Importance of brand-packaging, price and taste

Transcription

1 The current issue and full text archive of this journal is available at The relative importance of in affecting brand preferences José Luis Méndez, Javier Oubiña and Natalia Rubio Department of Finance and Marketing Research, Business Studies Faculty, Autónoma University of Madrid, Madrid, Spain 1229 Received October 2009 Revised May 2010 Accepted May 2010 Abstract Purpose This paper aims to analyze the relative importance of in the formation of brand preference for manufacturer and store brands in food product categories. Design/methodology/approach The authors first perform a blind taste test of the product using three brands (two manufacturer brands and one store brand) in two categories with differentiated characteristics (cola drinks and olives stuffed with anchovies). They then use conjoint analysis to analyze the influence of the intrinsic cue (taste) and the extrinsic cues (price and brand-packaging) on consumers preference for manufacturer and store brands. Finally, after telling the consumers which taste belongs to each brand, the authors study the influence of the extrinsic cues on the consumers quality evaluations of the real stimuli. Findings The results show that not knowing the brand to which the taste tested belongs, leads consumers in general to order their preferences fundamentally by taste. However, the results differ by product category and consumer segment analyzed. Consumers who evaluate the taste of store brands as better change their preferences more when they know which brand belongs to which taste. Further, the change in preference when consumers know the brand-taste correspondence is clearly greater in the most differentiated category. Research limitations/implications The main limitations of this research derive from the factors conditioning the information. A greater number of categories and attributes would enrich the information. In addition, it would be useful to analyze more than one store brand. Practical implications The results obtained have interesting implications for manufacturers and retailers concerning management of the brands in their product portfolio and management of their relationships in the distribution channel. Originality/value The main contribution of this paper lies in the work methodology used. The paper offers a comprehensive analysis of how the relative importance of price and taste affect brand preference for manufacturer and store brands. The study also contributes evidence on how the consumer s knowledge of the correspondence between brand and taste can change his or her brand preferences, an issue of great interest for manufacturers and distributors in managing their product portfolios. Keywords Store brand, Manufacturer brand, Preferences, Conjoint analysis, Brands, Brand awareness, Drinks, Prices Paper type Research paper The authors wish to acknowledge the financial support of Ministry of Education and Science (research project ref.: ECO /ECON) and Madrid Regional Ministry of Education (research project ref.: S2007/HUM-0413). The authors are listed in alphabetical order because all contributed equally to developing this article. British Food Journal Vol. 113 No. 10, 2011 pp q Emerald Group Publishing Limited X DOI /

2 BFJ 113, Introduction The main problem facing store brands is that they are perceived by consumers as products of lower quality than manufacturer brands and thus have lower purchase loyalty (Corstjens and Lal, 2000). The results of recent research demonstrate, however, that there has been a progressive reduction of the quality differential between manufacturer and store brands (Apelbaum et al., 2003; Davies and Brito, 2004 and Méndez et al., 2008). As shown by the merchandising policy applied to these brands (Fernández and Gómez, 1999; Hoch, 1996), retailers have been devoting increasing effort to marketing their own brands through the presence of these brands in new categories (Dunne and Narasimhan, 1999), through active communication about these brands both inside the establishment and in the communications media (Richardson et al., 1994), and through market segmentation of store brands (Dunne and Narasimhan, 1999; Seok, 2001). An exemplary case is the supermarket Carrefour in Spain, which incorporates store brands Carrefour Selección, Carrefour Calidad y Origen and Carrefour Eco Bio as premium brands, the Carrefour brand as a value brand and the brand 1 as an economy brand. In this context, we attempt to determine:. consumers quality evaluation of manufacturer and store brands based on the intrinsic and extrinsic cues of both brands; and. the relative importance of the intrinsic and extrinsic cues in consumers preferences. Our main contribution lies in the work methodology used: first, we analyze the perceived quality of the brands through a blind taste test of the product; then, we apply conjoint analysis to determine the relative importance of different extrinsic and intrinsic cues on the formation of the consumer s brand preference; finally, we examine the brand quality perceived by the consumer for the real stimuli. In this last stage, the consumer judges the quality of each brand by considering its true taste, price and brand-packaging jointly. More specifically, the paper offers a comprehensive analysis of the relative importance of how affect brand preference for manufacturer and store brands. It also contributes evidence on how the consumer s knowledge of the correspondence between brand and taste can change his or her brand preferences, an issue of great interest for manufacturers and distributors in managing their product portfolios. This study presents the results obtained in an investigation applied to two clearly differentiated product categories (cola drinks and olives) for three kinds of brands (leading manufacturer brand, second leading manufacturer brand and value store brand). It studies the consumer s perception of one intrinsic cue (taste) and two extrinsic cues (brand-packaging and price). Interesting implications for management emerge from the study performed. 2. Literature review: quality perceived by consumers and formation of preferences Consumers use, ordering and evaluation of product attributes provide an initial framework for investigating which factors determine the formation of quality perceived by consumers in brand choice.

3 The first theoretical studies proposed different classifications of these attributes to measure differences in quality between brands. Cox (1967) argues that products can be conceived as arrays of cues and that consumers assign information values to the cues available based on their predictive value PV (the degree to which consumers associate this attribute with the product s quality) and confidence value CV (the confidence that consumers have in their own capacity to use and interpret this attribute effectively as an indicator of quality). Later, Olson (1972) and Olson and Jacoby (1973) classified product attributes as intrinsic and extrinsic to products. Intrinsic cues represent product-related attributes that cannot be manipulated without altering the physical product itself. They include ingredients, taste, freshness, texture, aroma and nutritional value. Conversely, extrinsic cues are product-related attributes that are not part of the physical product itself and that may include price, brand name, advertising, labelling and packaging. There is evidence that extrinsic cues are more easily recognized, integrated and interpreted than intrinsic cues, which are harder to process (Purwar, 1982). Thus, one can assume that consumers assign greater CV to extrinsic cues than to intrinsic cues. It is reasonable to assume, however, that in determining the real quality of packaged goods consumers attribute more importance to intrinsic cues than to extrinsic ones. It is thus realistic to argue that the PV assigned to intrinsic cues is greater than that for extrinsic cues (Richardson et al., 1994). It is accepted that consumers have limited cognitive capabilities and seek efficient means of processing and storing information. Brand names have traditionally been shown to represent many attributes, and there is clear evidence that consumers recognize a brand name as an informational chunk (Jacoby et al., 1977). Brand names recall store information from memory, and this information interacts with the intrinsic cues to produce different results (Bettman and Park, 1980). Researchers have attempted to clarify the relative importance of extrinsic and intrinsic cues in perceived product quality for consumers. Olson (1972) argued that intrinsic cues are more important than extrinsic cues, mostly for utilitarian products such as nylon hose, carpeting and envelopes. Similar analysis of food products has produced contradictory results. Whereas Chung et al. (2006) find that intrinsic attributes are more important, Richardson et al. (1994) conclude the opposite. Holbrook (1986) and De Chernatony and Knox (1990) observe that extrinsic attributes mainly brand name and packaging may be more important than intrinsic cues for products for which image is important. This argument is supported by studies of image-reflective products such as carbonated bottled water, beer and colas (Christopher et al., 1987 and Steenkamp, 1990). Zeithaml (1988) and Steenkamp (1990) incorporate these intrinsic and extrinsic attributes into their definitions of perceived product quality. Zeithaml defines perceived quality as the result of an overall process of evaluation of a product (high-level abstraction) that integrates the information provided by a set of objective attributes of the product and whose importance, as informative inputs in the evaluation process, is given by a set of factors that are situational (situation prior to purchase or act of consumption) and personal (e.g. motivation or experience). These attributes are not perceived in the same way by all consumers. Likewise, Steenkamp (1990) understands perceived product quality as an idiosyncratic value judgment with respect to the fitness for consumption, which is based upon the conscious and/or 1231

4 BFJ 113, unconscious processing of quality cues in relation to relevant quality attributes within the context of significant personal and situational variables. Quality can also be understood in terms of fitness for consumption or satisfaction of needs (Steenkamp, 1990; Kotler et al., 2006). Kotler et al. (2006) define quality as the set of aspects and characteristics of a product and service that maintain a relationship with their capacity to satisfy consumers expressed or latent needs. The American Society for Quality Control integrates the elements of objective and subjective quality into its definition, using Kotler s concept of the term. Several studies have focused on store brands, performing comparative analysis of their quality with manufacturer brands through the evaluation of their intrinsic and extrinsic attributes. On the one hand, Bellizzi et al. (1981) uses a Likert scale to measure consumers perceptions of different intrinsic and extrinsic cues (specifically, design, external appearance, and overall quality measured). They find significant differences in the evaluation of extrinsic cues in favor of manufacturers brands. Cunningham et al. (1982) observe that consumers evaluate both the intrinsic and the extrinsic cues of manufacturer brands more positively. However, Richardson et al. (1994) examine the effect of intrinsic and extrinsic cues on consumer-perceived quality for five product categories and find that the most valued choices have the extrinsic cues of manufacturer brands, independently of their objective quality. On the other hand, the objective quality of manufacturer and store brands based on evaluations by qualified technical experts has been studied by Apelbaum et al. (2003), Davies and Brito (2004), and Méndez et al. (2008). Davies and Brito (2004) obtain data on objective quality for a single product category, liquid dishwashing detergent (based on evaluations performed by the British Consumers Association). They find that in this category the consumer did not pay extra for image only, as the leading brand had a chemical patent that made the product perform better. Méndez et al. (2008) analyze objective quality in 90 categories of food and beverage and 28 categories of home cleaning and personal hygiene products (based on the evaluations performed by OCU Compra Maestra ). They find that only eight (8.9 percent) categories of food and beverage and six (21.4 percent) categories of home cleaning and personal hygiene products showed significant differences in quality between store and manufacturer brands, in favor of the latter. The empirical studies developed from prior theoretical contributions to analyze the quality of manufacturer and store brands have primarily used variance analysis with experimental designs to obtain information. Nevertheless, if we consider quality as the set of aspects and characteristics of a product and service that maintain a relationship with their capacity to satisfy consumers expressed or latent needs (Kotler et al., 2006), variance analysis does not provide information on the intensity with which specific attributes act, or on the role of specific levels of attributes in the formation of consumer preferences. In this study, we propose and apply conjoint analysis as a technique for understanding:. the importance of different attributes; and. the preference for different levels of attributes, both of which are key issues for improving satisfaction of consumers real or latent needs.

5 Conjoint analysis studies the effects of the joint influence of two or more attributes (independent variables) on consumers preferences (dependent variable) by measuring quantitatively the relative importance of some attributes over others. To classify a set of alternatives in order of preference, the consumer must perceive these alternatives individually, not as a whole but as a set of partial attributes or characteristics. We can thus interpret consumers final ranking as the sum of qualities (or perceived utilities) associated with the different properties or levels of the attributes that characterize the brand (Hair et al., 1998). The application of the technique of conjoint analysis to food products is relatively recent. Steenkamp (1987) was one of the first European researchers to apply this technique to evaluate the quality of ham as perceived by Dutch consumers. Steenkamp used the attributes of brand name, packaging, store and price. In the 1990s, we find various studies along these lines, which examine consumers preferences for meat products (Sendim, 1995), wine (Gil and Sánchez, 1997) and eggs (Ness and Gerhardy, 1994), among other products. In the current decade, interesting studies also incorporate the technique of conjoint analysis to evaluate consumer preferences in different food products. To examine Portuguese consumers preferences in cheese, De Souza Monteiro and Ventura Lucas (2001) consider the attributes of price, texture (creamy, partially aged, or fully aged) and size of packaging. Skytte and Blunch (2001) study consumers preferences for fish and cheese products and use the attributes of quality, consistency, traceability, price, promotion, and reputation, among others. For the category of yogurt, Ferjani et al. (2009) measure brand equity using three attributes- brand name, price and flavour. For flavour, they do not use a taste test but instead establish a priori flavours of vanilla, strawberry and banana. The results of their study show the importance of brand value in the formation of consumers preferences for this product. None of the researchers mentioned incorporates a blind taste test of the product to determine the consumer s perception of the intrinsic attributes and to establish the effect of the experience of consumption on consumers evaluation for different brands. The only study we have found that uses conjoint analysis and blind taste test is that of Davies and Brito (2004). These researchers employ conjoint analysis to examine the consumer s preferences for manufacturer and store brands, analyzing the attributes of brand, taste and price. Their study performs blind taste tests on consumers using four categories of food products. Although most of the consumers in the sample claimed that they usually bought the manufacturer brand in the product categories analyzed (margarine, breakfast cereal, crackers and mayonnaise), only a small proportion of these consumers actually chose the manufacturer brand in the blind taste test of the product. Further, very few of those who chose the manufacturer brand continued to do so once they knew its price of sale to the public. These results show that brand image is often the only explanation for the higher prices consumers pay to acquire manufacturer brands. Our research follows Davies and Brito (2004) in using conjoint analysis and in incorporating attributes of price, taste and brand. However, their study differs from ours, among other issues, in that ours:. considers brand as linked to packaging (binomial brand-packaging); and. uses presentation of full profile stimuli instead of trade-off presentation. We describe the research methodology in the following section. 1233

6 BFJ 113, Methodology 3.1 Techniques of analysis applied This study uses the technique of conjoint analysis to examine consumers preferences for two product categories (cola drinks and olives stuffed with anchovies). To understand the existence of market segments with homogeneous preferences, we applied a TwoStep cluster analysis to the estimations of utility obtained in the conjoint analysis for each individual. 3.2 Phases of analysis Obtaining information to understand consumer preferences is developed in three phases, first for the category of cola drinks and second for the category of olives stuffed with anchovies. In the first phase, the consumer is asked to evaluate the perceived quality of the taste of three brands through a blind taste test. Quality was measured on a scale with a range of seven points, where the value 1 corresponded to very poor quality and 7 to very good quality. The taste of each brand in the category was presented to the consumer as Taste 1, Taste 2 or Taste 3. The environmental conditions of light, temperature, etc. were the same for all consumers. After the consumers had evaluated the taste of each brand in both categories, we performed the second phase, which consisted of the application of conjoint analysis. Table I shows the attributes and levels considered in the conjoint analysis. The attributes were taste as an intrinsic cue and brand-packaging and price as extrinsic cues. The levels for the attribute taste were presented to the consumer as Taste 1, Taste 2 and Taste 3. These correspond to the taste tested in Phase 1. For we considered two manufacturer brands the leading brand and the second leading brand and one store brand (belonging to Carrefour). The consumer was shown brand-packaging for the product, including the name of the brand, symbols and colouring, but not information about the composition of the product. Finally, the values of the prices were average actual (non-promotional prices) prices for the brands used, applied by Carrefour stores in Spain s capital city, Madrid[1]. We chose presentation of full profile stimuli[2] instead of trade-off presentation, because consumers usually evaluate jointly combinations of more than two attributes to form their preferences. The full profile presentation avoids the loss of realism Cola drinks Stuffed olives Table I. Attributes and levels considered in the conjoint analysis Taste Taste 1 Gold El Serpis Taste 2 Pepsi Cola Carrefour Taste 3 Coca Cola La Española Price Leading manufacturer brand (Coca Cola/La Española) 0.37e 0.73e Second Leading manufacturer brand (Pepsi Cola/El Serpis) 0.32e 0.92e Store brand (Gold/Carrefour) 0.16e 0.52e Brand-packaging Coca Cola La Española Pepsi Cola El Serpis Gold (Carrefour) Carrefour

7 involved in showing only two attributes per card and thus gives the results greater predictive validity. We also applied an orthogonal procedure (Orthoplan available on SPSS, version 17.0) to the initial (3 3 3 ¼ 27) hypothetical products to reduce them to nine product concepts. We used a complementary set of stimuli (four holdout cards) to evaluate the model s reliability[3]. The consumers were asked to order the cards according to their preferences. The conjoint analysis was performed using the following models to relate the data on preferences to the factors: for the attributes taste and we used the discrete model because it reflects the definition of these attributes (discrete). For the attribute price, we used the linear model, which obtained a better fit. After consumers had ordered the cards in the conjoint analysis, we began the third phase. In this phase, we told consumers which taste belonged to each brand. We then asked them to evaluate the overall quality of the three cards that contained the REAL information on each brand tested, using a scale with a range of seven points (1 very poor quality 7 very good quality). Each card presented one its taste and its price. The software package used in the data treatment was SPSS Qualitative research: selection of categories and commercial chain To select the product categories and commercial chain for analysis, we performed 20 in-depth interviews of consumers who did not subsequently participate in the quantitative research. We chose the categories of cola drinks and anchovies stuffed with olives because they represent categories that are familiar to consumers and they are characterized by social consumption. These categories have different brand detectability in social consumption and different brand differentiation among the brands that make up the category. The category of cola drinks involves social consumption and a manufacturer brand with strong leadership (we confirmed that, according to Alimarket[4], in Spain in 2008 the leading manufacturer brand, Coca Cola, had a market share of 84.6 percent; the second leading manufacturer brand, Pepsi Cola, a share of 8.1 percent; and all store brands taken together a share of 6.3 percent). In contrast, different manufacturer brands of olives stuffed with anchovies have moderate leadership (we confirmed that in 2008 the leading manufacturer brand, La Española, had a market participation of 21.9 percent, the second leading manufacturer brand, El Serpis, a participation of 4.1 percent and all store brands taken together a participation of 67.3 percent). Consumption of olives has also social dimension, but, unlike cola drinks, the consumer does not see the brand. We chose Carrefour and its store brand, because both the chain and the store brand have great brand recognition for the consumers interviewed. This commercial chain has a substantial presence in the city of Madrid, with five hypermarkets, eight supermarkets and ten convenience stores. 3.4 Quantitative research: sample and field work The criterion used for the sample unit selection in the quantitative research was that the person participating in the study habitually did his or her shopping in Carrefour. Shoppers were recruited at all stores of the chain in the city of Madrid, that is, in the 1235

8 BFJ 113, five Carrefour hypermarkets, the eight Carrefour Express supermarkets and the ten convenience stores, Carrefour city. The shoppers were chosen through a stratified process according to sex (70 percent females, 30 percent males) and occupation (70 percent working, 30 percent not working). We first chose 350 shoppers from the 23 Carrefour establishments operating in the city of Madrid. The interviewers were graduate-level marketing students trained in how to approach shoppers with the characteristics of the study. The interviewers explained the broad outlines of the research to the shoppers (that it consisted of tasting and evaluating brands in some of the categories that they marked on a list). The shoppers chosen had to mark the categories they purchased and consumed regularly on a list of 15 product categories. They were asked for their telephone number so that we could contact them to participate in the study. After one week, the marketing graduate students contacted the consumers who had marked the categories of cola drinks and olives stuffed with anchovies (220). Of the shoppers contacted, 130 participated in the study. However, only 93 shoppers contributed valid information for both product categories, a slightly high sample error for each category, ^10.37 percent with a confidence level of 95.5 percent. For the sample size achieved, the statistical power is 90 percent, higher than the minimum recommended level of 80 percent, for significance levels of 0.05 and moderate effects size (Hair et al., 1998). To obtain the information (from the blind taste test, the conjoint analysis and the evaluation of the stimuli with the real information), we performed the study in an air-conditioned room in which the environmental conditions of light, temperature, etc. were the same for all consumers. We began by asking for information about the category of cola drinks. The fieldwork for this category was performed over 13 days, during which we obtained information from a maximum of ten shoppers per day. For this category, we obtained valid information from 100 shoppers, who were subsequently contacted to perform the study in the category of stuffed olives. The fieldwork for this category was performed in the same way as it was for cola drinks, although we obtained valid information from only 93 shoppers for this category. Thus, 93 shoppers contributed valid information for both product categories, cola drinks and stuffed olives, a total of 186 preferences. 70 percent of the respondents were female, and 75 percent were employed. The average education level was secondary school and the median age category The median monthly household income was between Euros and the average number of members of the household was three. 4. Results 4.1 Results of conjoint analysis Results for the whole sample. Tables II and III show the results of the conjoint analysis for the sample of consumers in the categories of cola drinks and stuffed olives. The values for measures of goodness of fit for the sample (Pearson s R and Kendall Tau parameters) show the high precision of the model, not only for the original stimuli but also for the validation stimuli. They have a value of 1 or nearly 1 and are statistically significant with a confidence level of 95 percent. This result implies that the estimated ordering of the stimuli presented corresponds faithfully to the real structure of preferences in the two product categories composing the sample analyzed. The stimulus most valued in both categories analyzed is taste, before price and the binomial brand-packaging. However, price is more important than brand-packaging

9 Cola drinks (Total): 93 consumers Coca Cola Pepsi Gold Attributes Importance (%) Coefficient se Utility se Utility se Utility se Brand-packaging Taste Price Constant Notes: Pearson s R 0.99 *** ; Kendall s Tau 1.00 *** ; Kendall s Tau 4 holdout 1.00 ** ; se standard error; ( *, **, *** level of statistical significance of 0.10, 0.05 and 0.01 respectively); a In performing the conjoint analysis with the program SPSS 17.0, we used the subcommand Subject. This subcommand averages the values for importance of the individual subjects. These averages do not generally agree with those calculated in the summary of utilities obtained 1237 Table II. Results of conjoint analysis for the sample a Olives stuffed with anchovies (Total): 93 consumers La Española El Serpis Carrefour Attributes Importance (%) Coefficient se Utility se Utility se Utility se Brand-packaging Taste Price Constant Notes: Pearson s R 0.99 *** ; Kendall s Tau 0.87 *** ; Kendall s Tau 4 holdout 1.00 ** ; se standard error; *, **, *** level of statistical significance of 0.10, 0.05 and 0.01 respectively; a In performing the conjoint analysis with the program SPSS 17.0, we used the subcommand Subject. This subcommand averages the values for importance of the individual subjects. These averages do not generally agree with those calculated in the summary of utilities obtained Table III. Results of conjoint analysis for the sample a for stuffed olives (28.46 v ), whereas brand-packaging is more important than price for cola drinks (37.33 v ). Interestingly, in both categories only one of the brands showed positive utilities for taste: Coca Cola for cola drinks and El Serpis for stuffed olives. In contrast, brand-packaging has positive utilities in both categories of the manufacturer brands. The only negative utilities are for store brands, in taste and brand-packaging. Store brands are only evaluated more favorably than manufacturer brands in price. With cola drinks, the preferred taste and brand-packaging are those of the leading brand, Coca Cola. For stuffed olives, however, consumers preferred the taste of the second leading brand, El Serpis, while they preferred the brand-packaging of the leading brand, La Española. The difference between the manufacturer and store brands in the range of variation of the utilities assigned to taste and brand packaging is also interesting for each of the categories analyzed. In the case of taste, the maximum range of variation (difference between the highest and the lowest value of the brands analyzed) is 1.34 for cola drinks and 0.64 for stuffed olives; that is, based on the attributes of their experience in consumption, consumers evaluate the manufacturer brand better in differentiated categories than in generic categories.

10 BFJ 113, In the case of the difference is even greater. The maximum range of variation is 2.68 for cola drinks and 1.02 for stuffed olives. As we might expect, the variation occurs between the leading brand and the store brand and takes a much greater value in the differentiated than in the generic category. Results for the segments. We analyzed the utilities obtained for each individual in both product categories to identify possible market segments according to their preferences by applying TwoStep cluster analysis. The results obtained with TwoStep cluster analysis were validated with those obtained using Ward s method. Both procedures provide nearly identical results. We then applied conjoint analysis to each segment. Tables IV-IX show the results of the conjoint analysis performed on the market segments obtained. The values for measures of goodness of fit for the segments Segment 1: Consumers guided by intrinsic cues who prefer the store brand (31 consumers) Coca Cola Pepsi Gold Attributes Importance (%) Coefficient se Utility se Utility se Utility se Table IV. Results of conjoint analysis for the segments in cola drinks Brand-packaging Taste Price Constant Notes: Pearson s R 0.99 *** ; Kendall s Tau *** ; Kendall s Tau 4 holdout 1.00 ** ; se standard error; ( *, **, *** level of statistical significance 0.10, 0.05 and 0.01 respectively) Segment 2: Brand consumers (37 consumers) Coca Cola Pepsi Gold Attributes Importance (%) Coefficient se Utility se Utility se Utility se Table V. Results of conjoint analysis for the segments in cola drinks Brand-packaging Taste Price Constant Notes: Pearson s R 0.99 *** ; Kendall s Tau 0.94 *** ; Kendall s Tau 4 holdout 1.00 ** ; se standard error; ( *, **, *** level of statistical significance 0.10, 0.05 and 0.01 respectively) Segment 3: Consumers guided by intrinsic cues who prefer the leading brand (25 consumers) Coca Cola Pepsi Gold Attributes Importance (%) Coefficient se Utility se Utility se Utility se Table VI. Results of conjoint analysis for the segments in cola drinks Brand-packaging Taste Price Constant Notes: Pearson s R 0.99 *** ; Kendall s Tau 0.93 *** ; Kendall s Tau 4 holdout 0.91 ** ; se standard error; ( *, **, *** level of statistical significance 0.10, 0.05 and 0.01 respectively)

11 (Pearson s R and Kendall Tau parameters) are high and significant for the original stimuli and for the validation stimuli. In the category of cola drinks, we distinguish three segments[5]. Segment 1 is defined as consumers guided by intrinsic cues who prefer the store brand. These consumers establish preferences based primarily on taste. The store brand and Coca Cola are the two brands with positive utilities in this respect, although the value for the store brand is considerably greater. Segment 3 is composed of consumers guided by intrinsic cues who prefer the leading brand and who also determine their preferences based on taste. However, the alternatives with positive utilities are the manufacturer brands, and the leading brand Coca Cola has a considerably higher value. Segment 2 is composed of brand consumers. These consumers focus their preference on brand-packaging and choose the leading brand Coca Cola or, in its absence, the second leading brand Pepsi Segment 1: Consumers guided by intrinsic cues and brand-packaging (43 consumers) La Española El Serpis Carrefour Attributes Importance (%) Coefficient se Utility se Utility se Utility se Brand-packaging Taste Price Constant Notes: Pearson s R 0.99 *** ; Kendall s Tau 0.94 *** ; Kendall s Tau 4 holdout 0.87 ** ; se standard error; ( *, **, *** level of statistical significance 0.10, 0.05 and 0.01 respectively) Table VII. Results of conjoint analysis for the segments in stuffed olives Segment 2: Consumers guided by intrinsic cues (35 consumers) La Española El Serpis Carrefour Attributes Importance (%) Coefficient se Utility se Utility se Utility se Brand-packaging Taste Price Constant Notes: Pearson s R 0.98 *** ; Kendall s Tau 0.94 *** ; Kendall s Tau 4 holdout 0.87 ** ; se standard error; ( *, **, *** level of statistical significance 0.10, 0.05 and 0.01 respectively) Table VIII. Results of conjoint analysis for the segments in stuffed olives Segment 3: Price conscious consumers (15 consumers) La Española El Serpis Carrefour Attributes Importance (%) Coefficient se Utility se Utility se Utility se Brand-packaging Taste Price Constant Notes: Pearson s R 0.99 *** ; Kendall s Tau 1.00 *** ; Kendall s Tau 4 holdout 0.87 ** ; se standard error; ( *, **, *** level of statistical significance 0.10, 0.05 and 0.01 respectively) Table IX. Results of conjoint analysis for the segments in stuffed olives

12 BFJ 113, For the category of stuffed olives, Segment 1 is composed of consumers guided by intrinsic cues and brand-packaging. These consumers grant greater importance to taste (44 percent). For them, the store brand has the highest positive utility, followed by the leading brand. These consumers also grant relatively high importance to brand-packaging (34 percent). The leading brand is the most valued brand, and store brands show negative utility. Segment 2 is defined as consumers guided by intrinsic cues. These consumers show markedly higher preference for taste and value the second leading brand, El Serpis, highest. Segment 3 is composed of price conscious consumers. These consumers prefer store brands. 4.2 Results compared: taste test, utility of stimuli in the conjoint analysis and evaluation of the stimuli with the real information To observe how different intrinsic and extrinsic cues affect the formation of preferences, we analyzed three different aspects of consumers evaluations, according to the phases of the research explained in the methodology section. The first aspect is the evaluation of taste quality in each of the brands of cola drinks and stuffed olives through a blind taste test of the product. The second is the estimated utility value of the real stimuli of, based on the results of the conjoint analysis. The third and final aspect is the consumers quality evaluation of the real stimuli of, once the consumer is informed of the brand-taste correspondence. Results for the whole sample. Table X shows the results obtained for each product category. Cola drinks Mean SD Stuffed olives Mean SD Table X. Comparative analysis for sample: taste test, utility of the stimuli in the conjoint analysis, and evaluation of the stimuli with the real information Blind taste test of the product (values from 1 very poor quality to 7 very good quality) Blind taste test of the product (values from 1 very poor quality to 7 very good quality) Taste of Coca Cola Taste of La Española Taste of Pepsi Taste of El Serpis Taste of Gold Taste of Carrefour Preferences estimated for the real stimuli (utility values) Preferences estimated for the real stimuli (utility values) for Coca Cola (SIMULATION) for La Española (SIMULATION) for Pepsi (SIMULATION) for Gold (SIMULATION) for El Serpis (SIMULATION) for Carrefour (SIMULACIÓN) Overall quality for the real stimuli (values from 1 very poor quality to 7 very good quality) Overall quality for the real stimuli (values from 1 very poor quality to 7 very good quality) for Coca Cola for La Española for Pepsi for El Serpis for Gold for Carrefour Note: SD standard deviation

13 Regarding blind taste test of the product, the store brand receives the lowest evaluation in both categories (3.65 for cola drinks and 4.43 for stuffed olives). Although consumers evaluate the leading brand of cola drinks highest, they prefer the second leading brand of stuffed olives. The range of evaluation of taste quality is much greater for cola drinks (a difference of 1.36) than for stuffed olives (a difference of 0.39). For cola drinks, the taste quality evaluation for Coca Cola is clearly higher than that of the other two choices, which receive similar values. In contrast, all three brands of stuffed olives receive similar taste quality evaluations. When we compare the results of the estimated utility of the real stimuli and the quality evaluation of the real stimuli, we find a clear influence of extrinsic cues on consumers preferences. For cola drinks, the second leading brand (Pepsi) and the store brand (Gold) clearly differ in the estimated utility and in the quality evaluation (even though they were evaluated as similar in the blind taste test of the product). We see a clear preference for Coca Cola, followed by Pepsi and finally by Gold. Gold is the only brand assigned a value lower than 4 (mean value of the scale). For stuffed olives, the results of conjoint analysis reveal similar utility for the leading brand and the store brand. However, consumers relegate the store brand to last place once they know which taste belongs to which brand. Results for the segments. We performed a variance analysis to evaluate the existence of statistically significant differences between the segments in the three aspects discussed (blind taste test, estimated utility of the real stimuli and quality evaluation of the real stimuli). Tables XI and XII shows the results in the segments identified. The segments differ significantly according to the evaluations obtained for the blind taste test of the product, the estimated utility of the real stimuli, and the quality evaluation of the real stimuli. For cola drinks, we can see statistically significant differences in the blind taste test of the product for the leading brand, Coca Cola, and the store brand, Gold. Segment 1, consumers guided by intrinsic cues who prefer store brand, assigns the highest value for quality to the taste of the store brand. This is the only segment that values the taste of the store brand as above average. Segment 3, consumers guided by intrinsic cues who prefer the leading brand, assigns a value considerably higher than that of other segments to the taste of Coca Cola. When consumers order all of the stimuli presented after the blind taste test, Segments 1 and 3 give priority to the product s taste over price and brand-packaging. Segment 1, consumers guided by intrinsic cues who prefer the store brand, assigns the store brand, Gold, comparatively higher preferences. Although these consumers prefer the taste of Gold only slightly over that of Coca Cola in the blind taste test, the relative importance granted to price (23.7 percent) implies that they prefer the store brand considerably more than Coca Cola in the conjoint analysis. Coca Cola shows comparatively higher preferences for Segment 3, consumers guided by intrinsic cues who prefer the leading brand, and for Segment 2, brand consumers. As to the value obtained for the quality evaluation of the real stimuli, Coca Cola is primarily valued by Segments 2 brand consumers and 3 consumers guided by intrinsic cues who prefer the leading brand. For both segments, the results obtained agree with the preferences obtained in the conjoint analysis. In contrast, for Segment 1, consumers guided by intrinsic cues who prefer the store brand, the quality evaluation 1241

14 BFJ 113, Table XI. Comparative analysis for segments in cola drinks: taste test, utility of the stimuli in the conjoint analysis, and evaluation of the stimuli with the real information INTRINSIC þ LEADING BRAND PREFERENCE Segment 1 Segment 2 Segment 3 INTRINSIC þ STORE BRAND PREFERENCE BRAND Cola drinks Mean SD Mean SD Mean SD F-Snedecor Blind taste test of the product (values from 1 very poor quality to 7 very good quality Taste of Coca Cola * Taste of Pepsi Taste of Gold * Preferences estimated for the real stimuli (utility values) for Coca Cola (SIMULATION) * for Pepsi (SIMULATION) * for Gold (SIMULATION) * Overall quality for the real stimuli (values from 1 very poor quality to 7 very good quality) for Coca Cola * for Pepsi for Gold * Notes: * Level of statistical significance of 0.01; SD standard deviation

15 Segment 1 Segment 2 Segment 3 INTRINSIC þ BRAND INTRINSIC PRICE Stuffed olives Mean SD Mean SD Mean SD F-Snedecor Blind taste test of the product (values from 1 very poor quality to 7 very good quality) Taste of La Española Taste of El Serpis *** Taste of Carrefour *** Preferences estimated for the real stimuli (utility values) for La Española (SIMULATION) *** for El Serpis (SIMULATION) *** for Carrefour (SIMULACIÓN) *** Overall quality for the real stimuli (values from 1 very poor quality to 7 very good quality) for La Española * for El Serpis *** for Carrefour ** Note: Level of statistical significance of * 0.10; ** 0.05; *** 0.01; SD standard deviation 1243 Table XII. Comparative analysis for segments in stuffed olives: taste test, utility of the stimuli in the conjoint analysis, and evaluation of the stimuli with the real information

16 BFJ 113, for the real stimuli differs from the taste evaluation and from the preferences estimated in the conjoint analysis. In the conjoint analysis, this segment chooses the store brand for its quality of taste as well as its price. Yet when consumers in this segment know the brands of the tastes tested, they assign the store brand the lowest quality evaluation. Specifically, Gold obtains a value slightly lower than 4 (mean value of the scale), while the manufacturer brands Coca Cola and Pepsi obtain similar values above the mean value of the scale. This result shows the importance of the detectability of brand in quality evaluations for product categories with highly recognized brands. For stuffed olives, the results of the blind taste test of the product show significant differences in the second leading brand, El Serpis, and the store brand, Carrefour. Consumers in Segment 2, consumers guided by intrinsic cues prefer the taste of El Serpis significantly more, finding it to be quite good. This segment assigns a considerably higher value to the taste of El Serpis than to the other two brands. Segment 3, price conscious consumers, finds the taste of Carrefour significantly better, in fact quite good, but the value that this group assigns to the taste of Carrefour is only slightly higher than that assigned to the manufacturer brands. In the conjoint analysis, Segment 2, consumers guided by intrinsic cues clearly chooses El Serpis due to the importance these consumers give to taste. Segment 3, price conscious consumers, chooses Carrefour for price. Segment 1, consumers guided by intrinsic cues and brand packaging who evaluate the taste of the leading brand, La Española, and the store brand, Carrefour, as very similar, showing similar estimated utilities for both brands. We must remember that for this segment the importance of taste is 45 percent, but that of brand-packaging is also relatively high, at 34 percent. When the consumers learn the brands of the tastes tested, the quality evaluation of the real stimuli varies in some cases, specifically in Segments 1 and 3. In Segment 1, consumers guided by intrinsic cues and brand-packaging, brand-packaging clearly influences quality evaluations. The results of the conjoint analysis show a definite preference for Carrefour and La Española, a result that agrees with the point values given to the tastes of these brands and the importance granted to the attribute of taste. Once the brands of the preferred tastes are known, however, consumers do not clearly prefer any of the three stimuli but assign all three nearly identical values. In Segment 3, price conscious consumers, price-brand interaction clearly influences quality evaluations. Consumers perceive a similar taste for the three brands and initially form their preferences based on price. However, when they know that the leading brand is not the highest priced, they give this brand the highest quality evaluation, followed by the store brand. 5. Conclusions and implications for marketing strategy This paper proposes an approach to determining consumer preference formation according to consumers choice of manufacturer and store brands. To establish what aspects of a product influence preference, we perform a conjoint analysis with a full profile presentation of stimuli. We have seen in the categories analyzed that attributes of experience play a major role in consumer preference structure after consumption. In general, once a product has been consumed, taste is the strongest attribute determining the choice of the preferred stimulus, but price and brand-packaging also affect the consumer preference structure greatly. The results obtained in this research

17 show that the influence of price and brand-packaging are specific to the product category analyzed, based on its degree of differentiation. The influence of brand-packaging occurs in the most differentiated category, whereas the effect of price is greater in the generic category. It is also important to point out that the product with the best evaluation for brand-packaging does not always receive the highest taste evaluation. The agreement between taste and brand-packaging occurs in the most differentiated category. Further, we see high negative utility in taste and brand-packaging for store brands in both categories analyzed. Only in price do store brands achieve their competitive advantage. On the cola market, the leading brand maintains its leadership in both taste and brand-packaging. The consumer preferences expressed for taste are considerably affected by brand-packaging. Consumers resolve similar preference for taste in two brands, one a manufacturer brand and the other a store brand, in favor of the well-known manufacturer brand. Consumers make this choice because they have a high degree of knowledge of this category due to the social character of its consumption and the existence of two very well-known manufacturer brands that continually update their packaging design. The results obtained in this category show noticeable differences for the consumer segments identified. The consumer segments who prefer the leading brand, whether for its taste (Segment 3) or for its brand-packaging (Segment 2), value the overall quality of manufacturer brands consistently in their estimated preferences. However, those who prefer the store brand s taste (Segment 1) change their preference structure entirely when they know that the preferred taste corresponds to the store brand. This segment, which represents 33.3 percent of the sample, relegates store brands to last place in the overall quality evaluation. The fact that a highly differentiated category has a consumer segment that prefers the store brand taste when it does not know the extrinsic cues is interesting for store brand management in these categories. Store brands should make a significant marketing effort in highly differentiated categories to strengthen their image and generate brand equity and hence consumer confidence. Only so can they take advantage of their product s having similar quality in its intrinsic attributes and thus compete with manufacturer brands in specific segments. Some store brands on the Spanish market, such as that of the retailer Mercadona, generate a high degree of consumer satisfaction. Consumers trust the quality of Mercadona s store brands and inform other consumers of their advantages over manufacturer brands. This fact favors store brand loyalty, which encourages rather than discourages establishment loyalty. For stuffed olives, the preferences are less pronounced. Price affects consumer preference to a greater extent than and store brands are better accepted. This category has a low level of differentiation and lower consumption, and one does not usually detect the brand in social consumption. In this category, the consumer segment (Segment 2) that shows clear preferences for the second manufacturer brand, El Serpis, based on taste assigns values of overall quality and estimated preferences in the conjoint analysis that are consistent with the preferences declared on the blind taste test. Brand-packaging and price mainly affect the consumer segments that assign higher values to the store brand on the blind taste 1245