How does an advertising campaign influence the Brand
Equity of a brand?
Julie Mijnssen Student number 1342983
University of Groningen
Master Thesis BA Marketing Management
First Supervisor Dr. M.A. Tuk Second Supervisor Dr. L.M. Sloot
December, 2008
How does an advertising campaign influence the Brand Equity of a brand?
Author: Julie Mijnssen
Student Number: 1342983
Specialization: Marketing Management
Date: December, 2008
First Coordinator: Dr. M.A. Tuk
Second Coordinator: Dr. L.M. Sloot
Company: Sara Lee, Pickwick
Company Coordinator: Hein van Es
Management Summary
It has become clear to most companies that their brands are the most valuable asset they have.
Creating a valuable brand takes time and a lot of effort and advertising can be a very helpful way of creating such a strong brand. In this research we aim to determine whether an advertising campaign influences the brand equity of a brand.
From academic literature on brand equity we learn that brand equity can be approached from two different perspectives; a financial perspective and a consumer perspective. In this thesis the consumer perspective will be used to examine our research question. In order to measure brand equity from a consumer perspective, we will look at four components of brand equity.
These components are: brand loyalty, perceived quality, brand awareness and brand associations. Each component of brand equity will be investigated separately in order to find out how each component is influenced by different types of advertising.
Advertising can be done in various forms, the most important are; TV commercials, print advertisements, outdoor advertising, a new package design and a new logo. Each form has its own advantages and disadvantages and can be executed in different ways. How each form influences the components of brand equity is something that we investigate. The academic research on the influence of an advertising campaign on brand equity is limited. There is some literature that assumes there is a relation between advertising and brand equity but it does not describe specifically which form of the advertising campaign influences a component of brand equity. This is the gap that we aim to fill.
We developed a conceptual model based on existing literature. This model illustrates the expected relations between the components of the advertising campaign and the components of brand equity. After constructing the conceptual model we tested the hypotheses by conducting an ANOVA analysis and a regression analysis.
In this thesis we focus on the brand Pickwick, the largest tea brand of the Netherlands. This is
because Pickwick launched a new advertising campaign in the same time period as this
empirical investigation was conducted. First of all we measure the brand equity of Pickwick
before the campaign started, by means of the so called zero measurement. When the campaign
ended we measured the brand equity again and besides that we measured whether the respondents had seen the different forms of the advertising campaign, this was called the first measurement. These two measurements allowed us to draw conclusions on the impact of Pickwick’s advertising campaign on the brand equity.
The results of the study show that none of the components of the advertising campaign influenced the component brand loyalty. However, brand awareness increased when people had seen the TV commercial, the print advertisement, the new package design or the new logo. Subsequently, the new package design, the print advertisement and the new logo influenced the perceived quality of the brand. Some of the brand associations also changed in a positive way. The brand was perceived as: more natural, interesting, modern look, better taste, innovative and high variety of products.
Overall, we conclude that some of the components of the advertising campaign influenced the
components of brand equity. So there can be said that an advertising campaign can contribute
in creating a different brand equity.
Preface
The master thesis is the conclusion of my master Marketing Management within the study Business Administration at the University of Groningen. This thesis contains the results of a case study at Sara Lee.
I would like to thank some people who supported me during the writing of this thesis. First of all I would like to thank all the employees of Pickwick at Sara Lee for their support during my internship. They helped me with my research and also gave me the independence to conduct the research on my own.
I specially want to thank my first supervisor dr. Mirjam Tuk for all her advise and help during my earlier drafts of this thesis. She helped me maintain an academic perspective and gave me useful feedback, which has been of great help and resulted in this final version of my master thesis.
In the end, I would also like to thank my family, friends and boyfriend for supporting me during my study time in Groningen. I could not have done it without them! Thanks a lot!
Julie Mijnssen
Amsterdam, December 2008
Table of Content
Management Summary ... 3
Preface ... 5
Table of Content... 6
1. Introduction ... 8
1.1 Problem statement ... 9
1.2 Dataset ... 10
1.3 Thesis content... 10
2. Brand Equity ... 11
2.1 Introduction ... 11
2.2 Definition of brand equity ... 11
2.3 Approaches of brand equity consumer versus financial... 11
2.4 Brand Equity, different components ... 12
2.5 The components of brand equity... 15
2.5.1 Brand associations... 15
2.5.2 Perceived quality ... 16
2.5.3 Brand awareness... 16
2.5.4 Brand loyalty ... 17
2.6 Conclusion... 18
3. Advertising ... 19
3.1 Introduction ... 19
3.2 Definitions of advertising... 19
3.3 Advertising and brand equity ... 19
3.4 Advertising mediums ... 20
3.4.1 Television media ... 20
3.4.2 Print advertisements in magazines ... 21
3.4.3 Outdoor advertising... 21
3.5 Brand elements ... 22
3.5.1 Package design ... 22
3.5.2 Logo ... 23
3.6 Conclusion... 24
4. Conceptual Model and Hypotheses ... 25
4.1 Conceptual model... 25
5. Pickwick Sara Lee ... 27
5.1 Introduction ... 27
5.2 History of Pickwick... 27
5.3 Tea market figures worldwide... 27
5.4 Tea competitors worldwide ... 27
6. Pickwick’s advertising campaign... 29
6.1 Introduction ... 29
6.2 Background information ... 29
6.3 The new logo of Pickwick... 30
6.4 The new Pickwick commercial ... 30
6.5 The new Pickwick advertisements ... 31
6.6 The new Pickwick packaging... 31
6.7 Conclusion... 32
7. Methodology ... 33
7.1 Measurement ... 33
7.2 Sample size and techniques... 33
7.3 Scales questionnaire ... 35
8. Results ... 37
8.1 Introduction ... 37
8.2 Validity analysis ... 37
8.2.1 Measuring items ... 37
8.2.2 Internal reliability... 37
8.3 Results hypotheses ... 38
8.3.1 The impact of a TV commercial on brand equity ... 39
8.3.2 The impact of a print advertisement on brand equity... 39
8.3.3 The impact of outdoor advertising on brand equity ... 41
8.3.4 The impact of a new package design on brand equity ... 42
8.3.5 The impact of a new logo on brand equity... 43
8.4 Overall regression analysis... 45
8.5 Conclusion... 49
9. Conclusions and Recommendations... 50
9.1 Introduction ... 50
9.2 Conclusions ... 50
9.3 Discussion ... 52
9.4 Managerial recommendations ... 53
9.5 Limitations and further research ... 54
References ... 55
Appendix 1 ... 57
Appendix 2 ... 58
Appendix 3 ... 65
1. Introduction
The last couple of years strong brands have been associated with revenue growth and improved returns to shareholders. Branding has become a top priority for the management of many companies, and moreover companies realize that their brands are the most valuable asset they have.
Strong brands are brands that are easily recognized and best-known by the consumer. Brands have several valuable functions in relation to a consumer but also to a firm. In relationship with a consumer, brands take on a unique, personal meaning that will help their day-to-day activities and enrich their life’s. And as the life’s of consumers become more and more complicated, brands can simplify decision making (Keller, 2008).
In relationship with a firm, brands characterize pieces of legal property, are capable of influencing consumer behavior, are being bought and sold and provide a security of sustained future revenues (Keller, 2008). A strong brand has according to Keller (2008) strong, relevant and unique associations in the memory of a customer, and according to these kind of assets it has become clear to most firms that their brands are very important for their company.
The value of a brand is described in academic literature as brand equity, which will be discussed in chapter two.
Creating a valuable brand takes time and a lot of effort from the company. Advertising is very important in creating a strong brand. Advertising can be seen as any paid form of non personal presentation and promotion of ideas, goods, or services by an identified sponsor (Keller, 2008). Advertising has a lot of mediums through which a positive brand equity can be created, like television, radio and print advertisements.
Nowadays companies use advertising to create a different brand equity. This can be done by
changing brand associations, but also by increasing the brand awareness. Everywhere, outside
and inside their home, consumers are confronted with advertising, which can be too
overwhelming. So creating a good advertising program is not as easy as it looks. Companies
need to consider very carefully what kind of advertising they want to use before they decide
to implement an advertising program. "Advertising is an expensive business. Those who
spend money on it should want to know what results they're getting. And those who plan and
create it should want to find out if what they're doing is working; and how, and why it's working (or not), in order to learn how to do it better next time." (Feldwick, 1996).
Pickwick is a good example of a strong brand in the Netherlands, it has a very long history and a lot of customers are really attached to the brand. But once in a while traditional brands need to refresh and modernize their brand. So Pickwick started a campaign to change their traditional image into a modern image, to finally create a different brand equity. The case study of Pickwick on which this research will focus will be discussed in chapter five and six.
1.1 Problem statement
As is mentioned above, brands are a very interesting issue at the moment. Every company is focusing on their brand and their brand equity. In this thesis we will focus on the case study of Pickwick, and how their advertising campaign influences their brand equity. To investigate this, we conducted a measurement of the brand equity of Pickwick before the kick off of the advertising campaign and a couple of months after the campaign. In this way we aim to discover in which way the brand equity changed and which component of the advertising campaign influenced this change the most.
The main objective of this investigation is to show what the effect is of the different components of the advertising campaign on the different components of brand equity. Will the components of brand equity increase or decrease? The research question that will be examined is: “What is the effect of an advertising campaign on Brand Equity?” And the sub questions hereby will be,
• Which factors influence brand equity?
• What different kind of models exist of Brand Equity?
• Which factors influence the effect of an advertising campaign?
• What is the impact of advertising on Brand equity?
This investigation will focus on the case of Pickwick. Pickwick is one of the products from
Sara Lee International. Pickwick is the largest tea producer of the Netherlands, with a market
share of 55,6 percent. At this moment Pickwick is ‘reinventing their base’, their name will be
identical, but their logo and the whole look and feel will change. They want to change their
image through different channels of advertising to create a different brand equity.
The consumers where this research will focus on will be Dutch tea drinkers whom are familiar with the brand Pickwick.
1.2 Dataset
In this research primary and secondary data will be collected. Primary data is collected by the researcher for the specific purpose of the research problem, while secondary data is collected for some purpose other than the problem at hand (Malhotra, 2004).
The secondary data we collected for this thesis is of academic literature about brand equity and advertising. According to the literature several hypotheses will be formulated which will be tested in the field research.
The primary data is based on the real life case of Pickwick, and data that will be collected from Dutch tea drinkers, whom are familiar with the brand Pickwick. This data will be collected to answer the research question and to test the hypotheses.
Through this thesis, data from the Pickwick database about the tea market, the different kind of advertising and more interesting background information will be collected and described.
1.3 Thesis content
This thesis can be split up in two different sections. In the first section, chapter two until six,
the academic literature and the case study of Pickwick will be described. And in the second
section, chapter seven until nine, the research and conclusions will be illustrated.
2. Brand Equity 2.1 Introduction
In order to examine the effect of an advertising campaign on brand equity, we will present the available academic literature on brand equity in this chapter. The theoretical issues about brand equity first need to be discussed and we will have a critical look at the different kind of definitions and approaches about brand equity and subsequently we will see which one fits within our research.
2.2 Definition of brand equity
According to Alsem (2005) a brand can be described as a name, symbol, letter or sign (or a combination of them) that a company uses to differentiate their product from other kind of products or services. A strong brand can create a competitive advantage for a company, and a strong brand can be created by a different kind of brand equity in comparison with the other competitors in the market. In other words a brand and brand equity are closely related with each other.
2.3 Approaches of brand equity consumer versus financial
We can distinguish three approaches of brand equity, which all describe in which way brand equity can be measured (Feldwick, 1996).
1. The first approach contains of brand equity as a financial value of a brand. Brand equity can be seen as the total value of a brand when it is sold or when it is used in financial accounting.
2. The second approach consists of a criterion how consumers are connected to a brand. This can be indicated in four different kind of approaches (Feldwick, 1996).
• Based on price sensitivity
Consumers will pay a higher price for a strong brand.
• Based on purchase decision
Consumers who always buy the same product in a certain product category can be seen as emotionally connected to that brand.
• Based on attitude
This gives insights into the preferences of a consumer and the connection of a consumer with a brand, without focussing on price and distribution.
• Based on brand awareness
When a consumer thinks of a specific product category, a certain brand is on top of mind.
3. The third approach describes a brand on behalf of the associations a consumer has with a brand. How does a customer describe a brand? A consumer can describe a brand as an innovative brand for example.
Feldwick (1996) concludes that there is not one way to describe brand equity, but postulates that at different moments different approaches can be suitable. In this thesis the focus will not be on the first approach; financial value of brand equity, but on the second and third approach;
consumer behaviour and the brand perception of the consumer. This is due to the fact that the first results can be measured through the consumer, the consumer approach focuses more on the beginning stadium of an advertising campaign. The financial effects can only be measured after a long term to conclude whether the campaign had a positive effect on the market share for example. Therefore, the financial approach can not give an appropriate answer to the research question. The research question in this research is; “What is the effect of an advertising campaign on Brand Equity?” We would like to measure in which way brand equity changes (increases or decreases) when an advertising campaign starts focusing on brand associations or brand awareness for example. The components of brand equity are more related with a consumer than with a financial aspect.
2.4 Brand Equity, different components
In the existing literature we find various definitions from brand equity, every researcher uses his own definition. In the next part we will give an overview of the most often used definitions. The definitions described in the following section are all focusing on the fact that brand equity is created through the effect of a brand on consumers.
According to Aaker (1991) there are five brand equity assets that create value to a brand.
These assets are:
• Brand Loyalty
Brand loyalty is the connection a customer has with a brand. Are you really connected
• Brand awareness
Brand awareness can be created through brand recognition and brand recall. Do you recognize the brand in the supermarket or is it on top of your mind?
• Perceived brand quality
This is about the consumers’ judgment about a products’ overall quality. For example;
when a consumer has used a product, he or she can judge how he perceives the quality of the product.
• Brand associations
All the associations linked in a memory to a brand, for example if it is a traditional/
old brand or a modern/trendy brand.
• Other proprietary brand assets
These brand assets can be for example patents, trademarks and channel relationships.
These different kind of brand equity assets provide a value for the consumer by retrieving a huge quantity of information about the product, it can affect the confidence of the purchase decision and it can create valuable customer satisfaction by using the product (Aaker, 1991).
The assets of brand equity will also create value to the firm by enhancing the efficiency and effectiveness of marketing programs. For example, a consumer will try a sample of a product when he or she is already familiar with the brand. Brand loyalty can be strengthened by increasing customer satisfaction and providing reasons to buy the product. Brand equity will also create higher margins to a firm, like a familiar brand can permit premium pricing and can reduce promotions. It can provide a platform for brand extensions, when consumers are well known with a certain brand, they will have faith in another product from the same brand. It can provide leverage in the distribution channel, with a known brand it is easier to create leverage in a distribution channel and at last brand equity can create a significant advantage:
preventing customers to switch to a competitor, customers are familiar with the brand and are used to it (Aaker, 1991).
Keller (2008) describes brand equity from a customer perspective as well, also known as the customer-based brand equity model. “Customer-based brand equity is the differential effect that brand knowledge has on consumer response to the marketing of a brand.”
The following three ingredients of customer-based brand equity need to be taken into account:
1. “The differential effect”, brand equity arises from differences in consumer response, when no differences take place, the brand name product can be classified as a commodity.
2. “Brand knowledge”, what has the consumer seen, felt and heard about the brand as a result of their experience over time.
3. “Consumer response to marketing”, the different responses of consumers, which make up brand equity, are all related to the preferences, perceptions and behaviour of brand marketing.
All these three ingredients are a way of thinking of customers who can be influenced by marketing programs. To create the differential response that leads to customer-based brand equity, marketers should associate a unique, meaningful point of difference to the brand to provide a competitive advantage and a ‘reason why’ consumers should buy it. These different responses can be created by brand knowledge. So according to Keller (2008), brand knowledge is the key to create brand equity.
Keller (2008) defines brand knowledge in two components:
• Brand awareness
Brand awareness can be separated in brand recognition and brand recall. Brand recognition means that a consumer can recognize the brand when he or she is for example in a supermarket. Brand Recall means that a consumer thinks of the brand when he is thinking of that specific product category.
• Brand image
Brand image is a consumers’ perception about a brand, which is reflected by the brand associations a consumer has in his or her memory. A positive brand image obtains marketing programs who create a favourable, strong and unique association to the brand.
Kamakura and Russell (1993) also focused on the consumer side of brand equity. However, their approach was based on purchase behaviour of the consumer. Previous attempts, like Tauber (1981) measured brand value to the consumer on self reported measures of preferences and attitudes obtained through market surveys. Kamakura and Russell (1993) wanted to observe the actual consumer behaviour observed in the marketplace.
The two major sources of brand equity in the research of Kamakura and Russell (1993)
physical product and its physical cues create the perceptions of a brand. So not only a physical product can create brand equity but the physical cues like advertising as well.
Yoo et al (2001) recommended a measurement method of brand equity drawn from Aaker’s (1991) and Keller’s (1993) conceptualization’s of brand equity. Yoo et al (2001) divided brand equity into three kind of components, namely brand awareness/associations, perceived quality and brand loyalty. According to their research their factor analysis did not produce four distinct factors among the selected brand equity items, this is mainly due to the fact that brand awareness and brand associations are linked with each other. Only three factors were consistently found in each sample. By combining these two together they created a new measurement model.
Overall there can be said that there is not one ‘right’ definition of brand equity, there are all different kind of theories that are described above. These definitions are not all the same but some of them are comparable. All these definitions have a focus on the consumer, and most of them describe components of brand equity related to the consumer.
The components that are most frequently used are brand associations, brand awareness and perceived quality. According to Aaker (1991) there is another component that should be measured, namely brand loyalty. In this empirical investigation, these four components will be measured to describe brand equity. In our opinion these components capture the essence of brand equity.
2.5 The components of brand equity
The components of brand equity that will be used in this research will be described in this paragraph.
2.5.1 Brand associations
According to Aaker (1991) brand association is everything in a customers memory that in a
certain way is connected to a brand. This can also be described as the mental connections in a
customers memory between a brand and the symbolic meanings that connects a customer with
a brand. According to Keller (2008) these perceptions of a customer are reflected by the brand
associations, the image of a brand.
Keller (2008) says that a brand association needs to be strong, favourable and unique if it wants to create brand equity.
• Strong brand associations
How strong the association is, will be determined by the information that a customer remembers of a brand. Different factors can influence how strong a brand association will be. Two important factors hereby are the relevance of the information and the consistency of the information given to the customer. When a product communicates that it is very healthy for your body and it communicates it every time in the same way, customers are able to remember that information.
• Favourite brand associations
Overall a marketing program can create favourite brand associations. How favourite the brand associations are depends on how desirable the brand associations are to the customer and how they are successfully delivered by the product. It is important to know how desirable or important a brand association is to the brand attitude and the purchase decision of a customer.
• Unique brand associations
It is vital to a brand that it can distinguish itself from its competitors. Brands should not only be strong and favourite, but also unique if you want to create a competitive advantage.
Brand associations can play a very important role in the differentiation of a brand.
2.5.2 Perceived quality
Perceived quality can be described as the perception of the customer with the total quality of a product compared to other relevant products in the category (Aaker, 1991). Zeithaml (1988) describes perceived quality as: “not the actual quality of the product but the consumer’s subjective evaluation of the product”. The perception of a customer is always subjective since each customer has different needs and preferences.
2.5.3 Brand awareness
Brand awareness indicates if a potential customer is capable of recognizing or recalling a
brand of a specific product category (Aaker, 1991). Keller (2008) makes a distinction between
brand recall and brand recognition. Brand recognition is the aided brand awareness and brand
recall is the spontaneous brand awareness. In the first situation there is a confrontation with the brand, for example in the supermarket, and the customer has to confirm that he has seen the brand before. In the second situation there is a confrontation with the product category and then the customer can spontaneously recall a couple of related brands from that product category. Brand recognition is something that occurs more often than brand recall. We are in general more adept at recognizing a brand than at recalling it, this is because most consumer decisions are made at the point of purchase (Keller, 2008). But recall registers a brand in the mind of customers, which is a step in building brand equity.
2.5.4 Brand loyalty
Aaker (1991) describes brand loyalty as the attachment a customer has to a brand. Oliver (1997) defines brand loyalty as: “a deeply held commitment to rebuy or repatronise a preferred product or service consistently in the future, despite situational influences and marketing efforts having potential to cause switching behaviour.” Oliver’s (1997) definition is a behavioural dimension of brand loyalty. Yoo and Donthu (2001) see brand loyalty as a trend to be loyal to a certain brand, which can be confirmed by the fact that customers buy the brand as a first choice. Brand loyalty can be described in three ways:
• Share of customer
This can be described as the market share of a brand to a customer. A brand with a high customer share declares that the brand is the main brand of the product category.
• Attitude of a customer towards the brand
A positive attitude to a brand can create brand loyalty or can keep customers to stay brand loyal.
• Commitment to a brand
When a customer has a commitment with a brand they will not switch brands which will guarantee future profits.
Brand loyalty is different to other components of brand equity, due to the fact that brand
loyalty is much more closely related to user experience. Brand loyalty exists after a customer
has bought a product. Brand awareness, perceived quality and brand associations can exists
without buying or using a product.
2.6 Conclusion
Brand equity is a very important concept in the marketing literature since the last couple of years. Brand equity can be described in two different ways, a financial way and a consumer behaviour way. In this dissertation we will focus on the latter approach.
The consumer way of measuring brand equity uses some components of brand equity, like brand associations, perceived quality, brand awareness and brand loyalty.
In this chapter a definition of brand equity is described from literature, however, brand equity is not static but dynamic and a company sometimes want to change its brand equity. As far as we know, there is limited academic literature concerning methods to change brand equity.
Ways of building, buying or borrowing brand equity are extensively described in literature, but in which way the components of brand equity can be influenced is a gap that needs to be researched.
Changing brand equity can be done in different ways according to Aaker and Biel (1993), namely advertising can create a psychological differentiation between brands and can enhance brand equity. According to Aaker (1991) enhancing or retaining brand equity of a product should be done by focusing on brand awareness, brand loyalty, perceived quality and brand associations. In this way, the brand will be more valuable to both the firm and the consumer.
Keller (2008) says that brand equity can be build by marketing communication, like advertising and by choosing the right brand elements, like the package or logo of a brand. He does not describe in which way brand equity is influenced by marketing communication or brand elements.
There is no empirical research on the relation between the components of brand equity and the different types of advertising. The aim of this study is to fill that research gap.
In the next chapter the focus will be on advertising, the communication and the brand
elements. Subsequently the case of Pickwick will be described to take a closer look in which
way brand equity can be influenced by an advertising campaign.
3. Advertising 3.1 Introduction
This chapter will discuss the theoretical issues of advertising. With the intention to research whether an advertising campaign is successful, a generic understanding of advertising is needed. Therefore a definition of advertising will be formulated first. After that the relationship between advertising and brand equity will be explained and then the different mediums of advertising and brand elements will be discussed. These theoretical issues enable us to get insights in the importance of the different kind of advertising mediums. We will also describe after each medium of advertising which hypotheses can be formulated in relationship with brand equity to conduct this research.
3.2 Definitions of advertising
According to Percy and Elliot (2005) advertising can be described as “an indirect way of turning a potential customer towards the advertised product or service by providing information that is designed to effect a favourable impression, what we will call a positive brand attitude.” Advertising is aimed to build a long term positive brand attitude by turning the customer towards the brand.
Keller (2008) describes advertising as a powerful way of creating a strong, favourable and unique brand association and positive feelings and judgments. He also describes that each advertising medium has its own advantages and disadvantages.
Advertising is the primary mechanism for creating psychological differentiation among brands and for enhancing brand equity (Aaker and Biel, 1993). So, it is important to know how brand value is created in the mind of the consumer.
3.3 Advertising and brand equity
According to Cobb-Walgren et al (1995) advertising can influence brand equity in different
ways. Awareness can be created of the brand and it can increase the probability that the brand
is included in the consumers mind set. Krishnan and Chakravati (1993) declare that
advertising can contribute to brand associations which, when stored in accessible memory,
can be translated into ‘nonconscious but reliable behavioural predispositions’. Stigler (1996)
also discussed that brand associations can be influenced by advertising when it provides
information about objective attributes such as price and physical traits. Advertising influences brand loyalty also in a certain way according to Agrawal (1996). He says that “stronger brand loyalty requires less advertising than weaker brand loyalty, but a larger loyal segment requires more advertising than a smaller loyal segment”. Keller (2008) says that advertising and communication options can play different roles in the marketing program, but one important intention they all have is that they want to contribute to brand equity. According to Jedidi et al (1999) advertising intensifies brand equity while promotion does not. Taking all these findings of advertising and brand equity into account, we should take a closer look at the different advertising mediums and brand elements.
3.4 Advertising mediums
Different advertising mediums have different strengths and play different roles in a communication program. Mass media advertising focuses on print advertisement, outdoor advertising and TV commercials for example, while point of purchase advertisement focuses on packaging.
3.4.1 Television media
Television is a very powerful advertising medium, due to the fact that customers can see and hear the commercial. It is a small story that creates a certain look and feel, which can not be created by a print advertisement. It is also powerful because of the wide reach of TV advertising and the low costs per exposure. There are two important strengths of advertising;
through a commercial a brand can show there intangible assets like a certain feeling and it is also possible to explain customer benefits of a certain product. These two strengths create a positive attitude towards the brand if the commercial is a persuasive commercial (Keller, 2008). Disadvantages of a television advertising campaign can be that people most of the time ignore television commercials due to the fact that these minutes can be useful to go to the toilet or make a phone call. Therefore, a television commercial needs to be very attractive if you want to keep your customer close to the television.
The first hypothesis of this investigation focuses on the influence of the TV commercial on
perceived quality, brand awareness and brand associations. The commercial will influence
these three aspects the most, because a commercial can explain customer benefits, which can
create a positive attitude towards the brand. This positive attitude can ensure that customers
recognize the brand when they are in the supermarket and it can ensure customers to create a look and feel with the brand.
H1: A TV Commercial increases the perceived quality and brand awareness and changes the brand associations of the product.
3.4.2 Print advertisements in magazines
Print advertisements can provide very detailed product information. A brand can explain, in an easy way, through advertisements what the benefits of the brand are to a consumer. It is also possible to create an effective user and usage imagery (Keller, 2008). Through advertisements in magazines brands can choose to reach a certain target group, like for example teenagers or middle aged woman. Each magazine has its own target group which is a good way to focus on. Through a commercial it is much more difficult to target a certain group, because you will never really know who is watching television.
A disadvantage of print advertisements in magazines is that it can be a passive medium, it is only a visual, so it really needs to attract the consumer. The long lead time before it will be printed in the magazine can also create a problem in the advertisement process.
The second hypothesis focuses on the influence of print advertisements on brand awareness and brand associations. Especially brand awareness can be influenced because customers recognize the advertisement and can recall or recognize it when they are in the supermarket.
Brand associations can be created as well, because customers create a look and feel with the brand when they look at the advertisement.
H2: A print advertisement increases the brand awareness and changes the brand associations of the product.
3.4.3 Outdoor advertising
Instead of reaching customers in the traditional environments, like at home or at work,
companies started with advertising in the outdoor at huge billboards for example. Not only at
bus or train stations but also in football stadiums. In this way customers can be confronted
with products during the whole day (Keller, 2008). The main advantage of outdoor
advertising is that they can reach a certain target group in a cost-effective manner. A
disadvantage is that consumers are bothered by all the advertising, that they do not pay
attention anymore.
The third hypothesis focuses on the influence of outdoor advertising on brand awareness.
Outdoor advertising, tries to contact a customer outside his or her traditional environments. It is hard to measure if people really paid attention to the billboard, but while looking at the billboard, awareness can be created.
H3: An outdoor advertising increases the brand awareness of the product.
3.5 Brand elements
A package design and a logo are not really components of an advertising campaign, but more basics of brand elements. Brand elements, sometimes called brand identities, are the elements that differentiate a brand from another brand. The most common brand elements are; brand names, logos, symbols, characters, slogans, jingles and packages (Keller, 2008).
Each brand element can play a different role in building brand equity, so it is up to marketers to try to mix a couple of elements to match the brand equity of the product (Keller, 2008).
Changing the brand elements changes the brand awareness in an easy way. It is important to change it in a right way, otherwise your brand awareness will not be the same as before.
Alsem (2005) discusses that brand elements only consist of a; brand name, logo and package design. In the next section we will solely discuss package design and logo. This is due to the fact that is it very costly and time consuming to change a brand name. Therefore a company often decides to refresh their package design and their logo instead of changing their name.
3.5.1 Package design
One of the core strengths of packaging as a marketing communication tool is its natural accessibility at point of purchase (Underwood et al, 2001). The moment of point of purchase is very important, because about two-thirds of all supermarket purchases have been reported to be decided upon when consumers are actually in the store (Schoorsman, 1997). After all we do know that within the retail environment consumers come in contact with packaged products, while for a television commercial we do not know for sure that the consumer is watching (Underwood and Ozanne, 1998).
According to Alsem (2005) packaging must achieve a number of objectives like; it should
identify the brand, it should convey descriptive and persuasive information, it should assist at-
home storage and it should aid product consumption. Packaging can become very important
in means of brand recognition and it can convey or imply information to build or reinforce
firms want to upgrade it to a higher price or want to sell products more effectively through new distribution channels. Marketers should be really careful when changing a package design, they should test it often before introducing it into the market. Consumers who fail to recognize new packages can in the long run lead to reductions in a company’s market share.
Packaging can play a very important role in building brand equity directly, this can be done through functional elements of the packaging but also through brand awareness and brand image (Keller, 2008).
The fourth hypothesis focuses on the influence of a package design on perceived quality, brand awareness and brand associations. A package design can influence brand equity through functional elements which will influence the perceived quality but also through brand awareness and brand associations. Customers create a certain look and feel while seeing the product.
H4: A package design increases the perceived quality and brand awareness and changes the brand associations of the product.
3.5.2 Logo
As discussed above, a logo is also a brand element. Alsem (2005) postulates that companies most of the time decide too fast to change a logo. It should be tested very carefully because a logo changes the brand identity and in this way also the brand equity. And if the logo does not fit within the companies brand equity, customers are not able to recognize it again. Logos are a very important company asset that firms spend enormous amounts of time and money on promoting them (Rubel, 1994). Most companies update their logo once in a while to keep a fresh and modern look (Siegel, 1989). A very good selection process is essential in choosing a new updated logo. This is because everything needs to change with a new logo, from the companies business card to the product package, which costs a lot of money.
The fifth hypothesis focuses on the influence of a logo on perceived quality, brand awareness and brand associations. Logos create associations and awareness, a logo has a certain appearance which can create sense to a customer. But it can also create perceived quality in comparison to other brands. A logo is something which customers link to a certain product.
H5: A logo increases the perceived quality and brand awareness and changes the brand
associations of the product.
3.6 Conclusion
In this chapter the different mediums of advertising and two important brand elements have
been described. The different hypotheses describe in which way the advertising mediums can
be linked to brand equity. Because brand equity and the advertising campaign both consist of
different components, they all need to be taken into account when researching the overall
effect.
4. Conceptual Model and Hypotheses 4.1 Conceptual model
Based on insights we obtained from academic literature on the different components of brand equity and advertising, we constructed the following conceptual model.
Figure 4.1: Conceptual Model
Brand Equity
Brand Loyalty
Perceived Quality
Brand Awareness
Brand Associations
TV Commercial
(red)
Print Advertisements
(blue)
Outdoor Advertising
(green)
New Package Design
(purple)
Logo
(orange)
Advertising
Campaign
The hypotheses described in chapter three show the expected relationships between the components of the advertising campaign and the components of brand equity. These relationships can be found in this conceptual model.
In this investigation the advertising campaign consists of five different components. All these
components can influence the brand equity in different ways. The main objective of this
research is to investigate what the influence is of the different aspects of the advertising
campaign on the components of brand equity. In order to investigate control variables in this
research as well, we include respondents’ age and gender. The case study of the brand
Pickwick will be used to investigate this influence. In the next two chapters Pickwick and
their advertising campaign will be described. Subsequently, the methodology of this
investigation and the results and conclusions and recommendations will be illustrated.
5. Pickwick Sara Lee 5.1 Introduction
In this chapter the brand Pickwick and the tea market will be described. During this thesis the case study will focus on Pickwick and their advertising campaign. The main goal is to find out if the advertising campaign created a different brand equity of Pickwick.
5.2 History of Pickwick
Pickwick has a very long history which all starts with a man called Douwe Egberts. In 1753 he started a small shop selling different kinds of coffee and tea in a small village called Joure, in the north of the Netherlands. Until 1937 tea was sold under the name of Douwe Egberts, but from then on they wanted to give the tea a more English character so they changed the name Douwe Egberts into Pickwick (after the name of the book “Pickwick Papers” of Charles Dickens).
By now Pickwick has grown from a small shop in Joure to a large international brand known in fifteen countries worldwide. In 1978 Douwe Egberts started a cooperation with an American multinational, Sara Lee Cooperation, which is specialised in the Fast Mover Consumer Goods sector and has a large bakery assortment. Due to this merger, Douwe Egberts could internationalize.
15.3 Tea market figures worldwide
In Western Europe hot tea is the number one hot drink beverage, it accounts for 27% of the hot drinks liquid intake. Worldwide the hot drinks liquid intake accounts for 23%. Sara Lee Pickwick operates in the Netherlands, Denmark, Hungary, Spain (where it is branded under a different name, Hornimans), Czech Republic, Belgium, and Russia. With a market share of XX %, Pickwick is a market leader.
5.4 Tea competitors worldwide
Lipton is the number one tea brand in the world, with a market share of 15,7 %. Pickwick is number nine in this list with a market share of 1,4%. From this facts we conclude that the tea market worldwide is very fragmented and that many players play a role. A few examples are:
1
Tetley(Tata), Celestional Seasonings, Twinings and private labels from supermarkets (see Appendix I figure 1).
5.5 The tea market in the Netherlands
As we said above, the tea market in the Netherlands is mainly dominated by Pickwick.
Because of the long history of Pickwick, consumers are very connected to the brand. Other players in the Dutch tea market are Lipton, private labels from quality supermarkets, like Albert Heijn and private labels from discounted supermarkets, like Aldi.
Unfortunately for Pickwick the market share is decreasing. The decrease in market share of Pickwick can be explained by one reason, the stronger competition. This is mainly caused by Lipton and private labels from quality supermarkets. Lipton (the world largest tea brand) entered the Dutch tea market in 2005 with an introduction of pyramid tea bags. These pyramid tea bags gained popularity in a short period, which significantly increased Lipton’s market share and reduced Pickwick’s market share.
Private labels from quality supermarkets, like Albert Heijn and C1000 sell at a low price and improved the quality of their tea and their image. The packaging of the Private labels look almost the same as Pickwick. Therefore it is really hard for consumers to see the difference between Pickwick and private labels teas, and because of the lower price of the private labels, consumers prefer private label teas.
Because of the importance of the Dutch tea market for Pickwick, they felt threatened by the
upcoming competition. Therefore Pickwick started an advertising campaign to “reinvent their
base” in order to put the decrease of their market share on hold and to eventually gain back
market share again.
6 Pickwick’s advertising campaign 6.1 Introduction
In this chapter the advertising campaign of Pickwick to “reinvent their base” will be described. We will shed some light on the rationale for this campaign. Subsequently we devote attention to the different aspects of the campaign, like the new logo, the new commercial, the new advertisements, the outdoor advertising and the new packaging.
6.2 Background information
According to the last chapter we learn that Pickwick needed to reposition their brand and needed to take action to defend their market share. Pickwick needed to add value to their base assortment, because of the competitive quality- and packaging improvements and due to the competitive market entries and increased competitive pressure (AOP FY08, Sara Lee Pickwick).
Pickwick explored through consumer insights in what kind of way they should change their image or product. From the consumer insights they gathered the information that the old traditional image of Pickwick needed to be designed in a modern way, so a new logo and a new package design were created. These changes were made to strengthen in-store impact, to strengthen quality and naturalness, to strengthen a modern image and to strengthen user- functionality (Consumer Connection 2006, Sara Lee Pickwick).
Learning’s from a consumer connection in 2006 gave Pickwick the insight that the current Pickwick assortment created chaos at the shelf in supermarkets and that the tea market is more and more looking like a product market, so the brand is not so important anymore. Therefore the new design needed to create more consistency at the shelf in supermarkets.
According to Keller (2008) changes in brand awareness are the easiest ways of creating new sources of brand equity, but more fundamental changes are often necessary. Changes like a new marketing program to improve strength, favourability and uniqueness of brand associations making up the brand image are also needed (Keller, 2008).
Pickwick decided to support this campaign, because updating a brand requires a combination
of new packaging and new advertising to create a smooth introduction. The advertising
campaign of Pickwick was supported by a new commercial, outdoor advertising and
advertisements in magazines. So the overall idea of the whole campaign was to change the
brand equity for Pickwick, from a traditional brand image to a modern brand image. With the
new package design, they wanted to change the perceived quality and they wanted customers to see Pickwick as a more luxurious product than before. Brand awareness was something which had to be the same as before or better, they still wanted customers to recognize the brand at the shelf in the supermarket, because otherwise their market share would decrease even further. And as we mentioned above, brand loyalty exists after a customer has bought the brand, which is more related to user experience. But overall Pickwick wanted their customers to stay as brand loyal as they have been, before the campaign started.
6.3 The new logo of Pickwick
According to Keller (2008) logos can be very easily adapted over time to create a more contemporary look. However, marketers should make gradual changes and should not lose the inherent advantages of the logo out of sight. Consistent with one of their main goals of their campaign Pickwick altered their logo into a more modern one. This should reduce their traditional image.
The old (left) and the new logo (right) of Pickwick.
6.4 The new Pickwick commercial
According to the Consumer Connection in 2006 and the competition in the tea market, Pickwick decided to communicate a new international advertising platform in a modern way.
But in which way Pickwick wanted to communicate was something which was difficult to decide, so in 2007 Sara Lee Pickwick started various inspiration sessions with advertising agencies and market researchers to create a new platform. The insight was; “It is important to build in moments of rest and reflection from time to time in today’s world (in daily life, during sports, at work, etc)” The brand benefit was: ”With Pickwick you create moments of rest and reflection, moments in which you can reflect, to see things in perspective again and to realize what’s really important to you (emotionally/ functionally).”
And the end benefit would be: Pickwick is good for you.
The first Pickwick commercial was on air in week 16 of 2008 and the second flight of a commercial was on air in week 37 of 2008. The commercial was not on air during prime time and not on all the different TV channels, mainly on the channels Net 5 and SBS 6.
Examples of the Pickwick commercial.
6.5 The new Pickwick advertisements
Through advertisements Pickwick wanted to inform consumers about the new design of the package. In doing so they hoped that consumers would recognize the new package in the supermarket. When the first Pickwick commercial started on air, the advertisements in magazines and outdoor started as well, this way an optimal reach would be created.
Examples of outdoor advertisements and an advertisement in a magazine.
6.6 The new Pickwick packaging
The look of a package is one of the strongest associations a consumer has with a brand. It can
become an important manner of brand recognition and it can imply information to build or
reinforce valuable brand associations (Keller 2008). One of the most common reasons for
package redesign is that the package looks outdated, under these circumstances marketers
must not lose the key package equities that have been built up (Keller, 2008). Pickwick
introduced a new design to segment better and to keep up with the fierce competition in the tea market. The reason behind the new design of the package was to create a modern feeling through the new flip-top lid and the new modern design.
Examples of the old and new design of Pickwick
6.7 Conclusion
Pickwick ‘reinvented their base’ in order to change their traditional image into a more modern
one. Changing brand equity in the mindset of consumers is a difficult task and needs to be
done very carefully. The advertising campaign of Pickwick started in week 16 in 2008. To
investigate how successful Pickwick’s campaign has been a research will be conducted under
Dutch tea drinkers.
7 Methodology
In this chapter the methodology of this research will be described. We will shed some light on our measurement techniques, sample size and questionnaire.
7.1 Measurement
We visualized and investigated the effect of the advertising campaign on the brand equity of Pickwick, by means of a questionnaire that we send to Dutch tea drinkers. The survey method is a structured questionnaire given to Dutch tea drinkers to obtain specific information. We conduct a quantitative study because this gives a superior indication on how the majority of the consumers really behave. This questionnaire includes questions about all the factors shown in the conceptual model.
In order to measure certain effects it is vital to conduct a zero measurement, which allows us to compare the results with a starting point. In this case the brand equity of Pickwick is measured before the advertising campaign of Pickwick. Only by testing the situation before the advertising campaign, judgements can be made about the effect of the brand equity of Pickwick after the advertising campaign. One week before the advertising campaign started, a zero measurement has been conducted among Dutch tea drinkers. This measurement was conducted in week 15 of 2008.
The first measurement was conducted in week 41, 2008. This is the long term measurement.
Although this is a reasonably short period in the retail industry, this was the only time period in which the research could be conducted. We consider this as a limitation in this research. It is for this reason also not really fair to talk about any long term effects, because in a time period of 26 weeks, not every respondent has seen every aspect of the advertising campaign.
Summarizing, in total two measurements have been conducted, a zero measurement before the campaign started and a first measurement, a couple of weeks after the campaign.
7.2 Sample size and techniques
The target group in our empirical investigation are Dutch tea drinkers between 16 and 80
years old whom are familiar with the brand Pickwick. The sampling techniques that have been
used in this research was a non-probability sampling technique, called judgmental sampling
(Malhotra, 2004). In this form of sampling, the population elements are selected by the
judgment of the researcher. To conduct a research under Dutch tea drinkers, the first question
the researcher asked was: “do you drink tea?” When the answer was yes, the researcher asked if they wanted to fill in the questionnaire about tea. The questionnaires were distributed in the train and some of them were sent by mail. This was done in similar ways for the zero and first measurement. An example of the questionnaire for the zero and first measurement can be found in Appendix 2.
The sample size in this research were 159 Dutch tea drinkers for each measurement. In the zero measurement 32.7% was male and 67.3% was female. Most of the respondents were between 20 and 25 years old and out of all the respondents 72.3 % drank tea daily.
In the first measurement 23.9% was male and 76.1% was female. Most of the respondents were between 20 and 26 years old and out of all the respondents 68% drank tea daily. In the first measurement we tested whether the respondents had seen the advertising campaign.
Some respondents answered that they did not know if they had seen the commercial. We decided to treat those results as “has not seen the commercial”. In table 8.2 they are already included in “has not seen”.
Table 7.1: Descriptive statistics advertising campaign
Have you seen the commercial?
No Yes Total
Male 30 8 38
Female 82 31 121
112 47 159
Have you seen the print advertisement?
No Yes Total
Male 28 10 38
Female 62 59 121
90 69 159
Have you seen the outdoor advertisement?
No Yes Total
Male 29 9 38
Female 102 19 121
131 28 159
Have you seen the new package design?
No Yes Total
Male 16 22 38
Female 17 104 121
33 126 159
Have you seen the logo?
Female 37 84 121
60 99 159
7.3 Scales questionnaire
We developed a questionnaire to measure the brand equity of a consumer goods product, using the scale measure constructed by Yoo et al (2001). This scale measures the components of brand equity independently using related propositions. The component brand associations of brand equity will not be measured through this scale, we will touch upon this later. Each component is measured on the basis of a number of propositions. As this measurement instrument of brand equity is in line with the approach of brand equity that is chosen in this research, we chose to use this measurement in this research. The propositions of Yoo et al (2001) were translated in Dutch, because we will conduct the measurement under Dutch tea drinkers. And a seven-point Likert scale was used to measure whether a respondent agreed or disagreed with the proposition. Brand Equity was measured by measuring four components, three of them will be mentioned in table 7.2. Which propositions were linked to the scale of Yoo et al (2001) or to the scale developed by the researcher can be found in table 7.2.
Table 7.2: Research questions
