THE EFFECT OF NEGATIVE PUBLICITY ON CITY IMAGE

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THE EFFECT OF NEGATIVE PUBLICITY

ON CITY IMAGE

By

Rachel Berkouwer

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Master thesis, Rachel Berkouwer, September 2011 2

THE EFFECT OF NEGATIVE PUBLICITY

ON CITY IMAGE

By

Rachel Berkouwer

University of Groningen

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MANAGEMENT SUMMARY

In this thesis the impact of negative publicity on a city image is studied. Also the moderating effects of citizenship, city loyalty and distance on this relation are examined. First in the theoretical framework a difference is made between a corporate brand and a city brand and then a conceptual model is presented.

This thesis is done for the community Gouda. Nowadays the brand Gouda wrestles a lot with negative publicity. In this conclusive causal research a One Group Pretest-Posttest

Design is used. First a pre-test is taken and after showing the negative publicity, the posttest is taken. The independent variable negative publicity was manipulated in the form of an article. A paired t-test and a multiple linear regression were being performed to test the different hypotheses.

Evidence is found that negative publicity has a negative effect on city image and that citizenship negatively affects the effect of negative publicity on city image. Citizens score higher on the variable city loyalty than non-citizens, so citizens could react differently because they are loyal. Citizens could also have other memories about a city which are positively related to Gouda and are hard to destroy. Maybe the reason why citizens perceive negative publicity less harmful than non-citizens could also be cognitive dissonance. Then people have a motivational drive to reduce dissonance. In respond to this some marketing campaigns could be developed for the non-citizens. The marketing campaigns could focus on the brand values reliable and safe to increase the city image, because these scores are low on the current image of Gouda and some marketing campaigns could be developed for the non-citizens. Two of the three moderators are not significant; Distance does not positively affect the effect of negative publicity on city image and city loyalty does not negatively affect the effect of negative publicity on city image. The reason why city loyalty is not significant could be because of a low variation coefficient is measured and the reason why distance is not significant could be because the participants from this study are coming outside Groningen or outside the area Gouda and a few are in between.

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PREFACE

I have lived in the city of Gouda for 23 years now, and I am glad that I can do a study for the city Gouda. After Gouda received a lot of negative publicity, I was very curious about

different causes, consequences and solutions of this media frenzy. Unfortunately I could not really explore all issues of this subject and I specify myself in the impact of negative publicity on city image and what factors have contributed. I would like to thank Dr. Alsem and Dr. Scholten for the support they have given me during this investigation.

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TABLE OF CONTENT

1. Introduction 08

1.1 Background problem 08

1.2 Short introduction company 08

1.3 Problem statement 09

1.4 Research questions 09

1.5 Academic and managerial relevance 10

1.6 Structure of the thesis 10

2. Theoretical framework 12

2.1 Independent variable: Negative publicity 12

2.1.1 Definition negative publicity 12

2.1.2. Prior research negative publicity 12

2.2 Dependent variable: Brand image 14

2.2.1 Definition brand image 14

2.2.2 Prior research brand image 15

2.3 Moderator: Brand loyalty 15

2.3.1 Definition brand loyalty 15

2.3.2 Prior research brand loyalty 16

2.4 Moderator: User vs. non-user 17

2.5 Relations between variables 17

2.5.1 Negative publicity and the effect on brand image 17

2.5.2 The moderating effect of brand loyalty 18

2.5.3 The moderating effect of usage 18

2.6 The differences in place branding 19

2.6.1 Negative publicity and the effect on city image 19

2.6.2 The moderating effect of city loyalty 21

2.6.3 The moderating effect of citizenship 21

2.6.4 The moderating effect of distance 21

3. Research methodology 23

3.1 Case study brand Gouda 23

3.2 Research design 24

3.3 Participants and sample 25

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3.4.1 Independent variable; Negative publicity 26

3.4.2 Dependent variable; City image 26

3.4.3 Moderating variables; Distance, Citizenship and City loyalty 27

3.5 Questionnaire and procedure 27

3.6 Plan of analysis 28

4. Results 29

4.1 Checks 29

4.1.1 Results reliability analyses 29

4.1.2 Manipulation check 29

4.1.3 Multicollinearity 30

4.2 Descriptives statistics 30

4.3 Hypothesis testing 31

4.3.1 The effect of negative publicity on city image 31

4.3.2 Regression model 33

4.3.3 The moderated effect of city loyalty 33

4.3.4 The moderated effect of citizenship 34

4.3.5 The moderated effect of distance 34

4.4 Evaluation of the results 34

5. Conclusions and recommendations 37

5.1 Research question 37

5.2 Recommendations for the community Gouda 37

5.3 Limitations and further research 38

References 39

Appendix A: Questionnaire 43

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1. INTRODUCTION

In the introduction the brand Gouda and the general marketing problem, which will lead to this thesis, will briefly be discussed. Also you will find a problem statement with several research questions which will be discussed throughout this thesis. Furthermore the academic and managerial relevance for this thesis are discussed. At the end the structure of the thesis will be given.

1.1 Background problem

Consumers today can get their information of brands through a variety of sources including traditional media and new media, such as online news forums, webcasts, and podcasts. These media have provided firms with new opportunities to market their products and services, but also have made it more difficult for firms to manage (negative) publicity. Publicity is

considered as a relatively credible source of information and therefore is more influential than other marketer-driven communications (Bond and Kirshenbaum, 1998). Also according to Dennis and Merril (1996) media have a preference for reporting negative news and so companies are more likely to receive bad press rather than positive press. Negative publicity can be devastating, this can result in major losses of revenue and market share. This research is not about a corporate brand, but about place branding. According to Gold and Ward (1994) place promotion is defined as the conscious use of publicity and marketing to communicate selective images of specific geographical localities of area to a target audience. But what is the real effect of negative publicity on a city brand? And what variables influence this effect? This study will attempt to make a contribution to this general marketing problem.

1.2 Short introduction company

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1.3 Problem statement

In the current study a theoretical framework is made by focusing on the effect of negative publicity on city image. According to Pullig, Netemeyer and Biswas (2006) multiple aspects of an organization can be damaged once negative publicity is spread in the marketplace. Also according to Ealgy and Chaiken (1993) consumers pay attention to negative publicity and change their attitudes accordingly to the brand. In this research city loyalty will be tested as a moderator on the effect of negative publicity on city image, because it is interesting to know what the city loyalty is at this moment for a city and if there are differences by the level of city loyalty in interpreting negative publicity on city image. According to Dawar and Pillutla (2000) there is a relation between customer-based brand equity and negative publicity. Dawar and Pillutla (2000) employ an expectations-evidence framework to understand the impact of firms' responses to crises on customer-based brand equity. Dawar and Pillutla (2000) indicate that consumers interpret firm response on the basis of their prior expectations about the firm. Likewise the interaction of expectations and firm response is shown to affect post-crisis brand equity (Dawar and Pillutla, 2000). Also Ahluwalia, Burnkrant and Unnava (2000) found that commitment of a brand is an important moderator of consumer response to negative

information. Another moderator in this research is citizenship, because it is interesting to know if there are differences in interpreting negative publicity on city image between citizens vs. non-citizens. Romaniuk and Wight (2008) found that there are different consumer

responses to a brand when a consumer is a user vs. a non-user. This research is in the context of place branding. Furthermore distance is another moderator which will be studied, because it is interesting to know the extent how far men live from the city affects the effect of negative publicity on city image. Obenour, Lengfelder and Groves (2005) found that not all nearby and long-distance geographic markets are uniform by perceiving city image. So the problem statement of this research is;

What is the impact of negative publicity on a city image and how do citizenship, city loyalty and distance influence this effect?

1.4 Research questions

To come to a complete and satisfying answer to the problem statement, several

research questions should be answered. The following research questions are formulated:

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Master thesis, Rachel Berkouwer, September 2011 10 2) What is the influence of negative publicity on a city image?

3) What is the influence of negative publicity on a city image moderated by the level of city loyalty?

4) What is the influence of negative publicity on a city image moderated by citizenship?

1.5 Academic and managerial relevance

Many studies examined what strategies work and what strategies do not seem to work in the marketplace when negative publicity is being released. For example Weinberger, Romeo and Piracha (1991) examined the sales and market effects on six of the major negative publicity incidents’ in the automotive industry that have occurred during the last 25 years. They investigated what impact the negative product information has and how it can be dealt with more effectively. However little research is done for understanding the problem from a theoretical perspective. For example Pearson and Mitroff (1993) present a framework for crisis management based on the study of some companies in crisis situations.

Recommendations are given in line with general strategic directions without any

understanding how consumers process this information and which factors moderate its effects on consumer attitude. Citizenship, city loyalty and distance on the effect of negative publicity on city image are all not investigated in academic literature, so this could be an addition for the marketing knowledge.

The managerial relevance for managers and companies is to know what the impact of negative publicity on their city image is. The interesting part of this study is that this effect is moderated by the level of city loyalty, citizenship and distance. Then companies and

managers will have the knowledge if there are different reactions from consumers on how they interpret negative publicity. For example if citizens have a smaller city image change after viewing negative publicity than non-citizens, companies and communities can differentiate these consumers by dissimilar types of advertisement.

1.6 Structure of the thesis

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Master thesis, Rachel Berkouwer, September 2011 11 variables. In chapter 3 a research design is explained. This includes the way of collecting and analyzing the data statistically. Also the case of the brand Gouda will be explained and how this case fits within this study. Furthermore in chapter 4, the results

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2. THEORETICAL FRAMEWORK

In this chapter the relations between the variables are described. First the literature and definitions of the variables negative publicity, brand loyalty, usage and brand image are

described. Second the relationships of the variables are explained. Furthermore the differences are explained between a corporate brand and a city brand, because this study is about place branding. Finally the hypotheses and conceptual will be exhibited.

2.1 Independent variable: Negative publicity

2.1.1 Definition negative publicity

According to Dwane (2004) a corporate crisis is defined as an unexpected, non-routine event that creates uncertainty and threatens an organization’s priority goals. Dawar and Pillutla (2000) defined product-harm crises as discrete, well-publicized occurrences wherein products are found to be defective or dangerous. A crisis setting provides negative information (Dawar and Pillutla, 2000). So crises typically result in negative publicity (Dwane, 2004). Pullig et al. (2006) defined two classes of negative publicity, namely performance related negative brand publicity and values related negative brand publicity. They defined performance-related

negative brand publicity as publicity about specific brand attributes that raise questions about

the ability to provide functional benefits, like solving quality problems. Values-related

negative brand publicity does not involve specific attributes that affect functional product use.

This type of publicity involves social or ethical issues, such as the sprout of sexual harassment or racial discrimination by members of an organization, that affect a brand's ability to deliver symbolic benefits.

2.1.2. Prior research negative publicity

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Master thesis, Rachel Berkouwer, September 2011 13 Another study is done by Dwane (2004). Dwane (2004) found that companies

responding appropriately to a product harm crisis, will be more highly regarded by consumers than companies responding inappropriately to a product harm crisis. Also responsibility will account for the greatest proportion of variance in a case of negative publicity. The last finding was that a good firm responding appropriately to a crisis event will suffer a significant loss of regard if it is found to be responsible for a tragic event.

Fink (1986) described the pattern of crisis communication into different stages (prodrome, acute, chronic, and resolution).

There is also some research done about the effects of negative publicity. Monga and John (2008) investigated the effects of negative publicity with the moderated effect of holistic thinkers vs. analytic thinkers. Holistic thinking involves an orientation to the context or field as a whole, whereas analytic thinking involves a detachment of the object from its context and a focus on attributes of the object. They found that holistic thinkers are less susceptible to negative publicity information than analytic thinkers.

Dawar and Pillutla (2000) studied the effects of negative publicity and have the consumer expectations about the firm as a moderator. Dawar and Pillutla(2000) create an expectations-evidence framework. Dawar and Pillutla (2000) argued that identical firm responses would have different effects, depending on consumers’ expectations. They found that consumers with preexisting favorable opinions on a firm that is in crisis nowadays would react

differently on negative information about a firm than consumers who lacked a preexisting favorable opinion on a firm and they would draw more negative conclusions. Dawar and Pillutla (2000) used three types of firm response;

 Notice of product defect with apology, recall, and restitution  Notice of product defect without apology, recall, or restitution  No response in the face of negative publicity.

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Master thesis, Rachel Berkouwer, September 2011 14 Ahluwalia et al. (2000) also investigated the effects of negative publicity, but with the moderator consumer commitment. The authors found results that low-commitment consumers would exhibit greater attitude changes in response to negative information as

compared to positive information (so called; the negative effect) , whereas high-commitment consumers would not exhibit a negativity effect.

Renkema and Hoeken (1998) investigated what the influence of negative newspaper publicity is on a brand image in the Netherlands. The authors find that the image aspects they used (trustworthiness, expertise and attractiveness) were damaged by reading negative

information about the company. In the experiment the authors use two versions of negative articles; original or rewritten. Participants who read the original or rewritten negative article gave the company much lower scores for each image aspect and more quickly say that the firm's growth was due to bribes than were participants who read neutral information about the company. Also after a lapse of time, each of the image aspects still shows the damage caused by negative publicity. The original and the rewrite versions judgments are given after a period of time. For the neutral information the scores were given by the participants right after reading the neutral company information. The company scored it as less trustworthy, less competent, less attractive, and more likely to have grown as a result of paying bribes. The size of the damage, as evidenced by the percentage of explained variance, decreased for the trustworthiness, expertise, and likelihood ratings, but it increased for the attractiveness ratings.

2.2 Dependent variable: Brand image

2.2.1 Definition brand image

According to Keller (1993) brand image is defined as perceptions about a brand as reflected by the brand associations held in consumer memory. Brand image is a part of brand

knowledge (Keller, 1993). Keller (1993) splits up brand image in four parts; types of brand associations, favorability of brand associations, strength of brand associations and uniqueness of brand associations. Brand associations are the information nodes of brand image

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Master thesis, Rachel Berkouwer, September 2011 15 for them (Keller,1993). There are three types of benefits according to Keller (1993);

functional, experimental and symbolic. Keller (1993) defined attitudes as consumers’ overall evaluations of a brand. In this study a focus will be on all the dimensions of brand image.

2.2.2 Prior research brand image

Brand image is a variable that is often examined in academic research. Brand image is used as a mediator, moderator, dependent variable and independent variable. Wang and Yang (2010) researched the impact of brand credibility on consumers brand purchase intention in emerging economies. Wang and Yang (2010) used the moderators brand awareness and brand image to influence this relationship. The authors found that brand credibility has a positive influence on consumer brand purchase intention. Also brand image and brand awareness have a positive effect on this relation.

Pina, Iversen and Martinez (2010) researched what the effect of a brand extension is on the image of a parent brand. The extension attitude is mainly determined by the degree of perceived fit between the extension and the parent brand image. The paper focuses on the moderating role of two dimensions of consumer innovativeness: hedonist innovativeness (tied to need for stimulation), social innovativeness (tied to need for uniqueness) and the cultural orientation of the origin country. The authors found that attitude towards brand extensions can cause negative feedback effects on the extended brand image.

2.3 Moderator: Brand loyalty

2.3.1 Definition brand loyalty

Brand equity is conceptualized as a financial measure, a measure of consumer behavior, or as a measure of consumer beliefs (Keller, 1993). Our focus is customer based brand equity. Customer based brand equity is a general term in the academic literature. In this study customer based brand equity is defined as the differential effect that brand knowledge has on consumer response to the marketing of that brand (Dawar and Pillutla, 2000; Keller, 1993). There are three important parts in this definition; (a) differential effect, (b) brand knowledge and (c) consumer response to marketing. Differential effect is defined as comparing consumer response to the marketing of a brand with the response to the same marketing of a fictitiously named or unnamed version of the product or service (Keller, 1993). Brand knowledge is defined in terms of brand awareness and brand image (Keller, 1993). Consumer

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Master thesis, Rachel Berkouwer, September 2011 16 According to Yoo and Donthu (2001) customer based brand equity consists of four dimensions: (a) brand loyalty (the tendency to be loyal to a focal brand, demonstrated by intention to buy the brand as a primary choice), (b) brand awareness (the ability for a buyer to recognize or recall that the brand is part of product category), (c) perceived quality of the brand (the consumer’s judgment about a product’s overall excellence or superiority) and (d) brand associations (anything linked in memory to a brand). Yoo and Donthu (2001) linked brand awareness and brand associations, so three dimensions of brand equity are left. Keller does not link them and that is why in this paper the CBBE model of Keller (2008) is used. Keller (2008) distinguishes four steps to build CBBE; the Customer Based Brand Equity Pyramid. In this thesis a focus will be on resonance, because this is the highest level in the pyramid and also the most interesting one for this thesis. So according to Yoo and Donthu (2001) this part will be named as brand loyalty.

Figure 1; The Customer Based Brand Equity Pyramid (Keller, 2008)

2.3.2 Prior research brand loyalty

There is also a lot of research done about customer based brand equity. Bambauer-Sachse and Mangold (2011) examined the effects of negative online product reviews (that is a specific type of word-of-mouth communication) on consumer-based brand equity. The

authors found that there is an effect of negative online product reviews on consumer-based brand equity. This effect will lead to a brand equity dilution. The authors also found that even brands with regard to which consumers have a considerable brand knowledge are not immune from such detrimental effects.

Also some research is done where a part of the customer based brand equity is

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Master thesis, Rachel Berkouwer, September 2011 17 behaviors, (c) the share of purchase that a brand has instead of their competitors and (d) the way consumers need a brand.

A lot of research is done with customer based brand equity as a dependent variable, but there is not enough research done when customer based brand equity is used as a moderator. Ahluwalia et al. (2000) investigated the effects of commitment on negative publicity. The authors found that commitment is an important moderator of consumer response to negative information. Ahluwalia et al. (2000) defined commitment as one of the attitude strength dimensions. According to Park et al. (2010) brand attitude is a driver of customer based brand equity.

2.4 Moderator: User vs. non-user

In this study a distinction is made between an user of a brand and a non-user of a brand. Some research is done about what the different effects are between an user and a non-user. Romaniuk and Wight (2008) find that brand users are about 2.5 times more likely to recall advertising exposure than non-users, but for brand-prompted advertising awareness (people were stimulated for the brand names) this number was lower, with brand users only about 1.7 times more likely than non-users. This is because non-users respond more to brand-prompted advertising awareness measures. So scores are not comparable for different advertising awareness measures, unless you split into separate brand user/non-user groups.

2.5 Relations between variables

According to all this literature, now the literature is presented where the hypothesis could be formulated with.

2.5.1 Negative publicity and the effect on brand image

According to Klein and Dawar (2004) negative events, such as a product failure or negative publicity, often spur consumers into thinking about the causes of the behavior. Ahluwalia et al (2001) examined the effect of negative brand-performance-related information on brand evaluations. The authors found a relation between negative brand publicity and brand evaluations related to quality. So when this effect occurs, a consumer has also another thought about the brand image. In this study negative publicity is divided in two parts; performance-related negative brand publicity and values-related negative brand publicity. Renkema and Hoeken (1998) found that the image aspects they used in their study

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Master thesis, Rachel Berkouwer, September 2011 18 about the company. So the values-related negative brand publicity also damages the brand image. None of the investigations found that there are different effects between performance-related negative brand publicity and values-performance-related negative brand publicity, so no distinction will be made between these variables in this study. According to this relation the following hypothesis will be expected;

H1: Negative publicity has a negative effect on brand image

2.5.2 The moderating effect of brand loyalty

And what is the influence of brand loyalty on the relation between negative publicity and brand image. Prior research suggests that people who have positive attitudes toward a target are likely to engage in their experiences, resisting counter attitudinal information more than pro attitudinal information (Ditto and Lopez, 1992).

There is also a lot of evidence if the focus is only on negative publicity. First according to Petty and Krosnick (1995) found that stronger attitudes are known to exhibit greater resistance to information that attacks them, that is, negative information. Second Pullig et al. (2006) found when consumers encounter negative publicity about a brand, they are likely to retrieve a brand attitude from memory and then use this attitude as a basis to evaluate the negative publicity. Third Dawar and Pillutla (2000) found that consumers with a preexisting favorable opinion of a firm who is in crisis nowadays would react different from negative publicity about a firm than consumers who lacked a preexisting favorable opinion of a firm and they would draw more negative conclusions. Finally Ahluwalia et al. (2000) found that low-commitment consumers would exhibit greater attitude changes in response to negative publicity as compared to positive information (so called; the negative effect) , whereas high-commitment consumers would not exhibit a negativity effect. So according to these

researchers the following hypothesis will be expected;

H2; Brand loyalty negatively affects the effect of negative publicity on brand image

2.5.3 The moderating effect of usage

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Romaniuk and Bogomolova (2005) when there is a brand user base, there will be a high correlation between brand users’ perceptions of trust and brand penetration. So the users react different because of their level of brand loyalty? An user of a brand could also have a low brand loyalty, but is still a user then. So brand loyalty is a different variable. According to this researchers the following hypothesis is expected;

H3; Usage negatively affects the effect of negative publicity on brand image

Figure 2; Conceptual model

2.6 The differences in place branding

So in the previous part a theoretical framework is made for a corporate brand. But is this effect the same when the brand is a place? For example there could be a lot of differences as the practice of applying brand strategy and other marketing techniques and disciplines to the economic, political and cultural development of cities, regions and countries (Ashworth et al, 2009). Also according to Trueman et al (2007) city brands are multilayered and more complex than corporate brands, since marketing exchange in the public sector does not

demand any reciprocation. For all our expected hypothesis some theoretical research is linked.

2.6.1 Negative publicity and the effect on city image

So according to the previous framework it is expected that negative publicity has a negative

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Figure 3; The city brand model

effect on brand image. Kotler, Haider and Rein (1993) stated that a city’s image can be positive and attractive, negative, weak, mixed or contradictory (when the city has a favorable image among a certain

population, and a negative image among another population). Avraham (2004) distinguishes two types of city images; open images and closed images. Open images are those that enable one to add more characteristics and closed images are those to which one is not likely to add new characteristics, or at least not likely to add

characteristics that differ from the core image. Such images are also known as stereotypes; simplified attitudes or beliefs about a place that are not examined thoroughly and are difficult to change. Bütter (2009) transformed the pyramid of Keller (2008) into a new model for place branding; . In this model the rational

attributes come from Merrillees (2009) and the emotional attributes come from Aaker (1997), Davies, Chun, Vinhas da Silva and Roper (2004) and Voss, Spangenberg and Grohmann (2003). So according to the model of Bütter (2009) city image exist of emotional and rational attributes. Trueman, Cornelius and Killingbeck-Widdup (2007) examined negative and positive aspects of the street environment from a local community or ‘stakeholder’ perspective, and how this can have an impact on perceptions of brand value. The authors found that the negative features appear to outweigh the positive. The authors also found that a concerted effort to market the city periphery, rather than its streetscape, not only creates a narrow and negative perception of the brand, but also limits views of what a ‘good’ urban environment, and city is. So negative information definitely has a negative effect on city image.

2.6.2 The moderating effect of city loyalty

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Master thesis, Rachel Berkouwer, September 2011 21 city loyalty exists of “sociale binding” from Büter (2009) and resonance from Keller (2008). Pappu, Quester and Cooksey (2007) studied the relationships between consumers country-level and product-country-level images of a country and the CBBE they associate with a brand from that country. Pappu et al. (2007) found that there is a relationship between the set of macro and micro country images, and the set of citizenship-based brand equity dimensions (brand awareness, brand associations, perceived quality and brand loyalty). They also found that the contribution of each citizenship-based brand equity dimension to the relationship varies according to the product category, but in general there is a positive relation between the set of macro and micro country images, and a high level of the citizenship-based brand equity dimensions.

2.6.3 The moderating effect of citizenship

Trueman et al. (2007) examines negative and positive aspects of the street environment from a local community or stakeholder perspective, and what the effect is on perceptions of brand value. According to Trueman et al. (2007) urban residents retain a strong loyalty to their local neighborhood, but a predominantly negative view of other quarters and the city as a

whole. This result indicates that there is a need for linkages between disparate communities. The study shows that although many consider their own locality to be attractive, they believe it is the other parts of the city that are responsible for its negative city image (Trueman et al., 2007). So citizens will remain loyal to their neighborhood and therefore react differently than non-citizens. This can be because of the citizens loyalty (Trueman et al., 2007) or because of other factors which has nothing to do with loyalty. It would not say that a citizen is

automatically loyal, so citizen is a different variable than city loyalty. So it is expected that citizens will perceive the negative publicity less harmful than non-citizens.

2.6.4 The moderating effect of distance

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H4

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+

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So according to these differences the following hypotheses are expected;

H1: Negative publicity has a negative effect on city image

H2; City loyalty negatively affects the effect of negative publicity on city image

H3; Citizenship negatively affects the effect of negative publicity on city image

H4; Distance positively affects the effect of negative publicity on city image

Figure 4; Conceptual model included differences with place branding

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3. RESEARCH METHODOLOGY

In this research methodology, the research procedure will be explained in order to investigate the research question and the related hypotheses, also shown in chapter 2. In this research methodology the case study of the brand Gouda is used.

3.1 Case study brand Gouda

The brand Gouda wrestles a lot with negative publicity nowadays, the problems associated with young Moroccans in the district Oosterwei. The municipality Gouda does not deny that there is a problem in Gouda. There is an overrepresentation of young Moroccan, which is identical to the level of Amsterdam. There are problems with integration, but the biggest problem is that some parties want to emphasize the problems. A mediocre provincial town gets problems at national level. The brand Gouda has both negative as positive associations. The positive associations are a central location, historic city, a compact city with several hospitals and facilities, a thriving population, cheese and syrup waffles. The negative

associations are traffic congestion, pressure on space, not having water recreation for tourism, the problems surrounding the Oosterwei district and the mayor. The current status of the negative publicity on the brand Gouda is as follows, see figure 5;

Figure 5; The current status of the level of negative publicity on Gouda

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Master thesis, Rachel Berkouwer, September 2011 24  The municipality coordinates the joint approach between community, businesses,

entrepreneurs, tourism and housing.

 They encourage the cultural and sporting environment and promote the mutual contact among residents.

 Activities and events such as within the cultural sector on Sunday’s.  HBO institution or university in Gouda

So there are many objectives to help the brand Gouda in a positive mindset. But what is the impact of negative publicity on city image exactly? Are there different images between citizens vs. non citizens, distance and the level of city loyalty? Some people think that the negative associations should not influence the permanent associations (e.g. cheese), because these permanent associations are stored in people’s mind, it is history. Other people think that the city image of Gouda has decreased because of the negative publicity. A lot of

speculations, but what is actually correct? This data is important because of the consequences this image could have; the city Gouda will be avoided, the city will be empty, the property value decreases and there will be less incomes for Gouda because fewer companies want to settle here.

3.2 Research design

According to Malhotra (2007) there are two types of research design; exploratory research design and conclusive research design. An exploratory research design is to provide insights into, and an understanding of, the problem confronting the researcher (Malhotra, 2007). A conclusive research is typically more formal and structured than exploratory research. It is based on large, representative samples, and the data obtained are subjected to quantitative analysis (Malhotra, 2007). In this paper a conclusive research was done, because quantitative data was the result of this research. Conclusive research designs is also divided in descriptive research and causal research (Malhotra, 2007). In this paper a causal research was done. A causal research has its major objective is to obtain evidence regarding

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Master thesis, Rachel Berkouwer, September 2011 25 An experiment was conducted. According to Malhotra (2007) an experiment is

commonly used to infer causal relationships. An experiment is a process of manipulating one or more independent variables and measuring their effect on one or more dependent

variables, while controlling for the extraneous variables (Malhotra, 2007). The definition of an experiment applied strongly to this study, because in this study the causal relationships between the independent variable (negative publicity) and the dependent variable (city image) were studied. Negative publicity was manipulated in this study with a control to the

moderators (distance, citizenship and city loyalty. According to Malhotra (2007) there are several types of experimental designs, in this study One Group Pretest-Posttest Design (Malhotra, 2010) was chosen, to measure the effect of negative publicity. There was no control group and first a pre-measure (t=0) was taken, after showing the

negative publicity, a post-measure (t=1) was taken. Showing the negative publicity a newspaper article was chosen, see figure 6; newspaper article . The newspaper article contained information about the outcomes of an investigation that concluded the negative status of Gouda. For the With a One Group Pretest-Posttest Design it could be assumed that the effects in city image were the result of negative publicity and claim causality.

3.3 Participants and sample

In this experiment the sample size was 200 participants. Field (2005) found some general findings about a sample for a regression.

 If you expected a large effect then a sample size of 80 was suffice (with up to 20 predictors)

 If a medium effect was expected, then a sample size of 200 was suffice (with up to 20 predictors)

 If a small effect was expected, then a sample size of 600 was suffice (and many more if you have six or more predictors)

In this thesis a medium effect was expected, so 200 participants were sufficient. In this experiment/study both men and women taken into account. This was because both men and women were exposed to negative publicity. Also the sample consisted of different age, sex, income levels, and level of education to have a highly differentiated sample. The snowball

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Master thesis, Rachel Berkouwer, September 2011 26 sampling technique was used to get participants for this experiment. First a group of friends, family and acquaintances were asked to participate in the experiment, whereby they were asked to forward the research link to their friends, family, and acquaintances in order to reach enough participants with many differences.

3.4 Variables

In this part a description is given about the variables and the way of manipulating these variables. This part is about the independent variable (negative publicity), dependent variable (city image) and the moderators (distance, citizenship and city loyalty).

3.4.1 Independent variable; Negative publicity

The independent variable in this experiment was negative publicity. Participants were put together into one group. The newspaper article contained information about the outcomes of an investigation that concluded the negative status of Gouda. This newspaper article was

intended to have an effect on the dimensions of city image; the emotional, rational attributes and the identity from Gouda, this was tested with a paired t-test. For the manipulation check, the participants were asked if they perceived this article as negative publicity. This was analyzed with a one sample t-test. The variable negative publicity was a dummy variable, because to respecify a categorical variable with K categories, K-1 dummy variables were needed (Malhotra, 2010).

3.4.2 Dependent variable; City image

In this study the dependent variable was city image. City image will be used, because in this experiment it is very important for the brand Gouda what the exact impact of the negative publicity is on the brand image of Gouda. If the brand Gouda knows what the impact of the negative publicity is they can take this into account with the communication to the citizens for example. City image was measured according to a study by Büter (2009). Büter (2009)

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Table 1; Summary of the questionnaire

computed as one variable. A 5-point likert scale was used that required the respondents to indicate a degree of agreement or disagreement with each of a series of statements. If a

respondent did not agree or disagree then the respondent could choose the scale in the middle.

3.4.3 Moderating variables; Distance, Citizenship and City loyalty

The moderators distance and citizenship were very easy to measure. Measuring distance, participants had to fill in their ZIP code. The city hall was the starting point to calculate what the distance was. The moderator citizenship was measured if a participant live in Gouda or not. It is very important to know who is responding if there is an effect of negative publicity on city image. It is also very handy for the brand Gouda to know if for example people from Rotterdam have a bigger city image change than participants from Groningen and that is why the variable distance is used in this experiment. The variable citizenship was a dummy variable, because to respecify a categorical variable with K categories, K-1 dummy variables were needed (Malhotra, 2010).

The moderator city loyalty was measured through the measure resonance of Keller (2008) and social ties of Bütter (2009). A 5-point likert scale was also used here.

3.5 Questionnaire and procedure

Participants in this research are sent a hyperlink by email. The questionnaire starts with a short introduction about the brand Gouda. Then the participants can fill in their demographic variables, also their zip code. Then all the participants are getting a questionnaire about their city image and city loyalty of the brand

Gouda. Furthermore the group will see a

newspaper article with negative publicity of Gouda. Then they will be asked to fill in the questionnaire again with an extra question with the manipulation check. After having

answered the questions, participants are automatically sending their questionnaire results back to the researcher by clicking on the 'send' button, see Appendix A for the questionnaire and table 1 for the summary of the questionnaire.

Variables Dimensions

Descriptive statistics  Age  Gender  ZIP code  Citizenship  Income  Education level City Image  Sincerely (Bütter, 2009)

 Challenging (Bütter, 2009)  Competent (Bütter, 2009)  Chic (Bütter, 2009)  Authoritarian (Bütter, 2009)  Shopping (Bütter, 2009)  Transportation (Bütter, 2009)  Culture (Bütter, 2009)

 Identity (Interview Dhr. Scholten) City Loyalty  Resonance (Keller, 2008)

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3.6 Plan of analysis

In this study a paired t-test and a multiple linear regression are being performed to test the hypotheses, because a relationship is measured between a single metric dependent variable and a single metric independent variable (Malhotra, 2010). Paired t-test will be used to test whether negative publicity indeed has a decreasing effect on city image. Moreover, multiple linear regression analysis is used to test whether the effect was significantly higher or lower for

citizenship, city loyalty and distance.

For measuring the manipulation check a one sample t-test will be performed. To examine if there is multicollinearity between variables, the VIF level is used. Furthermore the

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4. RESULTS

In this chapter the results of the analyses will be discussed. First, all the checks that are done before the results will be presented. Second, the descriptive results will be presented. Finally, a paired t-test and multiple linear regression analyses are conducted to determine if there is a relation between negative publicity on city image, moderated by city loyalty, citizenship and distance. Finally an evaluation of the results is presented.

4.1 Checks

Some checks will be presented first to continue this research. First a reliability analysis is conducted and further a manipulation check and a multicollinearity check is conducted.

4.1.1 Results reliability analysis

Reliability analyses have been conducted to combine the following variables; Cityloyalty0, Cityloyalty1, City image0 and City image1, which are reported in table 2; Cronbach’s alpha. In SPSS the option `Cronbach’s alpha

when deleting one item` has been used, knowing if a item has to be deleted to make the reliability higher, see appendix B; Cronbach’s alpha. A low correlation would indicate that this item measures something else, and does not fit with to the new computed variable. Based on these analyses no items will be deleted to make the new variables more reliable. This is because the Cronbach’s Alpha cannot be higher. All the new variables are > 0.6 and are reliable to compute.

4.1.2 Manipulation check

The participants were asked at the end of the survey, if they perceived the article of the Telegraaf as negative publicity. This was to make clear that the perception of the participants were similar to the perception of the executor of this study. Before the questionnaire a small pre-test was conducted with five participants. This pre-test had a mean of 4.2 on a 5-point scale, , 1 was totally inappropriate and the score of 5 is totally appropriate. In the

questionnaire participants perceived the negative publicity with a mean of 3.6250 on a 5-point scale. So participants perceived this publicity as negative, but it is not very high. The

significant level is 0.000(p <.05), so it can be concluded that the manipulation is significant.

Item Cronbach's alpha

Cityloyalty0 0,951

Cityloyalty1 0,967

Cityimage0 0,728

Cityimage1 0,927

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Table 3; multicollinearity

Figure 7; Citizenship Table 7; Education level

4.1.3 Multicollinearity

Looking if there is multicollinearity between the variables for the regression, a closer look is taken at the variance inflation factor (VIF). There could be some multicollinearity, because city loyalty and city image are very closely linked to each other. According to Field (2005) the VIF should be concerning when it is higher than 10, so the multicollinearity is very low between the independent variables and the dependent variable, see table 3;

multicollinearity.To be sure, there is also a Pearson correlation

conducted between the variables city image and city loyalty and city loyalty and citizenship. The correlation between city image and city loyalty is not significant 0.978(p <.05), but there is an average relationship between citizenship and city loyalty 0.001(p <.05), see table 4; Pearson correlation.

4.2 Descriptive statistics

The number of respondents is 200 and they all filled in the questionnaires. These 200

respondents are used for the analyses. A major part of the respondents are between the ages of 16-30 years old, see table 5; Ages.

Age Percentage Income Percentage

Education

level Percentage

Citzenship Mean of city Loyalty (Pre-measure)

16-30 years 59,50% Under average 51,50% None 0,50% Citizens 2.95 31-45 years 19,00% Average 26,00% Primary school 1,00%

Non-citizens

1.82

46-60 years 18,50% Above average 21,50%

Secundary school 13,00% older than 60 years 3,00% High above average 1,00% MBO 24,00% HBO 30,50% WO 31,00%

The incomes are under average most of the time (51.5%), see table 6; incomes. So they are not equal divided. The sample is well educated, see table 7; education level. 85.5% studied above the average level of MBO. The respondents are equally divided if they come from Gouda or outside Gouda, see figure 7; Citizenship. Looking to the loyalty of citizens vs. non-citizens, citizens are more

loyal than non-citizens, see table 8; loyalty of citizens vs. non-citizens. A lot of participants

VIF Citizenship 1,721 Distance 1,472 CityLoyalty0 1,411 Variables Pearson correlation Sig. level Citizenship – Cityloyalty -0.526 0.001 City Image– City loyalty -0.002 0.978 58 % 42 % Table 5 ; Ages Table 6 ; Incomes

Table 8; Loyalty of citizens vs. non-citizens

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Figure 8; Effect of negative publicity on city image

Figure 8; Effect of negative publicity on emotional and rational attributes

Table 10; Differences in gender

Table 9; Means and Δ% of EA and RA

are students and that is why the descriptive statistics are not equally divided. This could be a problem for the reliability of the

sample.

4.3 Hypothesis testing

4.3.1 The effect of negative publicity on city image

For the first hypothesis a paired t-test is conducted. The hypothesis that has been investigated is, H1: Negative publicity has a negative effect on city image. The mean of the pretest of city image was 3.14 and of the posttest 2.92 on a 5-point scale, see figure 8; Effect

negative publicity. The significance level is 0.000(p <.05), so negative publicity has a negative effect on city image. The rational attributes (RA) score higher in the pre-measure and post-measure.

Delta(Δ) is the difference of a variable between the pre-measure and post-measure. Looking to the delta % emotional attributes (EA) and rational attributes (RA), they both do not change very different in %, see table 9; means and delta % of EA and RA. Are there differences in delta city image after seeing negative publicity between participants? Also a closer look is taken to delta city loyalty. When looking

to some differences between participants in the sample, some interesting topics will be shown. First a close look is about gender differences between delta city image and delta city loyalty. Females have a higher delta city image and delta city loyalty after

seeing negative publicity than men, but this result is not significant, see table 10; Differences in gender. The significance levels are 0.420(p >.05) for delta city image and 0.364(p >.05) for delta city loyalty. For the other descriptive statistics an independent t-test is not

performed, because these were not equal divided, e.g. the group of participants with a low education level was too small to compare with the participants with a high education level.

It is also interesting to see which parts of delta city image and delta city loyalty were extremely changed or not after seeing the negative publicity. Looking to the delta of city

Variable Mean Δ%

EA0 2.72 -7.35 EA1 2.52 RA0 3.29 -6.99 RA1 3.06

Gender Mean Sig. level

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Master thesis, Rachel Berkouwer, September 2011 32 image the scores of daring, successful and authentic have plummeted when participants were exposed to negative publicity. Road network and little room have a small change of scores. The rest of the parts of city image were very similar to each other, around -0.250. Looking to the delta of city loyalty the score of loyal has plummeted when participants were exposed to negative publicity, comparing to the other scores, see table 11: Differences in scores. The rest of the parts have a score of around -1.60. An explanation for these scores could be that the content of the advertisement responds to specific aspects, like the variable successful. Gouda scores low on the variables reliable and safe on their current city image. Only the scores who were significant are taken into account.

City Image T=0 T=1 ∆ Sig. Fair 2,825 2,56 -0,265 * Committed 2,7 2,44 -0,26 * Young 2,955 2,72 -0,235 * Daring 2,77 2,4 -0,37 * Reliable 2,51 2,26 -0,25 * Safe 2,05 1,845 -0,205 * Successful 2,704 2,201 -0,503 * Stylish 2,97 2,67 -0,3 * Authentic 3,675 3,315 -0,36 * Selfish 2,765 2,84 0,075 Controlling 2,59 2,47 -0,12 Shopsandrestaurants 3,245 2,965 -0,28 * Entertainmentoptions 2,835 2,565 -0,27

Accessible 3,44 3,195 -0,245 * City Loyalty

Roadnetwork 3,095 2,955 -0,14 * T=0 T=1 ∆ Sig. Culturalevents 3,165 2,94 -0,225 * Loyal 2,465 2,185 -0,28 * Historicallook 3,97 3,74 -0,23 * Visitmax 2,305 2,145 -0,16 * Compactcity 3,82 3,565 -0,255 * Need 2,05 2,005 -0,045 Thrivingpopulation 2,76 2,47 -0,29 * Likethiscity 2,305 2,08 -0,225 * Cheese 4,235 3,975 -0,26 * Misscity 2,43 2,26 -0,17 * Syrupwaffles 3,865 3,805 -0,06 Morethanacity 2,185 2,06 -0,125 Littleroom 3,35 3,17 -0,18 * Talkingaboutcity 2,065 2 -0,065 Nowaterrecreation 2,97 2,93 -0,04 Learning 2,235 2,165 -0,07 YoungMoroccans 4,26 4,2 -0,06 Familyandfriendsvisit 2,645 2,475 -0,17 * 4.3.2 Regression model

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Table 12; Coëfficiënts regression 4.3.2 Regression model

In this thesis a regression model will be used to model the relations. A multiple, linear regression is used to determine the relations between city loyalty, distance and citizenship on the effect of negative publicity on city image.

The regression equation is defined as follows:

Yi = (b₀ + b₁X₁ + b₂X₂ + b₃X₃) + εi

Yi = ∆ City Image b₀ = Contant b₁X₁ = Cityloyalty (pre-measure) b₂X₂ = Citizenship b₃X₃ = Distance εi = Error term

The R² is a measure of how much of the variability in the outcome (City image) is accounted by the

predictors (cityloyalty0, citizenship and distance). The R² is 0.040. This means that 4% of city image is

explained by city loyalty, citizenship and distance, this is extremely low. The adjusted R² gives an idea of how well our model generalizes and ideally it have to be very close of R² and it is (2.5%). This means that the model derived from the population rather than the sample would account for approximately 1.5% less variance in the outcome.

The ANOVA shows that this model has the ability to predict the outcome of city image and the data fits with the model, because the significant level is 0.045(p <.05), see table 12; Coefficients regression.

4.3.3 The moderated effect of city loyalty

The pre-measure of city loyalty has a mean of 2.29 on a 5-point scale, so the city loyalty for Gouda is low. Further for the moderating effects a multiple linear regression is conducted. The following hypothesis is tested; H2; City loyalty negatively affects the effect of negative publicity on city image. To see if there is a positive relation the b-values are examined. In this

R² 0.040

adjusted R² 0.025

ANOVA, sig. level 0.045 Sig. level b₁X₁ (Cityloyalty,

pre-measure)

-0.299 0.234

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Master thesis, Rachel Berkouwer, September 2011 34 thesis the standardized beta values will viewed, because they provide a better insight into the ‘importance’ of a predictor in the model. The standardized beta is for city loyalty

-0.299, so there is a negative relation. The significance level is 0.234(p <.05), see table 12; Coefficients regression. So city loyalty does not negatively affect the effect of negative publicity on city image.

4.3.4 The moderated effect of citizenship

The following hypothesis is tested; H3; Citizenship negatively affects the effect of negative publicity on city image. Also the standardized beta values will viewed. The standardized beta for citizenship is -0.263, so there is a negative relation between citizenship and city image. The significance level is 0.005(p <.05) , see table 12; Coefficients regression. Looking to the means of the delta city image, citizens have a city image change of -0,111 and non-citizens have a city image change of -0.3024, so citizens perceive the negative publicity less harmful than non-citizens. So citizenship negatively affects the effect of negative publicity on city image. Hypothesis H3 is conformed.

4.3.5 The moderated effect of distance

The following hypothesis is tested; H4; Distance positively affects the effect of negative publicity on city image. The standardized beta values will be examined. The standardized beta for distance is 0.104, so there is a positive relation. The significant level is 0.223(p >.05) , see table 12; Coefficients regression.So distance does not positively affects the effect of negative publicity on city image.

4.4 Evaluation of the results

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Figure 9; Calculating variation coëfficiënt

loyalty citizens have to their neighborhood. In this study citizens score a mean of 2.95 on city loyalty (pre-measure) and non-citizens score a mean of 1.82 on a 5-point scale, see table 8; Loyalty of citizens vs. non-citizens. In this study, no difference in different areas of Gouda are made, like Trueman et al. (2007). In this research the city is taken as one and is not divided in different areas. Trueman et al. (2007) found that urban residents have a predominantly

negative view of other quarters and the city as a whole comparing with their own

neighborhood. In this study the whole city is measured. So citizens are less loyal, but they are still loyal. Is loyalty a part of the different reaction of citizens vs. non-citizens? Citizens score higher on the variable city loyalty than non-citizens, so citizens could react differently

because they are loyal. Also the Pearson correlation stated that there is a medium relation between city loyalty and citizenship. But is this only because of city loyalty? City loyalty is not significant, so there have to be more reasons. Citizens could also have other memories about a city which are positively related to Gouda and are hard to destroy. Maybe the reason why citizens perceive negative publicity less harmful than non-citizens could also be

cognitive dissonance. Then people have a motivational drive to reduce dissonance.

The result that city loyalty does not negatively affect the effect of negative publicity on city image is not in correlation with the findings of Pappu et al. (2007). Pappu et al. (2007) found that the contribution of each citizenship-based brand equity dimension to the

relationship varies according to the product category, but in general there is a positive relation between the set of macro and micro country images, and a high level of the citizenship-based brand equity dimensions. The strength of city loyalty does not affect the relationship of negative publicity on city image negatively. Also a low variation

coefficient is measured, see figure 9; Calculating variation coefficient. It could be when the variation coefficient was higher, the hypothesis

was significant. This is because participants should give then answers with many differences. Another reason for this result is that loyalty of a city is inconsistent. It can be changed more quickly at any time.

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Master thesis, Rachel Berkouwer, September 2011 36 residents have a predominantly negative view of other quarters compared to their own

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5. CONCLUSIONS AND RECOMMENDATIONS

The hypotheses are measured and could be answered by the results obtained from the

experiment. The earlier introduced research question will be answered according to the results from the experiment. Besides this, the managerial implications, limitations and further

research will be addressed.

5.1 Research question

In the previous chapter the following research questions was formulated; What is the impact of negative publicity on a city image and how do citizenship, city loyalty and distance influence this city image? According to the results the research question could be answered. Negative

publicity has a negative effect on city image, The mean of the pretest of city image was 3.14 and of the posttest 2.92 on a 5-point scale. But what is the moderating effect of citizenship and city loyalty? According to the results citizenship negatively affects the effect of negative publicity on city image, so citizens perceive negative publicity as less harmful than non-citizens. City loyalty does not negatively affects the effect of negative publicity on city image. Furthermore distance does not positively affects the effect of negative publicity on city image.

5.2 Recommendations for the community Gouda

According to the results some recommendations for the community Gouda could be given. Knowing that there is an effect of negative publicity on a city image, the community could be more careful to avoid negative publicity and finding a way to react as soon as possible on this negative publicity to limit the damage. The community of Gouda did this already, but they first suggest that negative publicity would have a negative effect on city image, now they know it for sure. The marketing campaigns could focus on the brand values reliable and safe, because these scores are low on the current image of Gouda. This depends of course on what the goals of the city Gouda are.

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Master thesis, Rachel Berkouwer, September 2011 38 more effect on non-citizens than at local level. The other hypotheses are not significant, but some descriptive statistics can be used. The mean of city loyalty for Gouda is 2.29 on a 5-point scale. This is very low, so the community Gouda has to try to increase this city loyalty.

5.3 Limitations and further research

Within this study some potential limitations may have had an effect on the validity and the reliability of the results.These limitations will be noted and should be taken in

consideration when interpreting the results.A limitation of this study is the distance of the participants. Within the sample a lot of participants are coming outside the area Gouda and outside the area Groningen. This could have an effect on the reliability of the moderating role of distance. This moderating effect could be investigated more thoroughly, but then with evenly distributed distances.

Another limitation is that city loyalty is a part of citizenship. A citizen is not by definition loyal to the city, so is another variable. But the reason why citizens have a smaller city image change is partly explained by loyalty, but city loyalty was not significant. Further research could search for the reasons why citizens respond differently than non-citizens.

An additional limitation is that the sample was not equally divided, e.g. age, education and incomes. This is because a lot of the participants were students. For future research equally divided samples are interesting to segment the participants and seeing if there are differences in response to the effect of negative publicity on city image. Also the

manipulation check was just above the average (3-point) on a 5-point scale.

Finally further research can focus on how a community can avoid negative publicity and how to increase city loyalty. This study has described some effects of negative publicity and

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