University of the Fraser Valley

Final Paper on
Brand
Preference
Inderdeep Singh

SECOND DRAFT ON BRAND PREFERENCE

Table of Contents
1

Introduction............................................................................................................................1
1.1

Problem Statement............................................................................................................1

Why are they Problem?...............................................................................................................2

1.2
2

Content..............................................................................................................................2

What is a Brand?....................................................................................................................3
Why brand is needed?..................................................................................................................3

2.1

Brand Equity.....................................................................................................................4

2.2

Concept of Brand Preferences...........................................................................................7

Literature Review...................................................................................................................8
3.1

Conceptual Framework...................................................................................................11

3.2

Questions.........................................................................................................................11

Research Methodology.........................................................................................................13

Findings..................................................................................................................................15

Conclusion..............................................................................................................................16
Assumption and Limitation.......................................................................................................17

References:............................................................................................................................18

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1 Introduction
The world economy is established on two major aspects, (a) technology and (b) globalization.
Internet and free trade help companies to grow big and do business anywhere in the world.
(Kotler, 2015) And one of the critical resource of doing business is marketing. In order to define
marketing in simple words it is just identifying and meeting and social needs. But according to
American Marketing Association (2015) , formal definition is :marketing is the activity, set of
instruction and processes for creating, communicating, delivering and exchanging offerings that
have value for customers, clients, partners and society at large (Kotler, Keller, Ang, Leong, &
Tan, 2013). With todays marketing strategies companies have a way to differentiate themselves
from the both domestic as well as internationally. However, it is not possible for a company to be
successful in foreign market to have same level of success in the new market. There can be many
reason behind it like, global company does not able to adjust the new environment, they couldn't
understand the consumer needs, local company has a better brand presence, etc. Moreover,
consumer always make decision about one product over another based on different factors. This
paper will be searching for a reason why students in University of the Fraser Valley (UFV) have
a brand preference of Tim Hortons (local brand) over Starbucks (global brand) or the other way
around. This study will examine factors affecting brand preferences and relationship between
brand loyalty and brand preferences.

1.1

Problem Statement

The main objective of this paper is to investigate different dimensions like price, quality, social
status, reference group, brand beliefs and country of origin which contribute for the brand
preferences while comparing analysis of two coffee shop chains Tim Horton and Starbucks.
There are further sub-objectives of this paper are:
To know the relationship between brand preference and brand loyalty
To know the factors affecting Brand preference
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Why are they Problem?

For this paper, we consider that price, quality, social status, references group, brand belief and
country of origin are factors that are responsible to create brand preferences. In addition to that,
this paper will also find out the reasons for how these dimensions are changes between global
and local brands. And to know that how important is the brand preferences in order to get brand
loyalty for a particular company.

1.2

Content

The first section of the paper states the purpose of this study. The second section of the paper will
examine the background of branding and how brand equity is importance to know about brand
preferences. Different researchers works on branding will be discussed in order to give a broader
sense of what research has been done in the field of branding. A model explaining and measuring
brand equity will be discussed in this section as well. The third section in the paper will emphasis
on the review of literature from different researchers in the field of brand preferences. The forth
section will suggest the research methods that this paper will follow.

2 What is a Brand?
In todays world companies prefer to sell brands rather than normal product. So what is brand?,
A brand is a "Name, term, design, symbol, or any other feature that identifies one seller's good
or service as distinct from those of other sellers. (Ama.org, 2015). The importance of brands are
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to create value in the form of intangible asset which end up result in competitive advantage and
market success (Sksjrvi and Samiee, 2011). An effective brands can help in boost the sales on
not only one product of the organization but also help in increasing the sales of other products
too. The brand is valuable to the investor, the manufacturer, and the retailer only if it is valuable
to the consumer (Farquhar 1989; Crimmins 1992). Thus, it is important to understand how brand
value is created in the mind of the customer and how it converted into purchase intention. Beside
the definition of brand, brand has many characteristics like brand equity, brand awareness, brand
loyalty, brand association, brand personality, brand preferences, brand image. (Wikipedia, 2015).

Why brand is needed?

One thing we can see that brand made promises with their customer in order to provide better
products and services. Just think of a company Volvo, which is one of the biggest name in
automobile industry, and first thought that came in your mind are comfortable, Swedish, luxury,
and safety (Geller, 2015). Moreover, brands help in creating memory in consumers mind for
easy purchase decision. And with this it not only helps the product but also help in recognizing
sub brands, for example virgin brand has created a trust among consumer which helped in
creating success for all virgin sub-brands. From the companys perspective brands help in
increasing value for the organizations. According to Millward Brown, a market research
company says that a brand accounts more than 30% of the stock market value of companies in
stock exchange. For example Apple is most valuable brand in the world with value of 128 billion
US dollars (Statista, 2015). The brands enhance the business performance through influencing
key stockholders: customers, employees and investors. Brand also influences customer choices
and creates loyalty which attract, retain and motivate them for future purchase.

2.1

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Brand Equity

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The term Brand Equity emerged in late 1980s and David Aker developed a brand equity model.
Under this model it is defined as it is a set of brand assets and liabilities linked to a brand name
and symbol, which add or subtract from the value provided by a product or service. (Aaker,
1991). This model has four major dimensions brand loyalty, brand awareness, brand association
and perceived quality.
1. Brand Loyalty: It means when consumer become faithful to a particular brand and continuously
make a repeat purchase over time (Aaker, 1991). If we look at Paretos principle of 80/20 rule
which suggest that 80% of the profits comes from 20% of the customers (Parmenter, 2007).
Increasing in loyal customer result in increasing sales, cost reduction of marketing and acquiring
new customer with positive widespread of word of mouth. In order to have brand loyalty
consumer must have brand preferences and it can only be developed by better marketing of a
brand. Look at the two well-known brands Superman and Spider-man in comic industry,
consumer always have any kind of brand preferences before purchase. This preferences make
them loyal towards particular brand which results in repeat purchase and resistance to negative
comments on their favourite brands.
2. Brand Awareness: It is a brands ability to recognize or recalled a product or service (Aaker,
1991). In Aakers (1991) further description of brand awareness there are various level of brand

awareness. The lowest level is a brand recognition which reflects familiarity of a brand. Going
up is a brand recall which is ability of a consumer to retrieve the brand in their memory when
product class is mentioned (Asiamarketresearch.com, 2015). The first name of a brand come to
consumers mind is called Top of Mind (TOMA). This TOMA awareness of a brand comes from
consumers past experience of a brand (Peter & Olsson, 2008). Past experience can includes
previous purchase, brands presence through various medium (advertising, social media, in-store
experience etc.) and opinions of references group towards a brand (Aaker, 2011). Brand
awareness can affect the decision of consumer to buy between two brands. (Jacoby, 1977). High
levels of brand awareness raise the possibility of brand choice and generate greater consumer
loyalty (Keller, 1993).
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3. Brand Association: It is anything that associate in the memory to the brand and influences the
buying behaviour towards that brand. David Aaker (1991) suggested that there are ways in which
brand association creates value.
Information gathering: A strong brand association can help in gathering information and facts
which can be a crucial in terms of decision making.
Product Differentiation: A highly established brand with strong attributed and easy association
has a higher chance of competitive advantage over other.
Creates positive feeling: By creating positive feeling towards an association will help a brand in
creating positive feelings towards it. (Machleit & Wilson, 1988). If a consumer need to choose
between a branded and non-branded product then, in most cases they choose branded products as
they feel safe and reliable while purchasing a branded product.
Benefit for Extension: Brand extension will be much easier if a primary brand have a positive
association towards it. Consumer assumes that if a brand has a positive image in one product line
then it might also be good in another aspect too. (Aaker, 1991). Take an example of Gillette who
successfully extended their brand extension from selling razors to shaving creams. (Haig., 2003)
4. Perceived Quality: Perceived Quality is a driver of brand preference. It is customers
perception of the overall quality or superiority of a product or service with respect to intended
purpose, relative to alternative (Aaker, 1991). Perceived quality can be important for customers
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as they have a belief that higher they pay better will be the quality in that case they need to think
while purchasing. For example an iPhone which is perceived as both innovative and higher
quality brand, which make consumer to pay higher price. As consumer see that it satisfies their
value needs.

2.2

Concept of Brand Preferences

In marketing literature, the word preference means the desirability or choice of an alternative
brand when there are equal price and availability. (Zajonc and Markus, 1982). Brand preference
is defined variously as the consumers tendency toward a brand that varies depending on the
salient beliefs that are activated at a given time; the consumer biases toward a certain brand; the
extent to which a consumer favours one brand over another. For this study we defined brand
preference as brands preferred under assumptions of different brand attributes and factors
affecting brand choice. In order to have deeper understanding of brand preferences, we must
know how consumer preference works, mostly early psychological model like ABC model of
attitude and Fishbein model of multi-attribute focus on attitude towards brand or product
attributes. (Fishbein, 1965). The belief towards a brands are important as they help in building
brand preferences. Moreover, there are factors that influence consumers brand preferences:
Country of Origin, Quality, Price, Social Status and Friends & family. (Ismail, Masood & Tawab,
2012). Marketer uses different strategies for branding and one of them is brand preferences
strategy which involves incremental innovation to make the brand more attractive and reliable.
For example, Gillette who were creating only single blade razors but with time they improved
and innovate their product with Trac II and Mach III (Gilliard, 2015). In order to create regular
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customer interest, effective communication is required from cleaver advertising to impactful

promotion, more visible sponsorship to more social media involvement. (Aaker, 2011).
According to David Aaker, this strategy is one of the difficult path to success in today's scenario
as customers are not motivated to change their brand loyalty in established market.

How global brands Compete?

According to Harvard business review study on global brands vs local brands, people choose one
global brand over local brand because of different in global characteristics. (Holt, Quelch &
Taylor, 2004). Global brands have become culture all over the world with help of
communication. Majority of big brands have become lingua franca for consumers, people may
love them or hate them but they cant ignore them. Consumers have a many perceptions for
global brands like premium price with premium quality, develop new products with
breakthrough technology, having a feeling of being a part of something bigger while consuming
global brands and social responsibility. (Holt, Quelch & Taylor, 2004). Global companies have to
deal with negatives when it comes to social responsibility. For example McDonald is known for
pay low wages, as a global brand it will face negative popularity whereas if a local brand does
that nobody pays attention to it. Now a days consumer do care about country of origin (COO)
before purchasing a brand for example consumers dont like to buy products from America
because of countrys ugly stories like McDonalds low wages, Shells oil rig case, starting Iraq
war. Many consumers also says that American culture have ruined local culture. (Holt, Quelch &
Taylor, 2004). One the other hand people value global brand particularly highly because they
represent a way of life that they cherish. Sometimes many global brand may also be perceived
differently by consumers as they want to perceive differently like Walmart with their
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advertisement they say everyday low prices, this might create a perception that they might
have bad quality product as prices were low.

3 Literature Review
According to Ebrahim (2013), there is a strong relationship between brand experience and brand
preferences. In addition to that brand preferences is only possible if a person had a previous
brand experience. This argument completely fails for that consumer if he buys a new product.
Lets take a scenario in which a customer doesnt come in contact with any kind of brand
association which means he doesnt not know about the brand which results in no brand
preferences.

And the author suggested that brand experience is directly related to brand

association and brand association is directly related to brand preferences. Also brand association
helps in creating strong remembrance about the brand which leads to brand preference. (Aaker,
1991). Another argument Ebrahim (2013) says that brand association is positively influenced the
brand personality and brand personality positively influences brand preferences. So the brand
personality refers to symbolic meaning of brand association (Keller, 1998). The brand
personality concept effectively increase attitudinal and behavioural responses which further
leading to favorable brand attitude strong brand preference over the other. (Heding, 2009). In the
conclusion brand association, brand attributes and brand personality are the one of the factors
that affect brand preferences.

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In the consumer behaviour model of Fishbein (1965) suggest that attributes can help in choosing
the product. In addition to this fishbein also stated that beliefs is the knowledge that a consumer
has about the product, its attributes and benefits provided by a product. But Fishbein doesn't
justified that how knowledge can be obtained for the first time. In order to have a knowledge
about the product or a brand it require brand awareness which can be done through various
modes of advertising.
A combined study done by Zeenat Ismail and Sarah Masood (2012) of the topic of brand
preference stated that there are five main factors which tend to change consumers buying
decision: a) Country of Origin, b) Quality, c) Price, d) Social Status and e) Friends and family. In
consumers perspective on one hand a global brand is considered to be valuable and admired as
high status symbol while on the other hand global brands are sometimes criticized for over
showing local brands. Global brands usually have high price as compared to local brands and
high price of global brands assumes to have higher quality (Batra & Alden, 2000). In this
statement there are two argument which might not be true always. First is Country of origin, it is
not necessary that a strong global brand will always beat the local brand as argued by Nigel
hollis (2010). Second is Quality, if a global brand has a good quality product it doesn't mean its
going to sell like with example of New Coke although it is a good quality product but it fail
miserably.(Haig, 2003). Many studies believe that consumer obtain knowledge through personal

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experience will be perceived as more trustworthy as compared to guidance given by family and
friends (Swaminathan et al., 2001).
Another study on the impact of distribution intensity on brand preference and brand loyalty has
been done by Ahmed (2011), and he suggested that satisfaction, perceived quality, distribution
intensity affects the brand preference which is a key driver to brand loyalty. This study justifies
that brand preferences is the primary factor that affects distribution intensity and brand equity
construct. The brand equity has been considered as the prerequisite to brand preference which
affects customers purchase intention. (Tolba, A. H., 2011). The brand equity construct that
impacts are awareness, familiarity, weighted attributes, value for money, overall quality of brand.
(Mackay, 2001b). Additionally, several studies differentiated between Attitudinal Loyalty and
Purchase Loyalty (Morgan, 2000; Chaudhuri & Holbrook, 2001) Attitudinal Loyalty is defined
as the level of commitment of the average customer towards the brand. Purchase Loyalty is
defined as the willingness of the average consumer to repurchase the brand. This suggest that
there is a link between brand loyalty and brand preferences.

3.1

Conceptual Framework

Based on previous discussion, a conceptual model is developed that links brand preference and
brand loyalty. The model suggest direct and indirect relationship between brand belief, factors
and attributes towards brand preference. The proposed model has eight constructs: brand
preferences, brand loyalty, Country of Origin, Quality, Price, Brand beliefs, Social Status and
reference groups.

3.2

Questions

After discussing the literature review done by researchers in the field of branding, many
questions arises that will give a direction to this paper.

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1) Q1.Is brand preference is directly related to brand loyalty?

(If consumer preferred a product or a brand regularly which means that person is loyal to
that product or brand)
2) Q2: Is Country of origin has indirect or direct relation to brand preferences?
(If a people doesn't know about country of origin of a brand then they still buys that
product, if they know its origin they might not buy it) Country of Origin does not always
creates positive effects, like if a product which is say it is mad in china then that product
is perceived with bad quality. But for product made in Germany that is consider as good
quality as many good quality brands are from Germany.
3) Q3: Does quality of product has direct relation to brand preferences?
(If quality of a product is good then consumer easily preferred that product and they will
know about the quality either they experience it or influenced by reference group) As we
know quality is the essential factor with it not always means that if a product is good it
will succeed. For example, Betamax by Sony for instance had better picture and better
audio quality than VHS video recorder but still failed disastrously. (Haig, 2003).
4) Q4: Is Brand belief helps in deciding brand preference?
(If a consumer has a belief that brand or product they need is better or is the right choice
for them, they came to know either by advertising, word of mouth or through brand
association, then consumer preferred that brand). If a company is a global brand it has a
good brand belief. But it is a myth that big companies will not always have brand
success. Biggest example of this is Coca-Colas New Coke.
5) Q5: Does price has indirect or direct relation to brand preference?
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(If price of one brand is higher than other brand then it doesn't mean that consumer will
not buy high priced brand. Price might affect the brand depending on consumer
consumption of that product)
6) Q6: Is Social Status is importance to brand preferences?
(If a consumer want to create better self-identity then they buy that brand that have better
brand identity among society, eg. BMW and Mercedes are high luxury cars and consumer
who owned them are perceived as high social status. )
7) Q7: How did Reference group influences brand preferences?
(Consumers decision making towards brand can influenced by many reference group
like friends, family, role model, etc.)

Model 1.1
Price
H5
Quality
Social Status

Reference
Group

H3

H6
H7

H4
Brand Beliefs
H2
Country of
Origin

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Brand
Preferences

H1

Brand
Loyalty

SECOND DRAFT ON BRAND PREFERENCE

4 Research Methodology
For our secondary research, we conducted a literature review from journals on brand preferences,
the book of Marketing management, online resources for concept building and UFV library
business source complete. While researching from journal it helps in building understanding of
different conceptual models and some basic definitions about the topic. In addition to this, a
simple keyword search on Google was also performed , by typing in the model on brand
preferences,fishbein model, ABC model of attitude, Brand preference, brand equity.
For primary research or quantitative research, survey questionnaire would be conducted, the
questionnaire will focus on the area of brand preferences, different factors that influences brand
preferences, brand loyalty and brand belief. The survey will include variety of question including
multiple choice questions, Likert scale question and ranking question. Survey is one of the
effective way to collect data from a wide audience. And numerous questions can be asked which
will give extensive flexibility to our research. With more advanced statistical software and
technique the researcher would easily analyze the survey data to determine its validity and
reliability on multiple variables. Population for quantitative research will be all Canadian
consuming both local and global brand. And for sampling would be UFV student as this is
chosen on the basis of convenient sampling. This question will focus on different dimension like
price, quality, social status, reference group, brand beliefs and country of origin which contribute
for the brand preferences while comparing analysis of two coffee shop chains Tim Horton and
Starbucks.
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5 Findings
Research Findings
An empirical study has been done with the help of questionnaire and frequency analysis was
used in order to analysis the findings. Majority of the respondents were females from age group
of 18 to 24 years. According to our analysis Starbucks consumers are slightly higher than Tim
Horton consumers. In a week consumer visit their favorite coffee shop at least twice a week and
almost four times a week. First lets talk about Tim Hortons, respondents says that whenever
they hear the brand Tim Horton they associate it with low price and reliability. This means that
price and brand belief here is a motivational factor for brand preference. Second on the other
hand Starbucks is associated as high price, reliable, high class, high quality, global and relaxed
atmosphere. This suggests that price here is again an influencer. Beside price, quality is
considered to be motivational factor for brand preferences.
Paper Findings
Based on previous studies and critical review of the related literature on brand preferences, a
model 1.1 was created which suggest that price, quality, brand belief, country of origin, social
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status and reference group are pre-requisite for brand preference. The factors are classified into
two categories: perceived brand quality which include Country of Origin, Price, Brand Belief
and Quality and second is social factors which includes Social Status and Reference Group. If
consumer have brand preference of one brand over other which means they are like that brand
and in future they likely to buy that brand. This results in creating brand loyalty.
Perceived brand Quality

Country of Origin: Country of Origin can have both positive and negative impact on a

brand which results into final purchase decision. (Holt, Quelch & Taylor, 2004)
Price: Price and quality are perceived as interrelated by consumer as Price increases then

brand is premium brand and vice-versa.

Brand Beliefs: In order to have a brand belief consumer must have any sort of brand

association which make them blindly search for brand while purchasing.
Quality: As good quality is always sees as strong brands but thats not true. Many global
brand with good product failed to make a better brand like New Coke and Betamax.
Sometimes good quality not always attract consumers. (Haig, 2003).

Social Factors

Social Status: A global brands is consider to be better over local brands as they tend to
give a sense of luxury lifestyle. In the need of living better lifestyle consumer prefer

global brands. (Holt, Quelch & Taylor, 2004)

Reference Group: Consumer can easily influenced by the reference group which can be a
leader, friends, role model or family member.

6 Conclusion
Even though there are numerous of studies discussed about price, country of origin, reference
group, quality, social status, which leads to purchase intention it is clearly see that research
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examined on the interrelationship between these dimension and their effect on

brand

preferences. Therefore, this paper tried to fulfil this gap. This paper provides a model describing
the relationship pre-requisite of brand preferences and brand loyalty. Perceptions for global
brands and how the consumers come to the preferences for a specific brand name toward brand
purchase intention. This means that the higher in the likelihood percentage of purchase decision
making by a consumer is caused by the high preferences toward brands of consumers addressed.
Thus consumer un-intentionally adopt these factors while selecting any global brand.

Assumption and Limitation

This paper does not provide information with all explanations and models of brand equity since
there are many researchers investigating in this area, and many explanations can be found on this
literature. The paper will be concentrating on one of the main researchers work on branding,
David A. Aaker, Fishbeins consumer preference model and other articles. This paper limit the
number of respondents as per convenience research. And this paper will focus on student of
University of the Fraser Valley as a respondents.

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