An empirical investigation on the influence of brand awareness on the consumer’s repurchase intention of a newly launched product in China

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Anouk Lokhorst

s1342681

December 2008

UNIVERSITY OF GRONINGEN

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An empirical investigation on the influence of brand awareness on the

consumer’s repurchase intention of a newly launched product in China

Masterthesis

Author:

Anouk Lokhorst

Studentnumber:

s1342681

Date:

December 2008

University:

University of Groningen

Author’s address:

Marnixstraat 156- 3 hoog, 1016 TE Amsterdam

Author’s phone:

+31 6 41280572

Author’s email:

anouklokhorst@hotmail.com

Faculty:

Faculty of Economics & Management and Organization

Specialization:

Business Administration, MSc Marketing Management

Supervisor 1:

Dr. M.A. Tuk

Supervisor 2:

Dr. J.E. Wieringa

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Brand awareness and repurchase intention

An empirical investigation on the influence of brand awareness on the consumer’s repurchase intention of a newly launched product in China

Management summary

This master thesis focuses on the following objective: to investigate whether, and if so to what extent, there is an influence of brand awareness of a newly launched product on the consumer’s repurchase intention and if the consumer’s repurchase intention is influenced by socio- demographic factors and ten different subcultures in China.

Firstly - with the aid of a literature research - a theoretical framework has been created. In this framework, the variables which influence the repurchase intention are shown. The variables have been divided into three categories; brand awareness, the path between purchase and repurchase intention and the influence of the level of brand awareness on this path. This resulted in 7 hypotheses. These hypotheses are tested, using a sample of 2123 respondents divided over ten provinces in China. The respondents answered a questionnaire of Coca Cola Industries Ltd concerning their brand awareness and opinion about a new launched ice tea product: Original Leaf Tea. These interviews have been conducted in week 19, 20 and 21 of 2008. The data has been analysed with the statistical program SPSS, using regression analyses.

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Preface

This thesis is the conclusion of the Masters in Business Administration, specialization Marketing Management at the University of Groningen. Over the last months I have been studying the influence of brand awareness on the consumers´ repurchase intention. The results of that work are found in this report. There are a number of people that are specifically worth mentioning for their help in the realization of this thesis. First of all, I would like to thank my supervisors, Dr. Mirjam Tuk and Dr. Jaap Wieringa, for their useful comments and insights. Furthermore, I want to thank Mr. Martin Jansen, Mrs. Maria Lau, and Mr. Golden Gau of Coca Cola China Industries Ltd. I am really thankful for all the possibilities which they offered and all the help they gave me during my internship in Shanghai. Furthermore, it was a great opportunity to conduct a research for Coca Cola in China. Last but not least, I would like to thank my family and friends for their support.

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Chapter 1 Introduction and problem definition

This first chapter describes the problem definition and the background of this research.

1.1. Introduction

Successful new product introductions are very important for companies. They are more and more valued as a key component for sustainable success of a business’ operations (Henard and Szymanski, 2001). To make the newly launched product a success, companies invest a large amount of money into their promotional activities. With these activities, the companies aim to persuade consumers to purchase the product for the first time. But before the product introduction is becoming a success, the company needs not only first time purchases but also loyal consumers. Thus, important is that consumers have to buy the product again. Hence, for companies it is interesting to know which characteristics the consumer response path will include from the first trial to the repurchase behaviour in the future and how the company can influence this path.

Research findings on the connection between the purchase intention for the first trial and the repurchase intention in the future have been mixed. The product trial is the first phase after the purchase intention (Kempf and Smith, 1998). Most of the people create real purchase behaviour after they had the intention to purchase the product (Chandon, Morwitz and Reinartz, 2005). Subsequent to the product trial, consumers will evaluate the products and decide if they will purchase the product in the future again. This evaluation process is called the consumer response. As we have seen in the model of Esch and Langner (2006), Cronin, Brady and Hult (2000) and Lin and Chang (2003), brand satisfaction seems to be an important factor within the consumer response of repurchasing a brand. Szymanski and Henard (2001) mentioned in their meta-analyse on the empirical researches of brand satisfaction that there is a direct relationship between brand satisfaction and consumer repurchase intention.

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studies. Keller (2003) argues that brand awareness is primarily important, as there is a connection between brand awareness, purchase intention and brand choice. It has implications for the way consumers create consideration sets (Aaker, 1992) and make product decisions and choices (Keller, 2003). Consumers have to become aware of new products before making a purchase intention or choice among the brands in their awareness set (Aaker, 1992 and Narayana and Markin, 1975). Moreover, Hoyer and Brown (1990) mention that awareness will keep the brand in the evoked set, which increase the probability to purchase the product in the future.

Furthermore, to launch a new successful product in the fast moving consumer goods market, consumers have to choose and purchase the product in the near future for the second time again. Advertising is one of the ways to encourage these repurchases (Tellis, 1988). One of the major goals of advertising in situations with low involvement products is to create and maintain brand awareness (McMahan and Harry, 1980). Companies use repetition of their brand or product name in their advertisements so that the consumers become aware of it and feel comfortable with the product (Hoyer and Brown, 1990 and Bogart, 1986). In our research we are going to ask the question if this focus on brand awareness is that valuable for creating loyal consumers.

The conclusion of these studies is that brand awareness an essential aspect is focussing on the purchase process. Companies are trying to enhance this brand awareness by advertising (Tellis, 1988). With the help of advertising, they want to change newly launched products into successful products with consumers who purchase the product in the future again. However, there is only empirical evidence in the influence of enhancing brand awareness on product trial. Therefore, in our research we are interested in what extent enhancing the level of brand awareness could influence the consumers’ intention for repurchasing in the future.

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Furthermore, brand recall means the consumers’ need “to retrieve the actual brand element from memory when given some related probe or cue.” In this research, we attempt to make the difference between the influence of brand recall and brand recognition on the consumer’s repurchase intention clear. Using these two definitions, we can split the level of brand awareness into four groups of brand awareness; 1) consumers who do not know the brands, 2) consumers who only recognize the brand (brand recognition), 3) consumers who can recall the brand (brand recall) and 4) consumers who recall the brand at first (brand recall). We will research the different effects of these four groups on the (re) purchase process.

The influence of the level of brand awareness on the consumer repurchase intention is measured by several researchers. The link between brand recognition, as part of brand awareness and consumer choice is positively recognized by Hower and Brown (1990). Subsequently, Yuan and Yang (2007) also recognized a positive relation between brand recognition and the behavioural intentions of consumers to buy the product again. Ultimately, brand awareness should have long term value by guaranteeing future revenue streams, according to Aaker (1992, 1996). Concluding, this group of research can be summarized as a positive relationship between brand awareness and the consumer repurchase intention.

On the other hand, Esch and Langner (2006) did not find the relation between brand awareness and consumer repurchase intention directly. They constructed a framework to define the relationship between brand knowledge and purchase behaviour. They did not identify a significant relationship between recall, as part of brand awareness and future purchases. Nevertheless, they found a relation between brand recall and brand satisfaction through brand image. Moreover, they found an influence of brand satisfaction on future purchases, through brand attachment. The influence of brand awareness in a choosing process could be different, as Macdonald and Sharp (2001) argue; if consumers get more experienced with the choosing task, the use of awareness as a choosing tactic declines in importance.

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(1988) mentions that purchase behaviour is influenced by brand awareness, features, price and displays. We will not focus on price, displays and features during our research. We argue that the influences of price and display are stronger on behaviour than on intentions. This could indicate that intentions are influenced by a smaller amount of variables. Therefore, we hope to find a strong influence of brand awareness on the (re) purchase intentions.

Figure 1.1 Previous research

It is relevant to distinguish the different consumer behaviour factors which eventually influence the repurchase intention of a new product. We will measure the effects of socio demographic variables, since Lin and Chang (2003) noticed the influence of demographic variables on loyalty and Mittal and Kamakura (2001) found the link between these variables and the number of repurchases.

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2003). Culture can be defined on different levels of analysis, ranging from group level to organisational level or national level (Soares, Farhangmehr and Shoham, 2007). A great number of studies recognized the influence of national culture on a business’ performance (Hofstede, 1980, Gielens and Steenkamp 2007). Within most countries, several subcultures can be recognized. Subcultures could affect the performance of a company, since it will show a tendency towards particular human or consumer behaviours. This will influence practices and outcomes (Lenartowitcz and Rotz, 2001). Therefore, it is possible to hypothesize varying customer behaviour outcomes between different subcultures. Hence, it is very interesting to find the relationship between the subcultures and the consumer’s repurchase intention. This research will examine ten subcultures within a single country: The Peoples Republic of China. These subcultures will only be defined by geographic areas, since the other cultural differences within China are too difficult to measure.

1.2 Problem definition

The problem definition consists of the research objective, the research questions, sub questions and some limitations (de Leeuw, 2003).

1.2.1 Research objective

The research objective has to be defined, to get a better view of the problem and the objective of the research. The research objective is:

To investigate whether, and if so to what extent, there is an influence of brand awareness of a newly launched brand on the consumer’s repurchase intention and if the consumer’s repurchase intention is influenced by socio- demographic factors and ten different subcultures in China.

1.2.2 Research question

In order to achieve the research objective, a central research question is formulated.

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1.2.3 Sub questions and methodology

With the sub questions, the research question has to be answered. These sub questions will be answered by using quantitative research.

1. Which factors are important within the connection between the consumer’s purchase and repurchase intention of a newly launched product?

2. What kind of relationship exists between brand awareness and the purchase intention of a newly launched product?

3. What kind of relationship exists between brand awareness and the consumer’s response after product trial of a newly launched product?

4. What kind of relationship exists between the brand awareness of a newly launched product and the consumer’s repurchase intention?

5. In which way do subcultures and socio- demographic factors affect the consumer’s repurchase intention?

1.2.4 Limitations

 Since this research is conducted for Coca Cola China Industries Ltd, the results could not be focused on other products or markets.

 Since this research is conducted for Coca Cola China Industries Ltd, it can only cover the ten regions in China where they operate, as opposed to all the regions within China.

 Since the research is conducted for Coca Cola China Industries Ltd, the research covers the geographic areas of the regions, in terms of subcultures, as opposed to other characteristics between different subcultures.

1.3 Methodology

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1.3.1 Literature framework

In this part of the research, the framework or conceptual model will be developed, by combining previously conducted studies and literature. We will explain the definitions of the different variables and find factors which influence the particular relationships. This research will result in hypotheses, which show the relations within the conceptual model.

1.3.2 Empirical research

The findings in the literature framework will be tested in the empirical research. Different types of research have to be done to examine the hypotheses. First of all, the relation -purchase and repurchase intention- has to be tested. Secondly, the influence of brand awareness on this path will be measured. Finally, the influence of the subcultures and socio- demographic factors on the consumers’ repurchase intention will be deliberated. This will be done with data of more than 2000 (n=2000) respondents, divided over ten geographic regions.

1.4 Outline

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Chapter 2 The influence of Brand Awareness on Purchase Intention

In this chapter, we will explain the influence of the level of brand awareness on the purchase intention when consumers buy a product for the first time. To get a better view on this, we divided this chapter into four sections. First, the definition of purchase intention will be explained. Moreover, in the second part, the phenomenon of brand equity will be made clear. The third section discusses the definition of brand awareness as part of brand equity. Finally, in the fourth section, the way how brand awareness could influence the purchase intention will be examined. The influence of brand awareness on the purchase and repurchase intention will be clarified in chapter 3.

2.1 Purchase intention

Companies spend a lot of money promoting their newly launched products. They want to create awareness for their products in order to increase the consumers’ intention to purchase the products for the first time. Cobb-Walgren, Ruble and Donthu (1995) observe purchase intention as part of the choice behaviour of the consumer and define it as the intention to purchase a particular brand. Teng and Laroche (2006) mentioned the fact that the purchase intention is a result of a confidence process. After evaluating the knowledge of the product, consumers feel confident about the product or not. From there consumers create the intention to purchase the product for the first time.

We describe purchase intention in this research as the intention of the consumer to buy a particular product or brand for the first time. As we described above, Cobb- Walgren et al. (1995) described purchase intention as part of a choosing process and Tenga and Laroche (2006) mentioned that it is a result of a decision process. We argue that the purchase intention is a result, which is created through a decision process. In our research, the purchase intention is similar to the final intention to buy a specific product for the first time.

2.2 Brand equity

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harmony with most of the literature. According to Lassar, Mittal and Sharma (1995) brand equity is the driving force for incremental financial gains to organizations. Aaker (1992) adds that brand equity generates considerable value for a company. Therefore, it is valuable for companies to measure this brand equity.

2.2.1 The definition of brand equity

There are different types of definitions for brand equity. Before distinguishing them, we first have to make clear that brand equity can be divided into customer based brand equity and financial based brand equity (Lassar et al., 1995). Since this research is focused on customer behaviour, we will only look at the customer based brand equity measurement and focus only on the relating brand equity definitions.

Aaker (1992) describes the definition of brand equity as “a set of five categories of brand assets and liabilities linked to a brand, its names, and symbols that add to or subtract from the value provided by a product or service to a firm or to that firm’s customers, or both.” These five ways to create value to a brand are brand loyalty, brand awareness, perceived quality, brand associations and other proprietary brand assets. According to Aaker brand awareness in relation to brand equity is very important, since it influences the considerations and the selection process of a brand by the consumers. As a result, brand satisfaction and repetitive buying patterns are often indicators of a healthy brand. Furthermore, brand awareness creates brand value and higher brand equity, in accordance with his research.

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purchasing. Moreover, it gives the product an identity by linking brand elements to a product category and associated purchase and consumption or usage situations.

2.2.2 The influence of brand equity on (re) purchase intention

The studies above show the importance of brand equity towards the behaviour of consumers. It is also interesting to have a look at the research in the past, concerning the influence of the level of brand equity on the purchase and repurchase intentions.

Figure 2.1: Research model of Cobb-Walgren et al. (1995)

Cobb- Walgren et al. (1995) researched the impact of brand equity on brand preference and purchase intentions (see figure 2.1). They concluded that brand equity influences brand preference and purchase intentions directly. Furthermore, preferences and purchase intentions together influence brand choice, which the research defines as the final purchase choice. Thus, a product with a higher equity in each category generates significantly more preference and purchase intention.

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Concluding, we can say that there is empirical evidence of a direct and indirect relation between the level of brand equity and the repurchase intention. As brand awareness is part of the brand equity, it is interesting to figure out if this relation exists between the level of brand awareness and repurchase intention as well.

2.3 Brand awareness

Brand awareness describes the accessibility of the brand in the memory of the consumers (Chandon, 2003) and the level of name recognition on perceptual frequency (Yuan and Jang, 2007). It can be measured as the consumer’s ability to identify the brand in a given product class (Narayana and Markin, 1975) under different conditions (Keller, 2003).

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According to Laurent, Kapferer and Roussel (1995) brand awareness can be measured in line with three methods; spontaneous, top of mind and aided brand awareness. With spontaneous awareness the consumers are being asked to name all the brands they know in a specific product category. To measure the top of mind brand awareness consumers are being asked to name the first brand which comes to mind when thinking of a product category. With the aided brand awareness, consumers get a list of brand names and have to choose the brand names which they recognize.

In this research, we make the link between brand recall and spontaneous and top of mind brand awareness, as in both situations consumers have to name a brand without any recognitions. You can also perceive these definitions together as unaided brand awareness. We also make the connection between brand recognition and aided brand awareness, as in both situations the consumer has to recognize the product through previous exposure with the brand name. Due to this separation, we are able to measure the dissimilar effect of the different levels of brand awareness on specific factors.

2.4 The influence of brand awareness on purchase intention

In this paragraph, we will summarize the literature about the influence of the level of brand awareness on purchase intention.

Figure 2.2: Research model of Narayana and Markin (1975)

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the buyer actually considers when making a specific brand choice”. The inert set consists of “those brands in the product category for which the consumer has neither a positive nor a negative evaluation”. Finally, the inept set consists of “those brands the consumer has rejected from his purchase consideration” (see figure 2.2).

Once a consumer is aware of a brand, the consumer should assess it with the information, which he has available and accordingly consider the purchase. To achieve success of the launch of a new product, companies need to get the brand into the evoked set of brand awareness of the consumers, to create purchase intention. Narayana and Markin (1975) also mention that certain brands where consumers lack sufficient information are included in the inert sets of many consumers. Hence, we conclude that if companies provide more information - thus enhancing the brand awareness - these brands, could move from the inert and inept set into the evoked set. This means that these brands move into the phase where customers create the intention to purchase the product. We summarize these perceptions of the research of Narayana and Markin (1975) as a positive influence of the level of brand awareness on the purchase intention of a consumer.

Furthermore, one of the conclusions of research conducted by Hoyer and Brown (1990), mentions that awareness should be important for the first purchase of a product. The most well-known brand may be chosen in the first instance because of the confidence a customer will have that it is probably the best. Thus, this research recognized the influence of brand awareness on purchase intention too.

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In reference to these theories, we can say that greater brand awareness could result in a higher purchase intention for a first time purchase. The influence of brand awareness on the consumer’s repurchase intention -thus purchasing the product in the future again - will be discussed in the next chapter.

As we suggested in paragraph 2.3, brand awareness consists of brand recall and brand recognition. Since brand recall and brand recognition are measured on different levels of brand awareness, the influence on purchase intention can also be different. Aaker (1992) researched the influence of this difference with a taste test. The probability that customers will consider to buy this brand is increased when he mentions the brand on recall level. At recognition level, customers choose a lot of famous brands, even if they have never bought nor used the product. Although these facts are results of a taste test, we can say that it can be relevant for our research. The prospects for consumers who have the intention to purchase a product are higher when a consumer can recall a specific brand name thinking of an explicit category. This is as opposed to when a consumer merely recognizes the brand name within a list of different brands. Hence, we expect a difference in the positive effect of brand recall and brand recognition on the purchase and repurchase intention of consumers.

2.5 Conclusion of the chapter

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Chapter 3 The link consumer purchase- and repurchase intention

In the previous chapter, we described the influence of the level of brand awareness on the purchase intention when consumers buy a product for the first time. In chapter 3, we aim to discover the relationship purchase and repurchase intentions and the influence of the level of brand awareness on this relation. These facts can be important for companies who are launching new products. Nowadays, companies focus their promotional activities of newly launched products on enhancing brand awareness of consumers. It is interesting to know if consumers - who already have bought the product once - can still be influenced by brand awareness for buying the product again. In this chapter, we will examine the definition of repurchase intention in the first section and discuss the link purchase and repurchase intention in the second part. Finally, we will focus us on the influence of the level of brand awareness on this relationship.

3.1 The consumer’s repurchase intention

To create a strong brand, Esch and Langner (2006) argue that a company has to know the current and intended future purchase behaviour of consumers. Companies have to identify the reason why consumers intend to buy the brand again, especially if it just launched a new brand or product. If consumers buy the product again, the new brand will be partly accepted and the promotion could be continued to make the launch into a success. This important measurement whereby consumers intend to buy a product again is recognized as the consumer’s repurchase intention. Hellier, Geursen, Carr and Rickard (2003: p1764) defined the consumer’s repurchase intention as “the individual’s judgments about buying a designated brand from the same company again, taking his or her current situation into account.” The reason for consumers to buy a product again depends on different aspects and influences. After the first usage of the brand, the product trial, the consumer response will be created. This consumer response exists of the emotional reaction regarding the brand. We will discuss this reaction in paragraph 3.3.

3.2 Product trial

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intention to purchase actually buy the product. Other research discusses a smaller rate, around 60% (Chandon et al, 2005). We will not investigate this relationship, as we choosed to focus on (re) purchase intention instead of real (re) purchase behaviour.

3.3 The consumer’s response

Because product trial involves direct physical contact with the product, a consumer’s affective response should include emotional reactions towards the brand and/ or the experience itself. We call this the consumer’s response. The consumer’s response is the result of the product trial and consists of the product evaluation, brand satisfaction and brand preference. We will discuss these three definitions in this paragraph.

3.3.1 Product evaluation and brand satisfaction

The utilization of a brand - the product trial - results in an evaluation by the consumers, the first part of the consumer’s response. This cognitive evaluation of whether or not the exchange relationship with the brand is rewarding can result into brand satisfaction (Esch and Langner, 2006). Brand satisfaction can be defined as a post purchase evaluation of product quality given pre purchase expectations (Kotler, 1991).

Figure 3.1: Model of the role of expectations

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Thus, the expectations are part of the evaluations. Therefore, we will handle expectations and evaluations in our model together as one factor: product evaluation.

In previous descriptions, researchers emphasize that brand satisfaction could be viewed as a result of the evaluation of prior usage. Cronin, Brady and Hult (2000: p204) call this satisfaction “an evaluation of an emotion”. This is reflecting the degree to which a consumer believes that the usage of a brand reminds him of positive or negative feelings. Furthermore, Hellier et al. (2003: p1765) define brand satisfaction as “the degree of overall pleasure or contentment felt by the consumer, resulting from the ability of the brand to fulfil the customers’ desires, expectations and needs in relation to the service.” This definition includes the fact that the product has to be used or purchased before the brand satisfaction can be established.

The moment when the product will be evaluated by the consumers depends on the involvement of the product. For low involvement products the evaluation will occur during the consumption, while for high involvement products the evaluation will start at the point of purchase. As this research is focused on low involvement products, in our model the evaluation will occur after the product trial.

Other research concerning brand satisfaction shows the influence of brand satisfaction on repurchase intention. Oliver (1997) - for example - discussed loyalty as an outcome of brand satisfaction. He proposes three phases of satisfaction, namely the cognitive, affective and co native phase. These phases result in action loyalty, what we define as the repurchase intention or the repetitive usage.

Cronin et al. (2000) illustrates a significant direct relationship between satisfaction and behavioural intentions. This demonstrates that the factor brand satisfaction is in a direct relationship with the repurchase intention.

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focused on fairly complex products - low involvement products -, which implies that more brand satisfaction could result in more purchases in the future.

Hellier et al. (2003) found a direct and an even stronger indirect significant relation between brand satisfaction and the repurchase intention. The stronger indirect relationship could be clarified by the factor brand preference. Brand preference is “the extent to which the consumer favours the designated brand provided by his or her present company in comparison to the designated brand provided by other companies in his or her mindset” (Hellier et al., 2003: p1765). Hellier argues that brand preference is a strong factor linking brand satisfaction and the consumer’s repurchase intention to each other. This process whereby the consumer has to choose the most preferable between the provided brands is influenced by prior experience and should result in the intention of consumers to purchase the product again. We will discuss this factor in the next paragraph.

Figure 3.2: The role of product evaluation, satisfaction and brand preference in the research model

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3.3.2 Brand preference

One potential relevant aspect within the relationship between purchase intention and repurchase intention is already mentioned as one of the results of brand satisfaction in the previous paragraph; brand preference. Brand preference is the brand choice of consumers. Consumers prefer this brand above other brands.

We expect a direct role for brand preference on the repurchase intention in our model. Cobb- Walgren et al. (1995) and Keller (2003) already noticed this by describing the relation between brand preference and the purchase intention. Hellier et al. (2003) argue that brand preference results in the repurchase intention of a consumer. Therefore, the position of the consumer’s most preferable choice in our model will be in between brand satisfaction and the repurchase intention as is illustrated in figure 3.2.

To be clear, brand satisfaction is whether a consumer likes or dislikes a specific product, while brand preference relates to the most preferable brand of the consumer. Within the evaluation and brand satisfaction process an opinion of every brand separately will be created. During the brand preference process the different brands are compared with each other to finally pick out one brand as the most preferable one. Whether a consumer really intends to buy this preferred product in the future again is measured as the consumer’s repurchase intention.

3.3.3 Consumer response and repurchase intention

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3.4 The influence of brand awareness on the link purchase- and repurchase intention

As mentioned in chapter 2, brand awareness is an important factor for influencing the purchase intention. In this paragraph we will prospect the influence of the level of brand awareness on the link purchase and repurchase intention.

3.4.1 The influence of brand awareness on product trial and brand satisfaction

The influence of the level of brand awareness on brand satisfaction is not measured by most of the literature. Esch and Langner (2006) found no significant relationship between brand recall and brand satisfaction, although they found an indirect relation through brand image. Leong (2003) found an indirect positive relation between brand awareness and brand satisfaction. We also think that there is solely an indirect link between these two factors. Consumers have expectations of particular products. These expectations are often generated by communication that aim to increase brand awareness. Brand satisfaction partly exists of the evaluation of these expectations, as we already agreed with the articles of Anderson (1993) and Hellier et al. (2003). The link between brand awareness and brand satisfaction is the product trial, since consumers have to try the product before they can review their expectations. Moreover, brand awareness seems to influence the purchase intention, which suggests that it can be the same for product trial.

3.4.2 The influence of brand awareness on brand preference

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can form preferences. Image could also be a reason to prefer a specific brand over others. If a consumer is more aware of a product, it can be more popular in the market. Usually, consumers prefer more popular products.

All these arguments are given to show the positive direct relation between brand awareness and the brand preference of consumers. This shows that consumers with really high brand awareness prefer a brand more than somebody with lower brand awareness. Important hereby is that - in the end - consumers can prefer a different brand than the brand which they are the most satisfied about. Brand awareness can be one of the reasons of this fact.

3.4.3 The influence of brand awareness on the consumer’s repurchase intention

A lot of research is done referring to the positive influence of brand awareness on the purchase intention of a product which is never used by a consumer before. We have summarized some of this research in chapter 2. On the other hand, only a small amount of research have been done concerning the formal direct influence of the level of brand awareness - whereby recall and recognition is included - and the consumer’s repurchase intention. Since this causal relation is interesting, we are going to research this here.

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3.5 Conclusion of the chapter

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Chapter 4 Socio- demographic factors and Subcultures

To sell a product, a company needs consumers. Consumers are members of a particular national culture, which affects their attitudes, perceptions, tastes, preferences and values towards a product (Triandis, 1989). Therefore, it is expected that there exists a relationship between the acceptance of new products - and thus the repurchase intention - and the cultural differences between consumers. If this relation can be found, companies can separate their promotional activities into different focus points, with regard to the different subcultures and their characteristics.

4.1 Cultural differences

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outcomes (Lenartowitcz and Rotz, 2001). Therefore, it may be possible to hypothesize varying repurchase intentions between different subcultures.

4.2 Socio demographics factors

Previous research on the repurchase intention has largely disregarded the effect of socio demographic variables. Nevertheless, these variables could play a major role in the manifestations of culture on consumer behaviour according to Yeniyurt and Townsend (2003). This implies that different socio demographic variables have different influences on consumer behaviour and therefore on purchase intention. As Hofstede (1991) mentioned, subcultures could also be based on social class, occupation, religion, age and gender. Religion is not essential in this research, since most of the Chinese people have the same belief. Hence, we will focus on age, education, income and number of household members and call these the socio-demographic factors. We expect the following results focussing on the fast moving consumer goods market. Younger people tend to be more risk seeking than older people in this market. Hence, younger consumers are more attracted to new products, which results in more switching between new offerings. Therefore, the repurchase intention will be higher when the age is higher, which is a positive relation between age and the repurchase intention This is also what Gielens and Steenkamp mentioned focussing on the consumer packaged goods (2007). Moreover, the higher the level of education, the more risk consumers take, when repurchasing a product. This means a positive relation as well. The higher the level of income, the more able people are to purchase new products, so a positive relation could be the conclusion here. Remarkable hereby is that most of the people with a higher education have a higher income. Finally, there should be a positive relationship between the purchase volume and the household size, according to Gielens and Steenkamp (2007). Therefore, we expect a positive relation for repurchase intention as well here.

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Chapter 5 Hypotheses

In this chapter, we will show the hypotheses formulated as a result of our literature research in chapter 2, 3 and 4. Again, the purpose of this research is to examine the role of different brand awareness levels on the repurchase intention of a newly launched product. This role will be measured with the usage of hypotheses. We separated the hypotheses into (1) the link purchase - repurchase intention; (2) the influence of brand awareness on the path purchase - repurchase intention (product trial, brand preference and the consumer’s repurchase intention); and (3) the influence of subcultures and socio- demographic factors on the repurchase intention. We will discuss them in the following paragraphs.

5.1 Hypotheses related to the link purchase and repurchase intention

After the intention to purchase, consumers often use the product for the first time. We have called this the product trial. The product trial results in the consumer’s response, which exists of the emotional reactions towards the product. The consumer’s response starts with the evaluation of the product which will be translated into the brand satisfaction, as described in paragraph 3.3.1. Brand satisfaction will lead to brand preference, which is defined as the most preferable brand of the consumer. We expect both brand satisfaction and brand preference to positively influence the repurchase intention. Satisfied consumers are more likely to buy the product again than unsatisfied consumers and consumers will intend to buy their most preferable brand over other brands. Therefore, we will measure the influence of brand satisfaction and brand preference on the consumer’s repurchase intention. The following hypotheses describe this:

H1: Brand satisfaction positively influences the consumer’s repurchase intention of a newly

launched product

H2: Brand satisfaction positively influences the brand preference of a newly launched product

H3: Brand preference positively influences the consumer’s repurchase intention of a newly

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Hypothesis Empirical support

H1 Brand satisfaction upon repurchase intention Considerable empirical support

 Anderson and Sullivan (2001) significantly supported  Hellier et al. (2003) significantly supported

 Mittal and Kamakura (2001) significantly supported  Szymanski and Henard (2001) significantly supported

Limited empirical analyses

 Cronin et al. (2000) indirect significantly supported  Esch and Langner (2006) indirect significantly supported  Oliver (1997 in Szymanski & Henard, 2001) supported

H2 Brand satisfaction upon brand preference Considerable empirical support

 Hellier et al. (2003) significantly supported

H3 Brand preference upon repurchase intention Considerable empirical support

 Hellier et al. (2003) significantly supported

Not intuitively obvious with limited empirical support

 Cobb-Walgren et al. (1995) significantly supported  Keller (2003) supported

Table 5.1: Hypotheses 1, 2 and 3

A summary of the empirical evidence of the hypotheses is shown in table 5.1. Using previous literature, we

found that H1, H2 and H3 are supported by considerable empirical evidence. This explains that these studies

researched the same relations. Limited empirical analyses explain that nearly the same relation is being researched. Not intuitively obvious with limited support describes studies which did not focus on this relation, but focused on a relation close to ours.

5.2 Hypotheses related to the influence of brand awareness on the (re) purchase intention

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purchase intention is explained in 2.4. Hereby we recognized a positive relation between these two. Companies, which provide more information to consumers and thus enhancing the brand awareness of these consumers, could move their image into the evoked set of the consumers. This results in the intention to buy the product for the first time. Therefore, we expect a positive relation between brand awareness and the consumer’s intention to purchase the product for the first time. As we do not have the appropriate data to measure this relation, we will measure the influence of brand awareness on product trial. In paragraph 3.2 we adopt the fact that purchase intention - in most of the cases - results in product trial. Hence, we expect a positive impact of brand awareness on product trial. Furthermore, in paragraph 2.4 we argued that brand awareness could be separated into brand recall and brand recognition, as it is measured on a different level of brand awareness. We will make this distinction in our hypotheses as well. Only in that case we can determine the different effects and relations. Hence, we defined the following hypothesis:

H4: Brand recall influences the product trial of a newly launched product more positively than

brand recognition.

As we discussed in paragraph 3.4 brand awareness could be important in the link purchase and repurchase intention for a newly launched product. It is very interesting for companies to know if they still have to focus their promotional activities on enhancing the brand awareness of consumers who already tried the product before. Especially in the case of new products, consumers may choose and prefer a brand on the basis of a simple heuristic like brand awareness or the exposure effect and then evaluate the brand on basis of this knowledge. Therefore, we expect the following hypothesis:

H5: Brand recall influences the brand preference of a newly launched product more positively

than brand recognition.

Finally, we will measure the direct relation between brand awareness and the consumer’s repurchase intention:

H6: Brand recall influences the consumer’s repurchase intention of a newly launched product

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H4 Brand awareness upon product trial Considerable empirical support

 Hoyer and Brown (1990) significantly supported  Lin and Chan (2003) significantly supported

 Leong (2003), significant supported

 Aaker (1992) significant supported

 Esch and Langner (2006) indirect significant supported

H5 brand awareness upon brand preference Limited empirical analyses

 Bornstein (1989) significant supported  Janiszewski (1993) significant supported

 Hellier (1990) significant supported  Keller (2003) supported

H6 Brand awareness upon repurchase intention Not intuitively obvious with limited empirical support

 Bornstein (1989) significant supported  Esch and Langner (2006) supported  Janiszewski (1993) significant supported

Table 5.2: Hypotheses 4, 5 and 6

From previous literature, we found that H4have been subject of considerable empirical support. H5have been

subject of limited empirical analysis. H6is not intuitively obvious at all. Therefore it will very interesting to

investigate these influences now. A summary of the empirical evidence of hypotheses 4, 5 and 6 is shown in table 5.2.

5.3 Hypotheses related to the influence of subcultures-characteristics on the repurchase intention

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H7a: Sub cultural variables can predict behaviour towards the consumer’s repurchase intention

of a newly launched product.

Moreover, as we discussed in paragraph 4.3, socio demographic factors could also have consequences for the relevant repurchase intention. We expect to see an influence of socio demographics on the repurchase intention, which we hypothesize as:

H7b: Age positively influences the consumer’s repurchase intention of a newly launched product

H7c: The level of education positively influences the consumer’s repurchase intention of a

newly launched product

H7d: Income positively influences the consumer’s repurchase intention of a newly launched

product

H7e: Household size positively influences the consumer’s repurchase intention of a newly

launched product

H7a sub-cultural variables upon repurchase intention

 Traindis (1989) in Yeniyurt and Townsend (2003), significant supported

 Lenartowitcz & Roth (2001), significant supported

H7b,c,d and e

Socio-demographic variables upon relation repurchase intention

 Mittal and Kamakura (2001) significant supported  Lin and Chang (2003), significant supported

 Yeniyurt & Townsend (2003) significant supported

Table 5.3: Hypothesis 7

From previous literature, we found that H7a has not been subject to intuitively obvious support. Furthermore,

H7b,c,d,ehas been the subject of limited empirical analyses. A summary of hypothesis 7’s empirical evidence is

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The conceptual model is used to test the hypotheses. Moreover, it makes the problem more comprehensible and operational (de Leeuw, 2003). In this conceptual model (figure 6.1), the different relations are illustrated by a line with an arrow. The hypotheses are showed by normal lines, while dotted lines explain the relations, which will not be covered in this research (see paragraph 5.1 and 5.2). We are not going to measure the relations between the consumer’s purchase intention, product trial, product evaluation and brand satisfaction. This is because we only have the measurements of the brand awareness and repurchase intentions for one product, which means that we can not compare them with measurements of other products.

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Chapter 7 Research Design

This chapter presents an overview of the methodology that will be used to empirically test the hypotheses. In the first section the case study will be clarified. Subsequently, the qualitative and quantitative research will be given. We will explain how the empirical research will be conducted. This chapter ends with an overview of the variables.

7.1 Case study

In this research, we will make use of the data of a case study. Coca Cola China Industries ltd has launched a new product in China and requests to do research about the brand awareness of this new brand in their operating units.

7.1.1 The Coca Cola Company

The Coca Cola Company (TCCC) was founded in 1886 with its headquarters located in Atlanta USA. As the largest beverage company with an extensive distribution system in the world, Coca Cola boasts nearly 400 beverage brands and prevails in more than 200 countries. Moreover they have more than 2800 types of drinks and over 1.4 billion cups sold every day. It prides on the four brands on the top five list of most popular beverages in the world with Coca Cola, Diet Coke, Sprite and Fanta. Being the most valuable brand in the world, it is worth USD67 billion in 2006.

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TCCC has three major bottling groups in China: Swire, COFCO and the Coca Cola China Industries (CCCIL). Together they invested over USD1.3 billion in building 30 bottling companies and 37 plants through which TCCC operates the market and channel execution, brand development and production and sales of beverages.

7.1.2 Coca Cola Industries ltd

One of the major bottling groups of TCCC is CCCIL. CCCIL is the wholly owned company of the Bottling Investment Group (B.I.G.), the second largest bottling partner currently of the Coca Cola Company.

CCCIL was formerly the Kerry Beverages Company which started the cooperation with the Coca-Cola Company in 1993 and was acquired by the latter in August 2006. The company was then incorporated in the Coca Cola Bottling Investment Group China.

Figure 7.1 The operating units of Coca Cola China Industries Ltd.

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7.1.3 The research objective for Coca Cola China Industries Ltd

As mentioned before, CCCIL has launched a new ready to drink tea brand: Original Leaf Tea (OLT). The company has conducted numerous studies on the ready to drink tea market. The results showed that the ready to drink tea market in China was still growing strong. The two most important competitors: KSF and President - both Taiwanese companies - were taking advantage of these growing results. Coca Cola did not have a notable ice tea brand in this market. Hence, Coca Cola launched a new ready to drink ice tea product under the name Original Leaf Tea in February 2008.

Figure 7.2 The promotion poster of the Original Leaf Tea

The new drink of Coca Cola is a healthy tea product made from original leaves. The new brand has two tastes: Honey Green Tea and Lemon Ice Black Tea. This launch is the biggest launch for CCCIL since the moment it is established in China. The research for CCCIL will contain the measurements of the new product three months after the launch.

7.2 The data

In this research, we first conducted a qualitative research to get a better view of the market. Afterwards, we did the quantitative research with the use of questionnaires to obtain the data.

7.2.1 Qualitative research

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some extra information of the consumers to define the questions and answers in the questionnaire more specifically. We basically used this type of research defining the answers of some questions, like income scale, education levels, positive and negative arguments of OLT and brands in the ready to drink tea markets.

For the qualitative research, the direct, non disguised method, which is called depth interviews, is being used. We have chosen for depth interviews, because they can cover a greater depth of insight than focus groups and there is no social pressure. The depth interviews were on an one-on-one basis. With this method, the underlying motivations, beliefs, attitudes and feelings behind the ready to drink tea market and OLT are generated. The laddering method has been used, whereby the underlying psychological and emotional reasons that affect the consumers purchase decision are recognized. With the laddering method (Reynolds, Gutman, 1988), the attributes, the consequences and the personal values of a brand will be distinguished. The results of the qualitative research can be found in appendix B. and are being used for the quantitative part.

7.2.2 Quantitative research, the questionnaire

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7.2.3 Quantitative research, the respondents

The final data - which we used in our research -, is obtained by interviewing 2123 respondents in super- and

hypermarkets in week 19, 20 and 21 in 2008. We did the research

in the ten operating units - or provinces

- of CCCIL.

To find out which population we had to select for the participation in this research, we defined a target population (Malhotra, 2004). Our target population is recognized as people within all ranges of ages, who purchase ready to drink products in the super- and hypermarkets. Ready to drink products are bottled or canned beverages, like Coca Cola, Fanta Pepsi, water, etc. Only these respondents were attractive for the company, since they are the target group for the new ready to drink tea product; OLT. Therefore, we were looking for people who are buying these ready to drink products in the supermarkets where we conducted our questionnaires.

Since this research could be defined as a problem identification research, the typical range should be in between 1000 and 2500 respondents according to Malhotra (2003). For this research, our goal was to find 200 respondents in each operating unit, which will result in 2000 respondents. We asked the operating units to find 220 respondents, to make sure that we should reach the 2000 by deleting the invalid questionnaires. At the end, we received 2123 valid questionnaires (N=2123). All the questionnaires have been checked on reliability and deleted if they did not prove on these conditions. Furthermore, interviews are deleted when respondents never drink ready to drink products and when they work for a marketing or research company.

7.3 Antecedents of model

In this paragraph, the measurement of the different factors in our model will be explained and related with the questions in the questionnaire. This (English) questionnaire can be found in appendix C.

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brands they know in a specific product category. This is question 10: “Do you know any other ready to drink tea brands?” which is an open question and includes multiple answers. In question 11, we will measure the aided brand awareness, consumers get a list of brand names and have to choose the brand names which they recognized: “Which of these brands have you ever heard before and not mentioned in Q9 and Q10?” This is a multiple choice question with the possibility to give multiple answers. All the 2123 respondents answered these questions. The difference between brand recall and brand recognition will be given as a dummy variable. This implies that this data involves a transformation whereby new variables are created (Malhotra, 2004). Brand recall includes all the respondents who gave OLT as answer in question 9 en 10 (N=532) and can be separated into Q9 (N=56) en Q10 (N=476). Brand recognition includes all the respondents who gave OLT as answer in question 11 and whereby they did not gave OLT as answer in question 9 or 10 (N=571). The total definition of brand awareness is measured in 3 scales.

The product trial will be measured with question 12: “Which of these brands have you ever drunk?” All the respondents answered this question. It is a multiple choice question on nominal scale with 13 brands as answer. The respondents can give multiple answers. Only the respondents, who have given OLT as one of the answers, are valuable for our research (N=773). We will measure this file as a dummy variable.

The brand satisfaction will be measured with question 18: “Were you satisfied with the Original Leaf Tea after you had drunk the product?” Only the respondents, who have ever drunk the OLT product can answer this question (N=773). We asked this in question 12. The answers are given in a 5 point likert scale, with the range between “I am definitely satisfied about the OLT” and “I am definitely dissatisfied about the OLT”. The answers are given in ordinal scale, but since the scale of the answers are scaled as a normal distribution, we will determine it on interval/ ratio scale.

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The consumer’s repurchase intention will be shown through question 22: “Are you going to purchase the Original Leaf Tea in the future again?” Only the respondents who have drunk the product before (question 12) can answer this question (N=773). The answers are given in a 5 point likert scale, with the range between “definitely yes” and “definitely no”. The answers are determined as interval/ ratio variables.

The socio demographics and subcultures questions are answered by every respondent. The subculture is determined as the province where the interview will be held (question 1) and will together with gender (question 25), age (question 26), personal income (question 29), household size (question 30), highest level of education (question 27) and the occupation (28) be evaluated on nominal scale. Some of them can also be determined as ratio variables, see table 7.1. All these previous called questions have multiple choice answers.

Question Summarized Factor Measure scale Measure level

1 Provinces Sub cultural Multiple answer Nominal

9 Top of mind brand awareness Brand recall Open answer Nominal 10 Spontaneous brand awareness Brand recall Open answer Nominal 11 Aided brand awareness Brand recognition Multiple answer Nominal

12 Product trial Product trial Multiple answer Nominal

15 Brand preference Brand preference Multiple answer Nominal

18 Brand satisfaction Brand satisfaction Likert scale Ratio/Interval 22 Repurchase intention Repurchase intention Likert scale Ratio/Interval

25 Gender Socio demographics Multiple answer Nominal

26 Age Socio demographics Multiple answer Nominal/ Ratio

27 Educational background Socio demographics Multiple answer Nominal/ Ratio

28 Occupation Socio demographics Multiple answer Nominal

29 Personal income Socio demographics Multiple answer Nominal/ Ratio 30 Household size Socio demographics Multiple answer Nominal/ Ratio

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Chapter

8 Results

8.1 Data

To better understand the data, we first made some frequencies tables. 2123 respondents have answered the questionnaire in a valid way, 944 of them were men and 1179 respondents were women. Most of the respondents were aged between the 20 and 29, namely 1301 respondents. The respondents were nearly perfectly distributed over the ten provinces.

8.2 The regression analysis

Discovering whether there is a significant association between two or more variables is done with the usage of the regression analysis (Malhotra, 2004). This test describes the relationship between a dependent variable on the one hand of the equation and one or more independent variables on the other hand. A regression model takes the following form:

In this form, y is the dependent variable; α is the intercept (“constant” term), βi is the respective parameter of independent variable xi; and ε is the model's error term. The error tem represents the unpredicted or unexplained variation in the response variable. This regression model will tested by means of the Ordinary Least Squares (OLS) method. OLS regresses the consumer’s repurchase intention on the independent variables (xi) and estimates the respective parameters (βi) for these variables.

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extra information. Subsequent to the different analyses we can choose which model is the most complete one in our framework.

8.3 Product trial

Product trial should be positively influenced by only one independent variable: brand awareness, as hypothesis 4 of our framework shows. With the bivariate regression analysis, we can determine if this influence exists. The independent variable brand awareness is measured in 4 scales of brand awareness (1=very aware, 4=not aware). Product trial is measured with a dummy variable (1= consumer has purchased the product (N=773), 2= consumer has not purchased the product (N=1350)). The regression analysis showed a significant influence (p<0,001) of brand awareness on product trial. The results are showed in Table 8.1. The

product trial is for 54% influenced by brand awareness (R2_{= 0,540). The beta coefficient is 0,735.}

R Square B coefficient Beta coefficient F-value Probability value

Brand awareness 0,540 0,403 0,735 2491,591 0,000**

*= Significance < 0.1, **= Significance < 0.05

Table 8.1 OLS regression results brand awareness vs. product trial I

To differentiate brand recall and brand recognition, we measured the different influences of these types of brand awareness on product trial. The results of these regression analyses are summarized in table 8.2. There is a clear distinction between the influence of brand recall and brand recognition on product trial. Although both the influences are significant (p<0,001), the R-square, B-coefficient and F-value are much higher with regard to the influence of brand recall. With these results, we can conclude that hypothesis 4 is confirmed; brand recall influences the product trial of a newly launched ice tea product more positively than brand recognition.

R Square B coefficient Beta coefficient F-value Probability value

Brand recall 0,783 0,846 0,885 5590,348 0,000** Brand recognition 0,455 0,566 0,675 1326,798 0,000**

*=Significance < 0.1. **= Significance < 0.05

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8.4 Brand preference

According to our framework, brand preference is influenced by brand satisfaction and brand awareness. We will measure the influence together in a multiple regression analysis.

8.4.1 Multiple regression analysis; the influence of all the independent variables together

In this subparagraph, we are going to measure the model whereby brand awareness and brand satisfaction both influence the brand preference. Brand satisfaction is measured with an independent variable on interval/ ratio level with the likert scale (1= “I am definitely satisfied about OLT” and 5= “I am definitely dissatisfied about OLT”). Brand preference is dependent and measured with a dummy variable (1= prefers OLT and 2= prefers another brand than OLT). 7% of the respondents prefer OLT. A far greater number of respondents prefer other brands (84%) or did not answer this question (9%). The measurement of brand awareness is already explained in paragraph 8.3.

Before we conduct this research, we need to identify the multicollinearity between the independent variables brand satisfaction and brand awareness. Therefore, we calculated the variance inflation factor. This factor is an index which measures how much the variance of a coefficient is increased because of collinearity. The variance inflation factor for this multiple analyses is 1,038. The proportion value for brand awareness is 0,85, which is quite high. Nevertheless, as the proportion value of brand satisfaction is only 0,04, we conclude that the multicollinearity is low enough to conduct the multiple regression analysis.

R Square B coefficient Beta coefficient F-value Probability value VIF Proportion value Model 0,180 78,661 0,000** Brand satisfaction 0,149 0,289 0,000** 1,038 0,04 Brand awareness 0,169 0,260 0,000** 1,038 0,85 *= Significance < 0.1, **= Significance < 0.05

Table 8.3 OLS multiple regression results brand preference

An empirical investigation on the influence of brand awareness on the consumer’s repurchase intention of a newly launched product in China

Anouk Lokhorst

s1342681

December 2008

UNIVERSITY OF GRONINGEN

An empirical investigation on the influence of brand awareness on the

consumer’s repurchase intention of a newly launched product in China

Masterthesis

Author:

Anouk Lokhorst

Studentnumber:

s1342681

Date:

December 2008

University:

University of Groningen

Author’s address:

Marnixstraat 156- 3 hoog, 1016 TE Amsterdam

Author’s phone:

+31 6 41280572

Author’s email:

anouklokhorst@hotmail.com

Faculty:

Faculty of Economics & Management and Organization

Specialization:

Business Administration, MSc Marketing Management

Supervisor 1:

Dr. M.A. Tuk

Supervisor 2:

Dr. J.E. Wieringa

Brand awareness and repurchase intention

Management summary

Preface

Table of contents

Chapter 1 Introduction and problem definition

Chapter 2 The influence of Brand Awareness on Purchase Intention

Chapter 3 The link consumer purchase- and repurchase intention

Chapter 4 Socio- demographic factors and Subcultures

Chapter 5 Hypotheses

Chapter 7 Research Design

in the ten operating units - or provinces

- of CCCIL.

8 Results