The Influence of Brand Extension Exclusivity
on Category Buying Intention, Assortment
Evaluation and Perceived Assortment Choice
Jos Arno Dian Molema
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The Influence of Brand Extension Exclusivity
on Category Buying Intention, Assortment
Evaluation and Perceived Assortment Choice
Master Thesis
University of Groningen
Faculty of Economics and Business
Department Marketing Management
July, 2013
Author:
Jos Molema
Star Numanstraat 75
9714 JK Groningen
+31 (6) 122 718 61
Supervisors:
3 | P a g e TABLE OF CONTENTS
MANAGEMENT SUMMARY...5
PREFACE ...7
1. INTRODUCTION ...8
1.1 Problem Statement and Research Questions ... 9
1.2 Contribution and Relevance ... 10
1.3 Research Methodology ... 11
1.4 Structure of thesis ... 11
2. LITERATURE REVIEW ... 12
2.1 Brand Extension Exclusivity ... 13
2.2 Category Buying Intention ... 15
2.3 Assortment Evaluation ... 16
2.4 Perceived Assortment Choice ... 17
2.5 Brand Equity ... 18
2.6 Store Equity ... 19
2.7 Match-effect Brand Equity and Store Equity ... 20
3. RESEARCH METHODOLOGY ... 22
3.1 Research Design ... 22
3.2 Assortment Presentation ... 25
3.3 Pre-tests ... 27
3.4 Data Collection Methods ... 28
3.5 Independent Variable ... 29
3.6 Dependent Variables... 29
3.6.1 Measurement Category Buying Intention ... 29
3.6.2 Measurement Assortment Evaluation ... 29
3.6.3 Measurement Perceived Assortment Choice ... 29
3.7 Moderators ... 30
3.7.1. Measurement Brand Equity ... 30
3.7.2 Measurement Store Equity ... 30
3.8 Demographics and Control Variables ... 30
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4. DATA ANALYSIS AND RESULTS ... 33
4.1 Distribution Respondents ... 33 4.2 Socio-Demographic Characteristics ... 35 4.3 Brand Equities ... 37 4.4 Simple Analysis ... 38 4.5 Reliability Analysis ... 39 4.6 Normality Test ... 39 4.7 Multicollinearity Check ... 40 4.8 Regression Analyses ... 41
4.8.1 Model 1 Influence Brand Extension Exclusivity on Category Buying Intention ... 41
4.8.2 Model 2 Influence Brand Extension Exclusivity on Assortment Evaluation... 43
4.8.3 Model 3 Influence Brand Extension Exclusivity on Perceived Assortment Choice ... 45
5. Conclusion and Discussion ... 49
5.1 Conclusion ... 49
5.2 Discussion ... 50
5.3 Limitations and Further Research ... 50
APPENDICES ... 52
Appendix 1 Questionnaire ... 52
Appendix 2 Questionnaire Pre-test ... 57
Appendix 3 SPSS-Output ... 61
3.1 Output One-way ANOVA ... 61
3.2 Ouput Independent Samples T-test Brand Equities ... 62
3.3 Ouput Means Experimental Conditions ... 63
3.4 Ouput Reliability Analysis... 65
3.5 Output Multicollinearity Check ... 66
3.6 Ouput Regression Analyses ... 69
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MANAGEMENT SUMMARY
As a result of the concentration in the food retail industry, started by the price war in 2003, retailers are constantly trying to identify new opportunities to increase their competitive advantage. According to experts in the industry, cooperative differentiation is the latest tool to realize the desired increase in competitive advantage. Since current literature lacks a conceptualization for this phenomenon, for this study the following definition is applied:
cooperative differentiation is a process in which manufacturers and retailers enter into an exclusive agreement that a specific brand, promotion, format or variety is exclusively supplied to the retailer with the goal to fulfill the specific needs of the retailer’s customers and to create competitive advantage for that retailer.
This study focusses on the effects of one type of cooperative differentiation, namely brand extension exclusivity, on consumer behaviour. More specifically, this research examines the possible influence of brand extension exclusivity on consumer’s category buying intention, assortment evaluation, and perceived assortment choice in an online setting. The situation in which one online retailer is offered the brand extension exclusivity is compared to the situation in which all the online retailers are offered the same brand extension. Second, the moderating influence of both store and brand equity will be measured. Lastly, the influence of the level of congruence between brand equity and store equity on the above described relationship will be measured.
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PREFACE
The last stage of a special phase in my life
Looking back at my life as a student in Groningen, I have to conclude that this has been the most special phase in my life. During this phase, I have developed myself both personal as well as intellectual. I could not have realized these developments by myself. Therefore, I would like to utilize this opportunity to thank those people aiding and guiding me during this process.
First of all I would like to thank my father Jetze, mother Eliza, and brother Rick for their unconditional support. Having a safe haven to fall back on provided me with the confidence to carry on.
Second, I would like to thank my girlfriend Kim for her love and support. I really look forward to entering the next phase in life together.
Third, I would like to thank my friends. They, in particular my best friend Justin, have had a significant contribution (p<0.05) to my life as a student in Groningen. In my mind, I charish a lot of great moments with them.
Fourth, I would like to thank my first supervisor prof. dr. L.M. (Laurens) Sloot for his constructive feedback and clear method of communication when I was writing my master thesis. Furthermore, I would like to thank my second supervisor, dr. J.E.M. (Erjen) van Nierop, for his feedback during the final weeks of writing.
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1. INTRODUCTION
Product assortments of retailers have grown enormously over the past 25 years. Next to that, competition within the food retail sector is getting stronger: the three biggest players operating in the food retail industry (Albert Heijn, Jumbo & Plus) account for approximately 60% of the total market share (Nielsen, Sligro, ABN AMRO Sector Research). The consolidation of the food retailers is a result of the price war between food retailers started in 2003. Initially, these lower prices could be managed by retailers by increasing pressure on manufacturers and by improving efficiency. Nowadays, manufacturers of A-labels refuse to account for these price reductions and might even be fighting in court with retailers to enforce fair prices.
Due to the above described two developments, retailers are facing the challenge of having a balance between having the right amount of stock keeping units and at the same time differentiating themselves from their competitors. For this reason, manufacturers and retailers are seeking for new opportunities to increase their competitive advantage. Cooperative differentiation is the latest tool to realize this. Since present literature lacks a definition for this concept, the following definition for this research has been formulated:
cooperative differentiation is a process in which manufacturers and retailers enter into an exclusive agreement that a specific brand, promotion, format or variety is exclusively supplied to the retailer with the goal to fulfill the specific needs of the retailer’s customers and to create competitive advantage for that retailer.
Unilever has initiated the phenomenon of cooperative differentiation by exclusively offering retailer Albert Heijn with ‘Blueband Goede-Start bread’. More examples of cooperative differentiation are:
- Smiths’ ‘kronkelzoutjes’ snacks for Albert Heijn; - John West’s steamed tuna for Albert Heijn; - Grolsch’s ‘De Klok-bier’ for C1000;
- Bavaria’s ‘Dors bier’ for JUMBO.
9 | P a g e Retailers embrace the offering of exclusive brands/promotions/formats or varieties to their customers which cannot be found at other retailers since prices and margins of a lot of products are under pressure. Since prices and margins are under pressure, price as a tool is difficult to use when trying to increase competitive advantage.
Through cooperative differentiation retailers are better able to determine their price margins since they are the only supplier of the product. According to Marcel van Aalst (EFMI, 2012) retailers more and more see the benefits of cooperative differentiaton and therefore he expects it to become a commonly used tool over time.
There are several types of cooperative differentiation. Next to brand exclusivity, described above, manufacturers and retailers can enter into an exclusive agreement in which the retailer is offered an exclusive promotion, format or variety. This is also done with the goal to create a better fit between the retailer’s consumers and the manufacturer’s products. For example offering a XL bag of Lay’s Chips through the Albert Heijn in those areas in which a lot of families with children live.
A type of brand exclusivity is brand extension exclusivity (BEE). Brand extension exclusivity occurs when a manufacturer develops a certain brand extension which is consequently exclusively offered through a specific retailer, for example when Duyvis manufactures a new type of potato chip for Albert Heijn. This research examines the possible influence of brand extension exclusivity on consumer’s category buying intention, assortment evaluation, and perceived assortment choice in an online setting. More specifically, the situation in which one online retailer is offered the brand extension exclusivity is compared to the situation in which all the online retailers are offered the same brand extension. Second, the moderating influence of both store and brand equity will be measured. Lastly, the influence of the level of congruence between brand equity and store equity on the on the above described relationship will be measured.
1.1 Problem Statement and Research Questions
10 | P a g e For this research the following problem statement has been formulated:
What is the influence of brand extension exclusivity on category buying intention,
assortment evaluation and perceived assortment choice?
To properly answer this problem statement, the following research questions have been formulated: What is cooperative differentiation?
What are the most commonly used types of cooperative differentiation?
What are the advantages and disadvantages of cooperative differentiation for the retailer? What are the advantages and disadvantages of cooperative differentiation for manufacturers?
1.2 Contribution and Relevance
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1.3 Research Methodology
This section describes the methodology which has been applied for this research. First of all, a literature study has been performed to gain insights in the aspects of interest for this topic. By doing so, insights have been gained which consequently function as the theoretical fundament for this research. Next to that, a qualitative and quantitative analysis has been performed. For the qualitative analysis 2 managers working in the food retail industry have been interviewed through in-depth interviews. An in-depth interview is an unstructured, direct, personal interview in which a single respondent is probed by a highly skilled interviewer to uncover underlying motivations, beliefs, attitudes, and feelings on a topic (Malhotra, 2010). This way opinions and attitudes concerning cooperative differentiation have been revealed. Hereafter, a quantitative research has been conducted amongst at least 320 respondents through a controlled experiment displayed in a Dutch online questionnaire. Respondents were approached online and offline. The online respondents were approached through Facebook, Twitter, forums and e-mail. The offline respondents were approached face-to-face in the city Groningen, these respondents were asked to fill in the questionnaire through usage of tablets. Since at least 320 respondents were needed to complete the questionnaire, at least 600 people were approached since non-response/incomplete questionnaires had to be taken into account.
1.4 Structure of thesis
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2. LITERATURE REVIEW
In 2012 the Dutch supermarket industry was dominated by three main players: Albert Heijn, Superunie, and Jumbo Group Holding with a market share of respectively 33.7%, 29.0%, and 21.7% (Nielsen, 2013). Hence, the supermarket industry can be typified as an oligopoly, which refers to a market in which there are only a few, very large suppliers (Business and Management dictionary, 2007). In a differentiated-product oligopoly, the profits of an organization depend on the entry and differentiated-product-type actions of the competition, as well as the product the organization offers. (Mazzeo, 2002).
Nowadays, competition within the retail industry is high. Organizations spend a lot of their money and time on acquiring and retaining customers (Senthil, Chandrasekar and Selvabaskar, 2012). Next to that, retailers are not spending their time completely on the production of new products anymore, but are dealing with the increasing need for thinking strategically and being innovative (Senthil et al., 2012). Power between manufacturer and retailer has been shifting towards the latter (Kadiyali, Chintagunta and Vilcassim, 2000). This shift in power is caused by several reasons. Jones (1990) argues that competition between manufacturers is a reason. Another important reason is the introduction of the private labels brands (Raju, Dhar and Sethuraman, 1995; Hoch and Banerjee, 1993; Hoch, 1996). A private label refers to a product or variety of products offered by a retailer under their own name in competition with branded goods. Private label products, like nonbranded goods, are normally cheaper than branded items but are often perceived to have a lower quality (Business and Management dictionary, 2007). Salmon and Cmar (1987) argue that the high quality of private label brands in certain product categories leverages the retailer when conducting business with the manufacturer. Finally, the squeeze between scarcity of satisfactory shelf space and the increase in introductions of new products, the appliance of better information technology, and the above described concentration in the retail sector are important reasons for a power shift from the manufacturer towards the retailer (Kadiyali et al., 2000).
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2.1 Brand Extension Exclusivity
Concentration in the industry and increasing consumer needs pressures the retailer to differentiate themselves from competitors. The following two questions now arise: what is a differentiated product and why should a retailer offer differentiated products? Dickson and Ginter (1987) define differentiated products as product offerings which are perceived differently by consumers with the intention to be different from competitors on physical or non-physical characteristics including price. These differences can be categorized in actual differences and perceptual differences. Actual differences are created by the characteristics of the products, perceptual differences are created by promotion, word of mouth, and usage experience (Dickson and Ginter, 1987). It is important for retailers to offer differentiated products in order to increase their competitive advantage. Mazzeo (2002) revealed another important reason for organizations to differentiate. He suggests that when organizations are seeking to be different from competitors, they experience less competition and profits are higher. According to Porter (1985), generating competitive advantage through differentiation can be realized by several factors: customized service, increased advertising and promotional efforts, facility design and layout, and investment in product development.
Increasing competitive advantage through differentiation can also be realized in the assortment of retailers. Hamilton and Richards (2009) have found a positive relationship between category sales and assortment depth in highly differentiated product categories. However, for less differentiated product categories, they have found a negative relationship between assortment depth and category sales. For this research the definition of Draganska and Jain (2005) for assortment depth is used: the number of variants sold in a category, rather than as the size of the attribute space spanned by the variants within the category.
Organizations operating in the food retail industry are constantly seeking to improve their competitive advantage by differentiating themselves. A way to realize this is through cooperative differentiation. Since no clear definition exists in present literature, the following definition is used:
14 | P a g e Joris Maliepaard, formula manager at Jumbo, mentions two main advantages of cooperative differentiation for retailers in an in-depth interview. First of all, retailers can differentiate themselves from competition through their assortment. Namely, retailers can utilize the manufacturer’s brand equity to endorse the product assortment of the retailer. Next to that, when applying cooperative differentiation, retailers cannot be compared on a price-level since the product is only offered at one retailer. Hence, the risk for price erosion is small. Price erosion occurs when organization X lowers their price for a certain product, organization Y responds by also lowering their price for that product. One of the risks of cooperative differentiation is differentiating without any specified goal. This could lead to the scenario in which a retailer differentiates with the absence of a consumer need.
Next to advantages, cooperative differentiation also has disadvantages. A category manager of a large nutrition organization mentions two main disadvantages in an in-depth interview. She states: ‘often relative small quantities of products are involved which is not of interest from a distribution and cost perspective. Second, the manufacturer will have limited budget for supporting the product because of the limited product accessibility for the consumer.’
Both the manufacturer as well as the retailer recognize the possible advantages of cooperative differentiation and can initiate the process. ‘Cooperative differentiation can be initiated by both the manufacturer as well as the retailer. For smaller retailers, such as Deen, the initiative often lies with the manufacturer. In this case, it is important for the manufacturer to protect the profit of the retailer, otherwise the product will easily be taken of the shelves of the retailer. In the case of larger retailers such as Jumbo and Albert Heijn, the initiative for cooperative differentiation often lies with the retailers; they pressure manufacturers to produce a unique brand which can only be bought at that particular retailer’, according to Maliepaard.
15 | P a g e Since researching the possible influence of the four varieties of cooperative differentiation is too broad, this research focusses on the influence of a type of brand exclusivity, namely brand extension exclusivity. A brand refers to a name, term, sign, symbol, or design, or a combination of them, intended to identify the goods or services of one seller or group of sellers, and to differentiate them from those of competition (Kotler, 1991). These components together form the brand. Brand extension refers to the situation in which a current brand name is utilized to enter a completey different product class (Aaker and Keller, 1990). Exclusivity refers to the restriction in ability of buyer and seller to transact with third parties, these exclusivity provisions are often formulated in vertical contracts (Matouschek and Ramezzana, 2007). Hence, brand extension exclusivity refers to the retailer’s unique right to offer a certain extension of a brand to its customers. For example, Albert Heijn and OMO entering into an agreement in which Albert Heijn gets the exclusive right to offer OMO dishwashing detergent.
2.2 Category Buying Intention
Whitlark, Geurts and Swenson (1993) define buying intention as a purchase probability associated with an intention category at the percentage of individuals that will actually buy the product. Keller (2013) defines buying intention as the likelihood of buying the brand or of switching to another brand. Understanding customers’ buying intention is important because buying intention is a predictor of customers’ behavior (Hsu, Chang and Chen, 2011). Buying intention can be impacted by two factors: internal and marketing factors. The internal factors consists of knowledge, attitude, and personality. Marketing factors consits of product, promotion, and price (Barber, Kuo, Bishop and Goodman, 2012). According to Keller (2013), purchase intentions are most likely to be predictive of actual purchase in the case of correspondence between the two in the following dimensions:
- Action (buying for own use or buying to give as a gift); - Target (specific type of brand and product);
- Context (in what type of store based on what prices and other conditions); - Time (within a day, week, month, or year).
16 | P a g e It is expected that when a brand extension is added to the category, consumer’s buying intention will increase. Therefore, the following hypothesis now arises:
H1a: Brand extension exclusivity has a positive influence on consumer’s category buying intention
2.3 Assortment Evaluation
Product assortments of retailers have grown enormously over the past 25 years. For this reason, the assortment of the retailer is an important factor for the consumer to visit a certain retailer (Campo, Gijsbrechts and Nisol, 2004).
Assortment evaluation is defined as the net result of the consumer's subjective evaluation of the benefits and costs associated with the retailer's assortment after the product choice has been made (Reutskaja and Hogarth, 2009). Not much research has been conducted to discover the nature of the incentives that lead to product assortment decisions (Draganska and Jain 2005, 2006). Messinger and Narasimham (1997) have investigated a number of reasons why retailers increase their assortment (lower inventory cost, monopoly power, higher margins, and economies of scale) and they rule out these reasons in favor of the theory of the consumer’s desire to minimize shopping cost. As stated before, Hamilton and Richards (2009) have found a positive relationship between category sales and assortment depth in highly differentiated product categories. However, for less differentiated product categories they have found a negative relationship between assortment depth and category sales. So what are important assortment related drivers that move consumers towards a certain retailer? Research has shown that when the favorite product of the consumer is not present in the assortment of the retailer, this absence will have a negative influence on the consumer’s preference for visiting a retailer (Broniarczyk, Hoyer and McAlister 1998). In contrary, when favorable products are present in the assortment, the retailer will be evaluated more positive. Hence, delisting products which are favorable for customers will come at a certain cost. It is expexted that brand extension exclusivity is positively related to the consumer’s assortment evaluation. Therefore, the following is hypothesized:
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2.4 Perceived Assortment Choice
According to Van Herpen and Pieters (2002), variety is the key characteristic in the retailer’s assortment. They found that the variety in assortment can determine the store choice of a consumer. However, the variety in assortment can also negatively impact the experience of consumers: confusion or complexity, as a result of a larger choice in assortment, can lead to a decrease in sales due to dissatisfaction with the assortment choice (Huffman and Kahn, 1998).
Variety is becoming more important with today’s increasing amount of product offerings (Van Herpen and Pieters, 2002). The perception of variety at a store is especially important for those consumers who are seeking for variety. These variety-seeking consumers are likely to switch to another brand in comparison to the product consumed on the last occasion (Agrawal and Smith, 2009). Furthermore, reseach has shown that the perceived assortment choice in a specific assortment can function as a consumption benchmark for buyers; the larger the variety in the assortment, the larger the quantity of consumption (Kahn and Wansink, 2004). These findings are in line with research stating that when consumers choose multiple products, they try to find variety within or across purchase occaisons (McAlister, 1982; Ratner, Kahn and Kahneman, 1999). According to Simenson (19990), the consumer’s preferred choice for variety can be attributed to the following three factors: (1) variety-seeking behavior, (2) desire to maintain flexiblity, and (3) trade-off avoidance.
Further studies of retail patronage have shown that perceived assortment choice is an important determinant of attitudes and the choice of store, falling third behind location and price (Arnold et al.1983; Craig et al. 1984; Louviere and Gaeth, 1987). Moreover, Hoch, Bradlow, and Wansink (1999) mention three important reasons why consumers care about assortment choice: (1) greater assortments and variety within assortments increase the probablity of a match between retailer and consumer (Baumol and Ide, 1956), (2) assortment choice offers value for the consumer in the case of tastes being formed not well or alter over time (Reibstein, Youngblood, and Franklin, 1974), and (3) the innate desire to try different altevernates within or across occaisons. Consequently, it is expected that brand extension exclusivity is positively related to the perceived assortment choice of the consumer. Hence, the following hypothesis now arises:
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2.5 Brand Equity
Brand equity is a widely studied concept. Depending on the purpose the concept has been examined from two different perspectives: financial and customer based. Simon and Sullivan (1990) define brand equity in terms of the incremental discounted future cash flows that would result from a product having its brand name in comparison with the proceeds that would accrue if the same product did not have that brand name.
Keller (1993) defines Customer-Based Brand Equity (CBBE) as the differential effect of brand knowledge on consumer response to the marketing of the brand. Thus, this definition of brand equity is conceptualized from the perspective of the individual consumer, and positive CBBE occurs when a consumer is familiar with the brand and holds some strong, favourable and unique brand associations in memory (Kamakura and Russel, 1991).
Keller’s definition (1993) consists of three components: differential effect, brand knowledge, and consumer response to marketing. The differential effect is measured by comparing the response of the consumer to the marketing of a branded product with the response of the consumer to the same marketing of the product without a brand. Brand knowledge consists of brand awareness and brand image. Brand awareness relates to the strength of the brand in memory, reflected by the ability of consumers to identify the brand under varying conditions (Rossiter and Percy, 1987). Brand awareness consists of two parts: brand recall and brand recognition. Brand recall refers to the consumer’s ability to recall the brand from the consumer’s memory. Brand recognition refers to the consumer’s ability to recognize the brand from previous encounters. As stated above, brand awareness also consists of brand image. Herzog (1963) and Newman (1957) define brand image as perceptions about a brand as reflected by the brand associations held in consumer memory.
19 | P a g e Brand associations can differ from each other on three aspects: favorability, strength, and uniqueness. Favorable brand associations are created by showing the consumers that a certain brand has attributes and benefits satisfying the needs of the consumer in such a way that the consumers evaluate the brand positively. The strength of associations depends on how information concerning a brand enters the memory of the consumers and how it is retained as part of the image of the brand (Keller, 1993). Unique brand associations are critical to a brand’s success and are those associations that give the consumers reasons why thy should buy the product. It is expected that brand equity has a positive moderating effect on the influence of brand extension exclusivity on consumer’s category buying intention, assortment evaluation, and perceived assortment choice. Therefore, the following is hypothesized:
H2a: Brand equity has a positive influence on the effect of brand extension exclusivity on consumer’s category bying intention
H2b: Brand equity has a positive influence on the effect of brand extension exclusivity on consumer’s assortment evaluation
H2c: Brand equity has a positive influence on the effect of brand extension exclusivity on consumer’s perceived assortment choice
2.6 Store Equity
20 | P a g e It is expected that store equity has a positive moderating effect on the influence of brand extension exclusivity on consumer’s category buying intention, assortment evaluation, and perceived assortment choice. The following three hypotheses now arise.
H3a: Store equity has a positive influence on the effect of brand extension exclusivity on consumer’s category bying intention
H3b: Store equity has a positive influence on the effect of brand extension exclusivity on consumer’s assortment evaluation
H3c: Store equity has a positive influence on the effect of brand extension exclusivity on consumer’s perceived assortment choice
2.7 Match-effect Brand Equity and Store Equity
The moderators brand equity and store equity are expected to have a match-effect. The match-effect occurs when the level of congruence between two moderators have an influence on certain variables. The concept of the match-effect will now be explained through an example using two detergents and two online retailers. The detergents are Witte Reus (low brand equity) and OMO (high brand equity). The retailers are albert.nl from Albert Heijn (high store equity) and bestellenbijplus.nl from PLUS (low store equity). The match-effect occurs when a brand extension exclusivity of Witte Reus is offered through bestellenbijplus.nl. Next to that, a match-effect also when a brand extension exclusivity of OMO is offered through albert.nl. It is expected that the level of congruence between store equity and brand equity positively moderates the effect of brand extension exclusivity on consumer’s buying intention, assortment evaluation, and perceived assortment choice. Therefore, the following is hypothesized.
H4a: The level of congruence between store equity and brand equity positively moderates the effect of brand extension exclusivity on consumer’s buying intention
H4b: The level of congruence between store equity and brand equity positively moderates the effect of brand extension exclusivity on consumer’s assortment evaluation
21 | P a g e To summarize, the hypotheses are displayed in the conceptual model below in Figure 1.
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3. RESEARCH METHODOLOGY
This chapter describes the research design and data collection methods applied for this study. Second, the way the independent variable, dependent variables, and moderators are manipulated and measured is explained. Third, a plan of analysis, in which amongst others is described which type of statistical analyis is used, is provided. Before treating these different aspects of this chapter, the objective of this research is given:
This research examines the possible influence of brand extension exclusivity on consumer’s category buying intention, assortment evaluation, and perceived assortment choice in an online setting. More specifically, the situation in which one online retailer is offered the brand extension exclusivity is compared to the situation in which all the online retailers are offered the same brand extension. Second, the moderating influence of both store and brand equity will be measured. Lastly, the influence of the level of congruence between brand equity and store equity on the on the above described relationship will be measured.
From the objective of this research, one independent variable (brand extension exclusivity), three dependent variables (category buying intention, assortment evaluation, and perceived assortment choice), and two moderators (brand equity and store equity) can be identified. The way these variables are measured and manipulated will now be explained.
3.1 Research Design
For this research a 2 (no brand extension exclusivity – yes brand extension exclusivity) by 2 (high brand equity – low brand equity) by 2 (high store equity – low store equity) between-subjects design and scenario-based questionnaire, see Appendix 1, is used.
23 | P a g e The other half of the respondents were presented with the scenario in which the brand extension was offered exclusively at the specific online retailer of the scenario by explicitly mentioning the exclusivity next to the product.
For this research two types of products have been used: one product of the hedonic product category and one product of the utilitarian product category. Potato chips was chosen as the hedonic product category in which the brand extension was offered and tablet detergents was chosen as the utilitarian product category in which the brand extension was offered.
The moderator brand equity has two levels: high and low brand equity. Therefore, within the above described hedonic and utilitarian product category, two products were needed: one product with a high level of brand equity and one product with a low level of brand equity. Respondents completing the questionnaire with the scenario of a utilitarian product type with a high level of brand equity, were presented with the high equity brand OMO. Respondents completing the questionnaire with the scenario of a utilitarian product type with a low level of brand equity were presented with the low equity brand Witte Reus. Respondents completing the questionnaire with the scenario of a hedonic product type with a high level of brand equity were presented with the high equity brand Duyvis. Respondents completing the questionnaire with the scenario of a hedonic product type with a low level of brand equity were presented with the low equity brand Jack Klijn.
The moderator store equity also has two levels: high and low store equity. Respondents completing the questionnaire with the scenario of high store equity were presented with the scenario of shopping at the online store albert.nl from high store equity retailer Albert Heijn. Respondents completing the questionnaire with the scenario of low store equity were presented with the scenario of shopping at the online store bestellenbijplus.nl from low store equity retailer PLUS.
24 | P a g e The other half of the respondents will be presented with the scenario of a low level of congruence. The respondents with the scenario of a low level of congruence will be presenented with the scenario of a brand extension of a high equity brand at a low equity online store or with the scenario of a brand extension of a low equity brand at a high equity online store. Hence, in total the questionnaire has eight varieties.These varieties will be applied for both the hedonic product type as the utilitarian product type. These different questionnaires were randomly distributed amongst the participants. The above described manipulation of the variables within the scenarios of the questionnaire are depicted in Table 1.
Scenario Brand Extension Exclusivity Brand Equity Store Equity Level of congruency moderators
1 No High High High
2 No Low High Low
3 No High Low Low
4 No Low Low High
5 Yes High High High
6 Yes Low High Low
7 Yes High Low Low
8 Yes Low Low High
Table 1 Scenarios questionnaire
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3.2 Assortment Presentation
For each scenario a picture of an assortment of an online retailer was developed. Hence, in total 16 different pictures displaying the different assortments were developed. Before the respondents were asked to answer questions concerning the displayed assortment, they were aksed to imagine themselves being in the following situation:
You just got home from doing groceries at Albert Heijn/PLUS and you realize that you have forgotten to buy natural chips/tablet detergents. Therefore you decide to order this via albert.nl/bestellenbijplus.nl. You open the website albert.nl/bestellenbijplus.nl and you see the following assortment of naturel chips/tablet detergents from which you can make a choice between four brands. Before answering the questions, it is important to closely look at the presented assortment of albert.nl/bestellenbijplus.nl.
Consequently, the assortment of the scenario was presented to the respondent. Each assortment consisted of four products offering the same quantity. In the case of potato chips the quantity was 200 grams, in the case of tablet detergents the quantity was 40 tablets. Since the quanitities of the brand were equalized, the prices of the varying brands had to be indexed. The cheapest product was displayed at the top left and the most expensive product was displayed at the bottom right. Next to that, the brand extension was always displayed at the top right. In the scenario of an exclusive brand extension, the exclusivity was explicitely mentioned directly below the brand extension. In the scenario in which the brand extension was not exclusively offered through the specific online retailer, nothing was mentioned directly below the brand extension. As stated before, for the utilitarian product category OMO was used as the high brand equity brand and Witte Reus as the low brand equity brand. For the hedonic product category, Duyvis was used as the high brand equity brand and Jack Klijn as the low brand equity brand. Next to that, the webstore, albert.nl, of high equity store Albert Heijn, was used and the webstore, bestellenbijplus.nl, of low equity store PLUS, was used.
26 | P a g e See Figure 3 for the visualization of a displayed assortment with the scenario of an exclusive brand extension offered at a webstore with a high level of congruency between brand equity (high) and store equity (high) within the hedonic product category.
Figure 2 Non-Exclusive Brand Extension OMO at bestellenbijplus.nl
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3.3 Pre-tests
To determine whether the presented products truly differ on brand equity, the online retail stores truly differ on store equity, and the product type is truly hedonic versus utilitarian, three pre-tests have been conducted amongst experts within the retail industry. To test the difference in brand equity, pre-test number 1, and store equity, pre-test number 2, of the chosen brands and stores, the measurement scale of Verhoef, Langerak and Donkers (2007), explained in paragrapgh 3.7, was applied.
To test whether the products were truly perceived as hedonic versus utilitarian, pre-test number 3, the ten-item HED/UT scale by Voss, Spangenberg and Grohmann (2003) was utilized. The pre-tests can be found in Appendix 2. The results will now be discussed.
The experts had to indicate on a 7-point Likert scale to what extent they agreed on four items measuring the brand equity of the brands OMO, Witte Reus, Duvyis and Jack Klijn. The average brand equities of these four brands are depicted in Table 2. From the pre-test can be concluded that OMO is a high brand equity washing detergent and Witte Reus is a low brand equity washing detergent. Next to that, it can be concluded that Duvyis is a high brand equity peanut and Jack Klijn is a low brand equity peanut.
Brand Average Brand Equities
OMO ≈5.4
Witte Reus ≈3.9
Duvyis ≈6.0
Jack Klijn 2.75
Table 2 Average Brand Equities
Consequently, the experts had to indicate on a 7-point Likert scale to what extent they agreed on four items measuring the store equity of the online stores albert.nl en bestellenbijplus.nl. The average store equities of these two online stores are depicted in Table 3. From the pre-test can be concluded that albert.nl is a high online store equity retailer and bestellenbijplus.nl is a low online store equity retailer.
Store Average Store Equities
albert.nl ≈5.0
bestellenbijplus.nl ≈3.3
28 | P a g e Peanut Washing detergent 1 2 3 4 5 6 7 1 2 3 4 5 6 7 Uti litar ian Hedonic
Lastly, the experts had to indicate on a 7-point Likert scale to what extent they agreed to 10 statements measuring the level of hedonisim versus utilitarianism of the utilitarian product category ‘washing detergents’ and hedonic product category ‘peanuts’. The results are illustrated in Figure 4. From the pre-test can be concluded that washing detergents are truly utilitarian products and peanuts are truly hedonic products.
3.4 Data Collection Methods
For this study, both qualitative as quantitative data was collected. For the qualitative research two in-depth interviews were undertaken. The first interviewee was Joris Maliepaard, a formulage manager at JUMBO. The second interviewee was a category manager of a large international nutrition organization. Due to competitive sensitive information, this interviewee wished to stay anonymous. The in-depth interviews were undertaken with the goal to provide insights and understanding of brand extension exclusivity. Since little is known about brand extension exclusivity in present literature, data derived from these interviews was used for the literature review. Hereafter, a quantitative research has been conducted amongst at least 320 respondents through a controlled experiment displayed in a Dutch online questionnaire. Qualtrics was used as the software instrument to present the respondents with the questionnaire. Respondents were approached online and offline. The online respondents were approached through Facebook, Twitter, forums and e-mail. The offline respondents were approached face-to-face in the city Groningen, these respondents were asked to fill in the questionnaire through usage of tablets. Since at least 320 respondents were needed to complete the questionnaire, at least 600 people were approached since non-response/incomplete questionnaires had to be taken into account.
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3.5 Independent Variable
As stated before, brand extension exclusivity, will be measured at two levels. At level ‘no brand extension exclusivity’ the brand extension exclusivity will be offered at all the online retailers. At level ‘yes brand extension exclusivity’, the brand extension exclusivity will be offered at the specific online retailer of the scenario.
3.6 Dependent Variables
This study includes three dependent variables: category buying intention, assortment evaluation, and perceived assortment choice. These dependent variables were all measured through different questions and by applying varying measurement scales.
3.6.1 Measurement Category Buying Intention
Rossiter (2002) argues that the use of single-item measurement is appropriate when the object can be conceptualized as concrete and singular. Next to that, given that many consumer behavior studies have used a single-item purchase intention measure, e.g., see Spears and Singh (2004) for a comprehensive overview of regularly used purchase intention measures (Lwin and Williams, 2006), the following single item category buying intention measure is used: I would consider buying a product within this product category. Respondents were asked to indicate on a 7-point Likert scale (1=totally disagree and 7=totally agree) to what extent they agreed with the statement.
3.6.2 Measurement Assortment Evaluation
The second independent variable, assortment evaluation, was measured through one item based on Diehl and Lamberton (2008): I am satisfied with the assortment. Respondents were asked to indicate on a 7-point Likert scale (1=totally disagree and 7=totally agree) to what extent they agreed with the statement.
3.6.3 Measurement Perceived Assortment Choice
30 | P a g e
3.7 Moderators
This study includes the influence of the following two moderators: brand equity and store equity. The brand equities of the four brands were measured in the pre-test and in the actual questionnaire. The brand equities of the online stores were only measured in the pre-test. The way brand equity and store equity were measured will now be discussed.
3.7.1. Measurement Brand Equity
In order to measure the equity of the brands, the measurement scale of Verhoef, Langerak and Donkers (2007) was applied. The measurement scale consists of the following four items: (1) Brand X is a strong brand; (2) Brand X is a well-known brand; (3) Brand X is an attractive brand; (4) Brand X is a unique brand. The experts of the pre-test and respondents of the questionnaire were asked to indicate on a 7-point Likert scale (1=totally disagree and 7=totally agree) to what extent they agreed with the statements.
3.7.2 Measurement Store Equity
In order to measure the equity of the stores, the measurement scale of Verhoef, Langerak and Donkers (2007) was applied. Instead of measuring the equity of the brands of products, this measurement scale is applied here to measure the equity of the stores as brands. The measurement scale consists of the following four items: (1) Store X is a strong brand; (2) Store X is a well-known brand; (3) Store X is an attractive brand; (4) Store X is a unique brand. The experts of the pre-test were asked to indicate on a 7-point Likert scale (1=totally disagree and 7=totally agree) to what extent they agreed with the statements.
3.8 Demographics and Control Variables
31 | P a g e Next to the demographic questions, several control variables were implemented in of the questionnaire. Since respondents were presented with questions concerning the online store albert.nl from retailer Albert Heijn en bestellenbijplus.nl from retailer PLUS, they were asked how many times of their last 10 visits to a supermarket they have visited the Albert Heijn/PLUS. This way the respondent’s familiarity with the Albert Heijn or PLUS was measured. Next to that, product type was also implemented as a control variable. Lasty, the following control variables were implemented in the questionnaire: Is your favourite brand present in the assortment?; If you would have to make a choice out of the displayed assortment, which brand would you choose?; Have you ordered products before through an online webstore of a supermarket?
3.9 Analysis
The way the data will be analyzed will now be addressed. To get an idea of how the sample of the study looks like and gain insights concerning the sample, descriptive statistics of the sample will be given. Brand equity and store equity are measured through multi-item scales. In order to check the internal consistency reliability of the 4 items of these two moderators, the Cronbrach’s Alpha will be calculated. This coefficient varies from 0 to 1, and a value of 0.6 or lower generally indicates unsatisfactory internal consistency reliability (Malhotra, 2010). In order to test the hypotheses, regression analyses will be performed to see whether or not significant differences exist. These analyses will be performed by usage of SPSS. The relationship between the independent variable, dependent variables and moderators will be tested through the following regression equations:
Category Buying Intention: β0+ β1*BEE+ β2*BE+ β3*SE+ β4*(BEE*BE)+ β5*(BEE*SE)+ β6*(BE*SE)
+ β7(BESE*BEE) + ε
Assortment Evaluation: β0+ β1*BEE+ β2*BE+ β3*SE+ β4*(BEE*BE)+ β5*(BEE*SE)+ β6*(BE*SE)
+ β7(BESE*BEE) + ε
Perceived Assortment Choice: β0+ β1*BEE+ β2*BE+ β3*SE+ β4*(BEE*BE)+ β5*(BEE*SE)+ β6*(BE*SE)
+ β7(BESE*BEE) ε
BEE=Brand Extension Exclusivity BE=Brand Equity
SE=Store Equity
32 | P a g e In Table 4 an overview of the applied measurement scales for the variables is displayed.
Independent variable
Brand Extension Exclusivity Dummy variable, 0=no and 1=yes, no meaning all retailers offered the brand extension & yes meaning only 1 retailer offered brand extension
Independent variables
Category Buying Intention 1 item, 7-point Likert scale (1=totally disagree and 7=totally agree) (Lwin and Williams, 2006)
Assortment Evaluation 1 item, 7-point Likert scale (1=totally disagree and 7=totally agree) (Diehl and Lamberton, 2008)
Perceived Assortment Choice 3 items, 7-point Likert scale (1=totally disagree and 7=totally agree) (Sloot and Van Aalst, 2004)
Moderators
Brand Equity 4 items, 7-point Likert scale (1=totally disagree and 7=totally agree) (Verhoef, Langerak and Donkers (2007)
Store Equity 4 items, 7-point Likert scale (1=totally disagree and 7=totally agree) (Verhoef, Langerak and Donkers (2007)
33 | P a g e
4. DATA ANALYSIS AND RESULTS
In this chapter the analysis of the data and the results will be discussed. First, the distribution of the respondents per questionnaire and socio-demographic characteristics of the respondents will be discussed. Consequently, the simple analysis, reliability analysis, normality test, and multicollinearity check will be addressed. Finaly, the regression analysis is conducted in order to test the hypotheses, after which the results per model are discussed.
4.1 Distribution Respondents
In total, 620 respondents filled in the questionnaire. After a thorough screening, 205 respondents were removed from the database. These respondents were removed as a result of incomplete questionnaires or not seriously comleted questionnaires. Hence, the total sample size for this study consists of 415 usable respondents (66.9%). In Table 5 an overview of the distribution of respondents per questionnaire is displayed.
Questionnaire Brand Extension Exclusivity Brand Equity Store Equity Level of congruency moderators Number of Respondents
1 No High High High 49
2 No Low High Low 48
3 No High Low Low 56
4 No Low Low High 55
5 Yes High High High 55
6 Yes Low High Low 54
7 Yes High Low Low 47
8 Yes Low Low High 51
Table 5 Distribution Respondents over Questionnaires
As stated before, the different questionnaires were randomly and evenly distributed amongst the participants using Qualtrics. However, there are small differences in the number of respondents per questionnaire.This is a result of the removal of the 205 respondents mentioned above.
34 | P a g e Demographic Variable Sample size (n) Q1 49 Q2 48 Q3 56 Q4 55 Q5 55 Q6 54 Q7 47 Q8 51 Gender Male (%) Female (%) 67.3 32.7 50 50 42.9 57.1 52.7 47.3 52.7 47.3 46.3 53.7 42.6 57.4 41.2 58.8 Age 34 or below (%) 35 till 54 (%) 55 or older (%) 81.6 12.2 6.1 79.2 8.3 12.5 89.3 7.1 3.6 78.2 20 1.8 74.5 18.2 7.3 79.6 13 7.4 74.5 14.9 10.6 72.5 13.7 13.7 Family Composition Single (%)
Cohabit with children (%) Cohabit without children (%) Single parent (%) 65.3 12.2 20.4 2 41.7 14.6 41.7 2.1 55.4 8.9 32.1 3.6 56.4 12.7 30.9 0 49.1 16.4 34.5 0 46.3 22.2 27.8 3.7 53.2 19.1 27.7 0 60.8 7.8 31.4 0
Level of education (based on Dutch system) Lower (%) Middle (%) Higher (%) Doesn’t say (%) 10.2 10.2 79.6 0 4.2 8.3 87.5 0 3.6 8.9 87.5 0 3.6 20 76.4 0 1.8 12.7 85.5 0 9.3 11.1 79.6 0 8.5 19.1 72.3 0 5.9 13.7 80.4 0
Net Monthly Income
€500 or below (%) €501 - €1000 (%) €1001 - €1500 (%) €1501 - €2000 (%) €2001 - €2500 (%) €2501 - €3000 (%) €3001 - €3500 (%) €3501 - €4000 (%) €4000 or more (%) 18.4 24.5 18.4 18.4 18.4 2 0 0 0 14.6 18.8 25.0 18.8 12.5 2.1 4.2 0 4.2 25.0 35.7 12.5 12.5 7.1 5.4 0 0 1.8 25.5 29.1 12.7 14.5 7.3 5.5 3.6 1.8 0 16.4 34.5 9.1 10.9 10.9 5.5 5.5 0 7.3 22.2 24.1 9.3 14.8 16.7 3.7 5.6 1.9 1.9 29.8 25.5 17.0 17.0 4.3 0 4.3 0 2.1 25.5 19.6 9.8 25.5 5.9 5.9 0 2 5.9 Employment Status Entrepreneur (%) Full-time employee (%) Part-time employee (%) Unemployed/Job Seeker (%) Unfit for work (%)
Houseman/Housewife (%) Retired/Early Retirement (%) Student (%) 6.1 34.7 16.3 4.1 0 0 0 38.8 6.3 39.6 16.7 4.2 0 2.1 0 31.3 5.4 14.3 19.6 3.6 0 1.8 0 55.4 5.5 18.2 18.2 1.8 0 1.8 0 54.5 7.3 25.5 9.1 3.6 0 1.8 1.8 50.9 7.4 33.3 16.7 1.9 0 1.9 0 38.9 2.1 25.5 10.6 4.3 4.3 2.1 0 51.1 2 37.3 9.8 5.9 0 3.9 2 39.2
35 | P a g e To check whether the 8 groups of respondents do not significantly differ on age, level of education and net monthly income, a one-way ANOVA test was performed. The SPSS-output of the one-way ANOVA can be found in Appendix 3.1. The null hypothesis states that there is no significant difference between these groups with a confidence interval of 95%. Thus, when the p-value of a demographic variable exceeds the 0.05 threshold, there is no significant difference in that specific demographic variable between the groups of respondents. The results of the one-way ANOVA are depicted in Table 7.
Demographic Variable P-value
Age 0.397
Level of education 0.446
Net Monthly Income 0.179
Table 7 P-values one-way ANOVA
From Table 7 and Appendix 3.1 can be concluded that the demographic variables age, level of education, and net monthly income are evenly distributed between the 8 questionnaires: age (F(7)=1.048, p>0.05); level of education (F(7)=0.979, p>0.05); net monthly income (F(7)=1.464, p>0.05). Therefore, it can be concluded that null hypothesis is approved and there are no significant differences for these demographic variables between the 8 groups of respondents.
4.2 Socio-Demographic Characteristics
36 | P a g e Demographic Variable Sample size (n) Sloot et al. (2005) 749 Regular Dutch Shoppers (CBL 2011) 1786 Sample 415 Gender Male (%) Female (%) 77 23 71 29 49.4 50.6 Age 34 or below (%) 35 till 54 (%) 55 or older (%) 32 40 28 23 42 35 78.8 13.5 7.7 Family Composition Single (%)
Cohabit with children (%) Cohabit without children (%) Single parent (%) N/A N/A 53.5 14.2 30.8 1.4
Level of education (based on Dutch system) Lower (%) Middle (%) Higher (%) Doesn’t say (%) 27 42 30 2 24.2 37.5 38 0.3 5.8 13.0 81.2 0
Net Monthly Income
€500 or below (%) €501 - €1000 (%) €1001 - €1500 (%) €1501 - €2000 (%) €2001 - €2500 (%) €2501 - €3000 (%) €3001 - €3500 (%) €3501 - €4000 (%) €4000 or more (%) N/A N/A 22.2 26.7 14.0 16.4 10.4 3.9 2.9 0.7 2.9 Employment Status Entrepreneur (%) Full-time employee (%) Part-time employee (%) Unemployed/Job Seeker (%) Unfit for work (%)
Houseman/Housewife (%) Retired/Early Retirement (%) Student (%) N/A N/A 5.3 28.2 14.7 3.6 .5 1.9 .5 45.3
37 | P a g e Compared to previous research, the distribution of male (49.4%) and female (50.6%) participants is more equal for this research. This can be explained by the fact that the data collection for the other studies took place in actual supermarkets and the data collection for this study took place through an online questionnaire. Next to the demographic variable gender, this sample also differs on age compared to the other two studies. Whereas in this sample the group ‘35 till 54’ is the smallest (13.5%) group, in the other samples this group represents the largest group of respondents. Important to notice is that in this sample the group ’34 or below’ is by far the largest group (78.8%) compared to the other studies. This can be explained by the fact that a lot of the participants were approached through social media, forums and e-mail. Lastly, this sample also differs on level of eduction compared to the other samples. From Table 8 can be concluded that the difference in level of education, based on the Dutch system, in this sample is larger (higher level 81.2% and lower level 5.8%) compared to the difference in higher level and lower level of the two other samples. The large difference in level of education for this sample can be explained by the fact that this questionnaire was completed by a lot of students from the University of Groningen.
4.3 Brand Equities
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4.4 Simple Analysis
Now the means for the dependent variables category buying intention, assortment evaluation, and perceived assortment choice of the experimental conditions will be discussed. This is done to create an overall view on the different variables per experimental condition. The means of category buying intention are depicted in Table 9, the means of assortment evaluation in Table 10, and the means of perceived assortment choice in Table 11. The SPSS-output can be found in Appendix 3.3.
Albert.nl Bestellenbijplus.nl
Utilitarian Hedonic Utilitarian Hedonic
OMO Witte Reus Jack Klijn Duvyis OMO Witte Reus Jack Klijn Duyvis
Brand Extension Exclusivity
No 5.20 4.89 5.23 5.16 4.77 4.65 5.64 5.11
Yes 4.96 4.83 5.29 5.15 4.83 4.80 5.27 5.26
Tabel 9 Means Experimental Conditions Category Buying Intention
Albert.nl Bestellenbijplus.nl
Utilitarian Hedonic Utilitarian Hedonic
OMO Witte Reus Jack Klijn Duvyis OMO Witte Reus Jack Klijn Duyvis
Brand Extension Exclusivity
No 4.84 4.71 4.68 4.96 4.46 4.53 5.13 4.84
Yes 4.78 4.74 4.73 5.35 4.81 4.86 4.94 4.96
Tabel 10 Means Experimental Conditions Assortment Evaluation
Albert.nl Bestellenbijplus.nl
Utilitarian Hedonic Utilitarian Hedonic
OMO Witte Reus Jack Klijn Duvyis OMO Witte Reus Jack Klijn Duyvis
Brand Extension Exclusivity
No 4.45 3.89 3.57 3.93 4.24 3.87 4.06 4.11
Yes 4.26 4.12 3.63 4.30 4.14 4.25 3.82 4.21
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4.5 Reliability Analysis
There are two variables, perceived assortment choice and brand equity, in the questionnaire which are measured through multiple items. Although these measurement scales are derived from previous studies, it is important to measure whether or not these items actually measure the desired constructs (Malhotra, 2007). Therefore, the internal consistency of these two construcst was measured through the performance of the Cronbach’s Alpha test. When the Cronbach’s Alpha exceeds the threshold of 0.6, the measurement scale is reliable (Malhotra, 2007). The results of the Cronbach’s Alpha test is displayed in Table 12. The SPSS-ouput can be found in Appendix 3.4.
Variable Cronbach’s Alpha
Dependent Variable
Perceived Assortment Choice 0.842
Moderator
Brand Equity 0.820
Table 12 Cronbach's Alphas
Table 12 shows that both perceived assortment choice as brand equity exceeds the 0.6 threshold. Therefore, it can be concluded that the scales are internally consistent and that the items of these measurement scales truly measure the desired construct and thus are reliable.
4.6 Normality Test
In order to assess whether the sample is normally distributed, the skewness and kurtosis of the dependent variables category buying intention, assortment evaluation, and perceived assortment choice will now be discussed. Skewness is the tendency of the deviations from the mean to be larger in one direction than in the other. Kurtosis is a measure of the relative peakedness or flatness of the curve defined by the frequency of distribution (Malhotra, 2010). The values of skewness and kurtosis are depicted in Table 13.
Skewness Std. Error of Skewness Kurtosis Std. Error of Kurtosis Dependent Variable
Category Buying Intention Assortment Evaluation Perceived Assortment Choice
-0.924 -.785 -0.036 0.085 0.085 0.085 0.358 -0.505 -0.846 0.170 0.170 0.170
40 | P a g e From the Skewness test can be concluded that the data is skewed left, meaning that the left tail is relatively long compared to the right tail. From the Kurtosis test can be concluded that category buying intention is peaked a little bit more than a normal distribution and assortment evaluation and perceived assortment choice are flatter than a normal distribution. However, all the values do not exceed the l1l threshold, thus the distributions of the dependent variables are normally distributed.
4.7 Multicollinearity Check
The final step before conducting the multiple regression is to check for multicollinearity. Multicollinearity arises when intercorrelations among the independent variables are very high (Malhotra, 2010). In order to check for multicollinearity, the Various Inflaction Factor values for each independent variable is determined. Multicollinearity occurs when the VIF-value exceeds the threshold of 10. The VIF-values of the independent variables are depicted in Table 14. The SPSS-output can be found in Appendix 3.5.
VIF Independent Variable
Brand Extension Exclusivity (H1b) 23.638
Moderators
Brand Equity Store Equity
Brand Equity*Brand Extension Exclusivity (H2b) Store Equity*Brand Extension Exclusivity (H3b) Conqruency Brand Equity & Store Equity
(Congr. BE * SE)*Brand Extension Exclusivity ( H4b)
4.165 26.102 25.837 37.957 27.472 39.397 Control Variables Gender Age Family Composition Level of Education Net Monthly Income Employment Status Presence Favourite Brand Choice Assortment Familiarity Offline Store Familiarity Online Ordering Product type 1.038 1.608 1.046 1.258 2.183 1.938 1.230 1.389 1.784 1.060 1.326
41 | P a g e From Table 14 can be concluded there are indeed predicting variables that are dealing with multicollinearity. However, this is not surprising because it is not unlike that multicollinearity occurs when interaction variables are used (Cortina, 1993). This may lead to incorrect results of the predicting variables. The predicting variables exceeding the threshold of VIF 10, are mean centred before taken into the regression analysis.
4.8 Regression Analyses
As stated before, this research includes one independent variable: Brand Extension Exclusivity (BEE), three dependent variables: Category Buying Intention (CBI), Assortment Evaluation (AE), Perceived Assortment Choice (PAC) and two moderators: Brand Equity (BE) and Store Equity (SE). The results of the regression analysis will now be discussed per model in which model 1 represents the influence of BEE on CBI, model 2 BEE on AE, and model 3 BEE on PAC. The possible influence of the moderators will also be discussed per model.
4.8.1 Model 1 Influence Brand Extension Exclusivity on Category Buying Intention
The possible influence of Brand Extension Exclusivity on Category Buying intention and the possible moderating effects of Brand Equity and Store Equity has been tested through the following regression equation:
CBI: β0+ β1*BEE+ β2*BE+ β3*SE+ β4*(BEE*BE)+ β5*(BEE*SE)+ β6*(BE*SE) + β7(BESE*BEE) + ε
ε=error term
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Model 1 Influence BEE on CBI
R² 0.251 Adjusted R² 0.235 F-value 15.135 P-value 0.000*** Dependent Variable Category Buying Intention Beta Sig. Constant 4.974 0.000*** Independent Variable
Brand Extension Exclusivity (H1a) 0.290 0.533
Moderators
Brand Equity Store Equity
Brand Equity*Brand Extension Exclusivity (H2a) Store Equity*Brand Extension Exclusivity (H3a) Conqruency Brand Equity & Store Equity
(Congr. BE * SE)*Brand Extension Exclusivity (H4a)
0.165 0.321 -0.085 -0.194 -0.103 0.071 0.026** 0.510 0.399 0.775 0.323 0.630 Control Variables Gender Age Family Composition Level of Education Net Monthly Income Employment Status Presence Favourite Brand Choice Assortment Familiarity Offline Store Familiarity Online Ordering Product type 0.048 0.014 -0.207 0.017 -0.044 -0.159 -1.323 0.263 -0.032 0.070 -0.023 0.620 0.008*** 0.612 0.774 0.227 0.232 0.000*** 0.000*** 0.069* 0.653 0.837 * Significance at 10% level ** Significance at 5% level *** Significance at 1% level
Table 15 Regression Model 1 BEE on CBI
43 | P a g e Third, the interaction variable store equity*brand extension exclusivity does not have a significant influence on category buying intention; B=-0.194, p=0.775 (>0.05). Therefore, H3a is not supported. Lastly, the level of congruence between brand equity and store equity*brand extension exclusivity does not have a significant influence on category buying intention; B=0.071, p=0.630 (>0.05). Therefore, H4a is not supported.
4.8.2 Model 2 Influence Brand Extension Exclusivity on Assortment Evaluation
The possible influence of Brand Extension Exclusivity on Assortment Evaluation and the possible moderating effects of Brand Equity and Store Equity has been tested through the following regression equation:
AE: β0+ β1*BEE+ β2*BE+ β3*SE+ β4*(BEE*BE)+ β5*(BEE*SE)+ β6*(BE*SE) + β7(BESE*BEE) + ε
ε=error term
44 | P a g e
Model 2 Influence BEE on AE
R² 0.239 Adjusted R² 0.222 F-value 14.130 P-value 0.000*** Dependent Variable Assortment Evaluation Beta Sig. Constant 4.881 0.000*** Independent Variable
Brand Extension Exclusivity (H1b) 0.195 0.689
Moderators
Brand Equity Store Equity
Brand Equity*Brand Extension Exclusivity (H2b) Store Equity*Brand Extension Exclusivity (H3b) Conqruency Brand Equity & Store Equity
(Congr. BE * SE)*Brand Extension Exclusivity (H4b)
0.110 -0.443 -0.035 0.430 0.062 -0.063 0.156 0.386 0.740 0.543 0.568 0.680 Control Variables Gender Age Family Composition Level of Education Net Monthly Income Employment Status Presence Favourite Brand Choice Assortment Familiarity Offline Store Familiarity Online Ordering Product type -0.061 0.017 0.216 0.015 -0.082 -0.275 -1.433 0.202 -0.050 0.211 0.099 0.550 0.003*** 0.613 0.804 0.032** 0.048** 0.000*** 0.000*** 0.007*** 0.198 0.388 * Significance at 10% level ** Significance at 5% level *** Significance at 1% level
Table 16 Regression Model 2 BEE on AE
45 | P a g e Third, the interaction variable store equity*brand extension exclusivity does not have a significant influence on assortment evaluation; B=0.430, p=0.543 (>0.05). Therefore, H3b is not supported. Lastly, the level of congruence between brand equity and store equity*brand extension exclusivity does not have a significant influence on assortment evaluation; B=-0.063, p=0.680 (>0.05). Therefore, H4b is not supported.
4.8.3 Model 3 Influence Brand Extension Exclusivity on Perceived Assortment Choice
The possible influence of Brand Extension Exclusivity on Perceived Assortment Choice and the possible moderating effects of Brand Equity and Store Equity has been tested through the following regression equation:
PAC: β0+ β1*BEE+ β2*BE+ β3*SE+ β4*(BEE*BE)+ β5*(BEE*SE)+ β6*(BE*SE) + β7(BESE*BEE) ε
ε=error term
