Will brands survive the age of transparency? : a research to the effects of transparency on the customer-based equity of brands

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Will brands survive the age of transparency?

A research to the effects of transparency on the customer-based equity of brands

Nicole Waaijer - 10002289 University of Amsterdam

Master thesis

MSc. in Business Administration - Marketing track Supervisor: J. Demmers MSc.

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Statement of Originality

This document is written by Student Nicole Waaijer 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

Nowadays, brands have to deal with an increased demand for transparency by consumers. Due to Internet and social media, brands are more under scrutiny than before and as a result, brands feel more pressure than ever to communicate transparent information. Research to the effects of brand transparency suggest that brands may experience positive outcomes when communicating transparent brand information. However, current literature does not provide a clear view about the extent to which a brand’s transparency is able to influence the overall customer-based equity of a brand. Furthermore, knowledge is lacking about the extent to which the possible positive effects of transparency will continue to exist when more brands in a certain market start to communicate transparent information. The research question: ‘To what extent do brand transparency and market transparency affect a brand’s customer-based equity?’ is answered to close this current research gap. The results of the experiment (N = 167) show that none of the brands used in the experiment were able to directly increase their brand equity by communicating transparent information. Moreover, no significant effects were found on a brand’s equity when the majority of brands communicated transparent information in its market. These results imply that a well-known fast moving consumer goods-brand, which entails a relatively low risk for consumers when buying the brand, may not necessarily improve its brand equity when using a transparent marketing strategy.

Furthermore, this type of brand may also not be influenced by the level of transparency in its market. However, more research needs to be initiated to further clarify the effects of

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1| Introduction

Due to disappointing sales figures, Domino’s Pizza launched the ‘Oh Yes We Did’ campaign at the end of 2009 (Aaron Allen & Associates, n.d.; Brownel, 2013; Klaasen, 2010). In this campaign, Domino’s Pizza acknowledged that the quality of their pizzas fell short and

communicated that they had improved their pizza recipe based on received consumer reviews (Brownel, 2013; Vaughan, 2009). More than a year later, Domino’s broadcasted consumer evaluations (whether positive, neutral or negative) of their new improved pizza live on billboard-advertisements at Times Square in New York to support their ‘Oh Yes We Did’ campaign (Bailey, 2011). Results of the total campaign were positive: Domino’s had record breaking sales and consumers reacted positively on the campaign (Aaron Allen & Associates, n.d.; Malykhina, 2010). While most brands only highlight the positive aspects of their

products in marketing messages (Eisend, 2006), Domino’s Pizza was able to increase sales by communicating transparent brand information that ranged from negative to positive (Aaron Allen & Associates, n.d.; Bailey, 2011).

Domino’s campaign fits in the current trend of transparency, the so-called ‘age of transparency’ (Fournier & Avery, 2011). This age of transparency has emerged, because Internet and social media have made it easier for consumers to access (negative) brand information and to share and compare brand information (Fournier & Avery, 2011; Kohli, Suri & Kapoor, 2015; Pitt, Berthon, Watson & Zinkhan, 2002; Yoo & Jeong, 2014). As a result, brands are more than ever under consumers’ scrutiny and the chance that brands’ misrepresentations will be discovered by consumers has increased (Fournier & Avery, 2011; Yoo & Jeong, 2014). Therefore, brands may feel more pressure to be transparent about their characteristics and quality. In sum, the importance of transparency for brands seems to be growing.

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5 (e.g. Degeratu, Rangaswamy & Wu, 2000; Sinha, 2000), most research to the effects of transparency suggests that transparency will positively influence consumers as transparency can increase consumers’ trust in a brand and can increase perceptions of a brand’s credibility (e.g. Eisend, 2006; Liu, 2013). Thus, a brand that tries to differentiate itself from other brands by using transparency - as Domino’s Pizza did - may evoke more positive consumer

evaluations than its non-transparent competitors will. However, current literature does not provide a clear view about the extent to which a brand’s transparency is able to influence consumers’ overall brand equity. In this research, the effects of brand transparency on customer-based brand equity - the effect a specific brand will have on a consumer as a response to the marketing activities of that brand (Keller, 1993) - will be investigated to reduce this current research gap.

Furthermore, knowledge is lacking about the extent to which the possible positive effects of transparency will continue to exist when more brands in a certain market start to use a transparent marketing strategy. Consumers have a tendency to rely on brands to reduce uncertainty around a purchase decision, since brands serve as an indicator of their products’ attributes and quality (Erdem & Swait, 1998; Fischer, Völckner & Sattler, 2010; Rao, Qu & Ruekert, 1999). When more brands in a market start to communicate transparent information, consumers may be better able to assess the quality of products in that market (e.g. Granados, Gupta & Kauffman, 2006), and as a consequence consumers may experience a relatively low amount of uncertainty. Hence, in a highly transparent market consumers may rely less on brands to reduce their uncertainty. This research will examine the effects of market transparency on consumers’ brand equity to test whether brands become less important in highly transparent markets. The following research question will be answered to explain the effects of brand- and market transparency on consumers’ brand equity: To what extent do brand transparency and market transparency affect a brand’s customer-based equity?

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6 Current knowledge about the effects of transparency on customer-based brand equity is scarce. Because of its influence on a brand’s overall performance (Baldauf, Cravens & Binder, 2003), brand equity is an important concept in the marketing literature. Therefore, this research attempts to provide insights into the influence of transparency on this

concept. Furthermore, scientific research to the effects of market transparency on brands’ customer-based equity is in its early stages, meaning that this thesis will complement the already existing academic literature on the topic of transparency.

Because consumers demand more transparency from brands (Cohn & Wolfe, 2013; Yoo & Jeong, 2014) the importance of transparency is growing. However, in order to make strategic decisions about brand transparency, marketers should have more insights into the effects of transparency. This research shows marketers whether it is beneficial to

communicate transparent information and whether the degree of market transparency is able to influence their brand’s equity, which makes this research practically relevant.

In the remainder of this thesis, the relevant literature on the topic of transparency is outlined. Next to that, the research design and measurement methods are presented in the method section, which is followed by the results section. This thesis is concluded with a conclusion and a discussion section.

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2| Theoretical framework

In the theoretical framework of this thesis, the most important concepts of this thesis are defined. Using existing literature as a basis, the relation between the different concepts are identified and described.

2.1 Transparency & consumers

Research by Cohn & Wolfe (2013) suggests that the majority of British consumers (66 percent) indicate that transparency is an important factor to consider before purchasing an organization’s products. Results of Cohn & Wolfe’s (2014) latest research show that the value of being transparent and open as an organization has become even more important in 2014. The results of that study indicate that a large majority of consumers (91 percent) state that being transparent about services and products is the most important behaviour an organization could perform (Cohn & Wolfe, 2014). Being open is considered more crucial than the appeal or popularity of a brand. In sum, consumers seem to highly value and increasingly demand transparency (Cohn & Wolfe, 2013; Cohn & Wolfe, 2014; Yoo & Jeong, 2014).

This increased demand for transparency among consumers emerged because new media, such as the Internet and social media have created a situation in which it is easier for consumers to access (negative) brand information and to compare information about brands (Fournier & Avery, 2011; Kohli et al., 2015; Pitt et al., 2002; Yoo & Jeong, 2014). Because of these new media, companies are more under scrutiny than before, which increases the chance that brands’ false advertisements claims and misrepresentations will be discovered by consumers (Fournier & Avery, 2011; Yoo & Jeong, 2014). Concluding, the importance of brand transparency is increasing. To identify and explain the effects of transparency, the concept is first defined.

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8 2.2 Defining brand transparency

Schnackenberg and Tomlinson (2014) state that information can be considered as transparent, if it at least contains the three factors: disclosure, clarity and accuracy. First, disclosure is the extent to which all relevant information is shared with consumers. So, in order to be seen as transparent, information should be openly disclosed by organizations (Schnackenberg & Tomlinson, 2014). Furthermore, only information that is perceived as relevant can be categorized as transparent information. Tapscott and Ticoll (2003) also suggest that information is only transparent if the communicated information is relevant for a specific target group. Different target groups have different information needs, and the transparency perceived by a specific target group depends on the relevance of the communicated

information for that target group (Tapscott & Ticoll, 2003). The second factor distinguished by Schnackenberg and Tomlinson (2014) is clarity. This factor entails that organizations need to provide consumers with information that is clear and comprehensible for them, in order to be perceived as transparent. According to Schnackenberg and Tomlinson (2014) the last factor of transparency is accuracy, which means that information is only transparent, if the information is correct and reliable.

Tapscott and Ticoll (2003) define transparency as ‘‘the accessibility of information to stakeholders of institutions, regarding matters that affect their interests’’ (p. 22). To further define the concept of transparency, these authors make a distinction between active and forced transparency. When an organization is transparent in an active way (as opposed to a more forced, passive form of transparency), they intentionally provide their stakeholders with information (Tapscott & Ticoll, 2003). In this research, the focus is on transparent

information actively transmitted by brands to their customers, because this research hopes to provide insights into the consequences of using transparent information in marketing

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9 Schnackenberg and Tomlinson (2014), and Tapscott and Ticoll (2003) brand transparency will be defined in this research as: ‘the active disclosure of relevant, comprehensible and accurate information by brands to their consumers’.

2.3 Customer-based brand equity

This research will explore the effects of transparency. More specifically, the effects of brand transparency and market transparency on customer-based brand equity will be investigated. Customer-based brand equity is defined by Keller (1993) as: ‘‘the differential effect of brand knowledge on consumer response to the marketing of the brand’’ (p. 2). Thus, customer-based brand equity is the effect a specific brand has on a consumer as a response to the marketing activities of that brand (Keller, 1993). As Keller’s definition suggests, brand knowledge is related to the concept of customer-based brand equity. According to Keller (1993) consumers’ brand knowledge can influence how consumers perceive a brand. Brand awareness and brand image are the two determinants of a consumer’s brand knowledge. Brand awareness is the degree to which a consumer is able to identify a brand (Rossiter & Percy, 1987, in: Keller, 1993, p. 3) and is determined by the ease in which a consumer is able to recognize or recall the brand when given a specific cue about the brand (Keller, 1993). A consumer’s brand image stands for the meaning consumers attach to a brand based on his or her associations with the brand. Hence, according to Keller (1993) a consumer experiences a positive customer-based brand equity towards a brand, when this person has a high brand awareness and when this person attaches more favourable thoughts and associations towards this specific brand compared to other brands.

However, based on other research, concepts as the perceived brand quality and a customer’s loyalty towards a brand may also be predictors of a consumer’s brand equity (Aaker, 1991, 1996, in: Kim, Gon Kim & An, 2003, p. 337). Perceived brand quality is the subjective assessment of a brand’s quality as perceived by consumers (Yoo & Donthu, 2001).

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10 When one is loyal to a particular brand, this person tends to buy the products of that brand as a first choice (Oliver, 1999). Therefore, in this study, the following four concepts will be used to explain and predict customers’ brand equity: consumers’ loyalty towards a brand,

consumers’ idea about the quality of the brand, consumers’ brand awareness and brand associations (Aaker, 1991, 1996, in: Yoo & Donthu, 2001, p. 3; Keller, 1993, in Yoo & Donthu, 2001, p. 3).

When a brand is perceived as a high equity brand, this brand is likely to have a competitive advantage over its low brand equity competitors (Pappu, Quester & Cooksey, 2005), because the brand is for instance able to ask a price premium from its customers (Bendixen, Bukasa & Abratt, 2004). Hence, a high brand equity can lead to several financial benefits, such as a higher profitability and a more favourable market performance (Baldauf et al., 2003).

2.4 The effects of brand transparency

Research to the possible effects of brand transparency can already be found in the academic literature decades ago. Johnson and Levin (1985), for instance, discovered that consumers were less positive about a specific product when relevant information about that product was not available. However, so far, there is little research present that specifically tests the effects of a brand’s transparency on its customer-based brand equity. In order to investigate and explain the effects of brand transparency on consumers’ brand equity, the effects of brand transparency will first be explored in a broader sense. To do so, literature from several research disciplines will be used. In the following section of this theoretical framework, the positive effects of brand transparency are first discussed. Subsequently, the possible negative effects of brand transparency will be outlined.

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11 2.4.1 The positive effects of brand transparency

One of the dependent variables that is related to transparency in previous research is consumers’ trust (Liu, 2013). By means of an experiment, Auger (2014) shows that a

transparent organizational reputation may increase trust among respondents, which is further enforced when organizations communicate in a transparent way. Liu (2013) specifically examined the effects of brand transparency and suggests that consumers who perceive a brand as transparent, are more likely to trust this brand. A possible explanation for the beneficial effects of transparency on consumers’ trust in brands is provided by Granados, Gupta and Kauffman (2010). These authors state that when relevant information about a product is missing, suspicion among consumers will increase. Based on this argumentation, it is likely that in a situation where relevant information is provided by a brand, consumers’ suspiciousness is minimized, which may lead to more trust in the brand. Research by

Delgado-Ballester and Munuera-Alemán (2005) indicates that consumers’ trust is positively related to consumers’ loyalty towards a brand, which is one of the dimensions of customer-based brand equity (Yoo & Donthu, 2001). Therefore, customer-based on research by Auger (2014), Liu (2013) and Delgado-Ballester and Munuera-Alemán (2005) it seems possible that transparency can positively influence consumers’ brand equity as well.

Another important variable in the literature concerning the effects of transparency is brand credibility. Due to the fact that a brand’s credibility is positively related to consumers’ brand equity (Spry, Pappu & Cornwell, 2011), studies that relate a brand’s transparency with its credibility can be relevant to partly explain and predict the effects of transparency on customer-based brand equity. Based on previous research, communicating transparent information may increase a brand’s credibility (Arpan & Roskos-Ewoldsen, 2005; Eisend, 2006). Arpan and Roskos-Ewoldsen (2005) examined the impact of transparency in organizational crisis situations. These authors studied the effects of organizations that

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12 actively disclose unfavourable information about themselves in crisis situations, a concept also known as stealing thunder. The use of stealing thunder seems to have positive effects on an organization after a crisis (Arpan & Roskos-Ewoldsen, 2005). Organizations that used a stealing thunder strategy were seen as more credible than organizations that did not provide any information about themselves (Arpan & Roskos-Ewoldsen, 2005). However,

transparency is not necessarily limited to the disclosure of negative information (Heise, 1985, in: Rawlins, 2008, p. 74), meaning that brand transparency can also occur when neutral or positive information is communicated. Therefore, previous research by Arpan and Roskos-Ewoldsen (2005) has a limited ability to explain the effects of brand transparency.

Research by Eisend (2006) relates the concept two-sided advertisements to

consumers’ perceptions regarding the credibility of the source of these advertisements. Two-sided messages are advertisements in which favourable and unfavourable information about a product is disclosed at the same time (Yoo & Jeong, 2014). Since marketers are

communicating both positive and negative information in two-sided messages, consumers perceive marketers’ persuasive intent lower in two-sided messages than in one-sided

advertisements. The Persuasion Knowledge Model proposes that consumers have knowledge about persuasion methods and will use this information when evaluating marketing messages (Friestad & Wright, 1994, in: Yoo & Jeong, 2014, p. 11; Yoo & Jeong, 2014). Therefore, consumers will recognize when marketers try to persuade them (Yoo & Jeong, 2014). When consumers see information and feel that information is communicated to manipulate them, consumers will try to protect themselves from this information. However, when consumers are exposed to two-sided messages, they are less likely to judge the message as persuasive, because they have the feeling that marketers are honest and truthful. As a consequence, these types of advertisements are perceived as more transparent than one-sided advertisements that only present positive aspects of a product (Yoo & Jeong, 2014). For this reason, research to

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13 the effects of two-sided messages is related to research to transparent advertisements and the effects of two-sided messages may also apply to transparent messages. Results of Eisend’s study suggest that two-sided messages are able to improve consumers’ perceptions of the credibility of the advertising brand (Eisend, 2006). Furthermore, two-sided messages appear to be more effective than advertisements in which only positive arguments are presented. Surprisingly, the results of research by Yoo and Jeong (2014) show that two-sided advertisements were able to only positively influence one of four, by the authors predefined dimensions of transparency. These authors suggests that brand transparency occurs when four requirements are met: brands should (1) provide information, (2) they should be open, (3) be accountable and (4) have a participatory attitude (Yoo & Jeong, 2014). These authors’ research shows that respondents who observed two-sided messages only had a higher perception of the level of accountability of a brand, and thus did not perceive the brand as more open, more informative and more participatory. This means that although two-sided messages can positively influence the perception of a brand’s transparency by making marketers’ persuasive intent less obvious, the usage of two-sided messages only slightly increases the perception of transparency among consumers (Yoo & Jeong, 2014).

Concluding, although two-sided messages and transparent messages are somewhat distinct concepts, two-sided messages are perceived as slightly more transparent than one-sided marketing messages (Yoo & Jeong, 2014), and therefore the positive effects of two-sided messages (i.e. a higher perceived credibility) may also be partially applicable to transparent advertising messages (Eisend, 2006).

Besides the positive effects of two-sided messages on consumers’ credibility perceptions, Eisend (2006) suggests that advertisements in which both favourable and unfavourable information is communicated have a positive effect on consumers’ purchase intention. Research by Arpan and Roskos-Ewoldsen (2005) also indicates that being

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14 transparent can lead to a higher intention among consumers to purchase the organization’s products. Due to the organization’s stealing thunder strategy, consumers evaluated an organizational crisis as less harmful and were therefore more likely to buy the products of that organization in the future. In line with research by Eisend (2006) and Arpan and Roskos-Ewoldsen (2005), Liu (2013) found that consumers were more likely to pay a price premium for a brand when this brand was perceived as transparent. When a brand actively

communicates transparent information, less effort is needed from consumers to obtain information about the brand, which will decrease consumers’ information costs (Liu, 2013). Because of their decreased information costs, consumers are prepared to pay more for the products of a transparent brand. Consumers’ willingness to pay a price premium for a product is an indicator for their loyalty towards a brand (Aaker, 1996), which is in turn one of the predictors of a consumer’s brand equity (Yoo & Donthu, 2001). Moreover, a high purchase intention may be a requirement for loyalty, since loyalty implies that consumers have a tendency to buy the products of a brand as a first choice (Oliver, 1999). Therefore, research to the effects of transparency on purchase intention and the willingness to pay a price premium is also related to this research, which tries to clarify the effects of transparency on customer-based brand equity.

2.4.2 The negative effects of brand transparency

Although Eisend (2006) argues that two-sided advertisements are more effective than advertisements that only present positive aspects of a product, the usage of two-sided messages does not solely have positive effects on brands. When a brand highlights both its positive and negative aspects, consumers tend to appreciate this advertisement less (Eisend, 2006). In this section of this theoretical framework the possible negative effects of brand transparency are further outlined. Sinha (2000) suggests that cost transparency - the extent to

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15 which consumers have knowledge about the costs of a seller - can lead to less loyal and more mistrustful consumers. When cost transparency increases, consumers are better able to

predict the costs an organization makes to produce their products. In case consumers have the feeling the price a brand asks is unfair compared to its costs, consumers’ distrust will increase (Sinha, 2000). Since distrust among consumers is able to weaken a brand’s customer-based equity (Lassar, Mittal & Sharma, 1995), price transparency may have a negative impact on customers’ brand equity.

Degeratu et al. (2000) also provide evidence for the negative effects of transparency. These authors claim that when there is more information available about the product of a brand, consumers evaluate the brand name of that product as less important. Since brand equity can also be defined as the value consumers attach to a brand (Kamakura & Russel, 1993) or the added value of a brand as a result of a brand’s name (Aaker, 1991, in: Cobb-Walgren, Ruble & Donthu, 1995, p. 26), it is likely that when the importance of a brand (name) as perceived by consumers is decreasing, the brand’s customer-based equity will decline as well.

When comparing the current literature regarding the positive and negative effects of transparency, one can conclude that most research indicates that transparency has a positive impact on brands. Moreover, due to the fact that the latter two studies did not examine the effects of transparency as a result of brands’ marketing efforts, but merely regarded transparency as the availability of information, these studies may be less valuable when predicting the effects of brand transparency, since brand transparency in this research implies that information is actively disclosed by brands. As most research that indicates that

transparency has a positive effect on consumers regarded transparency as a result of a brand’s or an organization’s communications efforts (e.g. Auger, 2014; Eisend, 2006; Liu, 2013), the evidence that brand transparency will positively influence brands seems most convincing.

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16 Therefore, in this research it is expected that, as a brand increases its transparency, its

customer-based brand equity will increase as well. Hypothesis 1 reflects this line of reasoning:

H1: Brand transparency positively influences a brand’s customer-based equity.

2.5 The moderating role of the source of transparent information

To further test the effects of brand transparency, one must compare the effects of

transparency actively communicated by a brand with a situation in which similar transparent information is communicated by another source. This way, one can make sure that that the observed effects of brand transparency are indeed caused by the disclosure of transparent information by the brand, and not merely caused by the availability of transparent

information in itself. Therefore, a control variable, source of transparent information, will be incorporated in this research to compare the effects of transparent information communicated by a brand with information communicated by an external source.

Previous research indicates that the source of transparent information influences the effects of transparency (Demmers, Erbé, Van Strijp, & Wientjes, 2015). When a brand actively communicates transparent negative information about a product, consumers’ willingness to pay for that product is higher than when another source reveals similar

transparent information about the brand’s product. These positive effects of actively releasing unfavourable information occur, because consumers evaluate information released by a brand as more favourable and more relevant than when another source provides similar information (Demmers et al., 2015). Research by Arpan and Roskos-Ewoldsen (2005) also supports the theory that organizations will benefit if they actively provide transparent information about unfavourable issues concerning their organization. When a company discloses unfavourable information about themselves in an active manner, the company will be seen as more credible

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17 (Arpan & Roskos-Ewoldsen, 2005). However, as was mentioned before, transparency is not limited to the disclosure of negative information (Heise, 1985, in: Rawlins, 2008, p. 74). To test the effects of social responsible messages in the apparel industry, Bhaduri and Ha-Brookshire (2015) adopted a broader view of transparency by not only limiting transparency to the disclosure of negative information. These authors examined the effects of socially responsible messages on consumers’ attitude towards several apparel brands and tested the influence of the source of these messages. Overall, these authors did not found support for their hypothesis that consumers would react differently to social responsible message when communicated by either a brand or a third party (Bhaduri & Ha-Brookshire, 2015). However, Bhaduri and Ha-Brookshire (2015) did find an interaction effect between transparency and the source of information, in such a way that consumers were most likely to positively change their attitude towards an apparel brand when the brand, instead of a third party,

communicated a highly transparent social responsible message. Based on previous research about the effects of the source of transparent information, the following hypothesis is formulated regarding the moderating role of the source of transparent information in the relation between a brand’s transparency and its customer-based brand equity:

H2: A brand that actively discloses transparent information will have a more favourable customer-based brand equity than when similar transparent information is disclosed about the brand by an external source.

2.6 The effects of the degree of market transparency

Nowadays, consumers are demanding more and more transparency from brands (Cohn & Wolfe, 2013; Yoo & Jeong, 2014). Therefore, it’s likely that more brands will start to

communicate in a transparent manner and it is possible that transparency will turn into a point of parity rather than a point of difference in several markets. When transparency becomes a point of parity, communicating in a transparent manner is seen as the minimum requirement

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18 for organizations to be perceived as a legitimate player in a market (Keller, Sternthal & Tybout, 2002). In this section of the theoretical framework the effects of the overall transparency in a market on a brand’s customer-based equity will be examined. Granados et al. (2006) describe market transparency as ‘’the availability and accessibility of market information’’ (p. 154). Since this research focuses on transparent information actively provided by brands, market transparency is defined as ‘the total amount of market information that is available and accessible to consumers as a result of brands’ marketing communication efforts’. Market information may vary from information about prices, information about products or information about suppliers (Granados, Gupta &

Kauffman, 2005). Due to the fact that it is easier to assess the quality and value of products in a transparent market, consumers usually value transparent markets over non-transparent markets (Granados et al., 2006).

However, based on the signalling theory (Nelson, 1970, in: Liu, 2013, p. 78), it is expected that the increased amount of transparency in markets may negatively impact brands in those markets. According to the signalling theory, a brand can act as an important signal that communicates information to consumers (Erdem & Swait, 1998; Swait, Erdem, Louviere & Dubelaar, 1993). Moreover, a brand can act as an indicator for its products’ attributes and quality (Erdem & Swait, 1998; Fischer et al., 2010; Rao et al., 1999). A brand is therefore able to decrease the perception of risk for consumers when considering buying a product (Fischer et al., 2010; Swait et al., 1993). However, it is likely that the signalling function of brands is different in markets varying in their degree of transparency.

In low-transparent markets, most brands do not provide transparent information, meaning that there is only limited amount of product information available to consumers. Therefore these types of markets are characterized by an uneven, asymmetrical information distribution (e.g. Erdem, Swait & Louviere, 2002). According to the signalling theory, the

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19 signalling function of brands is especially important for consumers in markets with an

asymmetrical information distribution (Erdem & Swait, 1998; Wernerfelt, 1988, in: Swait & Erdem, 2007, p. 681). When crucial information about products is not disclosed, consumers are likely to experience high uncertainty surrounding a product and may use a brand as a signal in order to reduce risk (Swait et al., 1993; Erdem & Swait, 1998; Fischer et al., 2010; Wernerfelt, 1988, in: Swait & Erdem, 2007, p. 681). As a consequence, brands will have a major impact on the consumer-decision making process in low-transparent markets and consumers will highly value brands. Therefore, brands’ importance will be high and brands in these types of markets are likely to have a favourable customer-based brand equity.

However, when more transparent information is available in a market about brands and their products - as is the case in highly transparent markets - brands’ importance may decrease. In highly transparent markets, the majority of brands provide their consumers with transparent information. As a consequence, sufficient transparent information about the quality of the products in that market is available to consumers. Based on the argument that consumers will experience uncertainty when they do not know what quality to expect from a product (Erdem & Swait, 1998; Erdem et al., 2002) in a situation in which sufficient

information is available, consumers are less likely to experience uncertainty about their purchase. Consumers therefore do not necessarily need to use a brand as a signal to make their purchase less risky, because consumers more or less know what they can expect from the products. As a consequence, brands in a highly transparent market will become less important as consumers are likely to attach less value to brands. Brands therefore may be negatively impacted by a high market transparency, meaning that the brand equity of brands in those types of markets will decrease.

Research by Cohn & Wolfe (2013) provides support for the idea that brands become less valuable in the eyes of consumers in the ‘age of transparency’. As mentioned before,

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20 Cohn & Wolfe (2013) state that the majority of British consumers regarded the degree of transparency of organizations as an important factor in their buying process. In comparison, the importance of brand status is decreasing. In 2012, 43 percent of the UK consumers stated that brand’s status is an important factor to consider when buying products, while in 2013, only 27 percent of the British consumers indicated that brand status is important in their decision making process (Cohn & Wolfe, 2013).

Moreover, research by Ward and Lee (2000) provides support for the idea that the more information about products in a market available, the less brands are valued by

consumers. These authors found that consumers who had more Internet experience depended less on brands than consumer with less Internet experience. Because consumers with a relatively high amount of Internet experience were able to easily find relevant information about products online and were able to obtain all necessary information about products, these consumers did not need brands as a signal for the product’s quality as much as

low-experienced Internet users did (Ward & Lee, 2000). Research by Sinha (2000) also suggests that more transparency can lead to a lower brand importance. Consumers tend to choose a well-known brand, when product information is not available (Sinha, 2000). However, growing transparency in a market increases consumers’ ability to compare products’

characteristics and quality, which leads to better informed consumers. Based on research by Sinha (2000) the expected implication of high market transparency is that consumers will focus more on the quality and features of products and do not longer choose well-known brands only to reduce risk, meaning that brands will become less important in highly transparent markets.

Although research by Ward and Lee (2000) and Sinha (2000) merely focuses on the total amount of available information in a market, recent research by Van der Land (2015) examined the impact of market transparency as a result of brands’ communication efforts.

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21 Results of this research indicate that consumers, under certain conditions, attach less value to brands in highly transparent markets (Van der Land, 2015). However, that research used a brand’s utility as a dependent variable to explain the effects of highly transparent markets. In this research, the effects of the market transparency on the overall brand equity as perceived by consumers will be assessed. Since, brand equity is an important concept in the marketing literature, it is essential to identify the effects of the degree of market transparency on this concept. Based on the signalling theory and research by Cohn & Wolfe (2013), Ward and Lee (2000), Sinha (2000) and Van der Land (2015) it is expected that brands will become less important in highly transparent markets and therefore, their customer-based brand equity is likely to be negatively impacted by the high amount of transparency in the market.

H3: Market transparency negatively influences a brand’s customer-based equity.

2.7 The moderating role of the degree of market transparency

Besides the expected direct effects of brand- and market transparency on customer-based brand equity, it is possible that the effect of a brand’s transparency on consumers’ brand equity is influenced by the overall degree of transparency in its market. Based on research by Auger (2014), Liu (2013) and Eisend (2006), it is expected that brand transparency will increase consumers’ brand equity. However, due to the fact that consumers may rely more on brands in low-transparent markets than in highly transparent markets (e.g. Erdem et al., 2002), one may assume that the effects of a transparent brand will be stronger in markets which are characterized by a low degree of total transparency than in markets which are characterized by a high degree of total transparency.

Conversely, one can argue that a non-transparent brand will be evaluated less positive in a highly transparent market than in a market in which the majority of brands do not

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22 transparent market, consumers may compare the non-transparent brand with the transparent brands and may notice that for the non-transparent brand relevant information is missing. This will likely result in suspicion towards the non-transparent brand (Granados et al., 2010), which may lead to less favourable consumer evaluations for that brand. Due to the fact that the majority of brands in a low-transparent market will not communicate transparent

information, consumers are less likely to notice that information is missing for a specific non-transparent brand, meaning that this brand will not necessarily be regarded with more

suspicion than other brands in its market. Therefore, it is possible that a low-transparent brand will be evaluated less favourable in a highly transparent market than in a

low-transparent market. Concluding, the degree of market transparency could play a moderating role in the relation between brand transparency and consumers’ brand equity. This thesis will explore this interaction effect. Since this research is one of the first to identify this possible interaction effect, current literature about this subject is scarce. However, this research tries to identify this interaction effect in an explorative manner. Based on the signalling theory and research by Liu (2013) and Eisend (2006), the following hypothesis is developed:

H4: The relation between brand transparency and customer-based brand equity is moderated by the transparency in a market, in such a way that (1) the positive effects of a transparent brand are stronger in a low-transparent market than in a highly transparent market, and (2) the effects of a low-transparent brand are less unfavourable in a low-transparent market than in a highly transparent market.

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23 Figure 1 Conceptual model

Hypotheses

H1: Brand transparency positively influences a brand’s customer-based equity.

H2: A brand that actively discloses transparent information will have a more favourable customer-based brand equity than when similar transparent information is disclosed about the brand by an external source.

H3: Market transparency negatively influences a brand’s customer-based equity.

H4: The relation between brand transparency and customer-based brand equity is moderated by the transparency in a market, in such a way that (1) the positive effects of a transparent brand are stronger in a low-transparent market than in a highly transparent market, and (2) the effects of a low-transparent brand are less unfavourable in a low-transparent market than in a highly transparent market.

Degree of brand transparency Degree of market transparency Source of transparent information Customer-based brand equity

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24

3| Methodology

An online 3 (low versus high degree of brand transparency versus other source transparent information) x 2 (low versus high degree of market transparency) between subjects design - experiment was conducted to answer the research question. In this section, the precise method of the experiment is specified.

3.1 Stimuli

To test the effects of brand transparency, this thesis compared the advertisements of three orange juice brands: Appelsientje, CoolBest and Innocent. These three orange juice brands were chosen because they are widely sold in the Netherlands. Therefore, Dutch respondents were likely to be familiar with the products of these brands, which according to Yoo, Donthu and Lee (2000) would positively influence the reliability of the experiment. The

advertisements used in this experiment are based on actual advertisements of the three brands, but were adapted in publishing program Adobe InDesign to fit this experiment (Appendix A). The brand Appelsientje was selected as the focal brand and this brand was used to manipulate the first independent variable degree of brand transparency. The other two brands were used as a way to manipulate the second independent variable degree of market transparency.

The independent variable degree of brand transparency was manipulated into two categories. First, a situation, in which Appelsientje exhibits a low degree of transparency, was created. This means that respondents evaluated a regular Appelsientje print advertisement in which a relatively small amount of information was provided and in which only positive product claims were made. Second, a situation in which Appelsientje exhibits a high degree of transparency was created. In this treatment, the brand Appelsientje communicated more information and actively disclosed additional relevant information in its advertisement.

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25 Appelsientje for instance communicated that ‘its Appelsientje orange juice contains 6

oranges’. A pre-test was done to test several statements on their perceived degree of

transparency and neutrality to make sure that the communicated information is perceived as both transparent and neutral (see 3.1.1 for method and results of the pre-test). In this research the choice was made to specifically examine the effects of transparent information that was perceived as neutral by respondents, because this study attempts to provide insights into the effects of transparency, regardless of the tone of voice of these messages.

Only when transparent information communicated by a brand is compared to a situation in which similar transparent information is communicated by another source, one can draw conclusions about the actual effects of brand transparency. Therefore, the variable, source of transparent information, is used as a control variable to determine the effects of brand transparency. In this research, the moderating role of this variable was examined. The source of transparent information was manipulated into two categories. The first category of this variable is when a high degree of transparent information was communicated by the brand itself. In the second category of this variable, similar transparent information was communicated as in the high brand transparency-treatment, but now a consumer is the source of the information instead of the brand itself. By means of a consumer review, a consumer revealed transparent information about the brand.

The degree of market transparency is the second independent variable in this study and this variable comprises two categories: a low and a high degree of market transparency. In markets which are characterized by a low degree of market transparency, the non-focal brands CoolBest and Innocent only communicated the baseline amount of positive

information. This means that respondents evaluated advertisements of these brands, in which the positive aspects of the product were highlighted and in which a relatively small amount of information was given. In a highly transparent market CoolBest and Innocent both

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26 communicated transparent brand information. For instance, CoolBest communicated the amount of calories in its orange juice and Innocent communicated that its oranges are from Egypt. Again, the pre-test (see 3.1.1 for method and results of the pre-test) is used to make sure that the selected statements are perceived as transparent and as neutral.

3.1.1 Pre-test

Fifteen statements were tested on their perceived transparency and positivity using a within-subject pre-test (N=33). Respondents were first asked how positively or negatively they experienced the fifteen statements on a five point Likert scale that ranges from (1) negative to (5) positive. Subsequently, the respondents read a definition of the concept transparency and were asked to rate the statements on their perceived transparency on a five point Likert scale. By means of the pre-test, six statements were chosen that were perceived close to neutral and were at the same time perceived as highly transparent. Two statements were assigned to each of the three brands. Paired sample t-tests were used to test the difference between the total transparency and positivity scores of the three brands. With regard to the perceived positivity of the advertisements, Appelsientje did not significantly differ from CoolBest, t = -1.47, p = .152, and did not significantly differ from Innocent on its perceived level of positivity, t = -1.59, p = .122. The third paired sample t-test showed that CoolBest and Innocent also did not significantly differ from each other, t = 0.101, p = .920, meaning that all brands are perceived as equally positive. With regard to their perceived transparency, Appelsientje did not differ from CoolBest, t = 1.081, p = .288, and neither from Innocent, t = 1.574, p =.125. Moreover, CoolBest did not differ from Innocent, t = 0.171, p = .865. Concluding, the advertisements of the three brands are perceived as equally transparent by the respondents.

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27 Table 1

Pre-test scores

3.2 Measurements

After performing the pre-test the actual experiment could be carried out. The dependent variable in the experiment is customer-based brand equity. To measure the customer-based brand equity of the three orange juice brands, a scale developed by Yoo and Donthu (2001) is used. These authors developed a scale, which contains ten items to test the customer-based brand equity concept. Respondents were asked to fill in the customer-based brand equity scale for each of the three brands in this study. In the ten items, a respondent was asked to compare the orange juice brand in question to other brands in its product category. Since a brand equity score for a brand can only be calculated if a consumer compares that brand to other brands (Lassar et al., 1995), this scale can be used to measure the customer-based brand equity concept. Three of the ten items of the customer-based brand equity scale of Yoo and Donthu (2001) measure a consumer’s loyalty towards a specific brand. Two items of this scale measure a consumer’s opinion about the quality of the brand. The last five items capture a consumer’s brand awareness and identify whether consumers have unique brand

associations with a brand (Yoo & Donthu, 2001). Therefore, this scale represents the four main concepts that determine a consumer’s brand equity as is conceptualized by Aaker (1991, 1996, in: Yoo & Donthu, 2001, p. 3) and Keller (1993, in: Yoo & Donthu, 2001, p.3).

Brand Level of perceived positivity Level of perceived transparency

Appelsientje 6.03 8.12

CoolBest 6.55 7.81

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28 Examples of items of this scale are: ‘’brand X will be my first choice’’, ‘’I can recognize brand X among other competing brands’’ and ‘’ the likely quality of brand X is extremely high’’ (Yoo & Donthu, 2001, p. 14). All ten items of the scale are translated to Dutch and if necessary, adapted to fit this specific research and the specific product category (i.e. orange juice brands).

3.3 Procedure

The experiment contains six different treatments. The respondents were randomly divided to one of these six treatments.

Degree of market transparency

Low High De gr ee of brand tr an sp ar en cy

Low Treatment 1: Low – low Treatment 2: Low – high

High Treatment 3: High – low Treatment 4: High – high

Other source transparent information (consumer

review)

Treatment 5: Review – low Treatment 6: Review – high

Figure 2 Factorial design

In the first treatment (low brand transparency - low market transparency) respondents evaluated a non-transparent advertisement for each of the three brands. In the second

treatment (low brand transparency - high market transparency) respondents evaluated a non-transparent Appelsientje advertisement and two non-transparent CoolBest and Innocent

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29 low market transparency) respondents evaluated a transparent Appelsientje advertisement and non-transparent advertisements for the other two brands. In the fourth treatment (high brand transparency - high market transparency) respondents assessed three highly transparent advertisements. In the fifth treatment (consumer review - low market transparency) a non-transparent Appelsientje advertisement was combined with a non-transparent consumer review about this brand. In this treatment, CoolBest and Innocent displayed a low degree of

transparent information via its advertisements and this advertisement was not complemented with transparent consumer reviews. In the last condition, respondents saw three

non-transparent advertisements that were complemented by three non-transparent consumer reviews about the three brands.

Regardless the type of treatment, each respondent was asked to evaluate all three brands by filling in the customer-based brand equity scale. After evaluating the brands in the advertisements, respondents from the second to the sixth treatment were asked to answer one or more control questions. These control question (manipulation checks) were asked to test whether the respondents had read the advertisements and remembered the transparent information provided by the transparent brands. For every transparent advertisement a respondent had seen in his or her experimental treatment, one control question was asked. After these control questions, respondents were asked to answer a few general demographic questions about their age, gender, and educational level. Last, the respondents were asked whether they had ever consumed the orange juice brands used in the experiment.

3.4 Sample

In this research, a convenience sample is used (Bryman, 2008). The online experiment was distributed via several social media channels in the network of the researcher. In total, 291 respondents started the experiment and 250 of them completed the survey. In the data analysis only the respondents who answered the control question(s) in their experimental

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30 treatment correctly were included in the further statistical analysis. After cleaning out the respondents who did not answer the control question(s) correctly, 167 respondents remained. A minimum level of 25 respondents participated in each of the six experimental treatments to make the results of the experiment reliable. Out of the 167 respondents, 67.7 percent is female and 32.3 percent is male. The average age of the respondents is 25.69 (SD = 9.38). Most respondents (73.7 percent) highest or current level of education was university level. Just over 16 percent of the respondents followed or completed a HBO education, 3.6 percent of them completed or is currently enrolled in MBO education and 6.6 percent of the

respondents completed secondary school. Appelsientje was ever consumed by around 160 respondents, Innocent by 66 and CoolBest by 139.

3.5 Statistical analysis

The program SPSS is used to perform the statistical analyses to test the hypotheses. First, all respondents who answered the control questions in their experimental treatment incorrectly and respondents who had missing values were deleted from further analyses. One item of the customer-based brand equity scale was counter indicative and was therefore recoded. To create the actual customer-based brand equity scale, the internal reliability of the ten items for each of the three brands was tested. The scores on the items of each of the respondents from all six treatments were included in this analysis. First, the brand equity scale for Appelsientje was tested on its reliability. The Appelsientje brand equity scale proves to be a reliable scale with a Chronbach’s alpha of .76. This score could be improved with .03 by deleting the last item of the scale. Second, an internal reliability analysis was performed on the ten individual items of the CoolBest scale. This analysis shows that the CoolBest scale is reliable (α = .79). However, this scale could also slightly be improved with .02 by removing the last item. Last, the third reliability check for the brand Innocent shows that this scale is also reliable (α = .86). This scale could be improved as well (with .01) by deleting the last item. Because

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31 removal of the three last items of these three scales only leads to a very small reliability improvement and the scales were already reliable with all ten items, it was decided to retain all ten items in the customer-based brand equity scales. Overall, respondents assigned the highest brand equity score to the brand CoolBest (M = 3.40, SD = .60). Appelsientje (M = 3.29, SD =.56) and Innocent (M = 3.02, SD = .75) were evaluated slightly less positive. After constructing the customer-based brand equity scales, these scales were tested on their normal distribution. Subsequently, a correlation analysis was performed to identify whether the customer-based brand equity scales correlated with the other variables in this study. Last, multiple factorial ANOVA analyses (GLM) and one-way ANOVA analyses were used to test the hypotheses. In order to perform these analyses, variances on the dependent variable of the different groups should not significantly differ from each other (Starkweather, 2010). For each of the ANOVA analyses performed, a Levene’s test was executed to test this

assumption. None of the results of the Levene’s tests were significant, meaning that there were no significant differences between the groups and their variances on the dependent variables, meaning that all ANOVA analyses could be performed.

In hypothesis 1 and 3, the direct effects of brand transparency and market

transparency were tested. Brand and market transparency are defined in this research as the total amount of information about a brand or its market as a result of information actively provided by brands. Therefore, only respondents from treatment 1 to 4 were included to test the direct effect of brand and market transparency, since only these respondents evaluated information which was actively communicated by the brands. To make sure that the observed effects of brand transparency are indeed caused by the disclosure of transparent information by the brand, and not merely caused by the availability of transparent information in itself, the influence of the source of transparent information was tested (hypothesis 2). The effect of the control variable, source of transparent information, was tested by comparing the brand

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32 equity scores of respondents who evaluated transparent brand advertisements (in treatment 1 to 4) to respondents who evaluated transparent consumer reviews about the brand (treatment 5 and 6). The non-focal brands CoolBest and Innocent were used to manipulate the variable degree of market transparency. As a consequence, when CoolBest and Innocent communicate transparent information, the degree of market transparency is always high. Therefore, the direct effects of market transparency and the possible moderating role of this variable in the relation between brand transparency and consumers’ brand equity could only be calculated for the brand Appelsientje.

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4| Results

In this section, the results of the experiment are outlined. The brand equity scales were first tested on their normality. To test the normal distribution of these scales, the skewness and kurtosis scores were calculated for these variables (Table 2). The brand equity scale for Innocent was normally distributed. However, since the kurtosis scores for Appelsientje and CoolBest were above the 1.00 level, one could conclude that the brand equity scale for these two brands are leptokurtic, meaning that these scales are not normally distributed.However, because the sample size in this study is relatively large (N = 167), the absence of a normal distribution for these two variables is unlikely to influence further statistical analyses (Elliot, 2007, in: Ghasemi & Zahediasl, 2012, p. 486; Pallant, 2007, in: Ghasemi & Zahediasl, 2012, p. 486). Therefore, extreme values were not deleted.

Table 2

Normal distribution customer-based brand equity scales

Brand Skewness Kurtosis

Appelsientje -.17 (SD = .19) 1.41 (SD = .37)

CoolBest -.40 (SD = .19) 1.00 (SD = .37)

Innocent -.21 (SD = .19) -.10 (SD = .37)

4.1 Correlation analysis

A correlation analysis was done on all variables of this study to see whether and how they correlate (Appendix B). The results of the correlation analysis show several significant correlations between the presented variables. First, respondents’ gender and Innocent’s brand equity score appear to correlate significantly, r = .28, p < .001. This correlation suggests that women tend to evaluate Innocent more positively than men do. Second, there is a negative and significant relation between the age of respondents and their level of education.

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34 Respondents who are older tend to have a lower level of education, r = -.39, p < .001.

Furthermore, there is also a negative relation between respondents’ age and the brand equity score of both CoolBest and Innocent. Respondents who are older, evaluate CoolBest (r = -.21, p = .006) and Innocent (r = -.27, p < .001) less favourable. Next to that, there is a

significant correlation between the brand equity scores of Appelsientje and CoolBest, r = .23, p = .003. This means that respondents who evaluate Appelsientje more favourable also have the tendency to evaluate CoolBest more favourable, and vice versa. Last, the brand equity scores of CoolBest and Innocent correlated positively, r = 0.19, p = .015. This suggests that respondents who evaluate CoolBest more positively, also evaluate Innocent as more positive.

4.2 Direct effect of brand transparency on consumers’ brand equity

To test hypothesis 1, the direct effect of the degree of a brand’s transparency on consumers’ brand equity was examined for all three brands. The impact of brand transparency for the three orange juice brands was analyzed by comparing the situation in which these brands exhibited a low degree of transparency to a situation in which these brands exhibited a high degree of transparency via their advertisements.

First, the direct effect of brand transparency on Appelsientje’s brand equity was tested. As was expected, Appelsientje received a higher brand equity score from respondents who observed a transparent Appelsientje advertisement than from respondents who observed a non-transparent advertisement of the orange juice brand. However, differences between the mean scores of respondents in the transparent brand treatment (M = 3.30, SD = .52) and the non-transparent treatment (M = 3.24, SD = .60) are relatively small. A factorial ANOVA analysis was used to test whether the degree of brand transparency is able to significantly impact consumers’ brand equity. The direct effect of brand transparency on customer-based brand equity is not significant, F(3,110) = .15, p = .700. Thus, although Appelsientje is evaluated slightly more positive by respondents who observed a transparent Appelsientje

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35 advertisement than respondents who observed a non-transparent Appelsientje advertisement, no significant, direct effect of brand transparency on customer-based brand equity was found.

Second, the direct effect of brand transparency on CoolBest was tested. The brand CoolBest was also evaluated more favourably when the brand communicated transparent information (M = 3.47, SD = .62) than when transparent information was not communicated (M = 3.38, SD = .55). The factorial ANOVA analysis however indicates that these differences are not significant, F(1, 112) = .73, p = .395, meaning that respondents who were exposed to a transparent advertisement did not evaluate CoolBest significantly different than respondents who evaluated a non-transparent CoolBest advertisement.

Last, the influence of the degree of brand transparency for the brand Innocent was assessed. This brand also received a higher brand equity score after communicating transparent information (M = 3.16, SD = .72) than when non-transparent information was communicated (M = 2.95, SD = .76). However, the factorial ANOVA analysis indicates that these mean scores do not significantly differ from each other, F(1, 112) = 2.08, p = .152, meaning that Innocent’s transparency does not have a significant impact on the brand’s customer-based brand equity score.

Since the brand equity scores for all three brands were not significantly different for respondents evaluating transparent advertisements and respondents evaluating

non-transparent advertisements, H1, in which it was expected that a brand’s transparency positively influences consumers’ brand equity, cannot be accepted.

4.3 The role of source of transparent information

In this part of the results section, the moderating role of the source of transparent information is outlined. The brand equity scores of respondents who evaluated transparent information communicated by a brand were contrasted with a situation in which transparent information

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36 was provided by a consumer.

Unexpectedly, the brand Appelsientje received a higher brand equity score from respondents in the other source transparent information-treatment (M = 3.35, SD = .56) than from respondents in the transparent brand information-treatment (M = 3.30, SD = .52). However, the factorial ANOVA indicated that there is no significant, direct effect of the source of transparent information on the brand equity scores of Appelsientje, F(1, 107) = .28, p = .600. So, respondents did not evaluate the brand Appelsientje significantly different when being exposed to either transparent consumer information or transparent brand information. The influence of the source of transparent information was also tested for non-focal brands CoolBest and Innocent. First, the brand equity scores of respondents who observed a transparent CoolBest advertisement were compared to the scores of respondents who

observed a transparent consumer review about this brand. The results of the factorial ANOVA (GLM) indicate that the source of transparent information does not significantly influences the evaluation of CoolBest, F(1, 76) = .95, p = .333. The same analysis was used for Innocent. Again, no significant differences were found between the brand equity scores of respondents in the transparent brand information-treatment and respondents in the other source transparent information-treatment, F(1, 76) = .68, p = .413. Concluding, the brands in this research did not have a more favourable brand equity score when they actively disclosed transparent information then when an external source revealed transparent information about the brand. Hence, H2 cannot be accepted.

4.4 The effects of the three levels of transparency

So far, the direct effects of brand transparency on customer-based brand equity were assessed, after which the effects of the source of transparent information were examined. However, one can also directly compare the three levels of transparency created in this research: non-transparent information, other source transparent information and last,

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37 transparent brand information. In the following part of the results section, the effects of these three levels of transparency on the three orange juice brands are outlined to test whether overall differences exist between these three levels of transparency.

First, the mean brand equity scores for each of the three different levels of transparency for the brand Appelsientje are discussed. Appelsientje received the highest brand equity score from respondents in the other source transparent information-treatment (M = 3.35, SD = 0.56). When Appelsientje was the source of transparent information, the brand received a brand equity score of 3.30 (SD = 0.52). Furthermore, the brand received the least positive brand equity score in the non-transparent condition (M = 3.24, SD = 0.60). A one-way ANOVA is used to test whether significant differences exist between these three levels of transparency. This analysis shows that respondents do not evaluate Appelsientje

significantly different across the three levels of transparency, F(2, 164) = .53, p = .591.

Next, the brand equity scores for the three levels of transparency were compared for non-focal brand CoolBest. CoolBest receives a lower brand equity score when a consumer is the source of transparent information (M = 3.33, SD = .50) than when transparent information is not disclosed (M = 3.38, SD = .62). As was expected, CoolBest received the highest brand equity score from respondents who evaluated the transparent CoolBest advertisement (M = 3.47, SD = .62). Innocent also receives the highest brand equity score from respondents when the brand was the source of transparent information (M = 3.16, SD = .72). Furthermore, respondents who were exposed to other source transparent information evaluated Innocent slightly better (M = 3.01, SD = .76) than respondents in the treatments in which non-transparent information was disclosed (M = 2.95, SD = .77).

One-way ANOVA analyses were performed to test whether the mean scores for the three levels of transparency for each of the two non-focal brands significantly differ from each other. The first ANOVA analysis shows that respondents in the different conditions do

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38 not evaluate CoolBest significantly different, F(2, 164) = .55 , p = .579. The second one-way ANOVA analysis shows that the level of transparency does not significantly influence the brand equity of Innocent, F(2, 164) = 1.26, p = .286. Therefore, conclusions about the effects of the three levels of transparency on the brands CoolBest and Innocent cannot be drawn based on these mean differences. Even though the mean brand equity scores indicated that respondents evaluated the brands CoolBest and Innocent more positively when exposed to a transparent advertisement than exposed to non-transparent or other-source transparent information, the differences are presumably too small to be considered as significant.

4.5 The effects of market transparency

Hypothesis 3, in which it was expected that market transparency negatively influences a brand’s customer-based equity, was tested by using a factorial ANOVA analysis (GLM). Since Appelsientje is the focal brand of this study, the effects of market transparency is only tested for this brand. Unexpectedly, Appelsientje received a higher brand equity score when the market could be characterized as a highly transparent market (M = 3.35, SD = .51) then when the degree of transparency in a market was low (M = 3.20, SD = .60). However, the direct influence of the degree of market transparency on the customer-based equity of the brand was not significant, F(1, 110) = 1.84, p = .177. Therefore, one can conclude that in this research the degree of market transparency did not influence consumers’ brand equity score for focal brand Appelsientje and hence, H3 cannot be accepted.

4.6 The moderating role of market transparency

After testing the direct effects of both brand transparency and market transparency on consumers’ brand equity, a factorial ANOVA analysis (GLM) was performed to test the moderating role of the degree of market transparency in the relation between a brand’s transparency and its customer-based brand equity. This analysis could only be performed for

Will brands survive the age of transparency? : a research to the effects of transparency on the customer-based equity of brands