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Consumer attitude towards responsible luxury

How brand type and CSR type interact to affect consumer

attitude

Master thesis

MSc. in Business Administration – Marketing Track Author: Aleksandrina Rumenova Stoyanova

11371846

a.r.stoyanova@gmail.com Supervisor: Dr. Marlene Vock

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Statement of originality

This document is written by Student Aleksandrina Stoyanova 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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Abstract

Recent studies in the area of luxury and sustainability have focused on the incompatibility between these two concepts and the unfavorable consumer responses towards socially responsible luxury. The current study addresses this issue by focusing on one important aspect which moderates the relationship between luxury brands and consumers’ attitude towards the brand, namely, the type of corporate social responsibility (CSR) practice which is being used. Specifically, the research distinguishes two CSR types – product-related CSR and non-product related CSR (no CSR as a control condition) – and shows how each of these types leads to different consumer responses towards sustainable luxury. A mediator is included in order to explain the different effects. Perceived quality trade-off explains why product-related CSR has a backfire effect on luxury, whereas non-product related CSR seems to lead to more positive attitude towards the brand. Similar analysis for mass market brands reveals that consumers do not hold a high perception of quality trade-off and consequently, they evaluate mass market brands more favorably even after reading information related to product-related CSR initiatives. Further analyses show that no CSR leads to different consumer responses for luxury compared to mass market brands. The empirical findings bring useful insights to brand managers and marketers: despite the increasing concerns for sustainability and environmental consideration, not every type of CSR works equally well for luxury versus mass market brands.

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Table of Contents

1. Introduction ... 6

1.1. Luxury and CSR ... 6

1.2. Problem definition ... 8

1.3. Theoretical and managerial implications ... 9

2. Literature review ... 10

2.1. Luxury ... 10

2.1.1. Definitions ... 10

2.1.2. CSR-Luxury paradox ... 12

2.2. Corporate Social Responsibility ... 14

2.2.1. Definitions ... 14 2.2.2. CSR categorizations ... 16 2.2.3. Consumers’ responses to CSR ... 18 2.3. Hypothesis development ... 20 2.4. Conceptual model ... 25 3. Method ... 26 3.1. Design ... 26

3.2. Sample and procedure ... 26

3.3. Stimuli and manipulations ... 28

3.4. Pretests ... 30

3.5. Measures and reliability analysis ... 33

4. Results ... 39

4.1. Respondents ... 39

4.2. Data preparation and statistical procedure ... 40

4.3. Manipulation checks ... 41

4.4. Hypotheses testing ... 42

4.4.1. Hypothesis 1 and Hypothesis 3 ... 43

4.4.2. Hypothesis 2 and Hypothesis 4 ... 44

4.4.3. Hypothesis 5 ... 45

5. Discussion and conclusion ... 47

5.1. General discussion ... 47

5.2. Theoretical and practical implications ... 49

5.3. Limitations and directions for future research ... 50

References ... 52

Appendix A: Pretest ... 58

Appendix B: Final experiment ... 61

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Table of figures

Figure 1 Conceptual model ... 25

Figure 2 Experimental conditions - Luxury brand ... 27

Figure 3 Experimental conditions - Mass market brand ... 27

Figure 4 Interaction effect of brand and CSR type ... 42

Table 1 Brand description texts ... 29

Table 2 CSR description texts ... 30

Table 3 Descriptive statistics - manipulation pretest Brand Type ... 31

Table 4 ANOVA - manipulation test Brand type ... 31

Table 5 Descriptive statistics - manipulation pretest CSR type ... 33

Table 6 ANOVA - manipulation pretest CSR type ... 33

Table 7 Attitude towards the brand (Spears & Singh, 2004) ... 34

Table 8 Cronbach's Alpha coefficient for multiple-item scale (Attitude towards the brand) .. 34

Table 9 Attitude towards the product (Bezjian-Avery et al., 1998) ... 35

Table 10 Cronbach's Alpha coefficient for multiple-item scale (Att. towards the product) .... 35

Table 11 Purchase intent (Spears and Singh, 2004) ... 36

Table 12 Cronbach's Alpha coefficient for multiple-item scale (Purchase intent) ... 36

Table 13 Perceived quality trade-off (Sen & Bhattacharya, 2001) ... 37

Table 14 Cronbach's Alpha coefficient for multiple-item scale (Perceived quality trade-off) 38 Table 15 Frequency of luxury consumption ... 39

Table 16 Descriptive statistics per condition group (Attitude towards the brand) ... 41

Table 17 Correlation matrix ... 41

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1. Introduction

1.1. Luxury and CSR

For a very long time, the luxury market has not been associated with concerns about environmental pollution, sustainable production methods, human rights or societal wellness. Yet, the world is at a stage where overconsumption awareness and mindful production are no longer seen as choices but as necessities, not only due to economical, but also due to various environmental and societal factors. And like all other industries, luxury brands can no longer ignore these trends.

According to Heine (2012) luxury refers to the “images in the minds of consumers that comprise associations about a high level of price, quality, aesthetics, rarity, extraordinariness and a high degree of non-functional associations” (pp. 60). Moreover, luxury brands are a symbol of scarcity and limited availability (Kapferer & Michaut, 2015). On the other hand, mass market brands manufacture and offer products and services which are necessary (i.e. consumers feel the actual needs for them), are easy to find (i.e. widely available) and non-unique, affordable and provoking utilitarian values through the customer experience journey. Similar to mass market producers, in the recent years, luxury producers have not only been striving to minimize production expenses, but also to realize sustainable production (Kendal, 2010). Despite these attempts and unlike the recent trends in the mass market industry, consumers seem to be non-responsive to luxury brands’ CSR due to the fact that ethical considerations play small (if no) role in the purchase decision for luxury goods (Davies et al., 2012).

Even stronger, researchers across different fields such as marketing, CSR and economics have identified the presence of the so called CSR-luxury paradox (Wong & Dhanesh, 2017). This paradox occurs as a result of the “clash” between the different values associated with the consumption of luxury products on one hand, and sustainable products on

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7 the other (Torelli et al., 2012). Luxury has always been associated with elite, social distinction and out of the reach for the mass. These characteristics of luxury contradict to the number one rule in CSR, being equality. Identically, luxury consumption provokes feelings of self-enhancement and self-indulgence, while CSR enhances altruism and concerns for people and the nature. The existence of the CSR-luxury paradox can be explained by two phenomena. Firstly, by the moderation-excess paradox which relates to the contradictory feelings of excess and overindulgence provoked by luxury consumption and the concepts of moderation, preservation and mindful consumption promoted by CSR. Secondly, by the rationality-emotions paradox which relates to the positive rationality-emotions and dreams associated with luxury in contrast to the rationality and sense of responsibility associated with CSR (Kathurnia, 2013).

In spite of the contradictory findings related CSR activities by luxury brands (i.e. the CSR-luxury paradox) and the general business orientation for cost reduction, a growing number of luxury producers start to engage in sustainability (Forbes, 2016) and this trend goes hand-in-hand with the general increase of luxury consumers (Chandon et al., 2016). According to a few recent reports (i.e. “2016 Predictions for the Luxury Industry: Sustainability and Innovation”), the gap between luxury and sustainability seems to be closing faster than ever. There are few external key pressures causing this trend. First and forth most, the development of laws and legal regulations which obligate companies to disclose their sustainable practices in the annual reports. Second, societal norms are changing, and so are people’s perceptions of what is good and what is bad as well as their expectations of what corporations should be doing and what they should not. This phenomenon is particularly expressed in the personal values carried by the millennial consumer group. Third, nowadays investors take into consideration how many “green” companies they own in their portfolio since “being green” has a positive effect on the firm’s stock value and overall financial performance. And last, but not least, the scarcity of (some) natural resources such as diamonds, gold, clean water, etc. affects the

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8 producers of luxury goods (Winston, 2016). All of the factors mentioned so far lead to an increase in the “sustainable demand” for luxury (Kapferer, 2010).

1.2. Problem definition

The trend of moving towards sustainable production is spreading faster than ever and is here to stay. Luxury brands will have to find a way to overcome the existing CSR-luxury paradox as well as to use CSR as a major enhancer of favorable brand image. So far, there have been limited empirical studies on the effect that the different types of CSR activities have on luxury (versus mass market brands) and attitude towards the brand. Investigating the gap between luxury brands’ socially responsible practices and consumers’ evaluations of these should be the one of the first steps towards understanding of the existing CSR-luxury paradox. Hagtvedt & Patrick (2016) argue that the experience of guilt while consuming luxury (i.e. indulgence) products diminishes for brands engaging in socially responsible causes and charities. On the contrary, for some of the consumers, the attempt of luxury brands to meet the dual goals of elitism and responsibility is contradictive and even paradoxical (Kathurnia, 2013; Torelli et al., 2012). The results of this research will bring useful insights in order to fill in a gap in the existing literature by studying whether engaging in a particular type of CSR activity has a more favorable effect on attitude towards the brand when compared to the other activity types and how this effect varies for luxury versus mass market brands. Therefore, the following research question has been formulated:

“To what extent do the different types of CSR activities (non-product related practices and product-related practices) affect the relationship between luxury versus mass

market brands and attitude toward the brand?”

To answer this question thoroughly, an extensive set of sub-questions will be addressed as well. Among them, the following are worth highlighting: What are the differences between luxury and mass market brands? How do academicians classify the different CSR types? Which

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9 classification is most appropriate to be used in this study and why? What does luxury-CSR paradox refer to and when does it occur? Does any CSR type work better for luxury brands? If so, why? How about mass marker brands? How do consumers react to the different CSR types?

1.3. Theoretical and managerial implications

From an academic perspective, the current paper extends the line of research undertaken by Achabou and Dekhili (2013), related to the incompatibility between luxury brands and product-related CSR (i.e. recycling), by revealing one of the reasons why these two concepts do not go hand in hand. In addition, this study complements the findings by Janssen et al. (2012) by revealing that the acceptance of responsible luxury also depends on constructs such as the type of CSR activity the brand is involved in. Moreover, the current study builds upon the existing literature on the CSR-luxury paradox (Kathurnia, 2013; Torelli et al., 2012; Wong & Dhanesh, 2017) by specifically looking into whether the use of product-related vs. non-product related CSR practices could either deepen or eliminate the problem.

From a managerial perspective, the current study examines whether any of the CSR activity types affects attitude towards luxury as opposed to mass brands in a more positive way than the rest. By having this information at hand, managers and marketers will save unnecessary expenses related to investments in irrelevant or unsuccessful sustainability campaigns. Moreover, knowing the impact that CSR has on constructs such as brand image, brand preference and attitude towards the brand would help practitioners in the development, enhancement and communication of a stronger and sounder brand towards the end consumers.

The remainder of this research is structured as follows: first, the relevant literature related to luxury, CSR and the CSR-luxury paradox will be reviewed. Second, the research design and method will be discussed, followed by an analysis of the results. Lastly, the results will be discussed and summarized and an outline of implications and directions for future research will be given.

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2. Literature review

This chapter provides an overview of the literature on luxury, Corporate Social Responsibility (CSR) activities/practices and the paradox between these two concepts. The review begins with a brief summary of the literature on luxury by outlining some important definitions and characteristics and emphasizing on the existing CSR-luxury paradox. Second, definitions of CSR and an overview of the main CSR practices which exist are discussed. Lastly, the test hypotheses are developed and the conceptual model is presented.

2.1. Luxury

2.1.1. Definitions

As defined by Coco Chanel, luxury is “a necessity that begins where necessity ends”. There have been various definitions of luxury since the time when artists such as Chanel and Dior set the roots of one of the most powerful and profitable industries nowadays (Tynan et al., 2010). Unfortunately, all of the available definitions of luxury are high in subjectivity and dependent on social constructs (Nueno & Quelch, 1998). One of the major reasons for this subjectivity in defining luxury is that “what is luxury to one may just be ordinary to another” (Phau & Prendergast, 2000, pp.123). Although the aim of this research paper is not to pursue a thorough overview of the existing definitions for luxury, understanding this concept is of a major importance. Yeoman & McMahon-Beattie (2006) argue that luxury is no longer reserved only for the elite. Luxury is not only associated with higher monetary value, exclusiveness and craftsmanship traditions; it offers much more – self-indulgence, personal fulfillment and authenticity through experience. Very much in line with the dramatic changes of the luxury concept across time, Tynan et al. (2010) suggest that the key identifiers of luxury are “high quality, expensive and non-essential products and services that appear to be rare, exclusive, prestigious, and authentic and offer high levels of symbolic and emotional/hedonic values

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11 through customer experience” (pp. 1158). Taken through the prism of social versus personal context, luxury either signals high class and sophisticated taste or enhances the feelings of self-esteem and satisfaction (Kathurnia, 2013). A different, broader vision of luxury is presented by Dubois et al. (2001) who aggregate the various comments and views on the nature and characteristics of luxury. According the authors, there are six main aspects which best describe luxury. The first aspect is excellent quality – quality and luxury are so closely related that the two terms have become almost interchangeable nowadays. Another aspect of luxury is the very high price, which very often serves as a proof of the outstanding quality. A third aspect of luxury discussed by the authors is the concept of scarcity – due to the high quality and price, luxurious offerings cannot be mass-produced or mass-distributed and respectively mass-owned for that purpose. Fourth, luxury is closely related to the desire for self-indulgence, hedonism and is a distinct source of pleasure; therefore, luxury products should be able to meet some aesthetic standards. Another important aspect of luxury is the existence of rich brand heritage. Luxury brands are proud of their long history and respected traditions which strengthen the authentic product image and relationships between consumers and the product itself. Last but not least, luxury products need to go beyond what is considered to be functional, they do not not have to be necessary. And although some of the aspects might be less relevant than others nowadays, high price, outstanding quality, exclusiveness and long heritage remain key characteristics of the luxury concept.

On the contrary, and probably because this concept is so widely used, the academic literature lacks a good definition for a mass market brand. In order to define and outline the characteristics of mass market brands, a similar approach as the one undertaken by Dubois et al. (2001) for luxury brands will be used. Unlike luxury brands, mass market brands are expected to “score” moderate to low levels on quality and price. Due to these reasons, mass market brands are expected to be mass-produced, widely available and distributed and owned

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12 by a major part of the society. Mass products are expected to meet utilitarian rather than hedonic needs – they need to be functional, convenient and necessary. Moreover, mass market brands are almost never associated with long traditions and heritage. In fact, the aforementioned often leads to associations such as high price and exclusiveness. Therefore, none of these are aspects which consumers consider while purchasing a mass product. All in all, it can be concluded that mass market brands are situated on the opposite side of the spectrum for each of the aspects and characteristics which define luxury brands.

The current research will use the aggregated classification suggested by Dubois et al. (2001) in order to define luxury. The main reason behind this decision is that the authors’ approach outlines six major aspects of luxury (quality, high price, scarcity, aesthetics, brand heritage, and “non-necessity”) which could be easily transformed and applied in order to define a different concept such as mass market brands.

2.1.2. CSR-Luxury paradox

The notion “sustainable luxury” caries dual, contradictory meaning (Janssen et al., 2014). On one side, the increase of luxury consumption and the need to resonate with the recent trends of social and environmental responsibility call for engagement in responsible practices (Hagtvedt & Patrick, 2016). This statement is also supported by Bendell & Kleanthous (2007, pp.2) who state that luxury brands “have the opportunity and the responsibility to promote sustainable consumption”. On the other side, however, maintaining the elite branding and the concepts of luxury seems to be incompatible and even paradoxical with the socially responsible brand image (Torelli et. al, 2012). These competing constructs are a prerequisite for the rise of the CSR-luxury paradox (Kathuria, 2013; Torelli et al., 2012).

As stated earlier, Davies et al. (2012) argue that luxury consumers are less interested in CSR as an attribute of a luxury product if compared to consumers of mass market products. As a result, engagement in CSR activities seems to be less effective for luxury brands. Following

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13 this line of thought, Torelli et al. (2012) propose that motivations triggered by the luxury brand concept are in contradiction with the ones enforced by CSR. Consumers do not evaluate CSR information in isolation – there is an abstract role of the parent brand concept which influences consumers’ evaluations. This is due to the fact that luxury brands are seen and experienced by consumers as enhancement brands, while on the other hand, CSR activities activate self-transcendence values of caring for the societal well being. The simultaneous activation and experience of those values results in a “sense of unease or disfluency” (Torelli et al., 2012, pp. 950) which actually leads to unfavorable brand evaluation and lower customer satisfaction in return. Fortunately, the backfire effect of CSR activities on luxury brands can be mitigated by open communication of the potential disfluency due to luxury brands being self-enhancing and CSR information being self-transcendent. Choosing socially responsible products and brands seems like “the right thing to do” (Janssen & Vanhamme, 2014). Yet CSR seems to have only a negligible effect on the actual purchase decision of consumers.

On the contrary, Kapferer (2010) and Kapferer et al. (2013) examine the relationships and interactions between CSR and luxury from another perspective. Majority of the luxury consumers still believe that sustainability should not be a priority on the agenda of luxury producers. Next to exclusivity, luxury value is also based on rarity – rare leathers, materials and craftsmanship. Even though luxury brands rarely engage in communications on corporate responsibility (DeBeers, 2009), luxury is highly resource dependent (for example, Tiffany & Co depends on the availability of natural resources such as rare diamonds), and sustainability seems to be deeply embedded in the production, distribution and pricing strategies of luxury products. For example, by keeping high prices, demands for certain goods remain limited. What is more, by definition luxury stands for durability and long-lasting quality as opposed to the short time cycles within which mass market brands introduce new products. With a few exceptions, most of the luxury brands remain relatively small family owned businesses.

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14 Consequently, they can afford to remain in control of the whole value chain – from the selection of raw materials and production practices to the final delivery and creation of unique customer experience to the end consumers. Throughout the whole chain, the focus falls on aspects such as outstanding quality and extraordinary customer experience – two aspects which are unlikely to thrive on poor production practices, production outsourcing or unfavorable labor conditions. By demand luxury goods need to be produced locally – French luxury comes from France and Italian luxury is manufactured in Italy (Kapferer et al., 2013). In contrast, mass fashion brands such as Zara, H&M, Mango and C&A are more prone to receive public criticism due to their irresponsible practices. In their focus to maximize economic gains, mass fashion producers have outsourced their high production facilities in low-cost third world countries such as China, India, Vietnam and Thailand. Very often these brands are involved in reputational scandals and unsustainable practices such as unfair labor conditions, low employee compensations, child labor or use of manufacturing methods which pollute the local environment, etc. This reasoning explains why majority of the mass market consumers are far more concerned about sustainability compared to luxury buyers (Kapferer et al., 2013).

2.2. Corporate Social Responsibility

2.2.1. Definitions

Over the years, the meaning of CSR has changed and the importance of the concept for maintaining and generating customer value has drastically increased. Companies are supporting sustainability initiatives more than ever before by substantial transfer of financial investments into marketing activities (Bhattacharya & Sen, 2004). Researchers share the opinion that being socially responsible is not only the right thing to do. Sustainability practices also lead to doing better (Bhattacharya & Sen, 2004). But what does CSR actually stand for? The meaning of this concept is highly dependent on context in which it is used as well as on the personal values and associations which people have with it. Corporate social responsibility

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15 combines a broad area of activities such as human rights, environmental preservation, unfair business practices, community well-being, societal development and favorable and ethical workplace issues (Leonard & McAdam, 2003). Probably because of this, it will not be an overstatement to mention that academicians and practitioners have been struggling to give a precise definition of corporate social responsibility (Carroll, 1991). And while more recent definitions emphasize on the “commitment of business to contribute to sustainable economic development, working with employees, their families and local communities” (WBCSD, 2012), one of the oldest definitions available in the literature still stands out. According to Davis (1960), CSR refers to the company’s “decisions and actions taken for reasons at least partially beyond the firm’s direct economic or technical interest” (pp. 72).

Due to the nature of the current research, the definition for CSR formulated by Davis (1960) is the most suitable one. There are two reasons for this. Firstly, majority of the articles which are discussed here either mention or use this definition. Secondly, this definition is relatively general and is one of the few which does not provoke or suggest any associations related to a concrete CSR activity such as ethicality, philanthropy, business practices, etc.

CSR activities are perceived to carry important benefits not only to the firm itself but also to the general societal well being (Newell & Frynas, 2007). The engagement of companies in CSR practices is not only predisposition for enhanced differentiation from competitors (Visser, 2008), but also serves as a reinforcing mechanism for the creation of brand value and brand equity (Torres et al., 2012). Without doubt, in order to be able to get the maximum out of a well-planned and executed CRS strategy, companies first need to earn stakeholder’s trust (Morsing, 2006). For that purpose, it is essential to choose the right type of CSR activity (Dahl & Persson, 2008) which in return will have a favorable effect on building and/or retaining brand equity.

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16 2.2.2. CSR categorizations

Throughout different studies, researchers have conceptualized CSR into various categories. In that sense, while studying the effect that CSR has on firm value, Orlitzky et al. (2003) suggested that the effect of CSR varies per category type. Campbell (2007) explains these variations with the fact that people (consumers) tend to be subjective in their assessment of what is good and what is bad and very often those subjective assessments are dependent on a particular situation, place, surrounding environment, time, etc.

One of the earliest categorization of CSR was done by Carroll (1979, 1991) who differentiated four CSR types – economic, legal, ethical and discretionary. Economic responsibility relates to the construct that companies have to produce and sell goods and services, which the society needs, at a profit maximization price. The legal CSR refers to company’s obligations to obey certain countries’ laws and regulations. Ethical CSR represents the societal expectations which spread above the established laws and regulations. Finally, discretionary (philanthropic) responsibilities indicate the voluntary business engagements in various cause-related activities. According to this categorization, the four different CSR types are not mutually exclusive and a certain activity may satisfy the criteria of two or more different CSR types.

Lantos (2001) has a slightly different view on the CSR classification. According to it, three CSR categories exist – ethical, altruistic, and strategic. Ethical CSR is defined as morally mandatory even in situations when the business will not gain any financial benefits. Altruistic CSR is similar to the discretionary responsibilities defined by Carroll (1979, 1991). And finally, strategic CSR refers to strategic philanthropy aimed at achieving strategic business goals on one hand, and encouraging societal welfare on the other. Yet, mutual exclusivity between the categories does not exist.

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17 Polonsky and Speed (2001) & Lii and Lee (2011) distinguish between three types of CSR practices – sponsorship, cause-related marketing (CRM), philanthropy. Sponsorship can be seen a strategic investment tool used to gain access to the commercial potential of the activity or event being sponsored. It is often associated with the approach which companies undertake in order to simultaneously achieve their marketing and economic objectives by taking into consideration the social goals and needs. According to Harvey (2001), sponsorship has the potential to generate more revenues than the joint “efforts” of all other marketing media tools. The second category used by the authors mentioned afore is CRM. CRM involves company’s commitment to donate a certain portion of its revenue to a social cause or non-profit organization (Nan and Heo, 2007). The last CSR category is philanthropy. Unlike the previous two categories, philanthropy is not associate anyhow with the company’s goal of achieving its marketing objectives. Instead, philanthropy defines activities which the company participates in, explicitly for the benefit of the cause/activity.

Peloza et al. (2011) introduce another approach to CSR classification. The authors categorize CSR activities into three separate types, being: philanthropy, business practices and product-related features. Philanthropy seems to be the most common CSR category; whereby cause-related marketing (CRM) is dominating. In addition to CRM, the following activities also fall under the philanthropy category – donations, community involvement, employee volunteerism, promotion of a social issue, donation of products, licensing, event sponsorship, and non-specific support for charities. If examined within Holbrook’s value model, philanthropy would most likely be a source of other-oriented/intrinsic value. Findings by Yoon et al. (2006), however, suggest that philanthropy can be used to gain social status/recognition. Therefore, this CSR category can also be considered as a source of other-oriented extrinsic value. The second most dominating CSR activities are business practices; whereby environmental protection is the most common one. Moreover, activities related to prohibition

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18 of animal testing, employee relations, customer relations, human rights, socially responsible ads, and community satisfaction are also considered as business practices. Similar to philanthropy, business practices can enhance other-oriented values – both extrinsic and intrinsic. Lastly, the third CSR type relates to product-related features such as product quality, organic raw materials, sustainable production methods, recyclability, fewer pollutants generated during product usage, biodegradability, etc. Although the value resulting from this particular CSR practice has not been measured precisely, there is a reason to believe that self-oriented value will be of the biggest importance. This is due to the fact that consumers will not give up on quality for other-oriented CSR (Auger et al., 2008).

The categorization approach used by Peloza et al. (2011) has a few advantages over the conceptualization methods introduced by Carroll (1979, 1991), Polonsky and Speed (2001) & Lii and Lee (2011), and Lantos (2001). One of the most significant differences relates to the fact that the model by Peloza et al. (2011) allows for a better and clearer CSR activity classification since borders between the categories are well-defined and separated. Moreover, this distinct separation is also based on a better technique and deep insights related to the creation and understanding of consumer value. Nonetheless, both philanthropy and business practices enhance other-oriented values as opposed to self-oriented values embedded in the product-related practices. Accordingly, this research adopts a broader CSR categorization approach, namely a differentiation between product-related CSR, and non-product related CSR (combining philanthropy and business practices).

2.2.3. Consumers’ responses to CSR

But how do consumers respond to the different CSR types? Various studies have focused on the general positive consumer responses towards philanthropy and in particular – CRM. Nan & Heo (2007) argue that CRM would have a positive effect on consumer’s attitude towards the company (and less so on consumer’s attitude towards the product or the brand) even when the

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19 level of brand/cause fit is relatively low. Furthermore, in case of a high level of brand/cause fit, CRM does have a more favorable effect on other constructs such as attitude towards the product or towards the brand. This discovery is in line with older studies in this area by Webb & Mohr (1998) or Ross et al. (1992). These papers indicate that companies involved in CRM are considered to be socially responsible and consumer attitudes towards these companies is highly positive.

On the contrary, when it comes to product-related CSR, consumer responses seem to be more ambiguous. An early criticism of this type of CSR practice was related to the perception that CSR can diminish the functional value of the product. Even though these concerns have been properly addressed in the recent years (Obermiller at al., 2009), many consumers still perceive greener products to be associated with lower quality (Green & Peloza, 2011). A similar idea is also suggested by Bhattacharya and Sen (2004) who show that consumers may respond negatively to CSR practices if they feel that the practices are realized at the expense of improved product offerings. What is more, consumers might even believe that CSR initiatives detract as much financial resources that it may become difficult for the company to maintain the current (high-)quality standards.

Based on the findings discussed so far, there seems to be a significant heterogeneity in consumers’ responses towards sustainability initiatives. This only shows that what works best for one or a group of consumers might not always work for the others. And since consumers react so differently to the different CSR practices, companies need to be very precautions while determining the value of the resources devoted to sustainability as well as to keep in mind that the desired end results might be difficult to achieve since there are a lot of factors which have to be taken into consideration (Bhattacharya & Sen, 2004). The remaining part of this chapter will be devoted to a discussion of how the different CSR activities work differently for luxury and mass market brands and what could be a possible explanation for this.

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2.3. Hypothesis development

Over the recent years, consumers have expressed willingness to buy and consume products which are less toxic, more durable but at the same time made from recycled materials (Lozano et al., 2010). In general, consumers tend to evaluate socially responsible products more positively and are willing to buy them even if they have to pay premium prices (Trudel & Cotte, 2009; Cohn & Wolfe, 2011). Simultaneously, there are plenty of research streams which focus on the negative product and brand evaluations which come along with a too extensive emphasis on sustainability. Consumers realize that companies operate under strict budgetary and product development requirements. Therefore, they expect that if products are superior in one attribute, possibly they will be inferior on other attributes. Luchs et al. (2010) argue that halo effects and beliefs related to trade-offs which companies make, determine the effect of sustainability on product evaluation and preference. The authors suggest that the benefits sought through the consumption process would also influence consumer’s choices for ethical products by either seeking and valuing gentleness-related attributes or strength-related attributes. One of the examples which they used in order to illustrate this theory involved cleaning products. Consumers value ethicality and sustainability when they search for attributes such as safety and health. Albeit if consumers seek strength and effectiveness, ethical products would be disregarded since they are associated with weakness and gentleness.

Surprisingly, however, this recent trend does not seem to hold when it comes to luxury brands as consumers still tend to value the intrinsic product quality as primary selection criteria. Even though sustainability has been a “hot” topic in almost every industry over the past two decades, there are only a few studies which explore the opportunities for interaction between luxury and CSR. Majority of the undertaken CSR researches focus on non-luxury, functional, mass-distributed and used products and industries. One of the few studies which examines the effects of product-embedded CSR on luxury is by Achabou & Dekhili (2013). According to

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21 their findings, the use of recycled materials in the production process of luxury goods has a general negative effect on consumer preferences. Even though luxury brands have the opportunity and the responsibility to promote sustainable consumption (Bendell & Kleanthous, 2007; Davies et al., 2012), consumers tend to perceive luxury goods made from recycled materials as less prestigious and non-unique. This is a consequence due to the consumers’ perceptions that intrinsic quality of sustainability products is lower than the one of conventional products. Moreover, even if there is no link to poor product quality, consumers still tend to evaluate sustainable products less positively. Considering some of the main aspects of luxury, namely, scarcity, slow fashion and exclusivity, consumers do not share a believe that luxury clothing is of any danger for the planet. This phenomenon is in line with the findings by Widloecher (2010) who argues that luxury favors quality over quantity, rarity and craftsmanship over mass production and distribution. Therefore, wasted resources are most likely caused by the consumption of products with short lifecycle, such as mass market fashion brands, rather than products by exclusive luxury producers (Achabou & Dekhili, 2013).

In addition, Janssen et al. (2014) enter into a discussion of whether the use of the terms “sustainable” and “responsible” is really in contradiction to luxury. The authors find a dependency on the specific aspects of the promoted luxury products. Respectively, sustainability campaigns related to enduring luxury products which are classified by a higher level of scarcity, for example jewelry, will be a better fit. The higher perception of fit will trigger more positive consumer evaluations. On the contrary, ephemeral luxury products, such as haute couture, will trigger more negative consumer evaluations due to the lower perception of fit.

Based on the theories mentioned so far, for product-related CSR practices, it is expected that consumers will exhibit more negative attitude towards luxury brands (H1) and more

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22 positive attitude towards mass market brands (H2). Therefore, the following hypotheses are formulated:

H1: CSR type moderates the relationship between luxury brands and consumers’ attitude

towards the brand, such that product-related CSR will lead to more negative attitude towards the brand than no CSR.

H2: CSR type moderates the relationship between luxury brands and consumers’ attitude

towards the brand, such that product-related CSR will lead to more positive attitude towards the brand than no CSR.

Lately, various businesses and charitable organizations have combined efforts in order to increase the number of cause-related marketing (CRM) campaigns (Austin, 2003). CRM is defined as a strategic partnership between for-profit and non-profit organizations (Boenigk & Schuchardt, 2013). In a broader aspect, CRM falls under philanthropy, which for the purpose of this study is incorporated into the combined CSR type – non-product related CSR. Ricks (2005) argue that consumers have a positive view towards proactive corporate activities such as philanthropy. This argument is also backed up by a number of other studies which suggest that the concept of corporate philanthropy is closely related to an overall positive consumer attitude towards the company and brand (Sen & Bhattacharya, 2001; Keller & Aaker, 1995).

Nonetheless, very little empirical research has been devoted to study the effect that philanthropy, in particular CRM and donations, have on luxury consumers as majority of the studies tend to focus on the fast moving consumer goods industry. According to some findings by Strahilevitz (1999) luxury consumers would generally be more motivated to pay a premium price for CRM luxury offerings in order the balance the contradictory feelings of pleasure and guilt arising during consumption. In that aspect, Grau et al. (2007) argue that CRM campaigns for luxury brands would be more successful when firms make meaningful contributions. The existing research gap in the luxury literature is also partially addressed by Boenigk and

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23 Schuchardt (2013) in their study which analyzes the interdependencies of donation magnitude and price of the luxury product. Their empirical research revealed positive consumer attitude towards luxury brands which engage in CRM campaigns, especially if consumers perceive the donation contribution as relatively high in terms of monetary value. And while product-related CSR practices of luxury brands are usually associated with product quality concerns, none of the papers focusing on philanthropy (non-product related CSR) addresses such concerns. Instead, the main focus falls on characteristics such as fit between the donation cause and the luxury brand’s concept. Should the aforementioned be in line with consumer’s perception for fit, it is expected that non-product related CSR will lead to a more positive attitude towards luxury brands compared to product-related CSR. In addition, based on the empirical studies available on this topic (Ricks, 2005; Sen & Bhattachary, 2001; Keller & Aaker, 1995), it is expected that non-product related CSR will lead to positive attitude towards mass market brands as well. However, there is no reason to believe that product-related CSR will lead to different levels of brand attitude than non-product related CSR for mass market brands.

On another note, the scarcity principles which apply to luxury products already carry the idea that luxury brands promote a reasonable, responsible and sustainable consumption (Janssen et al., 2013). This statement is in line with Kapferer’s (2010) assertion that “luxury is resource dependent and obsessed by the sustainability of its resources: high prices limit the demand and is the best way to protect the future of these resources” (pp. 41). Sustainability is embedded in one of the aspects which seems to define luxury. Therefore, for luxury brands it is expected that non-product related CSR practices will not lead to any differences in attitude towards the brand compared to no CSR at all. However, this phenomenon will affect consumer’s attitude towards mass market brands in a different way. In general, mass market brands are associated with fast fashion, moderate quality, overproduction and unnecessary waste as well as corporate irresponsibility such as labor exploitation in third world countries,

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24 unfavorable working conditions and irresponsible usage and waste of raw materials. Consequently, it is expected that non-product related CSR will lead to higher levels of attitude towards the brand compared to no CSR.

Based on the theories discussed above, the following two hypotheses have been formulated:

H3: CSR type moderates the relationship between luxury brands and consumers’ attitude

towards the brand, such that non-product related CSR will lead to more positive attitude towards the brand than product-related CSR. However, there will be no difference in attitude

towards the brand between non-product related CSR and no CSR.

H4: CSR type moderates the relationship between mass market brands and consumers’

attitude towards the brand, such that non-product related CSR will lead to more positive attitude towards the brand than no CSR. However, there will be no difference in attitude

towards the brand between non-product related CSR and product-related CSR.

As stated previously, consumers react differently to the different CSR types. This can be explained by the general beliefs related to the trade-offs a company must make in order to support CSR initiatives (Sen & Bhattacharya, 2001). One of these trade-offs refers to corporate ability (CA). Corporate ability stands for the company’s expertise in producing and delivering products and services which withhold consumers’ expectations for a favorable company image and reputation. CSR detracts not only financial resources; it also detracts from the company’s ability to deliver the best possible quality. Brown and Dacin (1997) and Biehal and Sheinin (2007) study the different effects that CA and CSR have on product and brand evaluations. According to their results, a reputation which is based on CA (i.e. meeting quality expectations) will have more resonate impact on both product and brand evaluations than a reputation which is based on CSR. Similar findings are confirmed through the empirical research by Webb et al. (2008). The authors argue that individuals who believe that CSR comes at the expense of

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25 (lower) product quality will be less sustainability-oriented in their consumption preferences. All else equal, a product-related CSR practice such as reuse of recycled fabric material would lead to a higher perception for a quality trade-off and consequently, to a more negative attitude towards the brand and the product. Since non-product related CSR types such philanthropy, CRM or sponsorship are not directly associated with a shift from the production quality standards and company’s technical expertise, quality trade-off is not so obvious. Altogether luxury products are designed to connect with the end consumers on an emotional level (Kapferer, 1997; Nueno & Quelch, 1998). Generally, this is achieved through emphasizing product features such as oustanding quality, heritage and craftsmanship or in a broader sense – corporate ability. Therefore, it is expected that perceived quality trade-off due to company’s CSR actions will resonate more across luxury buyers.

In order to test the potential mediation effect of CSR-CA beliefs, the following hypothesis has been formulated:

H5: Perceived quality trade-off (CSR-CA beliefs) will mediate the effect brand type

and CSR type have on consumer’s attitude towards the brand.

2.4. Conceptual model

An illustration of the hypothesized relationships is presented in Figure 1.

Figure 1 Conceptual model

Brand type

• Luxury brands • Mass market brands

Attitude towards the brand CSR type • Non-product related CSR • Product-related CSR • No CSR CSR-CA beliefs

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3. Method

In the following chapter, the empirical part of the study will be discussed. Firstly, the research design, sample characteristics and procedure will be presented. Secondly, the stimuli and measurement scales of all variables will be described.

3.1. Design

In order to test the hypothesized relationships and answer the main research question of this paper: “To what extent do the different types of CSR activities (non-product related practices and product-related practices) affect the relationship between luxury vs. mass market brands and attitude toward the brand?”, an online survey-based experiment with a between subject 2 (luxury brand/mass market brand) x 3 (product-related CSR/non-product related CSR/control condition: no CSR) design is used. Experimental design enables the possibility to examine causal relationships between variables (Lewis & Saunders, 2012). The independent variables will be manipulated in different ways in order to show the differences in the dependent variable.

3.2. Sample and procedure

In order to answer the research question and to test the suggested conceptual model, a quantitative study in the form of an online experiment survey was conducted. The survey was administered via Qualtrics and it consisted of a set of questions for which, with the exception of one demographic – age, a predetermined set of responses was available. For a major part of the questions, respondents could indicate their personal opinion by selecting whether they agree or disagree with statements on a 7-point Likert Scale. The research was conducted by using a non-probability convenience sampling. Participants in the survey were approached via social media (Facebook and Instagram), e-mail, WhatsApp and face-to-face. Participation in the study was entirely voluntarily and anonymous. This method for collecting the data was appropriate for this research since the population of interest was consumers/buyers of clothing.

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27 Due to the 2 X 3 between subject design, respondents were randomly divided into six groups: a luxury brand – no CSR activity-, a luxury brand – product-related CSR activity-, a luxury brand – non-product related CSR activity-, a mass market brand – no CSR activity-, a mass marker brand – product-related CSR activity-, and a mass market brand – non-product related CSR activity group. The average age of all participants was 32 years (calculated on the basis of 170 respondents who were willing to indicate their age) and more than half of them were female (62%).

Figure 2 Experimental conditions - Luxury brand

Figure 3 Experimental conditions - Mass market brand

Depending on the condition to which the respondents were randomly allocated, they had to answer a different number of questions. Participants in the control conditions, i.e. brand description (luxury or mass market) but no CSR activity, had to answer 26 questions in total

Luxury brand Group 2 Group 3 Luxury brand Luxury brand Non-product related CSR No CSR Product-related CSR

Mass market brand

Group 2

Group 3

Mass market brand

Mass market brand

Non-product related CSR

No CSR Product-related CSR

Group 1

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28 of which four were demographics. Participants in the remaining four conditions had to answer 35 questions in total of which four were demographics. The survey started with a brief description of the fictive brand Avola and was followed by a brief description of Avola’s engagement in CSR practices or no engagement in the control condition. After this introduction, each respondent had to answer a set of seven questions measuring attitude towards the brand, three questions measuring attitude towards the product and three questions measuring purchase intent. If not in the control group, respondents had to answer additional nine questions measuring the CSR-CA beliefs (i.e. trade-off between product quality and company’s CSR involvement). The final part of the survey consisted of control variables measuring participants’ awareness of CSR as well as a control variable measuring the extent to which respondents were actual luxury consumers. In addition, a set of five questions was used in order test whether the luxury versus mass market brand manipulation worked. Lastly, four demographic questions were included – age, gender, level of education, and current occupation.

3.3. Stimuli and manipulations

Brand type. Respondents were randomly divided in two groups, a luxury brand- and a

mass market brand group. Participants in each of the groups had to read a brief description about a fictional brand named Avola. In order to guarantee and emphasize credibility of the provided information, respondents were told that the brand description text was taken from Vogue’s weekly fashion blog. Both texts were almost equal in length (i.e. number of words used). The luxury brand text is a (shortened) combination of the existing brand descriptions of three of the most well-known luxury brands - Hermes, Louis Vuitton, and Cartier. While choosing which parts of the descriptions to use, the list of six most important luxury brand characteristics, outlined by Dubois et al. (2001), was considred. The description for the mass market brand condition was composed by converting the aspects, characterizing a luxury brand,

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29 into aspects, characterizing a mass market brand. An overview of the aspects, i.e. brand characteristics, being manipulated is presented in Table 1. The specific characteristics, which are being manipulated, are underlined.

Table 1 Brand description texts

CSR type. Respondents were randomly divided into three groups – product-related CSR

activity-, non-product related CSR activity-, and no CSR activity condition. The “no CSR activity” condition was a control condition; participants assigned to this condition had to read only the brand description text. Respondents in the remaining two conditions had to read a brand description text, followed by a short text describing Avola’s involvement in a certain CSR activity. For the product-related CSR activity, Avola was displayed to reuse recycled materials in the clothing manufacturing process while for the non-product related CSR activity, Avola was donating money to a non-government organization (NGO) for waste reduction and management. Both CSR-related texts were almost equal in length. Moreover, both CSR practices supported a similar cause – the product-related CSR supported waste reduction through reuse of recycled materials and the non-product related CSR supported waste reduction through monetary donations towards waste management NGO.

Luxury brand description Mass market brand description

Avola, an iconic French luxury fashion brand, was established in 1805. From Haute Couture to Prêt-à-Porter, Avola places prestige, genuine performance, and perfection at the heart of each stage of the manufacturing process. The long traditions of excellence, authenticity, exquisite craftsmanship, and exceptional levels of quality give Avola a position of superiority in the very competitive and ruthless world of luxury fashion.

Avola, a well-known Spanish fast fashion brand, was established in 2009. From sparkling gala outfits to everyday basics, Avola places convenience, satisfactory performance, and efficiency at the heart of each stage of the manufacturing process. The contemporary practices of reliability, functionality, fair production expertise, and moderate levels of quality give Avola a position of superiority in the very competitive and ruthless world of fast fashion.

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Table 2 CSR description texts

Product-related CSR description

Non-product related CSR description

Avola reuses fabric materials from past and unsold collections during the clothing manufacturing process. If not recycled, the materials would otherwise be discarded as waste. Avola introduces a recycled collection each season.

Avola is a sponsor of Zero Waste Europe – a European nonprofit organisation for waste management and reduction. For every piece of clothing sold, Avola donates 7% of the transaction revenue to the organization.

3.4. Pretests

In order to assure that the brand and CSR descriptions, used in the manipulation, conveyed the desired information, a pre-test was done. A 2 (brand type: luxury brand versus mass market brand) x 2 (CSR type: product-related CSR versus non-product related CSR) between subject design was used, with a sample of 41 respondents. The two different brand descriptions were tested on the extent to which participants perceived the brand as being a luxury or a mass market brands. The perception was assessed by evaluating the extent to which participants believed that the brand is: of outstanding quality, very prestigious, very rare, very exclusive, and very highly priced. For each characteristic a seven-point Likert scale was used, whereby 1 = “strongly disagree”, 7 = “strongly agree”. The evaluation criteria used to determine “luxury” in the context of this study is based on criteria developed and introduced by Kapferer (1998) and Dubois et al. (2001). Although the original luxury “checklist” includes more constructs, some of them were left out from this study because, due to limited information, they could not be applied to the brand description texts which were composed (for example, creativity, craftsmanship, magic, etc.). An ANOVA showed significant difference between the two brand types for three of the characteristics – rareness, exclusivity and high price. Since the assumption for homogeneity of variances for prestige and outstanding quality was violated, Welch’s and

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31 Brown-Forsythe robust tests were run. There were significant differences between the results for the luxury and the mass-market condition. Therefore, there is a sufficient statistical evidence that the manipulation of luxury versus mass market brand is successful. A summary of all descriptive statistics of this pretest and ANOVA results is available in Table 3 and Table 4.

Table 3 Descriptive statistics - manipulation pretest Brand Type

LUXURY MASS MARKET

Luxury constructs N Mean Std. deviation N Mean Std. deviation

Of outstanding quality 21 6.24 0.768 20 3.90 1.917

Very prestigious 21 6.24 0.944 20 3.80 1.908

Very rare 21 4.95 1.564 20 3.20 1.735

Very exclusive 21 5.57 1.568 20 3.15 1.755

Very highly priced 21 5.71 1.419 20 3.00 1.622

Table 4 ANOVA - manipulation test Brand type

ANOVA Luxury constructs Levene's Sig.

value*

F Sig

Of outstanding quality .000 N/A N/A

Very prestigious .001 N/A N/A

Very rare .830 11.557 .002

Very exclusive .635 21.751 .000

Very highly priced .929 32.6 .000

In addition, similar manipulation checks were performed in order to assure that the CSR information conveyed the desired messages. Each of the CSR activities was tested on the extent to which respondents perceive a high level of fit between an anonymous fashion brand and the CSR activity type chosen. Although the pretest for the successful manipulation of both stimuli was done via one survey, the questions were phrased and put in a specific order so that respondents do not feel that the brand description of Avola is anyhow related to the CSR type being discussed. For that purpose, distraction questions related the evaluation of relatively well-known luxury (5) and mass market (5) fashion brands were used. Next to measuring the

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32 fit, the pretest also aimed to uncover the perceived impact on quality which respondents hold towards the fashion brand’s product, considering its CSR practices. Lastly, respondents also had to indicate whether the information they read actually indicates that the fashion brand is socially responsible. For each of these constructs a seven-point Likert scale was used, whereby 1 = “strongly disagree” and 7 = “strongly agree”. The evaluation criteria used to the determine the fit between the fashion brand and the CSR practice was borrowed from the study by Nan & Heo (2007). Impact on quality was pretested due to the hypothesized negative interaction between luxury brands and their involvement in product-related CSR activities. An ANOVA showed no significant differences between the two CSR types for none of the studied constructs. The results were satisfactory for the assessment of the level of fit and the brand’s social responsibility, i.e. manipulation worked equally well for both CSR conditions. However, the hypothesized negative impact of product-related CSR on product quality could not be proved. Even though there is a difference in the means (M product CSR = 3.85 versus M non-product CSR = 3.10), ANOVA did not reveal significant results. This could be due to the fact that the question assessing the impact on quality was listed only after the questions related to brand-CSR fit. Therefore, respondents might have been biased in their assessment of quality if they indicated a high level of fit prior to indicating the extent to which they believe that quality is impacted. Moreover, there was only a short reference to the type of company involved, i.e. “fashion brand”. As a results, this information might have been misjudged or not taken into consideration while indicating the impact on quality. Despite this outcome, it was decided to move on with the actual survey without making any adjustments to the texts which were used for the two CSR conditions in the pretest survey. A detailed overview of all pretest results for this manipulation is available in Table 5 and Table 6.

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Table 5 Descriptive statistics - manipulation pretest CSR type

Product-related CSR Non-product related CSR

Measurement N Mean Std.

deviation N Mean deviation Std.

Product-cause match 20 6.15 0.875 21 5.76 0.944 Brand-cause match 20 5.60 1.667 21 5.52 0.951 Impact on quality 20 3.85 1.424 21 3.10 1.700 Level of social responsibility 20 5.80 1.056 21 5.43 1.469

Table 6 ANOVA - manipulation pretest CSR type

3.5. Measures and reliability analysis

All main variables were measured using a seven point Likert scale. Wherever possible, scales introduced in previous studies were adapted in order to ensure construct validity. All of the measures were modified in order to fit the purpose of this study.

Attitude towards the brand. In order to measure attitude towards the brand, a measure scale

introduced by Spears and Singh (2004) was used. Due to the large number of items in the original scale, for the purpose of this study a seven item scale was adapted. This was done for two reasons. Firstly, if all items of the initial measure were to be included in the survey, the total number of questions would have increased by 24, hence, there was a chance for encountering low response rate and a lot of unfinished surveys. Secondly, not all items could be easily applied or answered by just relying on the brand descriptions composed for the purpose of this study. In the end, the scale included the following seven items – appealing -

ANOVA Measurement Levene's Sig. value* F Sig Product-cause match .574 1.860 .180 Brand-cause match .089 .217 .644 Impact on quality .256 2.362 .132

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34 unappealing, good - bad, pleasant - unpleasant, favorable - unfavorable, likeable - unlikeable, enjoyable - unenjoyable, and desirable - undesirable (e.g. Please indicate your overall feelings toward Avola based on the information you have just read. As a brand, I feel that Avola is…).

Table 7 Attitude towards the brand (Spears & Singh, 2004)

Consumer attitude towards the brand

Appealing – Unappealing Pleasant – Unpleasant Favorable – Unfavorable Likeable – Unlikeable Enjoyable – Unenjoyable Desirable – Undesirable

As mentioned previously, in order to eliminate any biases consumers might have towards known brands as well as to avoid the difference in perceptions between a well-known luxury brand and a well-know mass market brand, a fictitious brand was used for the purpose of this study. The name of the brand was identical for both – mass market and luxury conditions. Since the measurement scale was modified for the purpose of fitting this study, a reliability analysis was performed. Cronbach’s Alpha is 0.962 which is above the threshold of 0.7 for reliability of the scale. Additional analysis was run in order to determine whether the deletion of any item within the scale would lead to an increase in the reliability. This was not the case, hence, the scale remains a seven-item one.

Table 8 Cronbach's Alpha coefficient for multiple-item scale (Attitude towards the brand)

Cronbach's Alpha if item deleted Appealing - Unappealing 0.954 Good - Bad 0.958 Pleasant - Unpleasant 0.955 Favorable - Unfavorable 0.955 Likeable - Unlikeable 0.955 Enjoyable - Unenjoyable 0.955 Desirable - Undesirable 0.959

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Attitude towards the product. The scale used to measure attitude towards the product is

partially based on a scale introduced by Bezjian-Avery et al. (1998). As this is not the main independent variable of interest for this research, the scale consisted of three items only – like Avola’s clothing/dislike Avola’s clothing, have a positive feeling toward Avola’s clothing/have a negative feeling toward Avola’s clothing, and owning Avola’s clothing will be perceived favorably/owning Avola’s clothing will be perceived negatively. (e.g. Please indicate the extent to which you agree or disagree with the following statements about Avola’s clothing.)

Table 9 Attitude towards the product (Bezjian-Avery et al., 1998)

Consumer attitude towards the product

Like Avola’s clothing – Dislike Avola’s clothing Have a positive feeling towards Avola’s clothing – Have a negative feeling towards Avola’s clothing Owning Avola’s clothing will be perceived favorably – Owning Avola’s clothing will be perceived

negatively

A reliability analysis of the scale was performed in order to assess whether the scale measures what it is supposed to measure. Cronbach’s Alpha is 0.857. Further analysis revealed that the scale’s reliability will not be improved even if one of the items is deleted.

Table 10 Cronbach's Alpha coefficient for multiple-item scale (Att. towards the product)

Cronbach's Alpha if Item deleted

I like Avola’s clothing. 0.814

I have a positive feeling toward Avola’s clothing. 0.742 I believe that owning clothing produced by Avola will be

perceived favorably by the others.

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36

Purchase intent. The scale used to measure purchase intent has been adapted from Spears and

Singh (2004). Since this is an additional independent variable included next to the main independent variable “attitude towards the brand”, the scale was reduced from eleven items in total to only three included in this survey. The following items were selected, including one of them being a reversed measure – definitely buy/definitely do not buy, very low purchase intent/very high purchase intent, and likely to purchase/unlikely to purchase. The reversed-scale item was transformed.

Table 11 Purchase intent (Spears and Singh, 2004)

Purchase intent

Definitely buy – Definitely do not buy

Very low purchase intent – Very high purchase intent Likely to purchase – Unlikely to purchase

Following, a reliability analysis was run in order to assess the validity of the scale. Cronbach’s Alpha is 0.838; therefore, it can be concluded that the scale measures what it purports to measure. Additional analysis revealed that the reliability cannot be increased even when items are deleted.

Table 12 Cronbach's Alpha coefficient for multiple-item scale (Purchase intent)

Cronbach's Alpha if Item deleted

I’m likely to purchase Avola’s clothing. 0.716

Based on what I already know about Avola and its products, I would definitely consider buying Avola's clothing in future.

0.775 I have very low purchase intent towards Avola’s clothing. 0.837

CSR-CA beliefs. CSR-CA beliefs were measured after attitude towards the brand, attitude

towards the product, and purchase intent. This construct was measured only in the two CSR conditions. The scale was adapted from Sen and Bhattacharya (2001) and consisted of nine items, presented in Table 13.

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Table 13 Perceived quality trade-off (Sen & Bhattacharya, 2001)

CSR-CA beliefs

1) Socially responsible behavior detracts from Avola’s ability to provide the best possible product.

2) Socially responsible behavior is a drain on Avola’s resources.

3) Socially responsible behavior by Avola is possibly a cover-up for inferior product offerings.

4) Avola produces worse products than do firms that do not worry about social responsibility.

5) All else equal, Avola is likely to have lower technological expertise than a firm that is not socially responsible.

6) Since Avola devotes resources towards socially responsible actions, the firm has fewer resources available for increasing employee effectiveness.

7) Avola can be both socially responsible and manufacture products of high value. 8) Avola engages in socially responsible behaviors to compensate for inferior product

offerings.

9) Avola’s resources devoted to social responsibility come at the expense of improved product offerings.

Eight out of the nine items within this scale are reversed statements. Therefore, before proceeding with any further analysis, the items were recoded. A higher value for CSR-CA beliefs stands for a lower perception for quality trade-off. Following, reliability tests were performed. Cronbach’s Alpha is 0.894. Additional checks revealed that reliability cannot be increased any further.

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