Philanthropic Corporate Social Responsibility (CSR), Product Performance, and Emotion in Fuel Advertisement: A Research Agenda

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1 2013 2nd International Conference on Education Reform and Management Innovation Philanthropic Corporate Social Responsibility (CSR), Product Performance, and Emotion in Fuel Advertisement: A Research Agenda Mohamad Hazwan Zaharudin a, Zuraidah Sulaiman b,* Norhayati Zakuan c Department of Business Administration, Faculty of Management, Universiti Teknologi Malaysia (UTM), Skudai, Johor, Malaysia a haznvc@gmail.com, b zuraidahs@utm.my, c norhayatimz@utm.my Keywords: Advertisement, Corporate social responsibility (CSR), Philanthropic responsibility, Product performance, Emotion, Fuel, Purchase intention Abstract. The purpose of this study is to investigate the effect of corporate social responsibility (CSR) in advertising on consumer s fuel purchase intention. This research will study the relationship between independent variables (company s philanthropic responsibility, emotion, and product performance) and the dependent variable (purchase intention). The research designs of this study are descriptive research (survey) and causal research (experiment). A questionnaire will be used to obtain the data for this research. The questionnaire will be distributed to respondents that have the chance to use fuel now as well as in the future, as this research will investigate the effect of the advertising on consumers future purchase intention. 1. Introduction Nowadays, a lot of large companies place importance on corporate social responsibility (CSR) to build a better image of their company. Since this strategy has become more important, a lot of companies try to create advertising based on CSR to persuade their target customers to buy their products. [1] states that before making any buying decisions for products and services, Malaysians will consider the CSR first. This shows that the CSR created by a company will give benefits to the community. According to [1], philanthropy responsibility is an act to respond to societal expectations of good corporate citizens. This philanthropy responsibility is created to build a strong relationship between the organisation and the community through charity, education, and social activities. This research will study the effect of CSR on the oil and gas industry. The oil industry is often linked to environmental and human rights scandals around the globe. This shows that the oil and gas industry must actively participate in CSR to show their responsibility to the community and human rights. Good CSR applied in advertising will make the customers think that they can help the community by buying the company s products. Philanthropy responsibility is the most widely known form of CSR that has been applied by many companies. In Malaysia, the oil and gas industry leader PETRONAS has applied this CSR as their action towards improving the life of citizens. According to [10], consumers may be motivated to respond to CSR marketing appeals by economic motivations, social norms that encourage charitable behaviour, or enduring values which have been internalised, and this has the potential to have a positive effect on customer behaviour. 1.1 Research objectives Outlined below are the research objectives. This study has three main objectives: 1. To identify the effect of CSR (philanthropy responsibility) in advertising on fuel purchase intention of PETRONAS and Shell customers /10/$ IERI ERMI

2. To investigate the effects of other factors than CSR, such as product performance and emotion, in advertising on fuel purchase intention of PETRONAS and Shell customers. 3.

Based on previous studies, the hypotheses and research framework have been formulated. Fig.1 illustrates the hypothesised relationships in the research framework.

H2 There is a relationship between product performance and customer purchase intention of Shell and PETRONAS fuel.

H4 Overall, there are differences between Shell and PETRONAS consumers on fuel purchase intentions, where the independent variables are concerned. 1.

1 Philanthropy responsibility This research will focus on one of the important elements in CSR. In Malaysia, CSR became a way for many companies to serve the community.

2 2. To investigate the effects of other factors than CSR, such as product performance and emotion, in advertising on fuel purchase intention of PETRONAS and Shell customers. 3. To determine the differences in fuel purchase intention of PETRONAS and Shell customers. 1.2 Research hypotheses and framework The research hypotheses are the specific focus in this study. Based on previous studies, the hypotheses and research framework have been formulated. Fig.1 illustrates the hypothesised relationships in the research framework. H1 There is a relationship between philanthropic CSR responsibility in advertising and customer purchase intention of Shell and PETRONAS fuel. H2 There is a relationship between product performance and customer purchase intention of Shell and PETRONAS fuel. H3 There is a relationship between emotional appeal in advertising and customer purchase intention of Shell and PETRONAS fuel. H4 Overall, there are differences between Shell and PETRONAS consumers on fuel purchase intentions, where the independent variables are concerned. 1.3 Research framework Independent variables Dependent variable H1 H2 H3 H4 Fig. 1. Research Framework 2. Literature review 2.1 Philanthropy responsibility This research will focus on one of the important elements in CSR. In Malaysia, CSR became a way for many companies to serve the community. [1] refers to philanthropy responsibility as corporate actions that are in response to society s expectations of good corporate citizens. In other words, philanthropy responsibility can be defined as the company s behavior to bring added value to citizens lives. By carrying out this philanthropy responsibility, the company will gain benefits from these actions, because, according to [12], philanthropy responsibility does not bring economic returns directly to the company, but in the long term it can build a positive company reputation, legitimacy and employee loyalty. A lot of research has been done to investigate the influence of CSR on 304

3 customer purchase intention. [11] stated that in the US, CSR affects customer purchase intention and improves the customers perceptions towards the company s products. This research showed that there is a positive relationship between CSR by the company and customer purchase intention. Based on the arguments above, this research will investigate the relationship between philanthropic responsibility and purchase intention of consumers. 2.2 Product performance Product performance is one of the variables that will be used to investigate the effect of advertising on customer purchase intention of oil and gas products. Usually, a product s performance is evaluated by customers that have already used or experienced the product themselves. Based on [6], customers need to have a standard against which to determine the performance of the product. Therefore, in order to evaluate the product s performance, the customers need to be familiar with using the product; this is to ensure that the product evaluation by the users is correct. On the other hand, [6] said consumers need to have proper information in order to evaluate the performance of the product; this is because the experience and knowledge of the product is an important criteria of how consumers will evaluate the performance of the product. Besides that, the company s reputation is a very important factor to ensure that the customers believe in the company s product; the company s reputation is important because it reflects how a given firm compares to its competitors. With the review above, this study will investigate the relationship between product performance and consumer purchase intention. 2.3 Emotion Generally, emotion is the feeling experienced by a person. Emotion can be explained as a conscious experience that includes a state of physiological arousal and mediating interpretation. There are a lot of examples of emotion that is felt by humans; [2] states that emotion can be in the form of anger, fear, sadness, shame, contentment or happiness. There has been a lot of research about how emotions can affect customer purchase intention. [3] was one of the first to investigate consumer emotional responses to product/consumption experiences and their relationship to several central aspects of post purchase processes. Moreover, [4] found that emotions can have a positive or negative effect on customer behavior. According to [5], the emotion of the customer will lead to the purchase intention response of the customer. This is supported by research done by [2], who found that consumer emotions play a major role in purchasing behaviour, evaluation, and the decision-making processes. In response to the information above, this research will study the relationship between emotion and purchase intention of consumers. 2.4 Purchase Intention Based on the information in [13], purchase intention can be defined as a plan to purchase a particular good or service in the future. Other researchers, such as [7], suggest that more research needs to be done about how customers make their decision to choose between the same types of products. This situation occurs because today, a lot of companies that produce similar products compete against each other to expand their market share, so, to win in this situation, the company needs to know what the best factor is that will lead to customers purchase intention towards their product. According to [9], media advertising has little or no short-term impact on consumers brand choice behaviors. Based on this, it can be said that media advertising should focus on the long-term impact on consumers and their purchase intention. The study done by [8] proved that the appeals or themes used in advertising have an effect on consumer behaviors, such as on their purchase intention. Based on the arguments above, this research will investigate the relationship between philanthropic responsibility, product performance, and emotion in advertising on consumer purchase intention. 305

4 3. Methodology 3.1 Population and sample In this research, the population to be selected is fuel consumers in Malaysia. This is because the research is investigating the effects of philanthropic responsibility in advertising on consumers fuel purchase intentions. This research will use PETRONAS and Shell, as both of these companies are leading companies in the oil and gas industry and sell fuel to Malaysian citizens. Due to this, it is suitable for this research to use fuel consumers in Malaysia as our population to investigate the research. The sample size in this research is approximately 110 UTM students and staff that have the potential to purchase fuel in the future. 3.2 Data collection method Primary data will be obtained by distributing the questionnaire to the UTM students and staff. 3.3 Procedure Firstly, the respondents will be given the questionnaire and the first task will be for them to imagine a certain situation, for example, the respondents need to imagine that they are making a buying decision for fuel between PETRONAS and Shell. Respondents are then exposed to two video advertisements of PETRONAS and Shell, before they are asked to answer the measures for the independent and dependent variables. This procedure is to ensure that respondents answer the questionnaire correctly and the data collected is accurate. The entire procedure involved for the experiment is illustrated in Fig. 2 below. Step 2: The exposure will be given to the respondent, which is PETRONAS and Shell advertising Step 3: Respondents must answer measures for independent variables: philanthropic responsibility, product performance, and emotion Item: four items each variable Step 4: Respondents must answer measures for the dependent variable: purchase intention. Item: four items Step 5: Respondents answer demographic questions: age, gender, race, education level, and salary Item: one item each variable Item: four items 3.4 Data analysis Fig. 2. Summary of the task sequence for the experiment The data in this research will be analyzed by using Statistical Package for Social Science (SPSS) version Several analyses will be used to test the hypotheses in this research. The descriptive analysis will be run in this research by using SPSS software system. From this, results about the frequency, mean and standard deviation will be obtained from the data. There are also several types of inferential analyses that will be applied, including correlation, multiple regression and independent t-test. The correlation and multiple regression analysis will be used to analyse the relationship 306

5 between the independent variables (philanthropic responsibility, emotion, and product performance) and the dependent variable (purchase intention). Also, a t-test will be used to analyse the difference between PETRONAS and Shell purchase intention. 4. Summary This consumer behaviour research plans to investigate consumer s fuel purchase intention by studying the effects of independent variables (company s philanthropic responsibility, emotion, and product performance) on the dependent variable (fuel purchase intention). This particular conceptual paper is the earliest article produced from the research. It highlights the problem statement that motivates the research, delineates the research questions and hypotheses to be tested, and reviews the literature relevant to the major areas in marketing, such as corporate social responsibility, product quality and emotion in advertising. Future articles to be generated from this research will discuss in greater details on the aspects of experiments methodology used, survey instruments and administration, descriptive and inferential results, as well as managerial implications of this research. Findings from this research will assist companies to further improve their company image by embedding corporate social responsibility elements in their advertising efforts. References [1] A. Rahim, F. W. Jalaludin and K. Tajuddin, The Importance of Corporate Social Responsibility on Consumer Behaviour in Malaysia, Asian Academy of Management Journal, vol. 16, no. 1, pp , [2] F. J. M. Laros and J-B. E. M. Steenkamp, Emotions in consumer behavior: a hierarchical approach, Journal of Business Research, vol. 58, pp , [3] R. A. Westbrook, Product/consumption-based affective responses and post-purchase processes, Journal of Marketing Research, vol. 24, pp, , [4] C. Izard, Basic emotions, relations among emotions, and emotion cognition relations, Psychological Review, vol. 99, no. 3, pp , [5] A. Mehrabian and J. A. Russell, An approach to environmental psychology, Cambridge, MA7 MIT Press, [6] F. Selnes, An examination of the effect of product performance on brand reputation, satisfaction and loyalty, European Journal of Marketing, vol, 27, no. 9, [7] J. Hou, L. Du and J. Li, Cause s attributes influencing consumer s purchasing intention: empirical evidence from China, Asia Pacific Journal of Marketing and Logistics, vol. 20, no. 4, [8] J. H. Pedrick and F. S. Zufryden, Evaluating the Impact of Advertising Media Plans: A Model of Consumer Purchase Dynamics Using Single-Source Data, Marketing Science, vol. 10, no. 2, Spring [9] G. J. Tellis, Advertising Exposure, Loyalty and Brand Purchase: A Two-Stage Model of Choice, Journal of Marketing Research, vol. 25 (May), pp , [10] D. E. Sprott and T. A. Shimp, Using Product Sampling to Augment the Perceived Quality of Store Brands, Journal of Retailing, vol. 80, no. 4, pp , [11] T. J. Brown and P. A. Dacin, The company and the product: Corporate association and consumer product responses, Journal of Marketing, vol. 61, no. 1, pp ,

6 [12] C. J. Fombrun, N. A. Gardberg and M. L. Barnett, Opportunity platforms and safety nets: corporate citizenship and reputational risk, Business and Society Review, vol. 105, pp , [13] BusinessDictionory.com (2010) 308

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