Consumer perceived innovativeness
The impact of regulations on product innovation
Master Thesis
Submitted by: Daniel Benigni Student ID: 11373180 Master’s program: Entrepreneurship & Innovation Supervisor: Dr. Alexander AlexievStatement of originality This document is written by Daniel Benigni 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.
Table of Content
1. Introduction ... 5 1.1. Background ... 5 1.2. Problem ... 5 1.3. Purpose ... 6 1.4. Central Research Questions ... 7 1.5. The Research Approach ... 7 1.6. Objective of the Paper ... 8 1.7. Overview of the Thesis Structure ... 8 2. Frame of Reference ... 10 2.1. Regulatory Framework ... 10 2.2. Restricted Marketing ... 12 2.2.1. Restrictions on Price ... 13 2.2.2. Restrictions on Promotion ... 14 2.2.3. Restrictions on Place ... 14 2.2.4. Restrictions on Product ... 15 2.3. Regulations on Product Innovations ... 18 2.3.1. Economic Regulations ... 18 2.3.2. Social Regulations ... 18 2.3.3. Institutional Regulations ... 19 2.4. Consumer Perceived Innovativeness (CPI) ... 19 2.4.1. Perception Criteria for CPI ... 19 2.5. Intention to Purchase (PI) ... 21 2.5.1. Perception Criteria for PI ... 21 2.5.2. Characteristics for Diffusion ... 21 2.5.3. Inhibition Factors of Diffusion ... 22 2.6. Summary of the Frame of Reference ... 23 2.6.1. Theoretical Framework ... 24 3. Methodology ... 25 3.1. Research Strategy ... 25 3.2. Hypotheses ... 26 3.3. Conceptual Model ... 27 3.4. Sample ... 28 3.5. Measures ... 28 3.6. Data Collection ... 29 3.7. Company and Product Presentations ... 32 3.7.1. Capsule Cigarettes ... 32 4. Empirical Part ... 35 4.1. Analytical Strategy ... 35 4.1.1. Frequencies Check ... 35 4.1.2. Counter-indicative Item Check ... 35 4.1.3. Skewness, Kurtosis and Normality Check ... 35 4.1.4. Reliability Analysis ... 36 4.1.5. Correlation Analysis ... 36 4.1.6. One-way ANOVA of PI ... 37 5. Comparison of Theoretical and Empirical Findings ... 43 5.1. Total Effect of Regulations on PI ... 43
5.5. CPI Effect on PI ... 46 5.6. Remarks on the Analysis ... 46 6. Discussion and Conclusion ... 48 6.1. Final Discussion ... 48 6.2. Limitations and Future Research ... 50 7. References ... 52 8. List of Abbreviations ... 56 9. List of Figures ... 57 10. List of Tables ... 58
1. Introduction
1.1. Background
The well-known economist Joseph Schumpeter stated on innovation that anyone seeking to make profit must innovate (Schumpeter, 1934). This implies that businesses, which desire to increase their profits, should try to innovate their products or services regularly. Innovation is therefore described as a key factor for having a prosperous business according to Schumpeter. The remaining questions are: Does this apply to any market? Is Schumpeter’s statement true across the different kind of industries and product categories? This paper deals with the consumer perception on product innovation that might lead to a dilemma for companies operating in restricted markets. The impact of restrictions on product innovations and marketing activities are tested by measuring consumer perception on innovations and the corresponding purchase intention in a restricted market, namely the tobacco industry. The tobacco industry is one of the most regulated and restricted product categories in the fast moving consumer goods (FMCG) industry. To illustrate differences across countries and levels of restriction different tobacco markets such as the United States of America (USA), Australia (AUS) and the European Union (EU) are taken as an example.
1.2. Problem
Since smoking tobacco products certainly directly cause various diseases and health problems, regulators are looking for ways to educate population to quit the habit. Among other initiatives to lower smoking incidence, regulations on marketing opportunities and product development possibilities are imposed on tobacco producing
products, which can only hardly be influenced by the industry. However, other regulations are directly affecting the industry: regulations on the product itself and restrictions on marketing activities. The latter restrictions are designed to influence consumers’ intention to purchase tobacco products. The paper at hand tries to test how effective product innovations and marketing activities can be in such a regulated environment. Do consumers even perceive those activities as innovative and more importantly: Do consumers even perceive a degree of innovation in this product category? Another topic is the profitability for the tobacco industry players. Does the investment they put into innovating their products and performing marketing activities pay off in terms of consumer’s perception?
1.3. Purpose
The purpose of this study is to investigate how regulations influence the purchase intention and the consumer perceived innovativeness. The set for this study is the tobacco industry because it is characterized by strong regulations. The focus will be on investigating at what level of restriction a noticeable difference in perceived innovativeness and hence the desired effect to lower consumer’s purchase intention takes place. Therefore, different levels of restrictions represented by different legal settings in different markets will be analysed. In these markets tobacco companies have to deal in unequal environments with regards to the regulatory set-up to market product innovations. This inequality can lead to different levels of consumer perceived innovativeness. For this reason, this paper will describe the various legal backgrounds and restrictions and how those affect the innovation process and marketing mix of tobacco companies and therefore the implications on the consumer’s intention to buy these products.
1.4. Central Research Questions
The thesis will try to describe the consumer perception of product innovations and its supporting marketing activities in the tobacco industry. On the basis of differently restricted tobacco markets the same product innovation will be analysed to answer the research question. A special focus will be given to cigarette packaging regulations in AUS, the EU and the USA and their impact on the innovation process.
Therefore, the main research question of the thesis is:
“How do cigarette-packaging regulations affect consumer’s purchase intention of those tobacco products?”
1.5. The Research Approach
In order to find an answer to the research question of this thesis two distinct research types have been selected. First of all, this thesis will give a theoretical background on the topic. Conducting an extensive literature review will help to present a critical examination of already existing contributions to the topic and will serve as the basis for this research project. Secondary data will range from university publications, textbooks, articles published in well-known academic journals, legal texts provided by state authorities and company information provided by web sources. Providing accurate theoretical background is needed in order to get a clear picture on the tobacco landscape and the marketing practices applicable for multinational tobacco companies.
As a second step, primary research will be used in order to find answers to the research question and to find out whether the hypotheses are true or not. Quantitative research
the form of an online questionnaire based on a sample of 189 respondents will provide valuable insights into the research topic. More details on the research method and the research process will be given later on in the methodology chapter. After having analysed the already existing secondary data and processing the gathered primary data, the results of both parts will be put together at the end of this thesis. The outcomes of both research types will be combined and compared in order to give a complete picture of the research work conducted.
1.6. Objective of the Paper
The objective of this paper is to assess consumer perceived innovativeness of product developments and their purchase intention towards tobacco products, which are marketed in markets with different levels of restriction. Therefore, this thesis will give an overview of the tobacco industry landscape in AUS, the EU and the USA. The paper tries to explain the different environments for marketing tobacco products by multinationals. More importantly it will also try to give a future outlook how marketing restrictions can influence their marketing techniques. It will also try to show how the consumer’s attitudes differ towards the exact same product that is simply marketed in another way.
1.7. Overview of the Thesis Structure
Concerning the structure of the thesis, the paper at hand starts with an introductory chapter giving the reader a general overview of the innovation dilemma faced by companies in restricted markets and briefly describing the problem related to tobacco multinationals. Followed by a brief description of the purpose of the paper, the research
second chapter contains the frame of reference with an extensive overview of the regulatory environment of the observed markets followed by introducing relevant theories within the field of marketing and innovation. The next chapter contains the methodology of the paper that explains how the study was conducted. The following chapter contains the empirical part where primary findings will be presented. The final chapter of this thesis will contain the analysis of the empirical data collected compared with the literature presented in the frame of reference. This thesis ends with a discussion and conclusion chapter containing some remarks and suggestions for further research. Table 1: Overview on the Thesis Structure. Thesis Structure Chapter 1: Introduction Chapter 2: Frame of Reference Chapter 3: Methodology Chapter 4: Empirical Part Chapter 5: Comparison of Theoretical and Empirical Findings Chapter 6: Discussion and Conclusion
2. Frame of Reference
The frame of reference is intended to build the theoretical backbone of the thesis. It will set the scene of the topic and explore the environment tobacco producing companies face in AUS, EU and USA.
First of all, it will describe the entire legal framework and laws affecting innovations and marketing used by tobacco companies. To be able to explain the impacts of the regulations on innovation and marketing the next block of the thesis is dedicated to innovation theory, common marketing principles and restriction of those. Furthermore, a deep dive on consumer perception related to innovations will be made. Last but not least, the consumer intention to buy will be discussed to evaluate the research questions of the paper. 2.1. Regulatory Framework The tobacco industry is operating in markets that are restricted by differential laws that reflect the national attitude towards their health risk products. Their environment is therefore framed by regulations that will be described and analysed.
Since smoking is a worldwide health problem international organisations such as the World Health Organisation (WHO) put more focus on it in recent decades to tackle this issue. In 2003 the WHO issued the so called ‘Framework Convention on Tobacco Control’ (FCTC) that lays down important principles with regards to the usage of tobacco products (WHO, 2017b). Most countries worldwide ratified this convention. Australia and the EU with it`s member countries declared it binding for all member states. The USA did not ratify FCTC among a very small number of other countries (WHO, 2017a).
The FCTC is implemented in different ways in each market, as it has to be transferred into the individual national law. This work will concentrate on four different markets that represent different stages of restrictions on tobacco products. Australia is among the countries with the highest restrictions on tobacco products, followed by the EU. The EU has decided to implement the FCTC in two steps in the form of directives to its members. There are two different Tobacco Product Directives (TPD) namely TPD1 and TPD2 in 2001 and 2014 respectively (European Parliament, 2017; European Union, 2017). Since TPD2 is widely implemented in the EU it represents the second most restricted market in this study. The third market that will be analysed is the EU before the implementation of TPD2. In TPD1 the EU introduced for the first time 50 % text health warnings in the front and back of the pack. These markets are viewed separately. Therefore, changes in consumer perception from TPD1 to TPD2 can be analysed easier. The last market that will be described in this thesis is the tobacco market in the USA as it rejects to implement the FCTC. This market is a representative for a widely unregulated market (WHO, 2017a).
Australia, as the most restricted tobacco market researched in this thesis, employs a combination of national and subnational law. They regulate smoke free places, tobacco advertising, promotion and sponsorship as well as tobacco packaging and labelling. As tobacco advertising, promotion and sponsorship are similar regulated in all the mentioned markets except the USA, this study will concentrate on the tobacco packaging and labelling (Chapman et al., 2003). This is the most important source to communicate product information with the consumer and therefore different kind of packaging regulation will be compared (Moodie & Hastings, 2011).
states had to transfer this directive into each national law. Today most EU member states have tobacco packaging with about 65% of the displayed area covered with health warnings including pictures and pictograms according to TPD2. The United Kingdom and France are going even further than most EU countries by introducing plain packaging latest on 20th May 2017 similar to the Australian model (European Commission, 2017a).
The United States of America never joined the FCTC by the WHO and their tobacco industry is widely unregulated. Not until 2009 when President Obama passed the Family Smoking Prevention and Tobacco Control Act there was no federal power to implement a nation wide tobacco regulation. Since then the Food and Drug Administration (FDA) implemented some regulations on the tobacco industry but compared to TPD these seem to be still very low. Especially regulations on product packaging are still missing (Huston & Dayton 2013).
2.2. Restricted Marketing
Thereafter, the thesis will go deeper into the restriction aspect of marketing as the most affected business area by regulations in the tobacco industry. Marketing can be identified as an influencer on consumer perception and therefore it is widely restricted by the FCTC. Since the USA did not implement the FCTC guidelines this section will concentrate on the European and Australian market and their translation of the FCTC. We will have a look on one of the most important marketing tools to implement marketing strategies or plans: the marketing mix with the 4P’s namely product, price, place and promotion (Kotler, 2008). The FCTC by the WHO inspired more than half of the countries in the world to ban some form of tobacco marketing, since there has been
evidence of the causal role of tobacco marketing and the consumer demand for tobacco products. However, not all 4P’s are similar affected by regulations in the observed markets. One reason for that could be that for example price policies have a stronger impact than advertising bans followed by point of sale marketing and packaging (Hendriksen, 2012).
2.2.1. Restrictions on Price
In the European Union short-term price discounts in the tobacco have been completely banned (European Commission, 2017b). Long-term price reductions would be still possible but highly unattractive for the industry as a whole. There are several reasons for that: First of all there is a social responsibility aspect. It could create a bad image to discount a highly unhealthy product in comparison to the overall market. It would also decrease the already small margins for the whole industry, as competitors would follow the price decrease to stay competitive. The competitive advantage of being cheaper would diminish quickly followed by the consumer getting used to the new lower price. Furthermore in most European member states the taxation system on cigarette products consists of two parts, a fixed tax and a variable tax on top (European Union, 2017). As a result the market faces a minimum price for tobacco products due to the tax. The taxation in general is already quite high of approximately 75 per cent of the sale price. Therefore it leaves a limited leeway for the most effective marketing tool, the price discount (WHO, 2017c). In Australia taxation on tobacco products is different but also very high which makes discounts difficult for the same reasons described above. The taxation on tobacco products the excise tariff is rising every year by 12,5 per cent to further increase the pressure on the industry (Australian Taxation Office, 2017). There
very low compared to the WHO benchmark of 75% (Tobaccolabels 2017; Tobaccoatlas, 2017). 2.2.2. Restrictions on Promotion Promotion restrictions are commonly known as advertising bans for tobacco products. The FCTC describes comprehensive bans on advertising as follows: broadcast and print media, billboards/outdoor and point of sale as well as indirect advertising, including sampling (distribution of free tobacco products), promotional discounts, brand stretching (non-tobacco products identified with tobacco brand names), industry sponsored event and the appearance of tobacco products in movies or television (Hendriksen, 2012). In the EU the restrictions can be slightly different in each member state whereas restrictions on promotion can be seen as comprehensive advertising bans with the exception of point of sale promotions (Tobaccoatlas, 2017). Australia is seen as a country with the strongest restrictions on tobacco products with comprehensive advertising bans. Since point of sale promotions of tobacco products can have a serious impact on unplanned purchases they are banned in all states of Australia (Institute of Global Tobacco Control, 2017; Wakefield et al., 2008).
2.2.3. Restrictions on Place
The “place” in regard of the 4Ps to market tobacco products is also strongly regulated in the European Union. In most European member states distribution and sale of tobacco products are limited to licensed tobacco stores or vendors. In some EU countries the sale through websites is allowed but on a national scale only (European Commission, 2017b). In Australia the sale of tobacco products requires a licence and is therefore limited as well. The requirements to acquire such a licence are different in each state of
Australia due to their own regulations (Australian Taxation Office, 2017). One reason for licencing tobacco retailers is to control the density of tobacco sales points. The WHO describes the decrease in density of retailers as an effective way to reduce alcohol consumption and alcohol-related harms. This method could be also applied for tobacco retailers (Hendriksen, 2012).
2.2.4. Restrictions on Product
Last but not least there is the product itself that can be used as a marketing tool. This paper will mainly concentrate on the product as a communication asset in tobacco marketing. Especially its packaging became the most important marketing tool for tobacco companies in highly regulated markets. Even though, at least 65 per cent of the packaging is dedicated to health warnings in the EU since TPD 2 (Figure 1), it is seen as a key vehicle for marketing measures. It can be used to communicate with current and future smokers. Therefore, the tobacco industry uses all elements of the packaging including the construction, outer film, tear tape, inner frame and pack inserts (European Union, 2017; Hendriksen, 2012). The revealing results of focus groups showed that for seven cigarette brands attractive packaging was almost as important as seeing advertisements of those brands. Therefore, three different dimensions to packaging have been identified as follows: value based packaging, image based packaging and gimmick packaging or also known as innovation based packaging. Value based packaging can be a variation in pack size whereas image based packaging uses design to create a preferred brand image. Innovation based packaging tries to draw the attention to the pack with novel pack constructions such as the sideway openings and button dispensed cigarette packs (Moodie & Hastings, 2011).
Table 2: Overview of Restriction Levels on the 4Ps in USA, EU1, EU2 and AUS
Restriction Level USA EU1 EU2 AUS
Price Low* Moderate* Moderate* High*
Promotion Low* High* High* High*
Place Low* Moderate* Moderate* High*
Product Low* Low* High* High*
Figure 1: Health Warning Examples USA, EU1, EU2 and AUS USA EU1 EU2 AUS From 1984-present (front view of the pack) (Tobaccolabels. 2017) TPD1 (front view of the pack) (European Commission, 2017c) TPD2 (front view of the pack) (European Commission, 2017d) Plain Packaging (front view of the pack) (Australian Department of Health, 2017)
2.3. Regulations on Product Innovations
In the tobacco market different marketing opportunities are regulated as described above but since anyone seeking to make profit must innovate this section describes the various regulations that affect product innovations (Schumpeter, 1934). Regulations can affect innovations in different kind of ways. They can be differentiated between economic, social and institutional regulations (Blind, 2011). All three types of regulations affect tobacco companies directly or indirectly.
2.3.1. Economic Regulations
Economic regulations such as price regulations, market entry regulations, and public monopolies are certainly influencing innovations (Blind, 2011). The tobacco industries in the EU, AUS and the USA are underlying special pricing regulations (European Union, 2017; Australian Taxation Office, 2017; U.S. Department of the Treasury, 2017). They are bound by legal regulations that affect the pricing of their products.
2.3.2. Social Regulations
Social regulations like public smoking bans do also have a hindering effect on innovations. These safety regulations may restrain innovations but they also increase the acceptance of new product innovations, as consumers can trust a minimum standard secured by regulations. In the three described markets social regulations such as public smoking bans are differently strong widespread even within each market as all are a union of states with different national laws. Commonly it can be said that they are the strongest in AUS followed by the EU and the USA far behind with public smoking bans in just a small amount of states (WHO, 2017a).
2.3.3. Institutional Regulations Institutional regulations on innovations are implemented by administrative regulations. Especially liability rules can have a strong impact on innovation. If these regulations are too high innovators have less incentives to introduce new products in the market (BIind, 2011). For instance, tobacco companies are liable to state basic specifications such as tar and nicotine level of their tobacco products. This is a classical example how institutional regulations affect this industry (European Union, 2017; Tobaccoatlas, 2017). 2.4. Consumer Perceived Innovativeness (CPI) This part of the secondary research is dedicated to the perception of the consumers on the modifications they see in the tobacco industry. The changes in perception of product innovations due to different levels of regulations will be analysed. Since this is the heart of the thesis the primary research will further explore the implications of restrictions on consumer’s perception of product innovations. The “product” itself is one out of four dimensions of the marketing mix but since it is seen as the most important tool to communicate with consumers, this thesis will test their perception based on product packaging of tobacco products (Kotler, 2008; Hendriksen 2012).
2.4.1. Perception Criteria for CPI
“An innovation is an idea, practice or object that is perceived as new by an individual or other unit of adoption.” (Roger, 2015)
Following Roger (2015), it is important to translate the advantages of a product innovation to the consumer. Since the possibilities of the tobacco industry are limited to
they have to face. The consumer perception of certain criteria can help to identify the grade of perceived innovativeness, which in turn can lead to a higher or lower purchase intention. For example, the perceived concept newness, the perceived relative advantage and the perceived technology newness combined are helping to estimate the consumer perceived innovativeness (CPI) (table3) (Lowe & Alpert, 2015). Lowe and Alpert (2015) analysed previous research on CPI and came to the conclusion that most of them examined the cognitive dimensions, for example the relative advantage (“This product is better”). The affective dimensions, for example excitement (“Wow! That’s amazing”) were little observed by prior research. From a managerial perspective the excitement factor is important to understand. Therefore, they describe an evaluation matrix by combining affective and cognitive dimensions giving rise to four main classifications: • High affective – high cognitive (“Wow”; major innovation) • High affective – low cognitive (“Cool!”; loved but not awed) • Low affective – high cognitive (“Nice work”; moderate innovation) • Low affective – low cognitive (“Humdrum”; minor innovation or not an innovation) (Lowe & Alpert, 2015). Figure 2: Hedonic and Utilitarian Attitude (Purchase Intention)(Lowe & Alpert, 2015) Purchase Intention (PI) Utilitarian Attitude • Effectiveness • Helpfulness • Functionality • Necessarity • Practicalness Hedonic Attitude • Fun • Excitement • Delightfulness • Thrillingness • Enjoyability
2.5. Intention to Purchase (PI)
The last part of the thesis will analyse consumers’ intention to purchase based on perception characteristics of an innovation. Their buying decision is a central aspect in times of high competition for consumer spending. The intense risks, costs and potential profits related with product introductions create a need for the exploration of consumer perception of these product innovations.
2.5.1. Perception Criteria for PI
Therefore, Lowe & Alpert (2015) are describing certain criteria to identify the consumer´s purchase intention. The combination of the hedonic attitude and the utilitarian attitude towards a product as well as the perceived complexity and the perceived relevance of an innovation can indicate the consumer’s intention to purchase (table 3). The level of fun, excitement, delightfulness, thrillingness and enjoyability a consumer relates to a product is measures the hedonic attitude. They measure the consumer’s emotional attitude towards a product. To assess the utilitarian attitude measurements of a product it is done in a similar way as above. The level of effectiveness, helpfulness, functionality, necessarily and practicalness a consumer perceives can be collected (Lowe & Alpert, 2015).
2.5.2. Characteristics for Diffusion
Flight et al., (2011) describe the characteristics of the rate of diffusion of a product innovation throughout the market with three favouring factors: relative advantage, compatibility and social pressure.
2.5.2.1. Relative Advantage The relative advantage of a potential adopter that will be generated by the acquisition of a new product innovation can be described with the following attributes: uniqueness of features, higher quality and the ability to better meet needs, reduce costs or to complete a task uniquely (Flight et al., 2011; Atuahene-Gima 1995) Consumers usually buy products with a higher relative advantage for them.
2.5.2.2. Compatibility
Compatibility can be described by the degree of consistency with existing values, past experiences and needs for potential consumers. The new product innovation should be compatible with the lifestyle and the habits of an adopter. High computability will increase purchase intention.
2.5.2.3. Social Pressure
Social Pressure is the dimension of peer pressure or group expectations a potential adopter is exposed to. The opposite definition is the degree of independence while the purchase decision process – the adopter’s free will. When social pressure is high, the purchase intention is likely to increase.
2.5.3. Inhibition Factors of Diffusion
The three factors that inhibit the diffusion of a product innovation are: perceived performance risk, complexity and discontinuity.
2.5.3.1. Perceived Performance Risk
Perceived performance risk of a new product innovation can be defined as the perception of uncertainty of an unknown future consequence related to the acquisition
product, opportunity costs or social impairment certainly results in a slower rate of diffusion. The lower the perceived performance risk, the higher is the PI.
2.5.3.2. Complexity
The complexity of a perceived innovation can be described by the degree of difficultness to understand and use the new product. Countermeasures as interpersonal communications and marketing efforts should be done to keep the complexity low as it has a negative effect on the rate of diffusion. Consumers usually prefer to buy products with low complexity. 2.5.3.3. Discontinuity Discontinuity can be described with the ability to compare a new product innovation to a former product on the market and the amount of effort to adopt it. It also includes the risk of the new product’s performance, social implications and changes in infrastructure needed to adopt the innovation. All of the above-discussed characteristics will be exemplified to marketing and sales and consumption of tobacco products in the thesis (Flight et al., 2011). The lower the effort to adopt, the higher the PI will be.
2.6. Summary of the Frame of Reference
The environment for a successful product innovation is based on several factors that have been described above. Regulations on marketing and therefore on the ability to promote a product certainly diminishes the optimal chances for success. Chapman et al. (2003) and Hendriksen (2012) are describing these comprehensive restrictions on the tobacco industry that leaves a limited leeway. Moodie and Hastings (2011) identify the cigarette packaging as the most important communication tool. Furthermore, a
comprehensive restricted environment. This study tries to combine these findings with the established measurements of consumer perceived innovativeness and the intention to purchase by Lowe and Alpert (2015) and Flight et al. (2011) to give an answer to the research question. Therefore, on the basis of different levels of restriction this thesis tries to find out the success chances for the implementation of a product innovation within these different boundaries. The findings of this study could help managers operating in such environments to determine the economical reasonability to push innovations under certain conditions. 2.6.1. Theoretical Framework Figure 3: Theoretical Framework PURCHASE INTENTION (PI) CONSUMER PERCEIVED INNOVATIVENESS (CPI) MARKETING & PRODUCT INNOVATION REGULATORY FRAMEWORK Supanational and national laws 4P’s of the marketing mix Relative advantage, compatibility and social pressure Cognitive and affective dimensions
3. Methodology
This part of the paper will explain the research method of this thesis. It contains information about how the research has been conducted. Furthermore, the methodology will give a description how to recreate the study and an explanation for the method used to answer the research question. Therefore, an explanation on the topic choice, an overview of the theoretical framework, the conceptual model with the hypotheses, the survey design, the data collection method, the data analysis method used, sample and measure description will be given in detail.
3.1. Research Strategy
The thesis is focusing on a descriptive research approach to analyse the relationship between regulations (independent variables) and the intention to purchase (dependent variable). The consumer perception of product innovations will mediate this relationship. It will consist of two research types. First of all, the secondary research in the form of a literature review was done to set the stage and to give the theoretical background on the topics discussed. It established important findings that helped to design the second part of the thesis: the primary quantitative research. The quantitative research is conducted via a questionnaire study that will ask smokers to give their opinions on a certain product innovation (capsule cigarettes) in the tobacco market with regards to different stages of restrictions.
In order to do so the employed product innovation is defined by certain criteria to test the consumer perceived innovativeness following Lowe & Alpert, 2015. Four different levels of restriction were tested on the basis of the Australian market, the European
and the US American market. Regulations in Australia are the strongest among the observed markets followed by the EU after TPD2 (EU2), the EU before TPD2 (EU1) and the US American market as a widely unregulated market.
3.2. Hypotheses
Since regulations on product marketing in the tobacco industry are implemented to reduce the consumption and the incentives to purchase these harmful tobacco products the following hypotheses are established (Kasza et al., 2011). Furthermore, due to the limited marketing communication abilities as well as limitations on innovation intentions caused by restrictions it is assumed that regulations have a negative impact on CPI as a mediator on the relationship to PI (Figure 4) (Hendriksen, 2012). Following the research of Lowe & Alpert (2015) it was shown that a high level of CPI results in a higher intention to purchase a product. Therefore, the hypotheses of the paper are: H1: There is a negative relationship between regulations and the purchase intention. H2: The negative relationship between regulations and the purchase intention is mediated by the consumer perceived innovativeness.
H2a: There is a negative relationship between regulations and the consumer perceived innovativeness.
H2b: There is a positive relationship between the consumer perceived innovativeness and the purchase intention.
The hypotheses are predicating that regulations negatively affect the intention to purchase (H1) whereas regulations negatively affect the consumer perceived
innovativeness (H2a) and consumer perceived innovativeness positively affects the intention to purchase (H2b). If regulations are higher the consumer perceived innovativeness is lower and therefore the intention to buy as well. Whereas when regulations are low, consumers perceive an innovation higher and therefore their intention to buy increases.
To be able to test the hypotheses the US American market was used as a baseline group for comparison with the other regulated markets. The level of CPI of USA and the level of CPI of the remaining three observed markets were used for comparison to test hypothesis 1a (H1a). The testing of hypothesis 1b (H1b) was addressed in a similar way by comparing the alteration of PI by shifting CPI. The gathered data on the intention to purchase in the observed markets was also compared to the baseline group data to analyse the total effect of regulations and to test hypothesis 2 (H2). 3.3. Conceptual Model Figure 4: Conceptual Model PURCHASE INTENTION (PI) CONSUMER PERCEIVED INNOVATIVENESS (CPI) H2a (-) REGULATIONS H1 (-) H2 H2b (+)
3.4. Sample
The population for this research are smokers. The sampling frame was adapted to the presumed target group (adult smokers between 18 and 65) of tobacco companies to be able to match the sample (Centre for Disease Control and Prevention, 2017). So the actual sample is going to consist of adult smokers aged between 18 and 65. In order to contact those persons via an online survey, non-probability was used to reach out to a larger target audience and to increase the sample size for higher statistical relevance. The aimed size of the sample was between 120 and 200 respondents. After finishing the data collection 189 respondents were counted. To make sure only smokers fill out the questionnaire their smoking status was requested at the start of the survey. Respondents in the Netherlands, Germany, Austria, Switzerland, the United Kingdom and the USA between 18 and 62 years old filled out the online questionnaire that was shared on the website of Survey Circle and Poll Pool as well as on social networks.
3.5. Measures
The questionnaire asked the respondents for their demographics such as their gender (nominal variable) and age (ratio variable). First a traditional and highly well known product was used as a control variable followed by the product innovation randomly selected out of four different markets. The products used in the questionnaire were shown in a similar manner, using the same brand and product lines. The measure the different stages of restrictions the US American market is used as a representative for a widely unregulated market, the EU market before and after the latest change in
The following measures of each of the proposed dimensions were provided through past research and similarly used by Lowe & Alpert, 2015. A validated Likert scale was used on a 7-point scale at interval level. Item wording in the study appears in table 3. Four items were used to measure perceived relative advantage, one item to measure perceived complexity (Atuahene-Gima, 1995), one item to measure perceived technology newness (Gracia & Calatone, 2002), four items to measure perceived concept newness, one item to measure consumer perceived on a 7-point scale (strongly disagree – strongly agree). Five items were used to measure the hedonic attitude, five items to measure the utilitarian attitude and five items to measure the perceived relevance on a 7 point scale of 1=extremely negative and 7=extremely positive. One item was used to measure the purchase intention on a seven-point scale (extremely unlikely – extremely likely) (Lowe & Alpert, 2015).
3.6. Data Collection
The data collection of this study is solely based on primary sources and used a quantitative research method to collect the primary data. The online questionnaire was created using Qualtrics and was shared on the website of Survey Circle and Poll Pool as well as on social networks. Only data from smokers was collected within the survey by forcing the respondents to declare their smoking status as well as their preferred brand. This data was not collected for analysis purposes rather than to reach a certain level of prove and security that only smokers respond to the questionnaire. Thereafter, all respondents got split into four randomized groups to answer questions that indicate the level of consumer perceived innovativeness and their purchase
observed markets (AUS, EU2, EU1 and USA). All respondents had to test the same product line (Marlboro Ice Blast / Blue Ice) by observing an image of the packaging in the respective market (Figure 5). Besides the mentioned questions respondents had to answer demographic questions about their age and gender. The reason to choose the brand Marlboro in the survey was to present a well known brand among smokers as well as to choose an innovative tobacco product that is available in all observed markets.
The collected data was subjected to a correlation and a reliability analysis to assess the validity and the reliability of the data set. The validity analysis showed a high Pearson correlation of CPI and PI (0.731) which suggests a high validity (Cronbach & Meehl, 1955). Also the Cronbach alpha was assessed to measure the internal consistency reliability of the findings. It revealed a Cronbach alpha of 0.907 for CPI and 0.939 for PI which suggests that the measures are reliable (Cronbach, 1951).
Table 3: Overview of the Survey Questions Factor Indicator CPI: CPI CPI: PCN CPI: PRA CPI: PTN (Product name) is an innovative product (Product name) is new (Product name) is different (Product name) is unique (Product name) is original (Product name) offers unique benefits (Product name) is higher quality than the competition (Product name) solves problems I had with competitor products (Product name) replaces a vastly inferior alternative (Product name) ’s product technology is new to me. PI: HedAtt PI: UtAtt PI: PI PI: PC PI: PR (Product name) is not fun-fun (Product name) is dull-exciting (Product name) is not delightful-delightful (Product name) is not thrilling-thrilling (Product name) is not enjoyable-enjoyable (Product name) is ineffective-effective (Product name) is unhelpful-helpful (Product name) is not functional-functional (Product name) is unnecessary-necessary (Product name) is impractical-practical How likely is it that you would purchase this product if the price were reasonable for you? It will require a long time until I fully understand the advantages of (product name). For me (product name) means nothing to me-means a lot to me For me (product name) is unimportant-important For me (product name) does not matter-matters a lot to me For me (product name) is insignificant-significant For me (product name) is of no concern to me-of concern to me CPI: Consumer perceived innovativeness, PCN: perceived concept newness, PRA: perceived relative advantage, PTN: perceived technology newness, HedAtt: hedonic attitude, UtAtt: utilitarian attitude, PI: purchase intention, PC: perceived complexity, PR: perceived relevance (Lowe & Alpert, 2015).
3.7. Company and Product Presentations
The Marlboro brand of cigarettes was founded in 1847 in England and originally aimed at female smokers. It was actually the first cigarette brand especially for women as it was promoted to be mild and without any related health risks. The marketing strategy was not a success story so the manufacturer Philipp Morris International decided to rethink their strategy. The Marlboro marketing strategy was then aiming for male smokers and slowly began to be a successful brand. Today it is sold in 180 countries worldwide. It is the best known and the best selling cigarette brand in the world (PMI, 2017; Marlboro USA, 2017).
3.7.1. Capsule Cigarettes
Like many other cigarette brands Marlboro introduced a capsule cigarette. Capsule cigarettes are similar to traditional cigarettes whereas the filter of the capsule cigarette contains a small crack-able flavoured capsule inside the filter. That enables the smoker to enjoy the cigarette as a traditional one and provides the option to crack the capsule to enrich the inhaled smoke with the flavour inside the capsule. The history of capsule cigarettes goes back to the 1960’s when the American Tobacco Company introduced a water-containing capsule inside the filter of their cigarettes to release moisture to the inhaled smoke (Trasher et al., 2016b). Nevertheless, this innovation was not very common until some years ago when it experienced a revival. One reason for that was industry pretestings that revealed the attractiveness of the flavour containing capsule cigarettes. After they were reintroduced on the Japanese market in 2007 they became more and more available around the world. Typical capsule cigarettes today are containing menthol flavourings with chemosensory properties including a cooling
Research has shown that the preference of flavoured capsule cigarettes increased enormously (0-14%) in Mexico between 2012 and 2014 in combination with perceived benefits such as lesser harm towards brands offering capsule cigarettes (Trasher et al., 2016a). The success of this more or less recent product innovation in the tobacco industry was the reason for choosing it as a role model. This study used a menthol capsule cigarette of the Marlboro brand for testing the four observed markets because of its publicity and for the reason that it was among the few capsule cigarette brands available in all observed markets. The product line is called Marlboro Ice Blast in Australia, United Kingdom (UK) and United States of America. In the European Union except from the UK it is called Marlboro Blue Ice. For EU1 a product image from the UK was used whereas for EU2 a product image from Lithuania was used as a sample. The following figure (Figure 5) shows the presented images in the questionnaire.
Figure 5: Product Packaging in AUS, EU2, EU1 and USA Marlboro Ice Blast AUS (Trasher et al., 2016b.) Marlboro Ice Blast USA (Menthol Lights, 2017). Marlboro Blue Ice EU2 (Cigarety, 2017) Marlboro Ice Blast EU1 (Talking Retail, 2017)
4. Empirical Part
This part of the paper contains the empirical findings of the primary data collected. The dataset was retrieved from Qualtrics where the online questionnaire was created and where the data was collected. Further the dataset was inserted into the computer program IBM SPSS Statistics, version 24 in order to conduct statistical tests for analysis purposes.
4.1. Analytical Strategy
4.1.1. Frequencies Check
The analysis was started with a frequencies check to examine eventual errors in the dataset. As there were no errors found, the analysis proceeded with a check on missing values by excluding cases listwise to exclude all cases that had missing data in any variable. 4.1.2. Counter-indicative Item Check After that a check on counter-indicative items was done. That means that items which are written in a way which an agreement with the item is representing a low level of the measured construct. There were no such items found. 4.1.3. Skewness, Kurtosis and Normality Check
Furthermore, descriptive statistics were performed to tests skewness, kurtosis and normality. To visually test normal distribution two graphic test were performed: histogram and quantil-quantil (Q-Q) plot analysis. Histogram and Q-Q plot analysis are
distributed. The items of CPI had a skewness between -1.009 and 0,365 and a kurtosis between 0,311 and -1,277. Items of PI had a skewness between -0,741 and 0,580 and a kurtosis between -1,318 and 0,298. 4.1.4. Reliability Analysis
Then a reliability analysis of all items of CPI and PI has been done. “Reliability is the extent to which data collection techniques or analysis procedures yield consistent findings” (Saunders et al., 2009). Therefore a look on the Cronbach’s alpha was taken which is a measure of internal consistency reliability (Cronbach, 1951). The Cronbach’s alpha of CPI and PI are higher than 0.7, which means the scale is good. For CPI Cronbach’s alpha is 0.907 and for PI it is 0.939. The Corrected Item-Total Correlation was analyzed to see whether an item is good or not. All items of CPI were above 0,3 and therefore they are all good items. One out of 17 items of PI was -0.159 whereas all other items of PI were far above 0.3 and therefore they are good items. Further the difference of Cronbach’s alpha if item is deleted was analyzed. All items of CPI and PI have a smaller difference than 0.1 if item is deleted which means they are good items.
The table below shows the mean, standard deviation (SD) and correlations of the variables: Gender, Age, CPI and PI. Therefore, the scale means of CPI and PI were computed and coded as CPI_TOT and PI_TOT. 4.1.5. Correlation Analysis Thereafter, a correlation analysis of the variables CPI_TOT and PI_TOT has been done. “Construct validity is the degree to which an instrument measures the construct it is intended to measure (Cronbach & Meehl, 1955). The Pearson Correlation of CPI_TOT and PI_TOT revealed a high correlation of 0.731.
Table 4: Means, Standard Deviations, Correlations Variables Mean SD 1 2 3 4 1. Gender 1.51 0.5 - 2. Age 28.63 8.27 -0.08 - 3. CPI 4.17 1.26 -0.01 -0.11 (0.91) 4. PI 3.58 1.20 0.03 -0.10 0.73** (0.94) ** Correlation is significant at the 0.01 level (2-tailed) 4.1.6. One-way ANOVA of PI
The one-way analysis of variance (ANOVA) is a tool in SPSS that is used to determine differences between the population means of three or more groups (Aljandali, 2016). To test the effect of regulations on PI a one-way (ANOVA) was used. The one-way ANOVA descriptive statistics of different groups can be found in table 4. There was a statistically significant effect of regulations on the level of purchase intention, F(3,185) = 5.76, p<0.05. The tukey post-hoc test revealed that there was no statistical significant difference between the PI in the highest regulated market group (AUS) and the second highest regulated market group (EU2) (p<0.427). There was a statistical significant difference between AUS and the third highest regulated market group (EU1) (p<0.003) and the lowest regulated market group (USA) (p<0.004).
Table 5: Descriptive Statistics One-way ANOVA Markets Mean SD N 1. AUS highest 3.06 0.99 46 2. EU2 2nd highest 3.42 1.31 46 3. EU1 3rd highest 3.90 1.30 49 4. USA lowest 3.88 0.99 48 Total 3.58 1.20 189 The mediating role of CPI in-between regulations and PI was tested by using the SPSS macro Process of Hayes (2016). This macro enables SPSS to estimate the mediating role of CPI with a multicategorical independent variable (Hayes & Preacher, 2014). Therefore, dummy variables were created to differentiate between the observed markets. USA was used as a baseline group as it is the lowest regulated market. Further, regulations (X) as a multicategorical variable, CPI (M) and PI (Y) were used in the regression analysis. Their results are shown in figure 6.
The effect between multicategorical regulated market groups and CPI will be explained. The results indicate that a smoker in AUS and a smoker in USA are estimated to differ by -0.33 units on CPI whereas the constant coefficient is 4,25. The negative value means that higher regulations are estimated to decrease CPI. This effect is statistically different from zero t=-1,56, p=0.12 with a 95% confidence interval from -0.75 to 0.09. A smoker in EU2 and a smoker in USA are estimated to differ by -0.45 units on CPI. This effect is statistically different from zero, t=-2.12, p=0.03 with a 95% confidence interval from -0.89 to 0.03. A smoker in EU1 and a smoker in USA are estimated to differ by 0.28 units on CPI. The positive value means that EU1 is estimated higher CPI than USA. This effect
is statistically different from zero, t=1.33, p=0.19 with a 95% confidence interval from -0.13 to 0.69. USA has a smaller sample size than EU1 that might explain the difference or that the difference in perception is very similar. Further the effect between CPI and PI will be explained. Two smokers who experience the same level of regulations but differ by one unit of CPI are estimated to differ by 0.68 units in PI. The positive value means that those relatively higher in CPI are estimated to be higher in PI. This effect is statistically different from zero, t=14,19, p=0.00 with a 95% confidence interval from 0.59 to 0.77. Thereafter the direct effects between the various groups and PI will be explained (table 6). A smoker in AUS and a smoker in USA who experience the same level of CPI are estimated to differ by -0.46 units in their PI. The negative value means that those who experience higher regulations are estimated lower PI. This direct effect is statistically different from zero, t=-3.37, p=0.00 with a 95% confidence interval from -0.73 to 0.19. A smoker in EU2 and a smoker in USA who experience the same level of CPI are estimated to differ by -0.12 units in their PI. This direct effect is statistically different from zero, t=-0.83, p=0.41 with a 95% confidence interval from -0.16 to 0.40. A smoker in EU1 and a smoker in USA who experience the same level of CPI are estimated to differ by 0.25 units in their PI. The positive value means that EU1 scores higher PI than USA. This direct effect is statistically different from zero, t=1.82, p=0.07 with a 95% confidence interval from -0.21 to 0.52. R-squared quantifies the proportion of the total variance of PI explained by the overall model. This solution explains the 56% of the variance of PI, which is statistically significant.
Subsequently, the total effect between the various regulated market groups and PI will be explained (table 6). A smoker in AUS and a smoker in USA are estimated to differ by -0.69 units in their PI. The negative value means that the person perceiving higher regulations reports lower PI. This effect is statistically different from zero, t=-3.46, p=0.00, or between -1.08 and -0.30 with 95% confidence. A smoker in EU2 and a smoker in USA are estimated to differ by -0.20 units in their PI. This effect is statistically different from zero, t=-0.98, p=0.33, or between -0.60 and 0.20 with 95% confidence. A smoker in EU1 and a smoker in USA are estimated to differ by 0.44 in their PI. This effect is statistically different from zero, t=2.22, p=0.27, or between 0.05 and 0.83 with 95% confidence. Concluding the indirect effect will be explained (table 7). A smoker in AUS and a smoker in USA are estimated to differ by -0.23 units in their PI as a result of the tendency those facing higher regulations are perceiving less innovativeness, which in turn translates to lower PI. This indirect effect is statistically different from zero, as revealed by a 95% BC bootstrap confidence interval from -0.51 to 0.03. A smoker in EU2 and a smoker in USA are estimated to differ by -0.32 units in PI. This indirect effect is statistically different from zero, as revealed by a 95% BC bootstrap confidence interval from -0.65 to 0.00. A smoker in EU1 and a smoker in USA are estimated to differ by 0.00 units in PI. This indirect effect is statistically different from zero, as revealed by a 95% BC bootstrap confidence interval from 0.00 to 0.04.
Figure 6: Mulicategorical Mediation Model PI AUS vs. USA CPI 0.68*** -0.33 EU2 vs. USA EU1 vs. USA -0.45 0.28 -0.69*** -0.20 0.44*** Note: N =189. R² CPI = 0,05. R² PI = 0.56. Coefficients are presented. *p < .10. **p < .05. ***p < .01
Table 6: Direct and Total Effects of Regulations on PI
BC 95 % CI
B SE P Lower Upper
Direct effect of regulations (AUS) on PI -0.46 0.14 0.00 -0.73 0.19 Direct effect of regulations (EU2) on PI -0.12 0.14 0.41 -0.16 0.40 Direct effect of regulations (EU1) on PI 0.25 0.14 0.07 -0.21 0.52 Total effect of regulations (AUS) on PI -0.69 0.20 0.00 -1.08 0.30 Total effect of regulations (EU2) on PI -0.20 0.20 0.33 -0.60 0.20 Total effect of regulations (EU1) on PI 0.44 0.20 0.03 0.05 0.83 Note: N=189. BC, bias corrected. Table 7: Indirect Effects of Regulations on PI BCa 95% CI
B SE Lower Upper
Indirect effect of regulation (AUS) on PI -023 0.14 -0.51 0.03
Indirect effect of regulation (EU2) on PI -0.32 0.17 -0.65 0.00
Indirect effect of regulation (EU1) on PI 0.00 0.01 -0.00 0.04
Note: N=189. BCa: bias corrected and accelerated; 5000 bootstrap resamples.
5. Comparison of Theoretical and Empirical Findings
This section of the thesis contains the analysis of the empirical data collected and the literature, which was presented earlier in the frame of references. A close look on the impact of the different levels of restrictions on the purchase intention as well as on the consumer perceived innovativeness will be made by analysing the primary data sources. The analysis will briefly describe each market, the collected findings one by one and will further discuss the differences and commonalities. It will start with the US American market as it was used as a baseline group to which the other groups were compared. Since the USA has the lowest level of restrictions on the tobacco industry it is assumed that this group represents a neutral baseline group for the hypotheses. All other groups are assumed to underlie a higher level of influence regarding the different intensity of regulations. Another reason why this market was chosen to be the compare group is that the USA did not ratify the FCTC by the WHO and that it missed out to implement some comparable regulations on the tobacco industry. Most important for this comparison is that regulations on product packaging are missing which is the most important communication tool for tobacco companies in most restricted markets. All other marketing dimensions are even more restricted or completely banned by authorities in most regulated markets, regarding the marketing mix with its four P’s (Hendriksen, 2012). Therefore, the product packaging was used to test the purchase intention and the consumer perceived innovativeness in this study.
5.1. Total Effect of Regulations on PI
relationship implies that a consumer who experience higher regulations has a lower intention to buy the innovative product according to the values in table 6. Interestingly it did make a difference in all observed markets but when comparing the results they did not string up as assumed. From all four markets EU1 is the third highest regulated market and would be assumed to have the third lowest influence on the purchase intention. As it turns out, this is not the case in the sample tested. In fact EU1 was able to score highest on purchase intention compared to the other market groups. Whereas the highest regulated market namely the Australian tobacco market with plain packaging scored the lowest with regards to purchase intention. Followed by the second highest regulated market group EU2 as also assumed. These results indicate that it depends on the level of restriction to clearly affect PI. By taking a look on the sample size of each group it can be seen that they are not exactly equal. This might explain the unexpected order of the results.
For example, the sample size of the market group of AUS and the one of EU2 are the same with 46 respondents but the market group of USA has just 48 respondents compared to 49 respondents in EU1. This might bias these unexpected results.
5.2. Direct Effect of Regulations on PI
The direct effect of regulations on the purchase intention implies that a consumer who experiences higher regulations but who perceives the same level of innovativeness is estimated to differ in the values presented in table 6. Again, all the observed groups were compared to the values of USA. The results clearly show that regulations have an influence on the intention to buy an innovative product. By analysing the results of the direct effect it can be seen that the order of the different observed market groups are the same as the ones of the total effect. Even though they are again not in the assumed order
the direct effect of regulations reveals that the two highest regulated groups AUS and EU2 are scoring a lower purchase intention than the third highest regulated group EU1. The market group of EU1 with the third highest regulations had the highest purchase intention of all observed groups, followed by USA. This unexpected order might be explained by taking into account differing sample sizes of EU1 and USA. Since they have not the same number of respondents. Following the same conclusion as before it can be said that it clearly depends on the level of restriction to be able to reduce the purchase intention.
5.3. Indirect Effect of Regulations on PI
The indirect effect of regulations on the intention to buy the presented innovative product can be explained by: A consumer who experiences higher regulations is estimated to differ by the values presented in table 7 in their purchase intention. Resulting from the tendency for those who experience higher regulated tobacco packaging to perceive a lower level of innovativeness, whereas in turn higher perception of innovativeness translates into a higher purchase intention. By taking a look at the values of the indirect effect of regulations on the purchase intention it can be seen that the observed market groups are again not in the assumed order. The second highest regulated market EU2 is scoring the lowest purchase intention and is directly followed by the AUS market group scoring the second lowest purchase intention. Whereas the third highest regulated market EU1 and USA are scoring nearly the same results. These results are supporting the previous conclusion that a certain threshold level has to be reached to realize an impact on the purchase intention.
5.4. Regulation Effect on CPI Hereby the effect of the various observed strengths of regulations and their impact on consumer perceived innovativeness will be analysed. By looking at figure 6 the values for this relationship compared to the baseline group can be observed. The collected data implies that some form of regulations do have an influence on CPI. The two highest regulated market groups observed AUS and EU2 scored clearly lower on the perceived innovativeness of the presented product packaging. Whereas the baseline group USA scored lower than EU1. Which means that EU1 scored the highest in consumer perceived innovativeness even though it faces more restrictions on product packaging than USA. Since the EU1 collected data from 49 respondents in contrast to USA with 48 respondents this could explain this lead in the ranking. 5.5. CPI Effect on PI Last but not least the effect of consumer perceived innovativeness on the intention to purchase will be analysed. When analysing the value presented in figure 6 it can be said that a consumer who perceives higher innovativeness from the product packaging is estimated to have a higher intention to purchase the innovative product. 5.6. Remarks on the Analysis Since the analysis of the collected data certainly proved the hypotheses from an overall perspective but when comparing different levels of restriction the results did not always string up in the order as expected some remarks have to be done. First of all the four observed markets can be split into two groups of one with a low level of restrictions and one with high level of restrictions. The group with the low level contains USA and EU1
able to score results more or less close to each other, which can be related to close restriction levels regarding the product packaging only. A reason why EU1 scored slightly better than the comparable baseline group USA could be explained by several factors: One of those factors could be the appearance of the packaging itself (Figure 5) on which basis respondents had to answer the questionnaire. The packaging of USA is not affected by regulations but the overall impression of the design compared to EU1 could be seen as a bit “old-fashioned”. The packaging of EU1 has a more bright appearance with more futuristic elements than the package design of USA. This might have biased the perception even though there are health warnings on it. Another reason could be that most respondents who answered the questionnaire are living in the European Union therefore they are used to the package design with the health warnings according to TPD1. This might have lead to a wear-out effect. Whereas the package design of EU2 was implemented very recently in most European counties as well as the plain packaging of AUS in some European counties since end of May 2017. Therefore it could be that the new designs with health warning including pictures of diseases that are related to smoking might bias the perception to a stronger effect. Therefore the two highest regulated markets might have lead to a similar effect. Following these assumptions the same study would have lead to different results at another point in time.
6. Discussion and Conclusion
This section of the thesis will discuss the theoretical and empirical findings presented in the previous chapter followed by a conclusion. It will provide a comprehensive summary including the relevance of the topic, the approach of the thesis, the main findings and some limitations of the thesis. Furthermore, it will try to give an outlook on future research.
6.1. Final Discussion
Nowadays more and more industries are facing restrictions on various business sections and there has been little progress to evaluate the impact of regulations on innovation (Blind, 2011). Therefore it becomes increasingly important to focus on the remaining opportunities to successfully market a product or service. The tobacco industry was taken as an example as it faces comprehensive restrictions on their products. These regulations are implemented to protect consumers from the health risks related to tobacco products (WHO, 2017b). Since these regulations were getting higher and higher in more and more countries world wide it gets increasingly interesting which level of restriction achieves the desired effect to reduce smoking habits. This study was able to prove that regulations certainly can have an effect on the intention to buy tobacco products but not all levels do realize an effect. Therefore, it is very important to assure a minimum strength of restriction to reach the desired goal. The fact that it can have an impact supports the efforts of various governments but also shows that some implemented restriction levels have to be remeasured from time to time as some forms could fall victim to a wear-out effect. It was also shown that excluding the consumer perceived innovativeness in the overall model explained about 56 per cent of the effect
