The Role of Cultural Values in Evaluating Brand Extensions: Individualism Versus Collectivism
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THE ROLE OF CULTURAL VALUES IN EVALUATING BRAND EXTENSIONS: INDIVIDUALISM VERSUS COLLECTIVISM Author: Ken Chun Student Number: 24368866 A research project submitted to the Gordon Institute of Business Science, University of Pretoria, in partial fulfilment of the requirements for the degree of Master of Business Administration 7 November 2012 i © University of Pretoria Copyright © 2013, University of Pretoria. All rights reserved. The copyright in this work vests in the University of Pretoria. No part of this work may be reproduced or transmitted in any form or by any means, without the prior written permission of the University of Pretoria. ABSTRACT When launching brand extension strategies globally, It is very important for today’s brand marketers to understand the differences in those countries with high cultural diversity such as South Africa,. This research intends to investigate the role that a consumer’s cultural value plays in evaluating brand extensions, in the context of the cultural dimension of individualism- collectivism, in order to close the theoretical gap in this area. This research is quantitative and causal in nature, and used an experimental factorial design in the conduct of the research. Triandis’ scales were used in the questionnaire design, and 161 MBA students participated in the experiment at GIBS. The research results disprove that cultural values play a role in evaluating brand extensions, and there was insufficient evidence to prove that individualists differ from collectivists in evaluating brand extensions. Nevertheless, the research results found that there are some positive interaction effects between the product category relatedness and product involvement in the process of brand extension evaluations. Keywords: Brand Extension, Cultural Value, Individualism, Collectivism, Product Category Relatedness, Product Involvement ii DECLARATION I declare that this research project is my own work. It is submitted in partial fulfilment of the requirements for the degree of Master of Business Administration at the Gordon Institute of Business Science, University of Pretoria. It has not been submitted before for any degree or examination in any other University. I further declare that I have obtained the necessary authorisation and consent to carry out this research. Signature: Full Name: Ken Chun Date: 7 November 2012 iii ACKNOWLEDGEMENTS I would like to express my sincere appreciation to the following people who supported and assisted me in the completion of this research project: My supervisor, Nicola Kleyn, for her inspiration and guiding me through my entire research journey. Kerry Chipp, for helping me shape the research design. Gavin Price, for his valuable inputs and insights into my research. Albert Wocke, who helped me in the data collection process. My 161 classmates and schoolmates at GIBS, who supported me in responding to the questionnaires. My mother and wife, who always stand by me. iv TABLE OF CONTENTS ABSTRACT ⅱ DECLARATION ⅲ ACKNOWLEDGEMENTS ⅳ LIST OF TABLES ⅹ LIST OF FIGURES xi Chapter 1: INTRODUCTION TO THE RESEARCH PROBLEM 1 1.1 Research title 1 1.2 Research problem definition 1 1.3 Research aims 5 1.4 Research objectives 5 1.5 Research structures 6 Chapter 2: LITERATURE REVIEW 8 2.1 Introduction 8 2.2 Brands and branding 8 2.2.1 Brand definitions 8 2.2.2 Brand evolution 9 2.2.3 Brand elements 11 2.2.4 Brand functions 13 2.3 Brand extensions 15 2.3.1 Brand extension definitions 15 2.3.2 Types of brand extensions 16 2.3.3 Factors influencing brand extension success 17 v 2.3.4 Negative effects of brand extensions 21 2.3.5 Product category relatedness and brand extensions 23 2.3.6 Product involvement and brand extensions 24 2.3.7 Product category relatedness and involvement 25 2.4 Cultural values and cultural differences 26 2.4.1 Cultural values 26 2.4.2 Hofstede’s dimensions of cultural differences 28 2.4.3 Triandi’s dimensions of cultural differences 28 2.4.4 Cultural values and differences in South Africa 30 2.5 Branding and cultural values 31 2.5.1 Cultural branding 32 2.5.2 Brand-culture fit 32 2.5.3 Cultural values and brand consumer behaviours 36 2.6 Brand extensions and cultural values 37 2.6.1 Styles of thinking on brand extensions across cultures 38 2.6.2 Brand extension evaluations across cultures 39 2.6.3 Brand extension success and dilution across cultures 40 2.7 Conclusion 41 Chapter 3: RESEARCH HYPOTHESES AND CONCEPTUAL MODEL 43 3.1 Introduction 43 3.2 Research hypotheses 43 3.2.1 Hypothesis 1 44 3.2.2 Hypothesis 2 45 3.2.3 Hypothesis 3 45 3.2.4 Hypothesis 4 45 vi 3.3 Conceptual model 46 3.4 Conclusion 47 Chapter 4: RESEARCH METHODOLOGY 48 4.1Introduction 48 4.2 Research methodology and design 48 4.2.1 Research methodology 48 4.2.2 Research design 48 4.3 Research population and sampling 50 4.3.1 Target population 50 4.3.2 Unit of analysis 51 4.3.3 Sampling method 51 4.3.4 Sampling frame 52 4.3.5 Sample size 52 4.4 Research experimental assumptions 53 4.5 Measuring instrument 55 4.5.1 Self-administered questionnaire 55 4.5.2 Pilot-testing 57 4.6 Data collection process 57 4.7 Data preparation 57 4.7.1 Data cleaning 58 4.7.2 Data coding 58 4.8 Data analysis 60 4.9 Validity and reliability 62 4.9.1 Validity 62 4.9.2 Reliability 63 vii 4.10 Research limitations 63 Chapter 5: RESULTS 65 5.1 Introduction 65 5.2 Descriptive analysis results 65 5.2.1 Overview of the response rates 65 5.2.2 Overview of the respondents 66 5.2.3 Demographic summary by cultural values 68 5.3 Validity and reliability scale to measure dependent variable 71 5.3.1 Reliability analysis results 71 5.3.2 Correlation analysis results 72 5.3.3 Means calculation of dependent variables 73 5.3.4 Distribution of rating of dependent variables 76 5.4 Descriptive statistics of dependent and independent variable 76 5.4.1 Marginal means by cultural values 77 5.4.2 Marginal means by product category relatedness 82 5.4.3 Marginal means by product involvement 84 5.4.4 Marginal means by product category relatedness and involvement 86 5.5 Hypothesis testing 88 5.5.1 Hypothesis 1 results 88 5.5.2 Hypothesis 2 results 89 5.5.3 Hypothesis 3 results 90 5.5.4 Hypothesis 4 results 91 5.5.5 Summary of results 92 5.6 Tests of between subjects effects 93 Chapter 6: DISCUSSION OF RESULTS 97 viii 6.1 Introduction 97 6.2 Research hypothesis 1 97 6.3 Research hypothesis 2 99 6.4 Research hypothesis 3 100 6.5 Research hypothesis 4 101 6.6 Other observations 102 6.7 Summary of research hypothesis conclusions 103 Chapter 7: RESEARCH CONCLUSION 105 7.1 Introduction 105 7.2 Summary of research findings 105 7.3 Managerial implications 106 7.4 Academic implications 108 7.5 Limitations 109 7.6 Guidelines for future research 109 7.7 Conclusion 110 REFERENCES 112 APPENDICIES 118 Appendix 1 Questionnaire 118 Appendix 2 Coding of cultural value 134 ix LIST OF TABLES Table 1: Response rates by experimental conditions 65 Table 2: Overview of respondents 66 Table 3: Cultural values by gender 68 Table 4: Cultural values by home language 69 Table 5: Cultural values by race 70 Table 6: Cultural values by education levels 70 Table 7: Cronbach’s alpha analysis 71 Table 8: The correlation coefficients of dependent variables 72 Table 9: Means per dependent variable 73 Table 10: Estimated Marginal Means 75 Table 11: Aggregated mean scores of dependent variables 77 Table 12: Mean scores for involvement and relatedness 77 Table 13: MANOVA results of hypothesis 1 89 Table 14: MANOVA results of hypothesis 2 90 Table 15: MANOVA results of hypothesis 3 91 Table 16: MANOVA results of hypothesis 4 92 Table 17: Summary of hypotheses results 93 Table 18: Tests of between subjects effects 94 Table 19: Summary of research hypothesis conclusions 103 LIST OF FIGURES Figure 1: Brand characteristics in the ancient and modern worlds 11 Figure 2: Types of brand extensions 17 Figure 3: Consumers’ evaluations of brand extensions 18 Figure 4: The framework of ‘brand-culture’ fit 33 x Figure 5: Research Conceptual Model 46 Figure 6: Research assumption model 53 Figure 7: Experimental conditions 54 Figure 8: Box Plot of the Original Data for the Dependent Variables 76 Figure 9: Marginal means of liking at low level of involvement 78 Figure 10: Marginal means of liking at high level of involvement 78 Figure 11: Marginal means of purchase at high level of involvement 79 Figure 12: Marginal means of purchase at low level of involvement 80 Figure 13: Marginal means of appeal at high level of involvement 80 Figure 14: Marginal means of appeal at low level of involvement 81 Figure 15: Marginal means of liking by relatedness 82 Figure 16: Marginal means of purchase by relatedness 82 Figure 17: Marginal means of appeal by relatedness 83 Figure 18: Marginal means of liking by involvement 84 Figure 19: Marginal means of purchase by involvement 84 Figure 20: Marginal means of appeal by involvement 85 Figure 21: Marginal means of liking by product involvement and relatedness 86 Figure 22: Marginal means of purchase by product involvement and relatedness 86 Figure 23: Marginal means of appeal by product involvement and relatedness 87 Figure 24: The four brand extension situations 107 xi CHAPTER 1: INTRODUCTION TO THE RESEARCH PROBLEM 1.1 Research title The role of cultural values in evaluating brand extensions: individualism versus collectivism 1.2 Research problem definition Today’s business environment is becoming increasingly competitive as globalisation, and hence brands, play a more important role in the global competitive market.