ISTANBUL BİLGİ UNIVERSITY INSTITUTE OF SOCIAL SCIENCES MARKETING MASTER’S DEGREE PROGRAM EFFECTS OF LUXURY BRAND PERCEPTION AND BRAND PREFERENCE ON PURCHASE INTENTION FOR CIGAR AND CIGARILLO SİNE TEKİN 116676012 PROF. DR. SELİME SEZGİN İSTANBUL 2019 1 2 TABLE OF CONTENTS LIST OF TABLES …………………………………………………………………. vii LIST OF FIGURES ……………………………………………………………….. ix ABSTRACT ………………………………………………………………………. x ÖZET ……………………………………………………………………………… xi 1. INTRODUCTION ……………………………………………………………… 1 2. LITERATURE REVIEW ……………………………………………………… 2 2.1. UNDERSTANDING CONCEPT OF LUXURY……………………………. 2 2.1.2. DEFINITION OF LUXURY BRAND ……………………………………. 4 2.1.3. LUXURY CONSUMPTION THEORIES ………………………………... 6 2.1.3.1. Self Concept Theory …………………………………………….... 6 2.1.3.2. Conspicuous Consumption ……………………………………… 6 2.1.3.3. Social Comparison Theory ……………………………………… 6 2.1.3.4. Extended Self Theory ……………………………………………. 7 2.1.3.5. Theory of Uniqueness …………………………………………… 7 2.1.4. LUXURY BRAND MANAGEMENT …………………………………….. 7 2.2 BRIEF HISTORY OF CIGAR AND DEFINITION OF CIGAR TYPES … 9 2.3. WORLD CIGAR INDUSTRY ……………………………………………… 12 2.3.1 Marketing Strategies in Cigar Industry ………………………….. 14 2.3.2. Leading Companies in the World Cigar Industry ………………. 18 2.3.2.1 Swedish Match ……………………………………………………. 19 2.3.2.2. Habanos SA Corporation ………………………………………. 19 2.3.2.3. Scandinavian Tobacco Group ………………………………….. 20 2.3.2.4. Swisher International …………………………………………… 20 iii 2.4. CIGAR INDUSTRY in TURKEY …………………………………………. 20 2.5. RESEARCH CONSTURCTS AND LUXURY BRAND PERCEPTION ... 22 2.5.1. Financial Value ……………………………………………………. 23 2.5.2. Quality value ……………………………………………………….. 23 2.5.3. Uniqueness Value ………………………………………………….. 23 2.5.4. Hedonic value ……………………………………………………… 24 2.5.5. Conspiciousness Value …………………………………………….. 24 2.5.6. Prestige Value ……………………………………………………… 24 2.5.7. Brand Preference ………………………………………………….. 25 2.5.8. Purchase intention ………………………………………………… 25 3. METHODOLOGY …………………………………………………………… 25 3.1. RESEARCH OBJECTIVE AND DESIGN ……………………………….. 25 3.1.1. Research Objective ………………………………………………. 25 3.1.2. Research Design ………………………………………………….. 25 3.2. SAMPLE SELECTION AND DATA COLLECTION ………………….. 26 3.2.1. Sample Selection ………………………………………………….. 26 3.2.2. Data Collection ………………………………………………….... 26 3.3 QUESTIONNAIRE DESIGN ……………………………………………… 26 3.4. THEORETICAL FRAMEWORK OF RESEARCH ……………………. 27 3.5. MEASUREMENT OF INDEPENDENT AND DEPENDENT VARIABLES ..28 4. RESEARCH FINDINGS …………………………………………………… 30 4.1. DESCRIPTIVE STATISTICS FOR DEMOGRAPHIC VARIABLES AND CIGAR RELATED VARIABLES ………………………………………………………. 30 4.1.1.Age …………………………………………………………………. 30 4.1.2. Gender …………………………………………………………….. 30 iv 4.1.3. Marital Status …………………………………………………….. 31 4.1.4. Education Levels ………………………………………………….. 31 4.1.5. Income Levels ……………………………………………………. 31 4.1.6. Alcohol Consumption ……………………………………………. 32 4.1.7. Cigarette Consumption …………………………………………... 32 4.1.8. Frequency of Cigar Consumption ………………………………. 33 4.1.9. Duration of Cigar Consumption …………………………………. 33 4.1.10. Cigar Types ………………………………………………………. 34 4.1.11. Cigar Brands …………………………………………………….. 35 4.1.12. Respondent’s Understanding of Luxury Cigar Brands ………. 36 4.1.13. Conditions of Cigar Consumptions …………………………….. 39 4.1.14. Preferred Cigar Flavors …………………………………………. 40 4.1.15. Cigar’s Country of Origin ……………………………………….. 42 4.2. FACTOR ANALYSIS ……………………………………………………… 43 4.2.1. Factor and Reliability Analysis for Luxury Brand Perception…. 44 4.2.2. Factor and Reliability Analysis for Brand Preferences ……….. 45 4.2.3. Factor and Reliability Analysis for Purchase Intention ………… 46 4.3. CORRELATION AND REGRESSION ANALYSIS ……………………. 47 4.3.1. Correlation Analysis ……………………………………………. 47 4.3.2. Regression Analysis ………………………………………………… 49 4.3.2.1. Multiple Regression Analysis of H1, H2, H3, H4, H5, H6, H7 …. 49 4.3.2.2. Simple Regression Analysis of H3 ……………………………….. 49 Summery of Hypothesis Results ………………………………… 50 4.4. THE FRIEDMAN TEST …………………………………………………….. 50 v 5. CONCLUSIONS ………………………………………………………………. 51 6. MANAGERIAL IMPLICATIONS ………………………………………… 53 7. LIMITATIONS AND FURTHER RESEARCHES ………………………… 54 vi LIST OF TABLES Table 1. Definitons of Luxury Brand ………………………………………………… 5 Table 2. Cigar Types …………………………………………………………………... 10 Table 3. Measurement of Independent and Dependent Variables …………………. 28 Table 4. Age Distribution of the Participants ……………………………………….. 30 Table 5. Gender Representation of the Sample ……………………………………... 31 Table 6. Level of Education Representation of the Sample ……………………….... 31 Table 7. Level of Income Representation of the Sample ……………………………. 32 Table 8. Representation of Alcohol Consumption of the Sample ………………… 32 Table 9. Representation of Cigarette Consumption of the Sample ………………… 33 Table 10. Cigar Consumption Frequency of the Sample ……………………………. 33 Table 11. Representation of Cigar Smoking Length of the Sample …………………34 Table 12. Representation of the Prefered Cigar Types of the Sample ……………… 35 Table 13. Representation of Cigar Brand Preferences of the Sample ……………… 36 Table 14. Representation First Luxury Cigar Feature Indicated by the Participants…37 Table 15. Representation SecondLuxury Cigar Feature Indicated by the Participants..38 Table 16. Representation Third Luxury Cigar Feature Indicated by the Participants..39 Table 17. Representation of Cigar Consumption Conditions of the Sample………….. 40 Table 18. Representation of first choice of flavours of the sample…………………….. 41 Table 19. Representation of second choice of flavours of the sample …………………. 41 Table 20. Representation of third choice of flavours of the sample…………………… 42 Table 21-22-23- Representation of the countries which the participants think have quality cigar production…………………………………………………………………. 43 Table 24. Factor and Reliability Analysis for Luxury Brand Perception …………… 45 vii Table 25. Factor and Reliability Analysis for Brand Preferences …………………… 45 Table 26. Factor and Reliability Analysis for Purchase Intention ………………….. 46 Table 27. Correlations of the Variables ……………………………………………….. 48 Table 28. Multiple Linear Regression Analysis of H1, H2, H3, H4, H5, H6, H7…….. 49 Table 29. Multiple Linear Regression Analysis of H3 ………………………………... 49 Table 30. Friedman Test Result for the Variables …………………………………… 50 Table 31. Summary of Hypotheses Results …………………………………………… 50 viii LIST OF FIGURES Figure 1. Machine rolled cigars market share in U.S. (2018) …………….. 19 Fig. 2. Research Model ………………………………………………………. 27 Figure 3. Revised Conceptual Model ……………………………………….. 46 ix ABSTRACT Cigar and cigarillo related researches is relateviely an uncommon topic for the researches while there are a lot of researches about luxury consumption. In this research effects of luxury brand perception which has six factors as financial value, hedonic value, quality value, prestige value, conspiciousness value, uniqueness value and brand preference on purchase intention for cigar and cigarillo products. As a result of the study, it was revealed that hedonic and quality value have a positive effect of the purchase intention for cigar and cigarillo products. And also cigar consumption behaviors of the respondents were aimed to understood. In accordance with the research findings, goal is to make reccomendations and contrubiting to the marketing literature. And a future research can be conducted based on these findings maybe with additional variables. Keywords: Luxury, Luxury Brand, Cigar, Cigarillo, Purchase Intention, Brand Preference, Financial value, Hedonic value, Quality value, Prestige value, Conspiciousness value, Uniqueness value x ÖZET Lüks tüketimle ilgili birçok araştırma mevcutken puro ve sigarillo ürünleri ile ilgili araştırmalar literatürde yaygın olarak görülmemektedir. Bu araştırmada lüks marka algısının altı faktörü finansal, kalite, hedonik, prestij, dikkat çekme ve benzersizlik değerleri ve marka tercihinin puro ve sigarillo ürünü alma niyetine etkisi araştırılmıştır. Araştırmanın sonucu olarak görülmüştür ki, hedonik ve kalite değerlerinin puro ve sigarillo satın alımı üzerinde pozitif etkisi vardır. Bununla birlikte araştırmada puro tüketicilerinin tüketim davranışları da anlaşılmak istenmiştir. Araştırma sonuçları ışığında pazarlama literatürüne katkıda ve önerilerde bulunmak amaçlanmıştır. Bu araştırmanın sonuçları baz alınarak gerekmesi halinde yeni değişkenler de eklenerek gelecekte başka çalışmalar gerçekleştirilebilir. Anahtar Kelimeler: Lüks, Lüks marka, Puro, Sigarillo, Satın alma niyeti, Marka tercihi, Finansal değer, Kalite değeri, Hedonik değer, Prestij değeri, Dikkat çekme değeri, Benzersizlik değeri xi INTRODUCTION Luxury consumption has been an attractive topic for the marketing researches and other disciplines too. Luxury brand perception and brand preference effects on purchase intention was measured on various researches about various product categories. Since luxury consumption is much more common and available in these days than it is in history due to the technological improvements and production developments it is an attractive topic for marketing. On the other hand, cigar and cigarillo products were not a common topic in the field. Researches were focused more on the cigarette consumption and health issues about the tobacco products. As cigar products and cigar consumption attributed to the luxury consumption especially from the mid 90’s, it should be a topic for the marketing researches. There is a lot of researches showing that the consumption of cigars increased while the consumption of cigarettes decreased in America and Europe.