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Yupin Patara, PhD

The Effects of Certification Cobrand and Price on Consumers’ Product Evaluations and Purchase Intentions. Yupin Patara, PhD. Certification Cobrand Research Program. PhD Study is a Certification Process CERTIFIED by Kent B Monroe Yupin Patara.

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Yupin Patara, PhD

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  1. The Effects of Certification Cobrand and Price on Consumers’ Product Evaluations and Purchase Intentions Yupin Patara, PhD

  2. Certification Cobrand Research Program PhD Study is a Certification Process CERTIFIED by Kent B Monroe YupinPatara CertificationCobranding Strategycan make credible signals about the quality of the products.

  3. Certification • Certification is a quality assurance processas an external • assessment from a third partyconfirming the products or services • have certain attributes and quality level to consumers. • Certification logo serves as a brand when displaying on the products. • Only certified products earn the right to display the brand. • Acquiring certification is an upfront cost for the marketer both time - money.

  4. The Effects of Certification Cobrand and Price on Consumers’ Product Evaluations and Purchase Intentions Outline I. Research Issues II. Theoretical Framework III. Research Methodology IV. Results V. Contribution of the Research and Managerial Implications VI. Future Research

  5. Research Issues Using a Certification Brand as a Form of Brand Alliance When a certification brand is presented jointly with a primary brand on products as certification cobrand strategyat different price levels to consumers • How does certification cobrand influence consumers’ quality evaluations? • How does certification cobrand interact with the primary brand and price to influence consumers’ perceptions of quality and willingness to buy?

  6. Cobranding or Brand Alliance Strategy Brand alliance to include all circumstances in which two or more brand names are presented jointly to the consumers

  7. Theoretical Explanation Understanding Certification Cobrand Strategy • Information Integration Theory to Signaling Theory • Information Asymmetry (Akerlof 1970) • Signaling Theory (Kirmani and Rao 2000) • Information Integration Theory (Anderson 1981) • + = • Information Cues • Intrinsic Cues • Attributes • Extrinsic Cues • Brand • Price • Warranty • Advertising Exp. • Certification Cobrand Initial Impression Evaluation

  8. Perceived quality is the buyers' perceptions that the product or service can provide the benefits expected.  Brand name identifies relative quality levels. It takes long term investment to build reputations of quality. Falsely claim high quality hurts reputation and future profits. Brand and Perceived Quality Cobrand as a Signal of Quality When an individual brand is unable to signal quality by itself, the cobrand serves to signal the quality of the jointly branded product (Rao et al. 1997). The stronger brand put its reputation and future profits at risk as a bond to ensure the product’s quality. 9

  9. Certification Cobrand as a Signal of Product Quality • To get a certification cobrand, sellers must make an initial investment as an upfront cost to meet the standards of the certification agency • If the certification agency is known to be credible, then the certification cobrand serves to enhance consumers’ perceptions of the product’s quality.

  10. Perception of Primary Brand Perception of Certification Cobrand Primary Brand x Certification Cobrand Perceived Quality The Effect of Primary Brand and Certification Cobrand on Perceived Quality H1 H1: If a primary brand is familiar to consumers, then, ceteris paribus, they will perceive its product to be of higher quality compared to when the primary brand is unfamiliar to them. H2: If a primary brand is cobranded with a perceived credible certification cobrand, then, ceteris paribus, consumers will perceive the cobranded products to be of higher quality compared to if the primary brand is not cobranded with a certification cobrand. H2 H3

  11. Perceived Quality Perceived Quality With Certification Cobrand With Certification Cobrand High Low High Low No Certification Cobrand Without Certification Cobrand Unfamiliar Familiar Unfamiliar Familiar Primary Brand and Certification Cobrand Interaction Effect H3: There will be an interaction betweenthe primary brand and the certification cobrandon consumers’ perceptions of product quality such that (a) at a high price level, the magnitude of thepositive effectof a certification cobrand on perceived quality of a familiar primary brand will be larger than the magnitude of the positive effect of a certification cobrand on perceived quality of an unfamiliar primary brand. (b) at a low pricelevel, the magnitude of thenegative effectof a no certification cobrand on perceived quality of an unfamiliar primary brand will be larger than the magnitude of the negative effect of a no certification cobrand on a familiar primary brand. H3a Primary Brand H3b Primary Brand

  12. Price-Quality-Value Model Perceived Quality Actual Price Perceived Price Perceived Value Behavioral Intentions Perceived Sacrifice + H7 H4 + H8 + H5 H6 + - (Monroe and Krishnan 1985) H4: If the price of the primary brand is perceived to be high, then ceteris paribus, consumers will perceive its product to be of higher quality compared to when its price is perceived to be low. H5: There will be a positive relationship between buyers’ perceptions of price and their perceptions of monetary sacrifice. H6: There will be a negative relationship between buyers’ perceptions of monetary sacrifice and their perceptions of value. H7: There will be a positive relationship between buyers’ perceptions of quality and their perceptions of value. H8: There will be a positive relationship between buyers’ perceptions of value and their purchase intentions.

  13. Perceived Quality Perceived Quality Familiar Brand Familiar Brand High Low High Low Unfamiliar Brand Unfamiliar Brand Low Price High Price Low Price High Price Price and Primary Brand Interaction Effect • H9: There will be an interaction between the price and the primary brand on consumers’ perceptions of product qualitysuch that • when using a credible certification cobrand, the magnitude of the positive effectof a familiar primary brand on perceived quality for a high-priced product will be larger than the magnitude of the positive effect for a low-priced product. • (b) When not using a certification cobrand, the magnitude of the negative effect of an unfamiliar primary brand on perceived quality for a low-priced product will be larger than the magnitude of the negative effect for a high-priced product. H9a H9b

  14. Perceived Quality Perceived Quality With Certification Cobrand With Certification Cobrand High Low High Low Without Certification Cobrand Without Certification Cobrand Low Price High Price Low Price High Price Price and Certification Cobrand Interaction Effect H10: There will be an interaction between price and certification cobrand on consumers’ perceptions of product quality such that (a) with a familiar primary brand, the magnitude of thepositive effect of a credible certification cobrand on perceived quality for a high-priced product will be larger than the magnitude of the positive effect for a low-priced product; (b) with an unfamiliar primary brand, the magnitude of thenegative effect of no certification cobrand on perceived quality for a low-priced product will be larger than the magnitude of the negative effect for a high-priced product. H10a H10b

  15. Conceptualization of the Effects of Certification Cobrand, Primary Brand and Price on Consumers’ Product Evaluations and Purchase Intentions Perception of Primary Brand Perception of Certification Cobrand H2 Primary Brand x Certification Cobrand H3 H1 Primary Brand x Price H9 Certification Cobrand x Price H10 Perceived Quality H4 H7 Actual Price Perceived Price Perceived Value H8 Behavioral Intentions Perceived Sacrifice H5 H6 Primary Brand Certification Cobrand

  16. Experiment Study 1 2 x 2 x 2 between Subjects Factorial Design Independent Variables - Primary Brand - Certification Cobrand - Price Level • Dependent Variables • - Perceived Quality • - Perceived Value • - Perceived Price • - Willingness to Buy • Subjects • BADM310/320 students • (n=216) 17

  17. Experiment Study 2 2 x 2 x 2 between Subjects Factorial Design Independent Variables • - Primary Brand • - Certified Cobrand • - Price Level • Dependent Variables • - Perceived Quality • - Perceived Value • - Perceived Price • - Willingness to Buy • Subjects • General Representative • US Sample: 25-50 y • (n=158) 18 * Study 2 was the replication of study 1 which adds the robustness.

  18. H1: Primary Brand Effect on Perceived Quality Perceived Quality Perceived Quality 2.08 2.12 1.31 0.83 Primary Brand Primary Brand Cascadian Farm (Unfamiliar Brand) Cascadian Farm (Unfamiliar Brand) Kellogg’s (Familiar Brand) Kellogg’s (Familiar Brand) (F (1,181) = 38.72, p = .00, Effect Size r = .42) (F (1,215) = 30.44, p = .00, Effect Size r = .35) Study 2: National Study 1: Students H1 – Supported Combined Effect r = .52

  19. H2: Certification Cobrand Effect on Perceived Quality Perceived Quality Perceived Quality 1.98 2.22 1.21 1.00 Without Certification Cobrand Without Certification Cobrand With Certification Cobrand With Certification Cobrand ( F (1, 181) = 22.25, p = .00, Effect Size r = .33) (F (1,215) = 47.67, p = .00, Effect Size r = .43) Study 1: Students Study 2: National H2 – Supported Combined Effect r = .52

  20. H3a: Primary Brand and Certification Cobrand on Perceived Quality High Price Perceived Quality Perceived Quality 3.20 2.95 USDA Certified Organic Certification USDA Certified Organic Certification 2.00 1.49 No Certification No Certification 1.84 1.72 1.23 1.16 Familiarity of Primary Brand Familiarity of Primary Brand Cascadian Farm (Unfamiliar Brand) t (49) =2.19, p = 0.01 Effect Size r = .30 Kellogg’s (Familiar Brand) t(48) = 6.48, p = .00 Effect Size r = .68 Cascadian Farm (Unfamiliar Brand) t(41) =0.64, p = 0.26 Effect Size r = .10 Kellogg’s (Familiar Brand) t(42) = 3.29, p = .00 Effect Size r = .45 (Z = 2.52, p = .00) (Z = 1.71, p = .045) Study 1: Students Study 2: National H3a – Supported Combined Effect (Weighted Z = 3.03, p = .006, Tolerance for Null Result =12)

  21. H3b: Primary Brand and Certification Cobrand on Perceived Quality Low Price Perceived Quality Perceived Quality 2.02 USDA Certified Organic Certification USDA Certified Organic Certification 2.00 1.36 1.78 1.56 1.67 No Certification No Certification Familiarity of Primary Brand -0.27 0.39 Familiarity of Primary Brand Cascadian Farm (Unfamiliar Brand) t(48)=4.81, p = .00 Effect Size r = .57 Kellogg’s (Familiar Brand) t(47)=1.51, p = .07 Effect Size r = .21 Cascadian Farm (Unfamiliar Brand) t(58)=4.39, p = .00 Effect Size r = .50 Kellogg’s (High Familiar Brand) t(57)=1.41, p = .08 Effect Size r = .18 (Z = 1.91, p = .028) (Z = 2.03, p = .022) Study 1: Students Study 2: National H3b – Supported Combined Effect (Weighted Z = 2.77, p = .003, Tolerance for Null Result =9) 22

  22. H4: Price Effect on Perceived Quality Perceived Quality Perceived Quality 1.90 1.67 1.00 0.73 Without Certification Cobrand Without Certification Cobrand With Certification Cobrand With Certification Cobrand (F (1, 181) = 13.76, p = .00, Effect Size r = .27) F (1,215) = 16.15, p = .00, Effect Size r = .26 Study 1: Students Study 2: National H4 – Supported Combined Effect r = .36

  23. The Price-Value-Quality Model Perceived Quality Perceived Quality Actual Price Actual Price Perceived Price Perceived Price Perceived Value Perceived Value Behavioral Intentions Behavioral Intentions Perceived Sacrifice Perceived Sacrifice Study 1: Students F (1,214) = 13.94, p = .00, r = .25 r = .23 (p = .00). H4 H7 r = .18 (p = .00). H8 H5 H6 F (1, 214) = 647.47, p = .00, r = .87 r = -.45 (p = .00) Study 2: National (F (1, 181) = 11.36, p = .00, r = .24) r = .27 (p = .00) H4 H7 r = .76 (p = .00). H8 H5 H6 F (1, 181) = 316.41, p = .00, r = .85 r= -.59 (p = .00) The Price-Quality-Value Model Hypotheses are Supported. Combined Effect: H5 (r = .95), H6 (r = .67), H7 (r = .34), H8 (r = .65)

  24. H9a: Price and Primary Brand on Perceived Quality With Certification Cobrand Perceived Quality Perceived Quality Familiar Brand Familiar Brand 3.20 2.95 2.02 Unfamiliar Brand 2.00 Unfamiliar Brand 2.00 1.79 1.49 1.36 Price Level Price Level $1.96 Low Price t(45) = 1.86, p = .03 Effect Size r = .27 $4.19 High Price t(37) = 3.48, p = .00 Effect Size r = .48 $2.69 Low Price t(55) = .77, p = .22 Effect Size r = .10 $3.69 High Price t(51) = 4.45, p = .00 Effect Size r = .53 (Z = 1.11, p = .133) (Z = 2.50, p = .006) Study 1: Students Study 2: National H9a – Supported Combined Effect (Weighted Z = 2.66, p = .004, Tolerance for Null Result = 8) 25

  25. H9b: Price and Primary Brand on Perceived Quality Without Certification Cobrand Perceived Quality Perceived Quality 1.84 1.72 Familiar Brand Familiar Brand 1.67 1.56 1.24 1.16 Unfamiliar Brand Unfamiliar Brand 0.39 -0.27 Price Level Price Level $2.69 Low Price t(60)=4.68, p =.00 Effect Size r = .52 $3.69 High Price t(46)=1.50, p = .07 Effect Size r = .21 $1.96 Low Price t(50)=6.32, p = .00 Effect Size r = .67 $4.19 High Price t(46)=1.61, p = .06 Effect Size r = .23 (Z = 1.81, p = .035) (Z = 2.74, p = .003) Study 1: Students Study 2: National H9b – Supported (Combined Effect (Weighted Z = 3.18, p = .001, Tolerance for Null Result =12) 26

  26. H10a: Primary Brand and Certification Cobrand on Perceived Quality High Price Perceived Quality Perceived Quality USDA Certified Organic Certification USDA Certified Organic Certification 3.19 2.95 2.00 2.02 No Certification No Certification 1.84 1.72 1.56 1.66 Price Level Price Level $3.69 High Price t(48)=6.48, p = .00 Effect Size r = .68* $2.69 Low Price t(57)=1.42, p = .08 Effect Size r = .19 $1.96 Low Price t(47)=1.50, p = .07 Effect Size r = .21 $4.19 High Price t(42)=3.29, p = .00 Effect Size r = .45 (Z = 3.23, p = .000) (Z = 1.23, p = .11) Study 1: Students Study 2: National H10a – Supported Combined Effect (Weighted Z = 3.26, p = .001, Tolerance for Null Result =12) 27

  27. H10b: Primary Brand and Certification Cobrand on Perceived Quality Low Price Perceived Quality Perceived Quality USDA Certified Organic Certification USDA Certified Organic Certification 2.00 1.49 1.36 1.78 1.16 No Certification No Certification 1.24 -0.27 0.38 Price Level Price Level $1.96 Low Price t(48)=4.81, p = .00 Effect Size r =.57 $2.69 Low Price t(58)=4.40, p = .00 Effect Size r =.50 $3.69 High Price t(49)=2.20, p = .02 Effect Size r = .30 $4.19 High Price t(41)=0.64, p = .26 Effect Size r = .10 (Z = 1.21, p = .113) (Z = 2.50, p = .006) Study 1: Students Study 2: National H10b – Supported Combined Effect (Weighted Z = 2.53, p = .005, Tolerance for Null Result =12) 28

  28. Perceived Quality Perceived Quality With Certification Cobrand With Certification Cobrand High Low High Low No Certification Cobrand Without Certification Cobrand Unfamiliar Familiar Unfamiliar Familiar Theoretical Explanation of Key Findings from Interaction Effects Hypotheses H3, H9, H10 • When comparing the strategy using all positive signals to the mixed signals (H3a, H9a, H10a), the magnitude of the positive effect of all positive signals is larger than the magnitude of the positive effect of the mixed signals. • Explained by cue consistency theory • Multiple positive signals that are consistent in communicating quality create a reinforcing positive effect in signaling quality to consumers. H4a Primary Brand • When comparing the strategy using all negative signals to the mixed signals (H3b, H9b, H10b), the magnitude of the negative effect of all negative signals is larger than the magnitude of the negative effect of the mixed signals. • Explained by negativity bias • Multiple negative signals that are consistent in communicating quality create a reinforcing negative effect in signaling quality to consumers. H4b Primary Brand

  29. Contributions of the Research to Knowledge • First experimental study studying the usage of certification brand on the products as a certification cobrand strategy. • Extending knowledge in signaling theory paradigm in marketing by looking at the role of certification cobrand in signaling the products quality and unobservable attributes. • Bringing price element into cobranding literature, bridging the gap between cobranding and pricing in marketing strategy

  30. Implications • Marketers: Help marketers in their decision whether the company may benefit from adopting the certification cobrand strategy to convey missing attributes or quality related information to consumers. • Consumers: Helps consumers determine the certification cobrand strategy and consistency of multiple cues in signaling quality.

  31. Test Product: Ready-to-eat Cereal The product is familiar to college students. Certified cobrand is available in the market (i.e. organic product) Various certification brands (i.e. USDA certified, OCIA, CCOF, QAI) Pretest (n=29) to select brand and certification agency Degree of familiarity of brand (highly familiarity and unfamiliar) Credibility of certification agency (high credible, low credible) Rate 11 brands of ready-to-eat cereals and 5 certification agencies Selecting price levels Market Price range $2.20 to $4.67  Give as reference prices $3.69 (High Price), $2.69 (Low Price) (Study 2) and $4.19 (High Price), $2.19 (Low Price) (Study 3) Selection of Product, Brand, Certified Cobrand and Price 34

  32. Validity of Research • Conclusion validity • Study 1 is weak due to the quality of study 1 data. • Studies 2 and 3 have demonstrated statistically homogenous results in nature. The combined results of the hypotheses are in the moderate effect size range (.30 < r < .50) to high effect size range (r>.50). Additionally, the weighted Z for all interaction hypotheses in the combined results are statistically significant (p<0.01). The tolerance for null results ranges from n = 7 to n = 14 meaning it would take between 7 to 14 studies to move the significant level of p = .05 level in some of the interaction-effect hypotheses. • Internal validity • - Random sampling and random assignment of participants into the treatments which controls most threats in internal validity. Pretesting was conducted to select the primary brand and certification cobrand. Using actual prices from two markets in the Midwest and the East, primary brands of ready-to-eat cereal from the market place, actual certification cobrands from organic products, and the realistic presentation of the stimuli in the study, strong manipulations were achieved. According to the manipulation checks, all of manipulations worked as intended. 35

  33. Validity of Research • Construct validity • - Primary variables of interest were operationalized based on conceptualization from previous literature using multiple items. The reliability of the measures of the constructs is a necessary but insufficient condition for construct validity. All of the measures of the constructs in the research met or exceeded acceptable levels of reliability. • External validity • The study has realism component. Using two types of participants (study 2 – students, study 3 – general representative sample) enhanced the ability to extend the findings across samples of people. Additionally, external validity of this research can be developed more through a series of studies that systematically vary differences in subjects, products in the stimuli and manipulations. • The product category, brand and certification cobrand can be changed from ready-to eat cereal with USDA certified organic as a certification cobrand to electronic products with UL laboratory as a certification cobrand, appliances with ISO 9001 as a certification cobrand, or services like MBA education with AACSB accredited as a certification cobrand. 36

  34. Research Results: Combined Effects Main Effects and Price-Quality-Value Model 37

  35. Research Results: Combined Effects Interaction Effects Hypotheses 38

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