribution to consumers’ idea of the brand.

Secondly, sample utilized for this study was formed mostly by participants that were

undergraduated and graduated students. So that, it may be possible that their sensitivity about environmental issues was more prominent than in other consumer groups, leading to the presence of cognitive biases related to such characteristic of the sample. Therefore future researches should consider expanding sampling procedure to different consumers’ groups in order to avoid presence of such biases and further improve findings’ validity.

Thirdly, dataset contained information about a single retailer (Albert Heijn), therefore findings may not be generalizable to other brands, if not tested directly. Indeed, both private labels object of this research belong to such retailer. Moreover, both private label brands were part of same product category, the dairy one, thus excluding possibility to capture differences that may have interested products belonging to different categories. Therefore, future

researches should consider to replicate a similar experimental setup, and test assumptions in a richer context involving more retailers, and different product categories, to improve findings’ generalizability to a broader array of market situations. Moreover, Keller et al. (2016) showed that branding decision’s fit with the retailer has a significant predicting effect relatively to sales performances of a private label, especially for store-banner branded ones. Hence, future researches may consider including branding decision’s fit with the retailer as a control

variable, in order to verify if it does have an impact on products’ attributes perception by consumers. Furthermore, future studies may consider to integrate empirical findings with qualitative research in order to grasp richer and more detailed informations about consumers’ perception of private labels’ product attributes after being exposed to such advertising cues. In this way managers could assess CSR advertising’s impact on different levels of brand equity (awareness, associations, attitudes, resonance) (Keller, 2001a).

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In conclusion, process of data collection was performed by means of an online survey, and a prize was to be won for respondents. Thereby, it is possible that participants were subject to yes-biases due to one’s tendency to overlook some crucial informations contained in the questions, as well as, inaccurate responses driven mainly by prize’s appeal. Therefore future research should try to avoid such biases to improve findings’ validity.

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Appendix 1

1. Original items

Brand awareness

baw1 I can recognize Great Value products among other competing products. baw2 I am familiar with Great Value products.

baw3 I can quickly recognize the symbol or logo of Great Value products. Perceived quality

Pq1 Great Value products are very reliable

Pq2r Great Value products are of poor quality (reversed) Pq3 The quality of Great Value products is consistent Brand associations

Bas1 Great Value products have a positive image compared to competing brand of products Bas2 I respect people who use Great Value products

Bas3 I like the image of Great Value products Perceived value

Pv1 I believe that Great Value products offer good value for their price

Pv2 compared to other brands, I consider Great Value products are a good buy

Pv3 Considering what I pay for Great Value products. I get more than my money’s worth. Perceived risk

Pr1 I am concerned that purchasing Great Value products would be a poor use of my money Pr2 When I purchase Great Value products, I am concerned that they will not be as good

quality as other brands

Pr3 When I buy Great Value products, I worry that these products might not be consistent

with my self-image.

2. Adapted items

X replaces the two private label brands object of the study: Zaanse-Hoeve and AH, both selling milk, but belonging to two different price tiers. Zaanse-Hoeve is an economic PL, while AH is a standard one.

Brand awareness

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36 baw2 I am familiar with X products.

baw3 I can quickly recognize the symbol or logo of X products. Perceived quality

Pq1 X products is very reliable

Pq2r X products is of poor quality (reversed) Pq3 The quality of X products is consistent Brand associations

Bas1 X products has a positive image compared to competing brand of products Bas2 I respect people who use X products

Bas3 I like the image of X products Perceived value

Pv1 I believe that X products offer good value for their price Pv2 compared to other brands, I consider X products is a good buy

Pv3 Considering what I pay for X products. I get more than my money’s worth. Perceived risk

Pr1r I am concerned that purchasing X products would be a poor use of my money

Pr2r When I purchase X products, I am concerned that it will not be as good quality as other

brands

Pr3r When I buy X products, I worry that these products might not be consistent with my

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Appendix 2. (Stimulus 1 – CSR Advertising)

Advertising text has been inspired by “do more” section on AH e-commerce website (here), in which CSR activities entailed are communicated to consumer for advertising purposes.

Together for nature’s best

Environmental sustainability remains an important issue for Albert Heijn. Indeed, we are currently working with the World Wildlife Fund (WWF) to manifacture all of our branded products in a more sustainable way.

Sustainable palm oil and soya

Palm oil can be found in soups, sauces, biscuits, soap, and in many other products. So it is important that we care about how it is produced and from where it comes from. We do not want to harm rainforest’s ecosystem. That is the reason why we are members of the Roundtable on Sustainable Palm Oil and we commit ourselves to buy exclusively sustainable palm oil from our suppliers. The same applies to soya, which is also used as animal feed. Albert Heijn, as a member of the Dutch Foundation for Sustainable Soy leads the way in the use of sustainably produced soy. Furthermore, Albert Heijn has signed an agreement with the World Wildlife Fund (WWF) in which we aim to use 100% RTRS certified soy for our branded products.

Albert Heijn and food waste reduction

Albert Heijn is also committed to reduce food waste drastically. As an example, we donate a portion of vegetables, that do not make it to the shelves due to some imperfections, to the Food Bank. Moreover, when food is no longer disposable for human consumption, it is offered as animal feed to local farmers.

Would you like to do more for the environment?

This can be done in countless ways that come up with impressive results. Do you really need a receipt? If not, we can save every year over 50,000 km of paper rolls! Moreover, we do not sell free plastic bag at the checkout anymore, which ables us to save the impressive amount of 600 kilograms of plastic per day.

Be also aware you should not buy more than you need, so that you have to throw away less. Being environmental friendly will make you save money as well. For example, put the fridge a few degrees lower, and you will make your fruits and vegetables last longer!

Effects of corporate social responsibility advertising on private labels' consumer-based brand equity : a case in the supermarket retailing sector

Master’s thesis