‘A study on naming of OTC products’
November 2012
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THE MODERATING EFFECT OF PRICE CONSCIOUSNESS ON
THE RELATION BETWEEN BRANDNAMES AND AN
INDIVIDUAL’S BUYING BEHAVIOR THROUGH PERCEIVED
QUALITY AND BRAND EXPERIENCE
Master thesis, MBA
University of Groningen, Faculty of Economics and Business
November, 2012 LIEKE WIGGER Student number: 1903462 Beatrixstraat64 7587 AH De Lutte Tel: +31(0)630488112 E-mail: s1903462@student.rug.nl
Supervisor: Dr. Ir. M.J. Gijsenberg Co-assessor: Dr. J. E. Liu
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MANAGEMENT SUMMARY
Brand names play a major role in our culture, because they have a great influence on the buying behavior of consumers. Well-developed brand names can therefore financially benefit firms. It is therefore surprising that a large consumer good market, the pharmaceutical industry, has flourish with little help from the positive effect that brand names can have. This study therefore examined how pharmaceutical firms should integrate the competitive advantage that brand names could represent for their products. Since the pharmaceutical industry is large, the focus is on Over The Counter (OTC) products, which are medicines that are available without a prescription that can be bought in drugstores, pharmacies, supermarkets, evening stores or gas stations. Examples of OTC products are vitamins, minerals, analgesics and cough and cold preparations. More specifically, this study examined the relationship of an OTC brand name on the buying behavior of a consumer.
Buying behavior is defined as willingness to buy and willingness to pay. Willingness to buy refers to the activities that people engage in when selecting and purchasing products to satisfy needs and desires. Willingness to pay refers to a price range, including a minimum, correct and maximum price, at which a consumer is indifferent between purchasing and not purchasing a product. Nevertheless, the buying process of an OTC product remind consumers of imperfect health or it forces consumers to confront their mortality. The role of a brand name is therefore not only to identify a particular product, but rather to influence consumer’s perceptions and experiences towards the treatment or solution being offered. This study therefore provide answers to the following three research questions; ‘How do consumers perceive quality and brand experience in response to a brand name of an OTC product?’. Secondly; ‘How do perceived quality and brand experience impact willingness to buy and willingness to pay? Thirdly; ‘To what extent is the relationship between perceived quality and brand experience and willingness to buy and willingness to pay dependent on price consciousness?’. Perceived quality is defined as subjective quality evaluations from (potential) consumers. It was expected that higher perceived quality results in higher willingness to buy and higher willingness to pay. Furthermore, it was also realized that consumer experiences are important when managing purchase behavior, the mediation effect of brand experience on the relationship between a brand name and willingness to buy and willingness to pay is therefore also examined. Brand experience is further divided in sensory, affective, behavioral and intellectual responses. It was expected that scores high on the four brand experience responses result in higher willingness to buy and higher willingness to pay. Furthermore, when buying OTC products consumers make a trade-off between quality perceptions and experiences compared to the money they have to sacrifice. Price consciousness is therefore included as a moderator between perceived quality and brand experience and willingness to buy and willingness to pay. It was expected that, when price consciousness is low, the positive effect of perceived quality and brand experience on purchase behavior will be stronger.
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example is ‘Ibuprofen’. A half / half name is based on both the active substance and on a fantasy name, such as ‘Pantozol’. A fantasy name is a name without any (general) meaning; a fictional word unrelated towards the product, an example is ‘Advil’. A functional name refers to the product as a whole, the characteristics of the product and the function of the product or the possible product advantages, such as the brand name ‘Allerfree’. Participants were randomly assigned to one of these brand names and were asked to evaluate the brand name on quality perceptions and brand experiences. Subsequently it was asked to participants whether they would buy the sore throat product, and how much they would pay for the sore throat product.
By making use of several downloaded macros from Preacher and Hayes, it can be concluded that the use of a fantasy name results in higher purchase behavior compared to an academic, a half / half or a functional name. More specifically, the functional name is negative related towards correct and maximum willingness to pay. Furthermore, names that score high on quality perceptions are recommended since scores high on quality perceptions result in higher willingness to buy and higher average willingness to pay. However, higher perceived quality does not lead to higher maximum willingness to pay, which suggests that other factor, such as the package influence a consumer’s maximum willingness to pay. Moreover, perceived quality mediates the relationship between a fantasy name and correct and maximum pricing. The mediation effect of brand experience was also tested, and only the behavioral response has a mediating effect on the fantasy name and willingness to buy. Results also showed that participants scored low on the price conscious questions, and it is therefore assumed that participants are not really price conscious when buying sore throat products. Furthermore, price conscious does not moderate the relationships. This might be because consumers were unfamiliar with the sore throat product. When a consumer becomes more experienced, the consumer becomes more knowledgeable about the product’s quality and value, and this consumer will be more price conscious.
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ABSTRACT
This master thesis has been written to accomplish my master Business Administration,
specialization Marketing Management at the University of Groningen. With this Master thesis I finish my life as a student and ‘real’ life is going to begin…
Hereby I would like to take the opportunity to thank a couple of people who supported me during the writing of this thesis. I would like to thank my thesis supervisor Maarten
Gijsenberg for his valuable and fast feedback and his friendly support. Thanks also goes to Jia Liu for her additional reading.
Special thanks goes to Mike Dijkstra Taurel for offering me an internship at Globrands
Naming and Strategy in Amsterdam. I would also like to thank Mike and Danielle Dijkstra for their feedback and support. In addition, I would also like to thank the employees of Globrands for their input, feedback, support and the necessary distraction.
I proudly present my Master Thesis about the naming of pharmaceutical products. I think this thesis has become an interesting, practical, entertaining and an academic piece of text. By writing this thesis I have developed my knowledge on the subject, I have increased my statistical skills, I have learned to make realistic schedules and I have learned to keep my patience.
Enjoy reading! Lieke Wigger
Amsterdam, October 2012
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TABLE OF CONTENT
1. INTRODUCTION ... 9
2. THEORETICAL BACKGROUND... 13
2.1 Brand names ... 13
2.1.1 Types of brand names ... 14
2.1.2 Academic brand name ... 14
2.1.3 Half academic / half fantasy brand name ... 14
2.1.4 Fantasy brand name ... 15
2.1.5 Functional brand name ... 15
2.1.6 Effectiveness of brand name categories ... 15
2.1.7 Regulators around naming ... 16
2.2 Willingness to buy ... 16
2.3 Willingness to pay ... 17
2.4 Perceived quality ... 18
2.4.1 The mediating effect of perceived quality ... 18
2.5 Brand experience ... 19
2.5.1 The mediating effect of brand experience ... 20
2.6 Price consciousness ... 20
2.6.1 The moderating effect of price consciousness ... 21
3. METHOD ... 23
3.1 Design, participants and procedure ... 23
3.2 Measures ... 23 3.3 Manipulation check ... 26 3.4 Analytical procedures... 27 4. RESULTS ... 27 4.1 Descriptive statistics ... 27 4.2 Test of hypotheses ... 28
4.3 The mediation effect of perceived quality on willingness to buy (H1a) ... 30
4.4 The mediation effect of perceived quality on willingness to pay (H1b) ... 30
4.5 The mediation effect of brand experience on willingness to buy (H2a) ... 31
4.6 The mediation effect of brand experience on willingness to pay (H2b) ... 31
4.7 Mediation conclusions ... 31
4.8 The moderating effect of price consciousness on buying behavior (H3 & H4) ... 32
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5. DISCUSSION ... 33
5.1 Findings ... 33
5.2 Limitations and future research ... 36
6. RECOMMENDATIONS & IMPLICATIONS ... 38
6.1 Use fantasy names ... 39
6.2 Generate high quality perceptions ... 39
6.3 Focus on the behavioral component of brand experience ... 39
6.4 Use naming legislation ... 39
7. REFERENCES ... 41
APPENDIX A: INFORMATION ABOUT GLOBRANDS ... 48
APPENDIX B: OTC SORE THROAT MEDICINES ... 49
APPENDIX C: PACKAGE ... 50
APPENDIX D: RESEARCH PROTOCOL ... 51
APPENDIX E: DIRECT EFFECTS ON DEPENDENTS ... 53
APPENDIX F: DIRECT EFFECTS ON MEDIATORS ... 54
APPENDIX G: DIRECT EFFECTS OF MEDIATORS ON DEPENDENTS ... 56
APPENDIX H: INDIRECT EFFECTS ON WILLINGNESS TO BUY ... 57
APPENDIX I: INDIRECT EFFECTS ON WILLINGNESS TO PAY ... 59
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1. INTRODUCTION
This introduction demonstrates that brands are all around us and everybody is using brands during the day. A brand is a desirable and exclusive idea embodied in products, services, places or experiences’ (Kafperer, 2004). That evoke certain feelings and opinions, based on inter alia the brand name. This study defines a brand name as ‘the textual part of a brand that can be uttered’ (Usunier & Shaner, 2002). A brand name is a distinguishing name intended to identify the good or service of either one seller or group of sellers, and to differentiate this good from those of competitors (Aaker, 1991; 1996; Alsem, 2007; Keller, 2003; Kristensen, Gabrielsen & Zaichkowsky, 2012; Riezebos, 2002). Brand names can come in different forms; they can be based on real people, places, animals, birds, things and objects or just be made up (Keller, Heckler & Houston, 1998).
A well-developed brand name can benefit firms in financial advances (Leone, Rao, Keller, Luo, McAlister & Srivastava, 2006). This is because an effective brand name leads to certain consumer evaluations that build brand equity. Brand equity refers to a set of brand assets and liabilities linked to a brand, as its name, which add to or subtract from the value provided by a product or service to a firm and/or that firm’s consumers’ (Aaker, 1991). High brand equity translates into more inelastic (elastic) to price increases (decreases) (Srivastava & Reibstein, 2005). Brand equity therefore might result in the willingness of consumers to pay a price premium and to build a loyal brand relationship (Fischer, Völckner & Sattler, 2010). It is therefore not surprising that companies spend millions of dollars in naming and maintaining brand names.
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Given the benefits of brand names, it is extraordinary that one of the world’s largest consumers good markets, pharmaceuticals, have flourished with little help from brands for so long (Blackett & Robins, 2001). Interbrand (2010) even argues that brands are the most underleveraged business assets within the health and pharmaceutical industry. This is because pharmaceutical firms have not yet understood and integrated the competitive advantage that brands could represent (Schuiling & Moss, 2004). Since the pharmaceutical industry is rather large; the focus of this study is on Over The Counter (OTC) products. OTC products are defined as medicines without a prescription that can be bought in drugstores, pharmacies, supermarkets, evening stores or gas stations. A few examples of OTC products are vitamins, minerals, analgesics, acne treatments, first aid tape, anti-smoking aids and cough and cold preparations (Pharmaceuticals Industry Profile: the Netherlands, 2011). Since every country has its own rules and regulations, this study is focused on the Dutch OTC market. In 2007 new laws came into force, that classified products as an OTC product when it can be used safely, with reference to the ingredients, dosage and package size. When it is necessary to monitor, inform or guide the consumer when receiving the medication, then a prescription is compulsory. OTC products are therefore primarily used to treat a condition that does not require supervision and the risk of damage should be negligible during usage (Annual Report Neprofarm, 2007). With laws as these the Dutch government encourages pharmaceutical manufactures to make more prescriptive products available OTC in order to transfer the costs of medicines from the public (e.g. insurances) to the private purse (Blackett & Robinson, 2001). OTC sales are therefore forecasted to grow with 2.7% from 2010 to 2015, to a market value of $1.2 billion by the end of 2015 (OTC Pharmaceuticals Industry Profile: The Netherlands, 2012).
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no one else can make the product - except with the approval of the patent holder (Mansley, Teutsch, Busza, White & Geisel, 2008). Pharmaceutical firms ask for patents to recover the cost of the research and development of a new or modified product. Thus, only when patents are expired other firms are able to produce the same product; the so called ‘generics’. Generics are defined as copied products; identical to originator products in dosage form, strength, safety, route of administration, quality, performance characteristics and intended use (i.e. to be bioequivalent).
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especially when related towards purchase behavior (Brakus, Schmitt & Zarantonello, 2009). The mediation effect of brand experience on the relationship between a brand name and WTB and WTP will therefore also be examined
In addition, it is expected that the relationship between a brand name and purchase behavior through perceived quality and brand experience is dependent upon price consciousness. It is expected that consumers make a trade-off whether they will buy the OTC product based on the expected quality and experiences in addition to the money they have to sacrifice (Dodds, Monroe & Grewal, 1991; Scitovszky, 1945). In sum, this study examines whether price consciousness moderates the effects of a pharmaceutical brand name on purchase behavior through perceived quality and brand experience. The following three research questions will therefore be analyzed: ‘How do consumers perceive quality and brand experience in response to a brand name of an OTC product?’. Secondly; ‘How do perceived quality and brand experience impact willingness to buy and willingness to pay? Thirdly; ‘To what extent is the relationship between perceived quality and brand experience and willingness to buy and willingness to pay dependent on price consciousness?’.
While answering these research questions, this study makes several practical and academic contributions. This study closes the gap in literature about the simultaneous effects of brand names, perceived quality and the prices of a product (Grewal, Krishnan, Baker & Borin, 1998). Secondly, academic and practical insights are provided about the relationship between perceived quality, brand experiences and WTB and WTP. It provides managers with information about the use of brand names, what kind of brand name for instance increases buying behavior. Since, price consciousness is a less researched factor in academic literature (Sinha & Batra, 1999); a last contribution is about gaining insights into the price consciousness of consumers when buying OTC products.
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2. THEORETICAL BACKGROUND
2.1 Brand names
The pharmaceutical industry sells products and services that consumers do not necessarily want to buy because products remind them of imperfect health or force them to confront their mortality. The role that brand names play is therefore not only to identify a particular OTC product, but rather to transform consumer’s attitudes towards the treatment or solution being offered. In effect, brand names need to create a positive association, and, in some cases, a sense of hope (Interbrand, 2011).
In response to the role of brand names, brand names should provide meaning to consumers since meaningful names have the advantage of being easily processed and understood (Kohli & Suri, 2000; Meyers-Levy, 1989; Zinkhan & Martin, 1987). Marketing literature therefore shows the importance of meaningful names (e.g. Keller, Heckler & Houston, 1998; Perreault & McCarthy, 1996). Meaningful names convey relevant information about the product, or an important product attribute, or establishes a connection between the product and the product category’ (Hoyer & Brown, 1990; Keller, 1993; Keller et al. 1998).
As the consumers’ mind translates words into sounds and brand names are likely to be said, not only read, providing meaning by linguistic devices is therefore important (Trout, 1997). Four classes of linguistic devices are distinguished that operate either alone or in conjunction with one another (Lowrey, Shrum & Dubitsky, 2003). Brand names provide meaning by phonologic (i.e. vocal sounds as pronunciation), orthographic (i.e. spelling of words), morphologic (i.e. combinations, abbreviations, additions of words) and semantic responses (i.e. actual meaning as metaphors) (Huang & Chan, 1997; Keller, Heckler & Houston, 1998; Lowrey, Shrum & Dubitsky, 2003). The brand name ‘Prozac’ (i.e. antidepressant medication) for instance provides phonologic and orthographic meaning by focusing on the direct linkage between sound, spelling and meaning, since it communicates efficacy through the letter ‘z’ (Klink 2000, 2001). Furthermore, the brand name ‘NiQuitin’ (i.e. a stop smoking product) provides orthographic and morphologic meaning by the spelling and the combination of the words nicotine and quit. Moreover, semantic meaning can be imputed in a brand name by embedding entire words (e.g. nicotine in Nicotinell) or fragments of words (e.g. ‘vitamine’ in Davitamon) (Klink, 2001).
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2.1.1 Types of brand names
Consumers can only establish different brand associations and experiences through individually branded products (Laforet, 2011). As different product names allow for precise product positioning and high differentiation among products. However, pharmaceutical firms are only allowed to produce generic OTC products when patents are released (Interbrand, 2011; Piachaud, 2004). According to the European Medicines Act of 2004; three different branded product categories are distinguished. A fantasy name, a general or scientific and a functional brand name. However, when categorizing different existing brand names it became obvious that one category was missing. A fourth ‘half academic / half fantasy’ (half/ half) category is added to make the brand name categories more complete.
2.1.2 Academic brand name
According to the European Medicines Act, an academic name is based on the active substance. These names provide meaning by conveying relevant information about the active substance, as can be seen in Table 1. However, academic names do not convey any product features or benefits. In addition, using academic names is an easy and cheap way of naming since no brand naming research is necessary.
2.1.3 Half academic / half fantasy brand name
Half / half names are partially based on the active substance and partially based on a
TABLE 1
Brand name categories
Name categories
Description Examples taken from the OTC market
In parentheses are the active substances.
Academic Based on the active substance (MEB, 2008).
Paracetamol: painkiller (paracetamol) Ibuprofen: painkiller (ibuprofen) Cetrizine: sore throat (cetrizine) Half / half Based on the active substance
and partially based on a name with-out general meaning.
Brufen: painkiller (ibuprofen) Strepfen: sore throat (flurbiprofen) Pantozol: antacid (pantoprozal) Fantasy Name without general
meaning (MEB, 2008).
Advil: painkiller(ibuprofen) Sarixell: painkiller (ibuprofen) Trachitol: sore throat (lidocaine) Rennies: antacid (calciumcarbonaat) Functional Describe the function of the
product
Anti-hangover pill (succinic acid)
Hedex: painkiller (paracetamol) linked to headache and ex Antigrippine: painkiller (paracetamol) linked to anti fever [=griep in Dutch]
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fictitious name. As shown in Table 1, an example is the OTC product Brufen which is derived from the substance Ibuprofen. The Act argues that when the generic ingredient name forms part of the name, then the ingredient name must be listed in Dutch. This means that the part of the name that represents the substance must be in Dutch.
2.1.4 Fantasy brand name
The Act shows that a fantasy name is a name without any (general) meaning. ‘It is perceived as a fictional word, unrelated to the product and product category’ (e.g. Advil) (Interbrand, 2008; Kohli & Suri, 2000; Riezebos, 2002), the medical evaluation board will therefore object when there is a misleading correlation between the fantasy name and the application and the fantasy name may not lead to confusion with the scientific name.
2.1.5 Functional brand name
Functional brand names describe the product for which it is intended’ (e.g. ‘sore throat syrop’) (Keller, 2003; Kohli & Suri, 2000). They refer in a direct way to the product as a whole, the composition of the product, the characteristics of the product and the function of the product or the possible product advantages (Riezebos, 2002). Alsem (2007) labels this type of name functional brand name. Functional names however may be less distinctive, since every pain killer has the same aim as reducing pain (Fischer, Völckner & Sattler, 2010). The Act even argues that very general names as ‘allergy tablets’ are not acceptable, since these names cannot be claimed by specific marketing authorization holders.
2.1.6 Effectiveness of brand name categories
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most consumers, this study assumes that academic names do not provide meaning in a semantic way. With regard to the information theory, functional names appeared to be the most effective. However, all four brand name categories can provide meaning to consumers by phonologic, orthographic or morphologic responses.
2.1.7 Regulators around naming
As already shown above, the Dutch OTC market is full of regulations and restrictions (Blackett & Robins, 2001) which are listed in the review of the European Medicines Act, better known as Review 2001 that was completed in 2004 and implemented at a national level in the EU member states in 2005. The Act argues that names for pharmaceutical products with different active ingredients must differ from each other by at least three letters. Additionally, the medicine evaluation board can always demand a more extensive difference when confusion arises. Furthermore, a brand name may not end in a letter combination used by the World Health Organization. However, it is allowed to develop names or parts of the names in English rather than in Dutch, but only when no confusion arises. However data for labeling must be in Dutch. Additionally the foreign term may not serve as a replacement for information that would otherwise be compulsory. Additionally, the use of capital letters in the middle of the name is allowed. Additions are allowed, but only when they promote the correct use of the product, examples as ‘with lemon flavor’, ‘without preservatives’ and additions to characterize the pharmaceutical form or additions indicating the route of administration are acceptable. Not permissible are additions indicating that the product is of extra strength (unless the strength is also included in the name in quantitative terms). To illustrate, ‘Innovatium 200 mg’ versus ‘Innovatium 400 mg extra strong’ is allowed. The use of an existing name with the addition of a prefix or suffix (i.e. pro) in the case of the active ingredient being a pro-drug of the previous active ingredient is also not permitted.
2.2 Willingness to buy
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the level of product involvement (Silayoi & Speece, 2004). Since buying an OTC product does not involve high expenditures or a high personal risk (Percy & Elliot, 2005), OTC products are considered as low-involvement products. Although the first step ‘need for recognition’ from Blackwell, Miniard and Engel’s (2001) consumers’ decision process model is the same for high and low involvement products. The search for information, pre-purchase evaluation and purchase stages are influenced by the level of involvement. Consumers will not extensively search for information to satisfy their needs and they do not make many considerations about which OTC brand to buy in both the pre-purchase evaluation and purchase stage. Since former steps are not done exhaustively, the purchase behavior of consumers will mostly rely on easy and salient characteristics, as brand names (Blackwell Miniard and Engel, 2007; Chang & Wildt, 1996). In the last three stages of the model; consumption, post-consumption evaluation and divestment consumers use and check whether expectations are matched with the experienced performance (i.e. is the headache gone?) (Swan & Combs, 1976). Since brand names are intended to identify a product and to differentiate this good from those of competitors (Aaker, 1991; 1996; Alsem, 2007; Keller, 2003; Kristensen, Gabrielsen & Zaichkowsky, 2012; Riezebos, 2002). The brand name should become the product characteristic that consumers remember after consumption.
2.3 Willingness to pay
The price charged for an object is interesting, since this is the main source of profit for the firm (Kristensen, et al, 2012). Marn and Rosiello (1992) argue that improvements in price, in most industries, are said to have three to four times the effect on profitability as proportionate increases in volume. It is therefore central for firms to charge the maximum amount a consumer is willing to pay (Kristensen, et al, 2012). This study defined WTP as a price range at which a consumer is indifferent between purchasing and not purchasing a product (Moorthy Ratchford & Talukdar, 1997). At the beginning and at the end of this continuum are respectively a minimum and a maximum price. In the middle of the continuum is the average perceived market price, also known as the correct price level (Kamen & Toman, 1970; Miller et al, 2011). The minimum, correct and maximum price estimates are critical inputs for pharmaceutical product lines and assortment decisions (Chen & Hausman, 2000; Tarasewich & McMullen, 2001), the design of profit-maximizing products (Kohli & Krishnamurti, 1989) and pricing decisions (Day & Venkataramanan, 2006).
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upon how price information is comprehended and made meaningful to them (Evans, Moutinho & Raaij, 1996). In addition, price is an indicator of the amount of sacrifice needed to purchase a product compared with the expected value of the product (Ismail, Melewar, Lim & Woodside, 2011). Willingness to pay therefore results in a cognitive trade-off between perceptions of for instance the quality and sacrifice results in perceptions of value (Dodds, Monroe & Grewal, 1991; Scitovszky, 1945).
2.4 Perceived quality
In line with the current focus of marketing research, the quality concept rooted in this study recognizes that consumers have imperfect information about product quality and base their purchase decision on perceived rather than true quality (Steenkamp, 1989; Szymanowski & Gijsbrechts, 2012; Zeithaml, 1988). Perceived quality is thus about consumers perceptions of the overall quality or superiority of an OTC product with respect to its intended purpose, relative to alternatives (Aaker, 1991; Buzzell & Gale, 1987).
Products constitute an array of intrinsic and extrinsic attributes that consumers use to determine product quality (Miyazaki, Grewal & Goodstein, 2005). Intrinsic attributes that influence perceived quality are integral and inseparable parts of a product. Extrinsic attributes, are non-physical components of a product as a brand name or product price (Miyazaki, Grewal & Goodstein, 2005). Since the information around the purchase of low involvement products is not done thoroughly, consumers mostly will not have enough knowledge capabilities to judge the quality of an OTC product on intrinsic cues as the active substance (Chang & Wildt, 1996; Rao & Monroe, 1989; Zeithaml, 1988). In line with much other research, it is assumed that extrinsic cues serve as signs that affect consumers' quality perceptions for low-involvement products (Kirmani & Rao, 2000; Miyazaki, Grewal & Goodstein, 2005; Monroe 2003; Suri & Monroe, 2003).
2.4.1 The mediating effect of perceived quality
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WTB and minimum, correct and maximum price on the WTP continuum might decrease. It may even fall below the price range, meaning that consumers no longer buy the product (Monroe & Grewal, 1991). However, as with FMCG, it is expected that when consumers’ perceptions of quality are high their purchase behavior will be influenced positively (Cronin & Taylor, 1992; Monroe & Krinshnan 1985; Dodds, Monroe & Grewal, 1991; Tsiotsou, 2005). This study therefore states the following hypothesis:
H1a: Perceived quality mediates the relationship between a brand name and willingness to buy.
H1b: Perceived quality mediates the relationship between a brand name and willingness to pay.
2.5 Brand experience
Creating a superior experience for consumers is one of the central objectives in current retail environment. Gentile, Spiller & Noci (2007) argue that customer experience originates from a set of interactions between a product and a consumer which provoke a reaction. However, research about creating experiences by brands is relatively new, and only a limited amount of literature is available about the criteria and measurement of experiences (Carù & Cova, 2003). Moreover, this study attempts to shed light on a particular kind of experience in which consumers interact with brand names and how such interactions impact WTB and WTP. Brand experiences are subjective consumer-dependent responses evoked by the brand name (Brakus, Schmitt & Zarantonello, 2009; Ismail, et al. 2011). These brand experiences arise in a wide variety of settings when consumers inter alia search for and shop for products/brands (Brakus, Schmitt & Zarantonello, 2009).
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generate affective responses (Brakus, Schmitt & Zarantonello, 2009; Schmitt, 2009). Responses can also be more behavioral, referring to physical actions and behaviors of consumers when exposed to a brand (Brakus, Schmitt & Zarantonello, 2009).The last category is about intellectual responses, these responses are more cognitive responses since it is connected with the thinking processes (Brakus, Schmitt & Zarantonello, 2009).
2.5.1 The mediating effect of brand experience
Consumers’ brand experiences vary in strength and intensity; some brand experiences are stronger or more intense than others (Brakus, Schmitt & Zarantonello, 2009). This study expects that brand names can provoke certain sensorial, affective, behavioral and/ or intellectual responses based on the linguistic characteristics of brand names. However no previous studies (including those in other industries) examined the effect of brand names on the four brand experience components.
Additionally, research about creating consumer brand experiences; found that high brand experiences improve consumer satisfaction and loyalty (Barsky & Nash, 2002; Berry, Carbone & Haeckel, 2002; Brakus, Schmitt & Zarantonello, 2010). Indeed, the importance of customer satisfaction and brand loyalty has been recognized for several decades, since they are described as the core assets of any business, as future growth stems from the loyalty consumers have in a company’s brands (Gralpois, 1998; Kotler, 1991). A consumer loyal to a brand is less likely to switch to another brand and these consumers are less sensitive towards prices (Berry & Parasuraman, 1991; Tepeci, 1999). Consumers WTB and WTP is therefore expected to increase. Given these assumption, the following hypothesis is stated:
H2a: Brand experiences mediate the relationship between a brand name and willingness to buy.
H2b: Brand experiences mediate the relationship between a brand name and willingness to pay.
2.6 Price consciousness
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and brand experience. This definition is preferred since it shows that consumers make a ‘trade-off’ by the words ‘too large’ (Sinha & Batra, 1999); consumers decide whether they will buy the product based on characteristics as expected quality and the money they have to sacrifice (Dodds, Monroe & Grewal, 1991; Scitovszky, 1945).
Consumers are more price conscious when they are confronted with many different products in an assortment (Hsee, 1996). OTC assortments are mostly rather large and price estimations are presumably easy and accessible extrinsic signs to compare products (Chang & Wildt, 1996;Hsee 1996; Nowlis & Simonson, 1997 Rao & Monroe, 1989; Zeithaml, 1988). This implies that when assortments are large, consumers become more price conscious. Moreover, as already described OTC products are determined as low involvement products. Consumers for whom the purchase of a product is less important and less interesting are more price conscious (Flynn and Goldsmith 1993; Ramirez & Goldsmith, 2009). It is therefore expected that, as with low involved FMCG, consumers are price conscious when purchasing OTC products.
2.6.1 The moderating effect of price consciousness
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(Flynn and Goldsmith 1993; Ramirez & Goldsmith, 2009). Given these considerations the following hypotheses are stated:
H3a: The positive effect of high perceived quality on willingness to buy will be stronger when price consciousness is low, and the positive effective effect of high perceived quality on willingness to buy will be lower when price consciousness is high.
H3b: The positive effect of high perceived quality on willingness to pay will be stronger when price consciousness is low, and the positive effective effect of high perceived quality on willingness to pay will be lower when price consciousness is high.
The same relationships hold for brand experience. It is expected that when brand experience is high and price consciousness is low, WTB and WTP will increase. And the positive relationship between brand experience and perceived quality will decrease when price consciousness is high.
H4a: The positive effect of brand experience on willingness to buy will be stronger when price consciousness is low, and the positive effective effect of brand experience on willingness to buy will be lower when price consciousness is high.
H4b: The positive effect of brand experience on willingness to pay will be stronger when price consciousness is low, and the positive effective effect of brand experience on willingness to pay will be lower when price consciousness is high.
Below Table 2 shows a clear overview of the above stated hypotheses. Moreover, figure 1on the next page shows the conceptual model, including all variables.
TABLE 2
Expected moderated mediation effects
Mediator Moderator Dependent Dependent
Perceived quality high Price consciousness low WTB increase WTP increase Price consciousness high WTB lowered WTP lowered Brand experience high Price consciousness low WTB increase WTP increase Price consciousness high WTB lowered WTP lowered
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3. METHOD
3.1 Design, participants and procedure
One hundred and thirty two participants were randomly assigned to one of the four brand name category conditions. More specifically, 26 participants examined a scientific name, 29 participants examined a half / half name, 24 participants examined a fantasy name and 27 participants examined a functional name. The survey started with a cover story which told participants that PharmaFabrics was launching a new sore throat medicine called [brand name] and PharmaFabrics was conducting research about the brand name in the survey. To make the study more reliable an exemplary package of the new sore throat medicine was shown on almost every page, see Appendix C for an example. After this cover story perceptions of quality and brand experiences were asked, and thereafter several questions about WTP and WTB were asked. To finish the survey, participants received several exit and control questions about buying pharmaceutical brands. After completing the survey the subjects were thoroughly debriefed and thanked for their participation. The age of participants ranged from 18 - 66 years old (M = 35.57, SD = 5.4) and 56.8% were women.
3.2 Measures
This study included measures of perceived quality, brand experience, WTP, WTB, price consciousness and several control and exit questions. Appendix D shows the complete chronological research protocol including all the asked questions.
Brand names: The different brand names were manipulated by four different and self-invented brand names based on the four brand name categories. The active substance
FIGURE 1 Conceptual model Willingness to pay Willingness to buy Brand name: - Academic
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Lidocaïne was chosen as the academic brand name. As Appendix B shows, Lidocaïne is the active substance of the sore throat products Trachisan and Trachitol. Moreover, consumer research showed that a brand name should provide meaning to consumers, that is, brand names should convey relevant information about product features or benefits (Keller, Heckler and Houston, 1998). The word throat (keel in Dutch) is therefore added in the half / half name; the used name for the half / half category was ‘Keelbroxol’. Moreover, when keeping in mind that a fantasy name should be a name without any general meaning, the invented name ‘Mixofen’ was thought up. A functional name refers in a direct way to the product as a whole, the composition of the product, the characteristics of the product and the function of the product or the possible product advantages (Riezebos, 2002). The functional name used in this study refers to the product as a whole; the functional name was ‘KeelPastilles’. It can be concluded that all brand names had a phonological and orthographical meaning, since vocal sounds as pronunciation and spelling of words were rather simple and recognizable. To make the manipulation stronger, the package of the new product including the brand name was shown on almost every page in the survey.
Willingness to buy: Three items based on previous research of Dodds, Monroe and Grewal (1991) and a self invented question was used to measure WTB (Cronbach’s alpha: = .942). Questions were measured after the mediation questions were asked, but prior to the WTP questions. An example of a recoded question was ‘The likelihood that I would purchase [brand name]’ is’ and respondents answered on a scale ranging from Very low (1) to Very high (7). Land and Potter (2006) argue that intention to buy questions can best be posed in a direct way in order to minimize bias and represent the concept being tested. The following question was therefore added: Would you buy [brand name]based on your expected reliability and quality?’.
Willingness to pay: The other dependent variable was WTP. Three different questions asked the minimum, correct and maximum price consumers want to pay for the brand name and participants could answer on a scale ranging from 0 to 100. 0 represents free, 50 represents an average price and 100 represents twice the average price.
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allergy medicine will be reliable is’ and respondents answered on a scale ranging from ‘Very low’ (1) to ‘Very high’ (7).
Brand experience: Twelve items, based on four categories measured brand experience based on a relatively new scale from Brakus, Schmitt and Zarantonello (2009). The scale measured the four categories, each having three questions; sensory (Cronbach’s alpha: = .723), affective (Cronbach’s alpha: = .625, after deleting question 2) behavioral (Cronbach’s alpha: = .634) and intellectual experiences (Cronbach’s alpha: = .788). Questions were measured after the perceived quality questions were asked. An example of an intellectual question was: ‘I engage in a lot of thinking when I encounter this brand name’ and respondents answered on a scale ranging from ‘Strongly disagree’ (1) to ‘Strongly agree (7)’.
Price consciousness: Five items based on research of Lichtenstein, Ridgway and Netemeyer (1993) were used to measure price consciousness (Cronbach’s alpha: = .822). All questions were measured after the WTP questions, but prior to the exit and control questions. An example of a recoded question was ‘I would never shop at more than one store to find low prices for sore throat medicines’ and participants responded to these statements on a scale ranging from ‘Strongly disagree’ (1) to ‘Strongly agree’ ( 7).
Control variable: This study also tested some demographic influences on the expected relationships; it is expected that age and income influence buying behavior (Bartels & Hoogendam, 2011). Wolfe (1994) argues for psychological differences in age; elderly consumers are less materialistic and more objective. Furthermore, it is expected that elderly people are more concerned about their health, and therefore place more emphasis on perceived quality. Age was therefore entered as a control variable. Moreover, income levels might also influence buying behavior. The answer categories used in this study were based on the modal gross margin income in 2011 according to the Dutch CPB (Centraal Plan Bureau), which was € 33.000 and the category option € 30.000 - € 40.000 is therefore the middle of 5 categories. This leads to five different categories; considerably beneath modal, beneath modal, modal, above modal, considerably above modal.
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towards private label pharmaceuticals based on a scale of Burton et al (1998) (Cronbach’s alpha: = .763). An example of a question was: ‘I love it when private label brands are available for the pharmaceutical product I purchase’. Participants responded to these entire exit statements on a scale ranging from ‘Strongly disagree’ (represented by 1) to ‘Strongly agree’ (represented by 7).
3.3 Manipulation check
At first instance the academic name was tested by Ambroxol (instead of Lidocaïne), the half/half name was tested by Keelbroxol, the fantasy name was tested by ProKeel (instead of Mixofen) and the functional name was tested by KeelPastilles. When the surveys were distributed and the maximum number of participants was reached, it was expected that the study was finished. However, ANOVA’s based on one manipulation check question: ‘Where do you think this [brand name] is based on?’; with four answer possibilities; [A: Substance], [B: Partly substance, partly fantasy], [C: Fantasy] and [D: Function] showed surprising results. It became clear that Ambroxol was perceived as both a substance (F (1,29) =12.6, p <.01) and as a half / half name (F (1,30) =26.1, p <.01). In addition, ProKeel was experienced as both a fantasy name (F (1,29) =7.3, p <.05) and a functional name (F (1,29) = 39.0, p <.01). Nevertheless, ANOVA’s also showed that Keelbroxol was perceived as a half / half name (F (1,30) =39.2, p <.01) and KeelPastilles was experienced as a functional name (F (1,27) =43.5, p <.01). Since Ambroxol and ProKeel were not experienced as they were intended, the research was replicated for the academic and fantasy name with accordingly a different academic and a different fantasy name, respectively Lidocaïne and Mixofen. ANOVA’s accordingly showed that Lidocaïne was acknowledged as a substance (F (1,26) = 41.5, p <.01) and Mixofen was acknowledged as a fantasy name (F (1,23) = 10.6, p <.01). Table 3 shows the answers of the manipulation check questions in percentages.
TABLE 3
Manipulation checks
N Substance Half / half Fantasy Functional
Lidocaïne 26 62% 27% 12% 0%
Keelbroxol 29 21% 48% 24% 7%
Mixofen 24 13% 35% 48% 4%
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3.4 Analytical procedures
Effects of the independent variables (four brand names), the mediators (perceived quality & brand experience), the moderator (price consciousness) and the dependent variables (WTB & WTP) were tested by regression macros from Preacher and Hayes (2007). Since the independent variable (brand name) consisted out of four different categories, dummy variables and accordingly effect coding was used (Aguinis, 2004; Cohen, Cohen, West & Aiken, 2003). Effect coding provides one way of using categorical predictor variables in regression estimation models (Aguinis, 2004), it uses only ones, zeros and minus ones to convey all of the necessary information on group membership of the brand names. Moreover, an increasingly popular method for testing indirect effects of variables is bootstrapping (Bollen & Stine, 1990; Shrout & Bolger, 2002); this study therefore uses the downloaded macros from Preacher and Hayes (2007) since these include bootstrapping. This method is preferred since intervals make no assumptions about the distribution of the indirect effects and, therefore, provide greater accuracy (Edwards & Lambert, 2007). Mediation effects are tested by the Mediation macro and the moderated mediation hypothesis is tested by means of the ModMed macro. The moderated mediation hypothesis provides bootstrapping confidence intervals for the indirect effect of perceived quality & brand experience of a brand name at low (score of 1), average (score of 3.5) and high (score of 7) levels of price consciousness.
4. RESULTS
4.1 Descriptive statistics
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Means, standard deviations and correlations among study variables are shown on the next page in table 5. Only the half / half name correlated negatively with WTB (r= -0.19, p= <.05). The fantasy name is correlated with maximum price (r= 0.22, p= <.05). Furthermore, significant correlations between brand names and mediator variables appear; the fantasy name correlated with perceived quality (r= 0.24, p= <.01) and with the behavioral dimension of the brand experience (r= 0.17, p= <.05). The half / half name correlated with the affective (r= -0.18, p= <.05), behavioral (r= -.21, p= <.05) and intellectual (r= -0.22, p= <.05) brand experience dimensions. Moreover, perceived quality is related towards WTB (r= 0.68, p= <.01) and to correct (r= 0.40, p= <.01) and maximum pricing (r= 0.25, p= <.01). In addition, the brand experience dimensions sensory (r= .49, p= <.01), affective (r=0 .29, p= <.01), behavioral, (r= 0.48, p= <.01) and intellectual (r= 0.55, p= <.01) are related towards WTB. The behavioral and intellectual dimension are correlated towards correct pricing (respectively r= 0.26, p= <.01, r= 0.18, p= <.01). Furthermore, the dependent variables and the mediator variables are mutually correlated.
4.2 Test of hypotheses
To test for possible main and interaction causal effects; multiple regression analyses were conducted based on macros of Preacher and Hayes (2007). As recommended by De Vries and Huisman (2008), data was checked for linearity, homoscedasticity and multicollinearity by analyzing residual scatter plots and by examining the variance inflation factor and tolerance values before regressions could be conducted. Furthermore, the existence of outliers was identified by discrepancy, leverage and influence characteristics (De Vries &
TABLE 4
Effects of brand names on buying behavior
Brand name category WTB WTP
Minimum Correct Maximum
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Note. N = 124. * p< .05. ** p < .01. The brand name categories do not have means and standard deviations since no questions regarding these categories were asked.
TABLE 5
Construct means, standard deviations and correlations among study variables
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Huisman, 2008) but no extreme outliners were identified. Standardized variables were used in testing the hypotheses to diminish multicollinearity (Siero, Huisman & Kiers, 2007). Since dummy variables are used for the four brand names; effect coding is used. To generate a clear overview both the functional and academic names are alternatively used as reference points. The regression tables are divided to have a clear overview. Direct effects of the independent variables on the dependent variables are shown in Appendix E. Appendix F shows the effects of the independents on the mediators and appendix G shows the effects of the mediators on the dependent variables. Moreover, Appendix H shows the indirect effects on WTB, and Appendix I shows the indirect effects on WTP. The last Appendix shows the results of the mediated moderation analyses.
4.3 The mediation effect of perceived quality on willingness to buy (H1a)
Direct effects of the brand names on perceived quality are shown in Appendix F. It can be concluded that only the fantasy name is significantly related towards perceived quality (B = 0.37, p = <0.05). It can be concluded that perceived quality (B = .58, p = <0.01) is positively and significantly related towards WTB. Moreover, based on the mediation macro it can be concluded that only the fantasy name has an indirect effect on WTB through perceived quality (boot z = .25, 95% CI = .059, .484) because only this relationships has bootstrap confidence intervals which do not contain zero, as shown in Appendix H. However, since the inclusion of perceived quality does not drop the relationship between the fantasy name and WTB to zero; a partial mediation effect of perceived quality is concluded. More specifically, perceived quality accounts for some, but not all, of the relationship between the fantasy name and WTB. This means that hypothesis 1a only can be confirmed for the fantasy name.
4.4 The mediation effect of perceived quality on willingness to pay (H1b)
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maximum WTP. In addition, the functional name is negatively related towards both correct and maximum WTP.
4.5 The mediation effect of brand experience on willingness to buy (H2a)
The direct effects of the brand names on the components of brand experience were tested as shown in Appendix F. It can be concluded that no brand name is significantly related to any of the brand experience dimensions. However, as Appendix G shows, the behavioral component is related towards WTB (B = 0.20, p = <0.05). Based on the mediation macro it can be concluded that the fantasy name has an indirect effect on WTB through the behavioral component of the brand experience scale (boot z = .08, 95% CI = .007, .224), as shown in Appendix H. This means that hypothesis 2a only can be confirmed for the fantasy name. 4.6 The mediation effect of brand experience on willingness to pay (H2b)
As Appendix G shows none of the brand experience components are significantly related to minimum, correct or maximum WTP. It is therefore also not surprising that none of the brand names are related towards minimum, correct and maximum WTP through any brand experience mediating. Hypothesis 2b is therefore rejected.
4.7 Mediation conclusions
The above described mediation results are graphically shown in underneath table. Since the academic and half / half names did not result in any significant mediation relationship, these two categories are deleted in table 6.
TABLE 6
Mediation results
Category Dependent Perceived
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4.8 The moderating effect of price consciousness on buying behavior (H3 & H4) Participants scored low on the price consciousness questions (M = 2.85, SD = 1.26 on a scale from 1-7), meaning that participants were not really price conscious. Furthermore, price consciousness was not related towards WTB (B= 0.03, p= .604), minimum (B=-0.27, p= >0.05) correct (B= -.22, p= .387) and maximum (B= 0.08, p= >0.05) WTP.
Moreover, the tables in appendix J show the tests of the moderating role of price consciousness for the conditional indirect relationship between the brand name categories and buying behavior, through both perceived quality (Hypotheses 3a, 3b) and brand experience (Hypotheses 4a, 4b). The moderation effect of price consciousness is only tested on the significant mediation relationships as shown in table 6 on the previous page. For this moderated mediation test model 3 of the downloaded ModMed analysis is used, that specifies that the path from perceived quality and brand experience to WTB and WTP is moderated by price consciousness. However, it can be concluded that no modmed tests is significant, since all tested relationships have bootstrap confidence intervals that do contain zero. Hypotheses 3a, 3b and 4a, 4b are therefore rejected.
4.9 Tests of alternative models
As became clear from the correlation table, the demographics age and income might be correlated to the mediators, moderators and dependent variables. Regressions showed that income and age are directly related towards WTB (respectively B= -.01, p= <.01, B= -.18, p= <.01) but not towards minimum, correct and maximum WTP. Furthermore, age seemed related towards perceived quality (B= -.01, p= <.05)
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5. DISCUSSION
5.1 Findings
Selecting a brand name for a new product is often considered as the centerpiece of marketing campaigns (Keller, Heckler, and Housten, 1998). An effective brand name can enhance the success of the product in financial terms and ineffective brand names, on the other hand, can severely hinder a product’s success (Klink, 2001). The aim of this study was therefore to clarify the effect of brand names on buying behavior of pharmaceutical OTC products through the mediating mechanisms of perceived quality and brand experience. It was expected that the relationship between perceived quality and brand experience on purchase behavior is dependent upon price consciousness. In other words, this research provides answers to the following questions: ‘How do consumers perceive quality and brand experience in response to a brand name of an OTC product?’. Secondly ‘How do perceived quality and brand experience impact willingness to buy and willingness to pay? Lastly, ‘To what extent is the relationship between perceived quality and brand experience and willingness to buy and willingness to pay dependent on price consciousness?’.
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therefore only confirmed for the fantasy brand name. Furthermore, perceived quality also partially mediates the relationship between a fantasy name and correct and maximum WTP. Hypothesis 1B is therefore also only confirmed for the fantasy brand name. This study also showed that a functional brand name is negatively related towards correct and maximum WTP through perceived quality. These results are contradicting with expections. It was proposed that functional names were more effective, since these names convey relevant information about the product or about an important product attribute (Hoyer & Brown, 1990; Keller, 1993; Keller et al. 1998). However, this study showed that fictitious names (i.e. fantasy names) result in higher purchase behavior compared to functional names. Functional brand names even have negative effects on perceived quality and on purchase behavior. This suggests that a functional name might be perceived as the name of a generic product, since consumers doubt the quality of generics compared to branded products (Ganther & Kreling ,2000; Geyskens, Gielens & Gijsbrechts, 2010). Generics are perceived to be riskier than branded products because pharmaceutical firms just copy the product and they do not invest in research and development. Moreover, generics are cheaper to buy compared to branded products and since prices are an indicator of the level of quality; uncertainty about the quality may be increased (Evans, Moutinho & Raaij, 1996).
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since these products remind consumers of imperfect health or it activates negative feelings such as shame.
Another reason for the poor results of the brand experience scale might be because OTC products are low involvement products. Consumers devote only little attention to these purchases; experiences might therefore be induced to a lesser extent. However, as Keller (1993) argues; experiences may be the basis for more elaborative information processing and inference making that result in brand-related associations. Further research about brand experiences of pharmaceuticals is therefore recommended.
Furthermore, this study expected that consumers are highly price conscious among OTC products; however results show that participants do not score high on the price conscious questions in the survey. This might be because consumers were not confronted with different products in the assortment. Price estimations with other products were therefore not accessible and price was therefore no sign to evaluate the product (Chang & Wildt, 1996; Hsee 1996; Nowlis & Simonson, 1997; Rao & Monroe, 1989; Zeithaml, 1988).
Even though price consciousness scores were low, it was expected that the positive effect of high perceived quality on WTB and WTP would be stronger when price consciousness is low, and the positive effective effect of high perceived quality on WTB and WTP would be lower when price consciousness is high (H3a, H3b). The same relationship was expected for brand experience (H4a, H4b). However, H3a, H3b and H4a, H4b are rejected; price conscious does not moderate the relationships of perceived quality and brand experience and WTB and WTP. Another reason for the low and non significant scores on price consciousness might be because participants were unfamiliar with the products. Zeithaml (1988) believes that when consumers become more experienced with a product, the consumer becomes more knowledgeable as to its quality and value. Accordingly, when a consumer better understands the value of the product, they are more sensitive to changes in value which affects buying behavior (e.g. if the price were to increase) (Chang & Wildt, 1994; Reicheld, 1996). Consumers might therefore become more price conscious when they have more experience with and more knowledge about the products.
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5.2 Limitations and future research
Even though the results of this research contribute to the incomplete empirical research on the effects of brand names on buying behavior, the current study is clearly not without limitations. A first limitation concerns the sample size of 132 participants, which is acceptable but it can be improved to increase the generalizability. Since this study was only conducted in the Netherlands, and only the alphabet was used as writing sign, this study is not generalizable to countries in which syllabaries or ideographs are used. Furthermore, the meaning attached to brand names is largely dependent on the cultural values evoked in the specific usage or evaluation situation (Eckhardt & Houston, 2002). This means that results are not applicable in countries such as China, because ideographs are used and cultural values are different. Another issue about the generalization is that only one product with only one name is used; only sore throat pastilles with only one name were used. Future research might include more product categories such as; cold preparations, vitamins, minerals, indigestion preparations, medicated skin products or plasters. And future research should test more different name per brand name category.
Furthermore, although selection of the proper brand name is one of the most vital marketing decisions (Keller, 1993), this research shows that properties examining the effectiveness of brand names is more multifaceted than suggested. Results showed that fantasy names (i.e. non-meaningful names) result in higher purchase behavior compared to functional names (i.e. meaningful names). Indicating that non-meaningful names are more effective than meaningful names. This study therefore does not confirm previous research that argues that meaningful brand names are significantly better evaluated than non-meaningful brand names (Zinkhan & Martin, 1987; Kohli & Suri, 2000; Kohli et al,. 2005). An explanation for this contradicting finding is that, opposed to the possibility that products with a functional name are perceived as generic products, consumers were exposed only one time to the brand name. Keller (2008) argues that brand perceptions are built over time, and branding is therefore an ongoing process (Keller, 2008). Consumers therefore might perceive a brand name different when a name is exposed to them several times. A direction for further research is therefore the execution of longitudinal studies. It is interesting to test the effect of (non) meaningfull brand names when consumers are exposed to a brand name several times.
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descriptors will therefore become more important because fictitious names often need clarification. In addition, more attention will be devoted to logos to help distinguish a brand from competition. Further research about the use of descriptors and logo’s in combination with fantasy names is therefore of interest.
A limitation of this study is that participants did not follow the decision process model from Blackwell, Miniard and Engel (2001) since no real product was bought. Participants did not recognize a problem and participants also did not search for information about the product. WTB and WTP therefore reflect a hypothetical willingness since the commitment does not have financial consequences for participants (Voelckner, 2006). Since intentions do not always predict behavior, it is suggested for further research to use consumers that really are going to buy an OTC product.
Given that the role that brand names play in the pharmaceutical industry is to transform consumer’s attitudes towards the treatment or solution being offered. Brand names therefore need to create a positive association, and, in some cases, a sense of hope (Interbrand, 2011). Further research should therefore explore positive and negative worded versions of the brand experience scale and investigate if and how these experiences affect consumers purchase behavior when buying pharmaceutical OTC products.
Since pricing constitutes ‘one of the most powerful and effective strategic tools (Gauri,Trivedi & Grewal, 2008) because of its direct impact on profitability (Grewal & Compeau, 1999; Han, Gupta & Lehmann, 2001).To make profit maximizing pricing decisions, managers need to be able to estimate the price sensitivity and price consciousness of consumers with price–response functions (Levy et al., 2004). This is important, since this might be translated to a consumer’s WTP; more specifically the maximum price a consumer is willing to pay for a product (Wang, Venkatesh and Chatterjee, 2007). It is therefore interesting for further research to explicitly study the level of price consciousness of consumers when buying OTC products.
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consciousness when they are confronted with many products in an assortment (Hsee 1996; Nowlis & Simonson, 1997).
In addition, this study assumed that consumers place importance on the quality and reliability of OTC products, since these products are about the health of consumers. However, no previous study examined the weight and importance consumers give to quality and reliability perceptions of OTC products. It is therefore interesting to determine how important the quality of pharmaceutical products for consumers is.
Finally, it is important to pay attention to private labels within the pharmaceutical industry. Private label products refer to a brand that is legally owned by a retailer in which the manufacturer does not invest into developing and maintaining consumer preference (De Jong, 2007). These private labels reach the market when patents of new or innovative products expire. This research measured the attitudes from consumers towards private label brands within the pharmaceutical industry, and it can be said that consumers have an interest in buying private labels. They scored high on questions such as ‘considering the value for the money, I prefer the private label brands to national brands’ and ‘buying private label brands makes me feel good’. This might be because private labels have a cheap, simple and low priced image (De Jong, 2007; Steenkamp & DeKimpe, 1997), and because of the economic harsh times, consumers have an increased interest for the price proposition of products (Shama, 1981). This increased price consciousness seems to be a critical factor in the success of private labels (Ailawadi, Neslin & Gedenk, 2001). And since price consciousness is expected to increase further, the importance of private labels must not be underestimated.
6.
