0 University of Amsterdam
Faculty of Economics and Business
Master Thesis MSc Business Administration - Marketing Track
How the drivers of customer equity are related and differ among organic and non-organic food industries? A comparison between Eastern European Market and Western European Market
24th of June, 2016 | Final version By:
Kristina Tsvetanova Krasteva Student Number: 11086653
Supervisor:
Dhr. Drs. Ing. A.C.J. (Antonius) Meulemans
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Statement of originality
This document is written by Student Kristina Krasteva who declares to take full responsibility for the contents of this document.
I declare that the text and the work presented in this document is original and that no sources other than those mentioned in the text and its references have been used in creating it.
The Faculty of Economics and Business is responsible solely for the supervision of completion of the work, not for the contents.
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ACKNOWLEDGEMENT
I have reached the final part in my Master’s degree in Business Administration at University of Amsterdam, with the completion of this thesis. It was the first time when I write a thesis of this nature. This was a great learning opportunity.
I would like to thank my supervisor Dhr. Drs. Ing. A.C.J. (Antonius) Meulemans for his support during the process of writing my thesis project. I highly appreciate his positive criticism as it made me more ambitious and persistent during the working process. Further, I would like to thank my friends and family who have never given up their faith in me.
I really hope you will enjoy reading this thesis.
Kind regards,
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ABSTRACT
The purpose of this study was to make a comparison between two European markets – the Western, represented by the Dutch consumers and the Eastern, represented by the Bulgarian consumers, in the context of two industries – organic food products and their non-organic equivalents. Data was collected from 463 people of which 201 Dutch respondents and 262 Bulgarian respondents. The questions concerned their shopping behavior, brand attitude and awareness, their opinion about the price and the quality of four product categories. The results showed that there are strong relationships between the examined variables. Further, some of these effects were stronger after entering the culture as a moderator in the model. The findings highlighted, that the customer and value equity of organic food products are better predictors of the total customer and value equity. Also, Western European consumers have higher demand for quality. On the other hand, Eastern European consumers have higher brand awareness. Implications of these findings are discussed
Key words: Customer Equity, Value Equity, Brand Equity, Organic food products, Non-organic food products
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Table of Contents
1. Introduction ... 7
2. Literature Review ... 9
2.1. Stimulus- response model ... 9
2.2 Organic products ... 11
2.3 Customer Equity and its drivers ... 13
2.3.1 Value Equity ... 13
2.3.2 Brand Equity ... 15
2.3.3 Retention Equity ... 17
2.4 Culture ... 20
3. Research gap and research question ... 22
4. Conceptual Framework ... 23
5. Research design and methodology ... 28
5.1 Sample ... 28
5.2 Measurement of variable ... 28
5.2.1 Translation ... 28
5.2.2 Items and scales ... 29
5.2.3 Pre-test ... 30
5.3 Statistical procedure ... 30
6. Results ... 34
6.1 Correlation analysis ... 34
6.2 Direct Effects ... 39
6.3 Moderation effects testing ... 42
7. Discussion and Conclusions ... 50
7.1 Academic relevance ... 52
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8. Limitations and future research ... 54
Bibliography ... 55
Appendix 1: Pre-test ... 57
Appendix 2: Survey questionnaire ... 60
Tables of Tables Table 1: Hypotheses overview ... 27
Table 2: Mean, Standard Deviations, Correlations and Reliabilities ... 33
Table 3: Results for Customer equity (organic food products) and Customer equity (non-organic food products) as predictors of Customer Equity ... 36
Table 4: Results for Value equity (organic food products) and Value equity (non-organic food products) as predictors of Value Equity ... 36
Table 5: Results of Price as a predictor of Value equity ... 36
Table 6: Results of Quality as a predictor of Value Equity ... 37
Table 7: Results for Brand equity (organic food products) and Brand equity (non-organic food products) as predictors of Brand Equity ... 37
Table 8: Results of Brand Awareness as a predictor of Brand Equity ... 38
Table 9: Results of Brand Attitude and Nationality as predictors of Brand Equity ... 38
Table 10: Moderation effect of Nationality on the relationship between Price and Value Equity... 42
Table 11: Interaction variables (Nationality x Price) ... 42
Table 12: Moderation effect of Nationality on the relationship between Quality and Value Equity .... 44
6 Table 14: Moderation effect of Nationality on the relationship between Brand Awareness and Brand Equity ... 46
Table 15: Interaction variables (Nationality x Brand Awareness) ... 46
Table 16: Moderation effect of Nationality on the relationship between Brand Attitude and Brand Equity ... 48
Table 17: Interaction variables (Nationality x Brand Attitude) ... 48
Table 18: Hypotheses: results overview ... 50
Table of Figures
Figure 1: Stimulus-response model, (Kotler & Keller, 2012, p. 161) ... 10
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1. Introduction
Nowadays companies should understand their current and potential customers, what their needs are and how these needs can be satisfied. Almost in every industry the competition is highly intensive and if a company wants to perform the best it is important to pay attention to its target customers. The market is always changing, consumers and their needs are constantly changing. Marketers should be able to predict the new trends in order to excel among all their competitors. These days more and more people are concerned about their health, the environment and animal welfare. They change their shopping behaviors and the products that buy with organic, environmental friendly ones. According to recent researches there is substantial growth in organic products market. Nowadays, organically produced goods are not only products in food, but also in non-food industry. While there is variety of definitions in the literature, many practitioners consider that this type of goods do not contain fertilizers, pesticide and genetically modified components (Ngobo, 2011).
According to a report from 2014, during 2012 the European organic market is in continuous growth, representing 6 percent rate of growth (Willer & Lernoud, 2014). Because of this rapid increase and new trends, there is a growing literature, examine different aspects in the field. Most of the researchers focus on the economic part of the organic products industry. Even though, little is written about the consumers’ decision making process, regarding organic food. (Ngobo, 2011). Also, little is known about which drivers of customer equity matters most in one or another market. The consumers in different markets are not the same. They are distinguished by age, gender, income and many other characteristics, but most importantly by their culture. All these factors play role when it comes to the products they decide to buy or not. Having this in mind, people living in Eastern Europe and Western Europe will have different lifestyles, values and needs which will determine different types of consumer behaviors. Knowing what the drivers of customer equity are and which one is more important than another, will help marketers in their understanding of how to allocate the available resources. This results in strategies that are specifically developed for a particular market.
The study will focus on organic food products, by label and non-organic food products. The aim of the study is to compare two markets - Eastern European and Western European Market, and to define
8 the most influential drivers of customer equity in them. By answering to the following research question: How the drivers of customer equity are related and differ among organic and non-organic food industries? A comparison between Eastern European Market and Western European market, the purpose of the project is to find what is important for the consumers in these markets, which are the factors that influence their shopping behavior and what are the concerns when they choose one product instead of another. It will not only contribute to the existing literature, by adding new insights, but also will have a practical value for managers and marketers. The project aims to extent the knowledge about the decision process which underlies the choice of two different types of products – organic and non-organic. Most importantly, the results will provide the practitioners with valuable information about the processes and the drivers that determine the consumer behavior and particularly the customer equity. This is of great importance because will help them to decide in which driver of the customer equity to invest more, in order to achieve best results.
The following thesis proposal paper will be structured in separate sections. First, an introduction section briefly explains why the chosen topic is relevant and needs to be researched. Secondly, review of the existing literature follows, providing insights in existing theories and concepts. It will end with a literature gap and a research question, which will be the focus of the future thesis project. Thirdly, a conceptual framework will be developed, in order to illustrate the relationships and hypotheses that will be examined. Next, explanation of the research design and the methods that will be used for analyzing the data will be provide. Finally, the thesis will end with discussion of the findings, managerial implications, academic relevance, limitations and future research directions.
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2. Literature Review
This chapter aims to provide literature review of the existing concepts that are related to the topic of the study. First, the stimulus-response model is used as a starting point for understanding the market, following by explanation of the two types of business models according to Narver and Slater. Secondly a definition for organic-food products is adopted. Thirdly, the concept of customer equity and its drivers is explained. The final part makes a review of the literature concerning the concept of culture.
2.1. Stimulus- response model
As mentioned in the introduction part, consumers are different. They do not have the same needs and desires. What’s more, they do not go through the same decision making process when they consider a purchase. Practitioners and academicians constantly research the field of consumer behavior, trying to get new insights and understand it better. They develop models and tools that aim to explain people’s shopping behavior. What drives the purchase of one product instead of another, why they prefer one brand instead of another, what their current and latent needs are and etc.
One such model is stimulus- response model. It can be considered as the starting point for deeper understanding of consumer behavior (Kotler & Keller, 2012, p. 160). The following figure gives an overview of all the elements that are included within the model.
10 Figure 1: Stimulus-response model, (Kotler & Keller, 2012, p. 161)
According to the model (see figure 1) there are marketing and environmental stimuli which combined with consumers’ characteristics and psychological processes can influence and result in decision processes and shopping decisions. The task of the marketer is to understand these processes and to answer them (Kotler & Keller, 2012, p. 160). This model can be used by marketers as a basis for better understanding what happens in customers’ minds. It can be used as a starting point for analyzing consumers’ behavior in the context of different industries. This research will examine how the customer equity and its drivers can be affected by different factors. It will be made a comparison between two markets – Bulgarian and Dutch. Along with the marketing efforts of the companies, managers should also consider factors which are out of their control. One such factor that either inhibit or facilitate the decision making processes is the culture. Its influence will be examined in the context of two industries – organic and non-organic food products. As such factor, the culture can influence the purchase intentions evoking particular consumers’ responses.
Although there are some practitioners that argue against the modern marketing concept, most of the researchers believe that consumers’ needs should be the starting point for developing marketing strategies. According to the marketing concept, organizations should discover and fulfill the needs of their customers (Narver & Slater, 1998). The same authors define two different business models that an organization can follow.
11 The first is what they call - customer-led businesses, where the focus is on those customers’ needs that are expressed. Organizations should develop products and services that can satisfy these expressed desires. The main problem with this philosophy is that it has reactive, short term focus rather than proactive nature which results in adaptive learning.
The second business philosophy refers to businesses that are market-oriented. They take a step further by focusing not only on the expressed needs, but also by trying to reveal and satisfy the latent customers’ needs. These organizations adopt proactive, long term focus, resulting in constant creating of superior customer value. The two philosophies are nothing else than the reflection of how hard a company tries to understand its market (Narver & Slater, 1998).
2.2 Organic products
During the last decade more and more societies accept the existence of environmental crisis. People become more concerned about the consequences from their consumption than ever, which affects their purchase decisions. The growing demand for environmentally friendly products has pushed marketers to start searching literature, concerning this switch in consumers’ behavior (Follows & Jobber, 2000). According to the Institute of Food Science and Technology (IFST) (Lernoud, Willer, & Klicher, 2014) organic food products contain low levels of agriculture chemicals, which is the main difference with conventional food products. Organic food is a result of a whole system that uses little external inputs, as well as avoids the use of nonorganic fertilizers and pesticides in the production process. Only one-third of the pesticides, used in conventional food can be found in organic products (Shafie & Rennie, 2012).
According to a report from 2014, during 2012 the European organic market is in continuous growth, representing 6 percent rate of growth (Willer & Lernoud, 2014). In general, sustainable products have always been accepted as the more expensive, high-end option (Shafie & Rennie, 2012). Variables such as demographic, lifestyle and attitude toward environment define who the organic consumer is (Shafie & Rennie, 2012). People buying organic products are found to be highly educated and with
12 higher social status (Stobbelaar, et al., 2007; Padel & Foster, 2005). Also, women who has higher education and income tend to be more aware and knowledgeable of food hazards (Shafie & Rennie, 2012; Stobbelaar, et al., 2007). Interestingly, the groups that represent the youngest and oldest age range are not concerned for their health, dieting and as a consequence organic products. On the other hand, consumers who are in their 30s tend to buy more organic goods (Padel & Foster, 2005). (Ureña, Bernabéu, & Olmeda, 2008), have found that the organic consumers are willing to pay 10% price premiums for environmentally friendly products. According to the same study organic consumers can be separated in three different groups (regular, occasional, non-consumers), depending on how often they consume such products.
While the prediction about the growth of organic food products during 2015 were highly positive, conventional food products continued to be chosen over the organic ones (Lee & Goudeau, 2014). Several studies have found that in general consumers are positive toward the environmentally responsible products, but this attitude does not translate into a purchase behavior (Magnusson, Arvola, Hursti, Åberg, & Sjödén, 2001; Roddy, Cowan, & Hutchinson, 1996; Lee & Goudeau, 2014). Another researchers have tried to explain what prevents consumers from choosing organic goods. They have found that such inhibiting factors are: the higher price and limited availability of organic goods compared to non-organic (Lee & Goudeau, 2014). On the other hand, factors that motivate such purchases include concerns about health, environment and taste and quality (Bezawada & Pauwels, 2013). (Makatouni, 2002), has found that another facilitating factor is the consumers’ concern about animals’ welfare.
Although, most of the existing literature highlights the financial part of the organic products industry and rarely emphasizes on the consumers’ decision making process (Ngobo, 2011), some recent studies have been based on the consumers’ consumption of organic food products. The disadvantage of these studies is that they mainly focus on the consumers’ behavior, which occurs right after the purchase and use of the product (Follows & Jobber, 2000).
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2.3 Customer Equity and its drivers
(Blattberg & Deighton, 1996), are the first authors who talk about customer equity. They define it as the perfect balancing between what a company spends when acquires customers and what spends when retains customers. The authors suggest that to measure customer equity, the company should first calculate every customer’s contribution toward company’s fixed costs, by considering the expected life value of this customer. After this, the company should “discount the expected contributions to a net present value at the company’s target rate of return for marketing investments” (Blattberg & Deighton, 1996, p. 138).
Many other practitioners have researched this academic area, developing the definition and adding new concepts. Customer equity can also be seen as the sum of all discounted lifetime values of all company’s customers. It consists of three levels of equity: Value equity, Brand Equity and Retention Equity. These three components can be seen as the drivers of the Customer Equity. By analyzing which of these three drivers have the biggest impact on an industry, managers can better allocate an organization’s resources in order to answer the customers’ needs in the market (Rust, Zeithaml, & Lemon, 2000, p. 54). According to (Kotler & Keller, 2012, p. 268) customer equity concept focuses on the bottom-line financial value. Although it doesn’t include important aspects such as creating a strong brand, opportunities for growth and others., its main advantage is that it can be used for measuring the financial performance of a company.
In the following subchapters of the literature review the main theories and concepts regarding the three drivers of customer equity (value, brand and retention equity) will be explained in details.
2.3.1 Value Equity
Nowadays, companies face customers with increased demand, intensive global competition and stagnate economies. All these factors force them to start searching new ways to differentiate and achieve competitive advantage (Woodruff, 1997). What’s more, providing a quality and improved performance rarely can be used as a foundation for competitive advantage. As a consequence, the companies should
14 start looking for another source of advantage. One such sources are the customers and markets learning in which the company operates. This means that the organization should oriented all of its internal processes to meet customers’ needs and create value for them (Woodruff, 1997).
We can talk about value in terms of different contexts. Several major concepts worth discussing. The first one conceptualizes that the high-value customers show the worth of each customer for the company, while the value of the company refers to what the worth of the organization is for its owners. It is important to be mentioned that the concept of customer – based value focuses on a company’s customers, their needs, desires and beliefs (Woodruff, 1997). In this section of the study the customer- oriented concept will be addressed and explained.
Plenty of definitions for value can be found in the existing literature. Some authors see the customer value as a tradeoff between the buyers’ perceived quality and benefits of the product related to the price that they pay for it (Monroe, 1990). (Butz & Goodstein, 1997), represent the idea of customer value as the emotional relationship between the company and a customer. This relationship is formed after the customers have tried the product or service and believe that it adds value for them. Another perspective defines customer value as the customers’ objective evaluation of a brand, based on the assessment of what they had to give up for what they have received by using the brand (Rust, Zeithaml, & Lemon, 2000, p. 56).
Although slightly different most of the definitions agree that customer value is related to the customers’ perceptions and these perceptions often include evaluation of what is received for what is given up (Woodruff, 1997). From all said previously, we can conclude that the value equity concept plays essential role for building customer equity. That’s why the companies should take it into consideration and understand how to manage it.
(Rust, Zeithaml, & Lemon, 2000, p. 76), indicate three major ways for building value equity by improvements in quality, price and convenience. Quality can be decomposed in four major managerial components: service delivery, service product, service environment and physical product. These elements should be constantly investigated and updated. The second driver of value equity are the
15 different price strategies that a company adopts. Such strategies are: everyday low pricing, discounts/sales and payment plans. The last way for managing value equity is the convenience. It can be thought in terms of location (cyberspace and geographically), product’s ease of use and availability (opening hours and days, communication and etc.) (Rust, Zeithaml, & Lemon, 2000, p. 77). (Kotler & Keller, 2012, p. 10), also talk about the value. They define it as the tangible and intangible benefits and costs that a consumer receive or make by using a product. The same authors see the value as a combination of three major components – quality, service and price. According to them the customers perception for the value increases with the quality and service and decreases with the price.
2.3.2 Brand Equity
According to The American Marketing Association brand is “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 competitors” (Kotler & Keller, 2012, p. 241). Brands are this thing that differentiate the products of a company and the products of the competitors who aim to meet the same customers’ need. They allow consumers to assess these products and create impressions based on this evaluation. Although competitors can easily copy the product they can’t easily build and match similar impressions to it (Kotler & Keller, 2012, p. 242).
There are various perspectives that researches adopt when they talk about brand equity. Customer-based approaches define brand equity from the perspective of the customer. Customer-based brand equity occurs if consumers are familiar with the brand as well as the associations they have in their minds are favorable, strong and unique (Keller K. L., 1993). Also, customer-based brand equity can be defined as the differential effect that brand knowledge has on consumers’ responses toward the brand (Keller K. L., 1993). Later definition considers brand equity as a “set of assets (and liabilities) linked to a brands’ name and a symbol that adds to (or subtracts from) the value provided by a product or service to a firm and/or that firm’s customers. The major asset categories are: brand name awareness, brand loyalty, perceived quality and the brand associations.” (Aaker, 1996, p. 7).Brand equity also can
16 be thought in terms of “customers’ subjective and intangible assessment of a brand, above and beyond its objectively perceived value.” (Rust, Zeithaml, & Lemon, 2000, p. 57) They distinguish three key drivers of brand equity: customers’ brand awareness, customers’ attitude toward the brand and customers’ perceptions of brand ethics (Rust, Zeithaml, & Lemon, 2000, p. 87).
Although there are slight differences in the way some researchers and practitioners define customer-based brand equity and its drivers, most of them agree that having a strong brand can result in a number of benefits for the company. By investing in brand equity, managers can influence customers’ assessment and attitude toward the brand. On the other hand, developing strong brands can create emotional relationship with the customers (Rust, Zeithaml, & Lemon, 2000, p. 84). These emotional relationships are the final and the highest phase of building a customer equity and most of the authors consider that this is the level where loyalty is built. Having a strong brand is important, but it is not easy to achieve. It can lead to plenty of positive benefits for a company, such as high levels of customer loyalty, perceived uniqueness, price elasticity, high levels of channel support, marketing communication effectiveness and ability to extent the brand in different categories (Keller K. L., 2001).
In his early work from 1993, Keller defines brand equity as consisting of two elements-brand awareness and brand image. The first one answers the question how easily customers can recall and recognize a brand. The second component relates to the brand associations that customers have in their minds. Later in an article from 2001, Keller develops a Customer-Based Brand Equity (CBBE) model which gives the answer of the question how companies can build strong brands. The main advantage of the CBBE model is that the strength of a brand is a result from what customers know, feel, think, and see about the brand in long period of time (Keller K. L., 2001).The CBBE model can be thought as a pyramid, consisting of four steps. The firm can move to the next step only after achieving the previous one (Keller K. L., 2001).
The first level of the pyramid relates to the customers’ awareness of the brand. It is important for a company to build brand awareness, because it means that the product is well understood by the customers. They can easily recall and recognize the brand and relate it to the category it competes in and the needs that can satisfy (Keller K. L., 2001).
17 The second step refers to the meaning that the brand has for the customers. Brand meaning consists of performance-oriented considerations and imagery-oriented considerations. The first ones are more functional than the second more abstract ones (Keller K. L., 2001).
After having brand awareness and established brand meaning, a firm can expect appropriate customers responses. One type of brand responses is related to the customers’ judgements toward the brand. Another brand responses refers to what feelings and emotional reactions the brand evokes. Finally, the accomplishment of the previous three steps helps a firm to move forward to the fourth step - creating strong relationship, high level of customers’ loyalty and identification with the brand (Keller K. L., 2001).
2.3.3 Retention Equity
Nowadays it is not enough a company to have strong Brand Equity and Value equity. The competition is more intensive than ever. That’s why the focus should be on building a strong, long-term relationship with the customers, in order to insulate them from competitors’ products and services (Rust, Zeithaml, & Lemon, 2000, p. 95).
The concept of loyalty has always been of great interest. Having loyal customers provides lot of benefits for the company. But when we talk about loyalty we should keep in mind that this concept is tightly connected with customers’ satisfaction. Although many companies think that if they have loyal customers, they have satisfied ones, this is not always the case. It should be well understood that satisfaction not always results in loyalty, but it is an essential step in the loyalty – building process (Oliver, 1999). Satisfaction relates to the customers’ feelings such as pleasure or disappointment which occur when they compare the actual performance of a product and what was expected (Kotler & Keller, 2012). When there is no discrepancy between what was expected and the real outcomes, the consumers are satisfied. They hold positive feeling that the product succeed in meeting their needs, desires and goals. On the other hand, loyalty is characterized by customers’ commitment and desire to rebuy the same products in future. The consumers should believe that the company is able to offer the same
18 products and to fulfill the needs in long- term period of time in order to become loyal to the brand (Oliver, 1999).
In his research from 1999, Oliver uses previously developed framework which distinguishes four phases of loyalty development. The framework logically follows the cognition – affect- conation path. According to it, the first stage refers to as he calls it cognitive loyalty. The foundation of loyalty here is what consumers believe about the brand. These beliefs result from their prior knowledge and information gained by personnel experience. Customers use the combination of these beliefs as an indicator that one brand is better than the other options. The second phase of loyalty development – affective loyalty, refers to the customers’ positive attitudes toward the brand. They are a consequence from the level of consumers’ satisfaction in a particular usage situations. At the next conative loyalty or behavioral intention stage, customers are brand committed and they have the intention to rebuy the brand in future, but still there may be a lack of actual action of repurchase. The final phase in this framework is the action loyalty where the rebuying intention from the previous stage transforms in a real actions. If this engagement is repeated over time we talk about action inertia (Oliver, 1999).
(Rust, Zeithaml, & Lemon, 2000, p. 95), connect the concept of loyalty with the last driver of customer equity – Retention Equity, which refers to the relationship of the company with its consumers. This driver of Customer Equity can be thought as the effect of all relationship building programs that a company uses in its marketing strategy. The main goal of Retention Equity is to provide an experiential connection between the customers and the firm. Every relationship – building program should be designed in a way that meets specific customers’ needs. By using such programs a company aims to ensure that its customers will return and buy again in future instead of switching to a competitors’ products (Rust, Zeithaml, & Lemon, 2000, p. 96). Retention equity can be achieved by investing in five actions: loyalty programs, special recognition, affinity programs, community programs and knowledge-building programs (Rust, Zeithaml, & Lemon, 2000, p. 99).
Once a customer becomes loyal to a brand, he can’t easily switch to another products. Managers should maintain the loyalty because this are the consumers that will continue buying the product.
Retention Equity is also related to the last stage of Keller’s CBBE model – brand resonance (Keller K. L., 2001). At this stage the company has built a strong relationship with its customers. They
19 have started to identify with the brand and feel deeply, psychologically connected with the company and its products and services. This relationship can differ in nature and four categories can be distinguished.
The first one is the behavioral loyalty which is characterized by repeated purchases. Another possible relationship can be between the company and customers who buy its products because they find them accessible or affordable. This is what is called – attitudinal attachment. Some customers can feel so deeply connected with the brand that they create a community around the branded product or service. Finally, the strongest relationship occurs when people wants to spend time and invest money, energy and resources into the brand. All these four categories can be related to two main dimensions – intensity and activity. Intensity shows how strong is customers’ attitudinal attachment and sense of community. On the other hand activity relates to the purchase frequency (behavioral loyalty) and the level of engagement with the brand (Keller K. L., 2001).
Both practitioners and academics agree that the strongest relationship between a company and its customers is marked by customers’ repeated purchases, engagement with the brand, devoting time and investing money into the brand. Companies who have so strong brands that can build communities around them are the most successful ones. Brand community can be defined as “specialized, non-geographically bound community, based on a structured set of social relationships among admirers of a brand.” (Muniz & O'Guinn, 2001, p. 1). Three markers show the existence of a brand community- shared consciousness, rituals and traditions, and a sense of moral responsibility. Consciousness of kind represents the connection that members have between each other and the sense of being different from others which are not members of the community. Shared rituals and traditions celebrate the history, culture and consciousness of the community. The last indicator is the sense of moral responsibility toward the community and each of its members. The aim of relationship marketing is to attract, strengthen and build long-term relationships with the customers. Having such a strong connection with them can provide number of competitive advantages for the company. So, it can be said that a brand around which is formed a strong community is more valuable for marketers, than a brand without or with weak community (Muniz & O'Guinn, 2001).
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2.4 Culture
Consumer Behavior is a discipline that focuses and studies how the consumers go through the process of selecting, buying, using and throwing away goods, in order to fulfill needs and desires. These consumers can be individuals as well as groups and organizations. Their behavior can be viewed as affected by three types of factors: cultural, social and personal. Among all these three factors cultural ones are the most influential (Kotler & Keller, 2012, p. 151)
“Culture” as a term is accepted in management vocabulary in 1980s. It can be defined as “the collective programming of the mind which distinguishes the members of one category of people from another.” (Hofstede,1989, p. 391) It can be seen as a mental software that affects people’s feelings, thoughts, perceptions and behaviors. This software can be only noticed in the way people behave. A single individual can belong to different categories of people – nationality, profession etc. These categories add different layers to one’s mental programming, that have to be in mutual harmony. However, internal contradictions can occur. (Hofstede, 1989). Everyone’s mental software is unique but also shared with others. (Hofstede, 2001, p. 2 ). Hofstede, distinguishes three levels in mental programs:
1. Universal level – it is shared with almost all humankind. It includes behaviors such as laughing, weeping etc. (Hofstede, 2001, p. 2)
2. Collective level – on this level the mental programs are shared with some people. More often these people belong to the same group or category. It includes the common language, the perceptions of human activities, such as eating, loving etc. (Hofstede, 2001, p. 2)
3. Individual level – this level is unique for each individual. At this level individual personality can be found. It is a base for different behaviors within the collective culture. (Hofstede, 2001, p. 2)
There are some elements of culture that are universal across modern societies. Every society can be compared with others on universal concepts such as happiness, religiousness, gender equity etc. The main assumption is that these concepts make sense everywhere. (Minkov & Hofstede, 2013, p. 17).
Different elements of culture can be distinguished. Values are a core element of culture. The term personal values explains what individuals perceive as important or unimportant for themselves in a long
21 period of time. Examples for such concepts are religion, job, family, friendships etc. (Minkov & Hofstede, 2013, p. 40). There are number of theoretical definitions of values but they are too abstract. The main problem with these definitions is that they do not give an answer of how the concept can be measured (Minkov & Hofstede, 2013, p. 41). Values are often unconscious (Hofstede, 1989) and programmed in the early stages of our lives (Hofstede, 2001,p. 6).They represent people’s perceptions about good and bad, rational and irrational, beauty and ugliness etc. (Hofstede, 1989). It is important to be mentioned that values can be desired or desirable. This means that there is difference between what people desire and what they think should desire (Hofstede, 2001, p. 6). Although values can be considered as an invisible cultural manifestation, there are some visible cultural elements too, such as symbols, heroes and rituals. Symbols can be thought as shared words, gesture, objects, which are recognizable only for those who carry the same culture. Heroes are respected persons, who possess highly appreciated features in a culture and play a model role for behavior. Rituals are those activities that keep the culture and the relationship between the individuals within it. These three elements put under one general term – practices. Although they are visible for people who are not in the same category, their cultural meanings are invisible (Hofstede, 2001,p. 10)
Another important element of culture are the norms and ideologies. It is important to be made a distinction between what values are and what norms are. Some authors see the term “norms” as external factors that influence people’s behavior. Also norms can be defined as prescriptions (Minkov & Hofstede, 2013, p. 42).
(Hofstede, 2001,p.11), suggest that the societies maintain stability of their culture across generations by mechanisms. In the center is the system of shared societal norms. They stem from different ecological factors. These societal norms are the reason for the development of structures such as family, education, political systems and etc. Once developed, these structures support the societal norms. It can be accepted that they will not be changed or if they are, they will not affect the societal norms. So, it can be concluded that the main difference between the national cultures comes from their value component. (Hofstede, 1989). In his cross-cultural study, conducted within more than 50 countries, Hofstede defines five
22 dimensions of cultural differences. The following five dimensions can be found in (Hofstede, 2001,p. 29):
1. Power distance – it refers to the ways cultures resolve the basic problem of human inequity. 2. Uncertainty avoidance – the level of stress that is evoked by the unknown future.
3. Individualism vs collectivism – the way that the individuals are integrated in different groups.
4. Masculinity vs femininity – shows the degree to which values, which are masculine, such as performance, success, competition prevail over values, which are more feminine, such as personal relationships, life quality, concerns about the weak and etc. (Hofstede, 1989) 5. Long-term vs short-term orientation – relates to the focus of people either on future or the
present.
3. Research gap and research question
There are number of researches explaining the cultural difference between western European market consumers and Eastern European consumers, but little is known about how this factor can influence the customer equity in the context of organic-food products and non-organic food products industries. Analyzing these cultural differences and their effect on the drivers of customer equity, managers can better understand the market and satisfy its needs.
The following study will focus on organic food product industry and non-organic food product industry. A comparison between the customers in the two markets will be made in order to find what drives their decision making process and creates customer equity. The cultural differences of the customers, representing each of the two markets will be adopted as a moderator of this relationship. The research question that will be the focus of this thesis project is:
How the drivers of customer equity are related and differ among organic and non-organic food industries? A comparison between Eastern European Market and Western European market.
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4. Conceptual Framework
Figure 2: Conceptual framework
Figure 2 shows the conceptual framework of this thesis project. The purpose of this framework is to test the hypotheses, which are explained in the following chapter. Another aim of this framework is to show and analyze how customers’ cultural differences affect the customer equity and its drivers in two markets- Eastern European and Western European. Also, to see how this effect differs for two types of products. The data collection process is explained in the next chapter.
4.1 Hypotheses:
Over the last ten years environmentalism has become in a significant social problem. Socially conscious consumers are those that evaluate and care about the consequences of their consumption upon society and take into consideration the environmental footprint they leave with the products that purchase. (Follows & Jobber, 2000). As mentioned before according to a report from 2014 European Organic Market is in a rapid and continuous growth during 2012 (Willer & Lernoud, 2014). Because of this trend, the existing literature focuses on the economic part of the organic products industry rather than on consumers’ decision making process (Ngobo, 2011). Although, there are some recent studies that are based on the consumption of environmentally friendly products, the focus in most of them is on the
24 consumers’ behavior after the actual purchase and use of the product, such as recycling and etc. (Follows & Jobber, 2000). There are several researches that examine the perceptions of the consumers toward organic food and the factors that drive their purchase behavior. They buy such products because are seen as a healthy choice, with minimum content of pesticides and fertilizers. Another motives are the better taste, lack of GMO and BSE. Along with the reasons that facilitate the buying process of organic food, there are such that inhibit it. Factors that prevent consumers from choosing organic products are the higher price compared to non-organic food, the limited choices and availability and etc. (Makatouni, 2002).
Customer equity can be defined as what a company spends when acquires and retains customers (Blattberg & Deighton, 1996). As mentioned earlier, customer equity consists of three drivers – value equity, brand equity and retention equity (Rust, Zeithaml, & Lemon, 2000, p. 54). For the purposes of this thesis project, the focus will be on two out of the three drivers – value equity and brand equity.
H1: The customer equity for organic food products is higher than for non-organic food products.
Customer value represents the customers’ evaluation of the utility of a product they have purchased, based on their comparison between what was gave up and what was gained (Rust, Zeithaml, & Lemon, 2000, p. 56). The interaction between price and quality is the core concept of customer value. In general, Western consumers are more conscious when it comes to price, quality and brand (Mooij & Hofstede, 2011). The higher price of organic food in comparison with non-organic food products is seen as a factor that prevents customers from choosing these products (Makatouni, 2002). Price premium is the extra amount that is charged on organic food compared with the price of non-organic food products (Shafie & Rennie, 2012). The awareness and recognition of organic food products among Dutch consumers is 96%. The motives that drive their purchase of organic products are: the healthiness, conscious for the environment, the better taste and the better quality (Stobbelaar, Derk Jan; Casimir, Gerda; Borghuis,
25 Josine; Marks, Inge; Meijer, Laurens; Zabeda, Simone, 2007). In comparison Eastern European consumers have the lowest rates of money spent for organic products (Sahota, 2010).
(Hofstede, 2001) found in his cross-cultural study that the uncertainty avoidance index for Bulgaria is twice higher than those for Netherlands (70 compared to 30 for Netherlands). Uncertainty avoidance index shows how threatened people feel by the unsecure future. People living in countries with high UAI try to avoid uncertain situations. Because the need of structure is high in these cultures, people tend to look for truth and expertize. The high UAI translates in their consumer behavior through a need for pure products (Mooij & Hofstede, 2011).
As a whole Western European countries have higher life standard compared to Eastern European countries. The consumers in these markets tend to be more price sensitive, because of this and the findings explained earlier. Thus, I expect that the value equity will have higher rates for organic food products, compared to non-organic products but the price as a driver of value equity will be more important in Eastern European countries. Also, it is expected that the quality will be more important for Western European consumers, rather than Eastern European ones.
H2: The value equity is higher for organic food products rather than for non-organic food products
H2a: The price as a component of value equity is more important for the Easter European
markets rather than for Western European markets
H2b: The quality as a component of value equity is more important in Western European
markets rather than in Eastern European markets
As mentioned earlier, brands can be thought as this thing that helps in distinguishing the products of one company from those, produced by another. Consumers often use their evaluation of a brand’s ability to meet particular needs as a base for creating impressions (Kotler & Keller, 2012, p.
26 242). (Rust, Zeithaml, & Lemon, 2000), distinguish three key drivers of customer-based brand equity: brand awareness, consumers’ attitude toward the brand and their perceptions of brand ethics.
The expanding literature about the differences across different cultures, provide explanation for different consumers behavior across countries (Mooij & Hofstede, 2011). In his cross-cultural study, conducted within more than 50 countries, Hofstede defines five dimensions of cultural differences. The following five dimensions can be found in (Hofstede, Culture's Consequences, 2001): power distance; uncertainty avoidance; individualism/collectivism; masculinity/femininity; long-/short-term orientation; According to the results from this study Dutch people (index=80) are more individualistic than Bulgarians (index=30). This suppose that there will be a difference in their consumer behavior. In general Western countries tend to be individualistic. As a consequence, brands should be consistent, unique and distinctive. The brand should be seen as a part of a bigger picture, coming from a trustworthy company. As a whole individualistic countries are consistent in their attitudes, which means that consumers’ behavior in these countries can be predicted, once there is a positive attitude, a purchase prediction can be made. Countries with high individualism index consider health as very important (Mooij & Hofstede, 2011). Some studies have found that individualistic societies are more likely to stick to brands and also more likely to become loyal (Zhang, Doorn, & Leeflang, 2014). Because of these studies and the fact that 96% of Dutch consumers are aware what organic products and they are able to recognize them. What’s more they also have positive attitude toward these types of products (Stobbelaar, et al., 2007), I hypothesize that the levels of brand equity will be higher for organic food products, rather than for non-organic food products. Also, it is expected that there will be a difference between the levels of brand awareness and brand attitude in Western European and Eastern European countries. Thus the hypotheses are as follow:
H3: The brand equity is higher for non-organic food products rather than for organic food products
H3a: Brand awareness as a component of brand equity is higher in Western European Markets
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H3b: Brand attitude as a component of brand equity is more favorable in Western European
Markets rather than in Eastern European Markets
Table 1: Hypotheses overview
H1 The customer equity for organic food products is higher than for non-organic food products.
H2 The value equity is higher for organic food products rather than for non-organic food products
H2a The price as a component of value equity is more important for the Easter European markets
rather than for Western European markets
H2b The quality as a component of value equity is more important in Western European markets
rather than in Eastern European markets
H3 The brand equity is higher for non-organic food products rather than for organic food products
H3a Brand awareness as a component of brand equity is higher in Western European Markets rather
than in Eastern European Markets
H3b Brand attitude as a component of brand equity is more favorable in Western European Markets
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5. Research design and methodology
To investigate the effect of the culture on customer equity in two markets – Dutch and Bulgarian, as well as how the importance of customer equity drivers can differ among male, female, age and level of education, data was collected. The first part will provide information about the sample. The research design part is described in the second section of this chapter, including the survey, the measurement if the items and the variables. In the third part, the procedure about data collecting will be described.
5.1 Sample
The population of this study consisted of two groups – Bulgarians and Dutch. A questionnaire was developed. The survey was started on 29.05.2016 and closed on 11.06.2016. It was conducted in English and Bulgarian. The survey was completed by 463 people of which 201 (43%) Dutch respondents and 262 (57%) Bulgarian respondents. The survey was conducted online.
Taking all the 463 respondents (Mage=1.78, SD = 0,92), 48% out of them were in age range of
18-24, 34% in age range 25-34, 12% in age range of 35-44, 5% in age range of 45-54 and 1% in age range 55-64. The whole sample consisted of 30% male and 70% female respondents. The sample has a broad range of education degrees completed: 24% has high school or equivalent degree, 44% has completed a Bachelor, 31% have a Master’s degree and 1% has other advanced degree.
5.2 Measurement of variable 5.2.1 Translation
The survey was developed in Qualtrics. All the items were adopted from English surveys. Since the respondents were from Netherlands and Bulgaria, a translation was made. To avoid any mistakes in understanding the questions, they were translated in Bulgarian. The Dutch respondents filled the survey in English, since this is the second official language in Netherlands.
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5.2.2 Items and scales
To measure the drivers of value equity and brand equity a scale of (Rust, Zeithaml, & Lemon, 2000, p. 268) was adopted and adjusted for the purposes of the current study. The respondents were first provided with photos of four different categories products: tomatoes, fish, milk and eggs. For each product category there were two photos – one for organic and one for non-organic type. The survey and the photos can be found in the Appendices. The purpose of providing the photos was to make sure that all the respondents think for the same categories when they answer the questions. After this, questions were asked for these four categories. The first question concerned the frequency of the purchases of the products. A seven point Likert-scale, ranging from 1 (every time) to 7 (never) was used.
The scale for value equity consisted of seven items. Three out of these seven items were for the price. An example item is “When I buy organic food products the price is important to me”. A 7 point Likert-scale ranging from 1 (Strongly agree) to 7 (strongly disagree) was used. The other four items measured the quality as a component of value equity. An example item is “For the following product categories, to what extent is the quality important when you buy them?” A 7 point Likert-scale ranging from 1 (strongly agree) to 7 (strongly disagree) was used.
The scale measuring brand equity consisted of six items, concerning consumers’ attitude and awareness. An example item is “I have a favorable attitude toward the following product categories”. A seven point Likert-scale ranging from 1 (strongly agree) to 7 (strongly disagree) was used.
The respondents also were asked which is more important for them – the price or the brand. A seven point Likert-scale ranging from 1 (strongly agree) to 7 (strongly disagree) was used.
The final block of questions had demographic character. The respondents were asked for their gender, age, completed level of education and nationality. Later in the analyses the questions regarding age, educational level and gender were use as control variable.
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5.2.3 Pre-test
Before the main study a pre-test were performed. Its aim was to check if both the Bulgarians and the Dutch respondents share the same understanding for organic and non-organic food products. They were provided with photos of organic products and their non-organic equivalents. The pre-test was of great importance for Bulgarian respondents, because the products that were used were with labeling in English. The sample consisted of 56 Bulgarian and 49 Dutch respondents. Both groups of respondents showed great understanding of the photos. The results were as follows: 89 %, or 50 out of 56 Bulgarian respondents showed correctly which the organic and non-organic food products were; 92 % or 45 out of 49 Dutch respondents gave correct answers. These results revealed that the English labeling will not affect the ability of the Bulgarian respondents to do the main study.
5.3 Statistical procedure
Data was collected by the means of online survey. The survey was started on May 29th 2016 and
closed on June 11th 2016. Statistical software Package for Social Sciences (SPSS) was used for
performing the analyses. The first step was to check for missing variables and to deal with them if any were found. This was done by frequency analyses.
As for the continued analysis, the List-wise Deletion was chosen, this means that only the cases without any missing data was used for the analysis. However, the disadvantage of this strategy is that it reduces the effective sample size and power, which can result in some bias into the estimates (Norusis, 2008).The survey did not contain reverse coded items, so no recoding was necessary. The next step was performing scale reliabilities, descriptive statistics, skewness, kurtosis and normality tests. The skewness for two of the items (brand attitude and price) was moderately positive. For Quality and Brand Awareness substantial positive skewness was found. According to (Tabachnick, Fidell, & Osterlind, 2001) when the sample is reasonably big, the influence of skewness does not make a substantial differences in the analysis. Although kurtosis can result in minimized variance, this risk is also reduced when the sample is big (200+ cases) (Tabachnick, Fidell, & Osterlind, 2001). In this research more than
31 200 participants took part, which means that the risk is reduced and skewness and kurtosis would not make a substantive difference in the analysis.
After the descriptive statistics, reliability tests for all the items (Price, Quality, Brand Awareness and Brand Attitude) were conducted. All the scales reported good Cronbach alpha’s above 0.70 (Table 2). The values are as follow: Price α=0.89, Quality α=0.87, Brand Awareness α=0.91, Brand Attitude α=0.85. These values for the alphas show that the scales are good.
Regression analyses were performed to test the hypothesized moderation effect between the variables. For analyzing the direct relationships a hierarchical regression was used. The tested variables were: (1) Price, (2) Quality, (3) Brand Awareness, (4) Brand Attitude, (5) Value Equity and (6) Brand Equity. In step 1, the control variables gender, age and education were entered in the models. The aim of this step was to control the shared variability of the demographic variables with the predictive variables. So, the influence of independent variables in the models on the dependent ones is independent of the effect of gender, age and education. The hierarchical regression was conducted for hypotheses 2a, 2b, 3a and 3b. For H2a price and nationality were included as independent variables, to check how well they can predict changes in value equity. In H2b the independent variables entered in the second step were quality and nationality, again the aim was to check their influence on the predictive variable – value equity. Finally hypotheses H3a and H3b were tested. For this purpose brand awareness and brand attitude were entered in the second step of the hierarchical regression analyses.
Next a multiple regression analyses were performed in order to check the relationships and their strength described in hypotheses H1, H2 and H3. The multiple regression analysis give the unique contribution of each of the entered predictors on the dependent variable. For H1 the customer equity of organic and non-organic food products were entered in the model, in order to find how well they are able to predict the customer equity as total. The same was done for H2: value equity of organic and non-organic food products were entered as predictors of value equity. Finally, for analyzing H3 brand equity of organic and non-organic food were included as predictors of brand equity.
32 The final step was to check the moderation effect of nationality on the main relationships. For analyzing the moderation effect Process macro for SPSS and SAS, version 2.15, released January 10th
2016. For estimating the direct and indirect effects in single and multiple mediator models, Process uses ordinary least squares and logistic regression-based paths. Also, it uses two and three way interactions for finding moderation effects along with simple slopes and regions of significance for probing interactions, conditional indirect effects in moderated mediations, as well as indirect effects of interactions in mediated moderation models.
33 Table 2: Mean, Standard Deviations, Correlations and Reliabilities
Mean Std. D Gender Age Education Nationality 1 2 3 4 5 6 7 8 9 10 11 12 13
Gender 1,71 0,453 1 Age 1,77 0,917 ,048 1 Education 3,08 0,776 -,005 ,371** 1 Nationality 1,57 0,496 ,262** ,255** ,022 1 Price 3,37 1,147 -,117* ,041 -,062 ,162** 1 ,(89) Quality 3,04 0,739 -,079 ,032 -,020 ,014 ,129** 1 ,(87)
Value Equity Organic 3,09 0,955 -,132** ,068 -,004
,187** ,456** ,723** 1
Value Equity Non-Organic 3,19 0,743 -,042 -,001 -,064 -,057 ,492** ,576** ,187** 1
Value Equity 3,14 0,653 -,116* ,044 -,046 ,100* ,611** ,854** ,805** ,728** 1
Brand Awareness 3,73 1,228 -,104* -,114* -,020 -,295** -,048 ,340** ,226** ,125** ,237** 1 ,(91)
Brand Attitude 3,21 0,919 -,140** -,085 -,009
-,194** ,060 ,580** ,416** ,335** ,495** ,395** 1 ,(85)
Brand Equity Organic 3,44 1,214 -,082 -,054 ,001 -,001 ,007 ,552** ,612** ,029 ,449** ,618** ,682** 1
Brand Equity Non-Organic 3,43 1,032 -,138**
-,109* -,027 -,452** ,013 ,315** -,002 ,419** ,246** ,653** ,623** ,209** 1
Brand Equity 3,43 0,872 -,146**
-,116* -,017 -,286** ,012 ,558** ,390** ,283** ,446** ,820** ,849** ,782** ,764** 1
Customer Equity Organic 3,25 0,937 -,114* ,011 -,006 ,124** ,280** ,705** ,898** ,137** ,710** ,452** ,606** ,890** ,101* ,638** 1
Customer Equity Non-Organic 3,29 0,717 -,100* -,059 -,051 -,284** ,317** ,532** ,119* ,837** ,583** ,463** ,569** ,141** ,847** ,623** ,142** 1
Custoemr Equity 3,27 0,622 -,146** -,034 -,034 -,085
,392** ,827** ,711** ,602** ,862** ,603** ,781** ,720** ,575** ,835** ,797** ,705** 1 **. Correlation is significant at the 0.01 level (2-tailed).
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6. Results
In the next chapter, first the correlation matrix (see table 2) will be analyzed. Next, the results from the regression analyses will be discussed. Finally, the moderation effects will be explained.
6.1 Correlation analysis
An overview of the scale reliabilities, correlations and descriptive statistics can be found in table 2. The first result derived from the table is that the price significantly correlates with the nationality, value equity and customer equity. The correlation between the price and the nationality (r=0.16, p<0.05) appears to be weak. On the other hand, there is a strong correlation between the price and the value equity (r=0.61, p<0.05) and moderate one for the price and the customer equity (r=0.39, p<0.05). On the other hand quality strongly correlates with the value equity and the customer equity. Both the correlations between quality and value equity (r=0.85, p< 0.05) and quality and customer equity (r=0.83, p<0.05) are strong. Both value equity of organic and value equity of non-organic food products correlates statistically significant with the total value equity and the quality. In both cases the correlation between value equity of organic food products and the quality (r=0.72, p<0.05) and the total value equity (r=0.81, p<0.05) appears to be stronger than the same correlations but for value equity of non-organic food products (r quality=0.58, r value equity=0.73, p<0.05). Interestingly the value equity of organic food products have a weak positive correlation with the nationality (r=0.19, p<0.05) and strong positive correlation with the quality (r=0.72, p<0.05). Brand awareness negatively correlates with age (r= - 0.11 p<0.01), gender (r= -0.10, p<0.01) and nationality (r= -0.30, p<0.01), but these correlations are weak. It can be explained with the fact that the younger people do not have a high brand awareness. Brand attitude also negatively correlates with gender (r= -0.14, p<0.05) and nationality (r= -0.19, p<0.05). Brand attitude also strongly correlates with the total brand equity (r=0.85, p<0.05). Both brand equity of organic food products and non-organic food products strongly correlates with the total brand equity, but the correlation between brand equity for organic food products (r=0.78, p<0.05) seems to be stronger than the one between brand equity for non-organic food products and the total brand equity (r=0.76, p<0.05). The total customer equity also strongly correlates with both customer equity for organic
35 (r=0.80, p<0.05) and non-organic food products (r=0.71, p<0.05), but the correlation with customer equity for organic food products appears to be stronger than for non-organic food products.
36 Table 3: Results for Customer equity (organic food products) and Customer equity (non-organic food products) as predictors of Customer Equity
Table 4: Results for Value equity (organic food products) and Value equity (non-organic food products) as predictors of Value Equity
R R2 B SE β T
Model summary .997 .993*** .052
Customer Equity organic food .472 .003 .712*** 181.58
Customer Equity non-organic food .524 .003 .604*** 154.06
Note: Statistical significance: *p<.05;**p<.01;***p<.001
R R2 B SE β T
Model summary .996 .993*** .056
Value Equity organic food .474 .003 .693*** 170.97
Value Equity non- organic food .526 .004 .598*** 147.65
Note: Statistical significance: *p<.05;**p<.01;***p<.001
R R2 R2 Change B SE β T Step 1 .136 .019* Gender -.165 .068 -.114* -2.448 Age .046 .036 .064 1.269 Education -.065 .043 -.077 -1.531 Step 2 .610 .372*** .354*** Gender -.064 .054 -.044 -1.167 Age .016 .029 .023 .563 Education -.019 .034 -.023 -.563 Price .342 .021 .601*** 15.916
Note: Statistical significance: *p<.05;**p<.01;***p<.001 Table 5: Results of Price as a predictor of Value equity
37 Table 7: Results for Brand equity (organic food products) and Brand equity (non-organic food products) as predictors of Brand Equity
R R2 R2 Change B SE β T Step 1 .136 .019* Gender -.165 .068 -.114* -2.448 Age .046 .036 .064 1.269 Education -.065 .043 -.077 -1.531 Step 2 .855 .732*** .713*** Gender -.072 .035 -.050* -2.024 Age -.021 .019 .029 1.096 Education -.034 .022 -.041 -1.544 Quality .748 .022 .848*** 34.599
Note: Statistical significance: *p<.05;**p<.01;***p<.001
R R2 B SE β T
Model summary .994 .989*** .093
Brand Equity organic food .467 .004 .651*** 127.22
Brand Equity non-organic food .531 .004 .628*** 122.75
Note: Statistical significance: *p<.05;**p<.01;***p<.001 Table 6: Results of Quality as a predictor of Value Equity
38 R R2 R2 Change B SE β T Step 1 .185 .034** Gender -.267 .090 -.138** -2.970 Age -.116 .048 -.121* -2.417 Education .027 .057 .024 .473 Step 2 .823 .678*** .644*** Gender -.113 .052 -.058** -2.157 Age -,024 .028 -.025 -.861 Education .006 .033 .005 .175 Brand Awareness .577 .019 .812*** 29.930
Note: Statistical significance: *p<.05;**p<.01;***p<.001
R R2 R2 Change B SE β T Step 1 .186 .035** Gender -.272 .090 -.141** -3.029 Age -.114 .048 -.120** -2.389 Education .032 .057 .028 .567 Step 2 .851 .724*** .690*** Gender -.057 .048 -.030 -1.176 Age -.042 .026 -.044 -1.642 Education .015 .030 .013 .491 Brand Attitude .798 .024 .842*** 33.442
Note: Statistical significance: *p<.05;**p<.01;***p<.001
Table 9: Results of Brand Attitude and Nationality as predictors of Brand Equity Table 8: Results of Brand Awareness as a predictor of Brand Equity
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6.2 Direct Effects
For testing the direct effects regression analyses were performed. In the tables 3, 4, 5, 6, 7, 8, and 9 the results are summarized.
For testing H1 (table 1), according to which the customer equity for organic food products is higher than for non-organic food products, a multiple regression was performed, in order to test which of the two variables predicts the customer equity better. First, the data was tested for a normal
distribution, also if there are outliers, high leverage points or highly influential points,
multicollinearity and homoscedasticity. The results met all the assumptions needed, so the multiple regression analysis was performed. The results can be seen in table 3. After entering the two predictors, the model was statistically significant F (2, 460) = 33003.83; p < 0.001. The model was able to explain 99.3 % variance in customer equity. Both of the predictors were statistically significant (p < 0.001). Further, the results revealed that customer equity of organic food products was a better predictor, reporting higher Beta values (β= .712; p < 0.00) than customer equity of non-organic food products (β =.604; p < 0.001). The results from the conducted multiple regression support H1.
For testing H2 (table 1), according to which the value equity for organic food products is higher than for non-organic food products, a multiple regression was performed, in order to test which of the two variables predicts the value equity better. First, the data was tested for a normal distribution, also if there are outliers, high leverage points or highly influential points, multicollinearity and
homoscedasticity. The results met all the assumptions needed, so the multiple regression analysis was performed. The results can be seen in table 4. After entering the two predictors, the model was statistically significant F (2, 458) = 31321.95; p < 0.001. The model was able to explain 99.3 % variance in customer equity. Both of the predictors were statistically significant (p < 0.001). Further, the results revealed that value equity of organic food products was a better predictor, reporting higher Beta values (β= .693; p < 0.00) than value equity of non-organic food products (β =.598; p < 0.001). The results from the conducted multiple regression support H2.
