driving consumer adoption of brand extensions: a …
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DRIVING CONSUMER ADOPTION OF BRAND EXTENSIONS:
A CASE OF FAST MOVING CONSUMER GOODS
BY
IDDAH AKINYI RASANGA
UNITED STATES INTERNATIONAL UNIVERSITY AFRICA
SUMMER 2018
DRIVING CONSUMER ADOPTION OF BRAND EXTENSIONS:
A CASE OF FAST MOVING CONSUMER GOODS
BY
IDDAH AKINYI RASANGA
A Research Project Report Submitted to Chandaria School of Business
in Partial Fulfillment of the Requirement for the Degree of Masters in
Business Administration (MBA)
UNITED STATES INTERNATIONAL UNIVERSITY- AFRICA
SUMMER 2018
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STUDENT’S DECLARATION
I, the undersigned, declare that this is my original work and has not been submitted to any
other college, institution or university other than the United States International
University in Nairobi for academic credit.
Signed: ________________________ Date: _____________________
Iddah Akinyi Rasanga (ID 645397)
This project has been presented for examination with my approval as the appointed
supervisor.
Signed: ________________________ Date: _____________________
Dr. Peter Kiriri
Signed: _______________________ Date: _____________________
Dean, Chandaria School of Business
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COPYRIGHT
Copyright © Iddah Akinyi Rasanga, 2018
All Rights Reserved. Compliance with copyright restrictions necessitate that no part of
this proposal may be produced or transmitted in any form or by any means without prior
written permission from the researcher except for brief citations in further research,
critical reviews and articles.
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ABSTRACT
The FMCG industry is proliferated with many brands and products. This has led to
market saturation and companies within this sector have had to struggle to sustain profits
amid changing micro and macro environmental factors. Brand marketers in FMCG
companies are constantly looking for new ways to expand their products to reach new
markets or use existing products to address new needs. Introducing an entirely new brand
present certain risks that make most brand managers opt to extend existing brands.
The purpose of this research was to examine in-depth, the factors that drive consumer
adoption of brand extensions in the FMCG industry in Kenya. The study aimed to
examine and replicate the Hem and Chernatony’s model of factors influencing successful
brand extensions, in order to establish the extent to which the consumer related factors
have influenced adoption of Kimbo Premium. Kimbo premium is a brand extension of the
parent brand Kimbo. Specifically the study sought to answer four main questions: To
what extent does brand trust influence consumer adoption of brand extensions? Does
customer innovativeness influence consumer adoption of brand extensions? What is the
influence of perceived risk on consumer adoption of brand extensions?
The research design was descriptive in nature. The study was based on a primary survey
targeting shoppers of Nakumatt, Tuskys, Naivas and Uchumi chain stores in Nairobi
namely; Nakumatt Mega branch, Tuskys Pioneer, Naivas Mountain Mall and Uchumi
Sarit Center. The study adopted stratified random sampling technique and data was
collected through self-administered questionnaires. Data was analyzed using SPSS and
presented using tables and figures. A set of hypotheses were developed and tested by
regression analysis. The statistical tests investigated the effect of factors such as brand
trust, consumer innovativeness and perceived risk on willingness to adopt a brand
extension. The findings supported only one out of the three hypotheses that was
developed from Hem and Chernatony’s model.
Parent brand trust had a significant positive effect on consumer willingness to adopt
Kimbo Premium. This study found that brand trust as multi-dimensional construct was a
crucial factor in the evaluation of brand extensions. The findings further revealed that
consumer satisfaction with the parent brand influenced the likelihood of successful
adoption of brand extension. Consumers were willing to try Kimbo Premium because the
Kimbo brand is highly trusted and regarded.
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This study revealed that consumer innovativeness did not have a positive effect on
consumer willingness to try brand extensions. This was attributed to the fact that even
though brand extensions are new products, consumers do not necessarily view them as
unique. The findings of this research supports previous literature on consumer adoption of
innovation which state that consumers tend to show higher levels of adoption intention
for innovations that are more complex.
The study revealed that the three major dimensions of perceived risk that influence
consumers’ willingness to adopt brand extensions were financial, performance and
psychological. The research findings showed that consumers were willing to try new
cooking oils as long as it didn’t involve an extra cost and considered taste of the food as a
major concern in purchasing new brands of cooking oil. The greater the level of risk that
consumers perceived, the less likely they were to adopt a new brand extension.
In conclusion, brand extension is a popular strategy for FMCG companies because it is
less costly and the existing brand enjoys some level of brand awareness. Consumers are
likely to try a new product from a well-known brand name rather than a new brand.
Kenyan consumers show brand loyalty to Bidco, one of the biggest FMCG companies in
Kenya by sticking to well-known Bidco brands.
This study recommended that Bidco should direct its marketing effort in persuading
consumers to try the new Kimbo Premium. Bidco should create a compelling reason for
consumers to want to switch from their current brands. Knowing that price, taste is a key
consideration for consumers looking to buy cooking oil, Bidco should include product
features in its advertising and explain to consumers what makes Kimbo Premium, a
premium cooking oil.
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ACKNOWLEDGEMENT
All Glory and Honor goes to God, who granted me good health and strength to carry out
this project. I acknowledge my Supervisor, Dr. Peter Kiriri, whose valuable input,
insights and feedback made this research an enriching experience.
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DEDICATION
To my family and friends
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TABLE OF CONTENTS
STUDENT’S DECLARATION ....................................................................................... ii
COPYRIGHT…………..……………………………………………………..…………iii
ABSTRACT………………………..……….……………………………………………iv
ACKNOWLEDGEMENT ............................................................................................... vi
DEDICATION................................................................................................................. vii
LIST OF TABLES .............................................................................................................x
LIST OF FIGURES ......................................................................................................... xi
CHAPTER ONE ................................................................................................................1
1.0 INTRODUCTION........................................................................................................1
1.1 Background of the Problem ...........................................................................................1
1.2 Statement of the Problem ...............................................................................................6
1.3 Purpose of the Study ......................................................................................................7
1.4 Research Questions ........................................................................................................7
1.5 Significance of Study .....................................................................................................7
1.6 Scope of Study ...............................................................................................................8
1.7 Definition of Terms........................................................................................................8
1.8 Chapter Summary ..........................................................................................................9
CHAPTER TWO .............................................................................................................10
2.0 LITERATURE REVIEW .........................................................................................10
2.1 Introduction ..................................................................................................................10
2.2 Brand Trust Influence on Brand Extensions ................................................................10
2.3 Consumer Innovativeness Influence on Brand Extensions ..........................................16
2.4 Perceived Risk Influence on Brand Extensions ...........................................................23
2.5 Chapter Summary ........................................................................................................28
CHAPTER THREE .........................................................................................................30
3.0 RESEARCH METHODOLOGY .............................................................................30
3.1 Introduction ..................................................................................................................30
3.2 Research Design...........................................................................................................30
3.3 Population and Sampling Design .................................................................................31
3.4 Data Collection Methods .............................................................................................33
3.5 Research Procedure ......................................................................................................34
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3.6 Data Analysis Methods ................................................................................................34
3.7 Chapter Summary ........................................................................................................35
CHAPTER FOUR ............................................................................................................36
4.0 RESULTS AND FINDINGS .....................................................................................36
4.1 Introduction ..................................................................................................................36
4.2 General Information .....................................................................................................36
4.3 Effect of Brand Trust on Consumer Adoption of Brand Extensions ...........................46
4.4 Effect of Consumer Innovativeness on Adoption of Brand Extensions ......................49
4.5 Effect of Perceived Risk on Adoption of Brand Extensions........................................53
4.6 Regression Analysis .....................................................................................................57
4.7 Chapter Summary ........................................................................................................59
CHAPTER FIVE .............................................................................................................60
5.0 DISCUSSION, CONCLUSIONS AND RECOMMENDATIONS ........................60
5.1 Introduction ..................................................................................................................60
5.2 Summary ......................................................................................................................60
5.3 Discussion ....................................................................................................................61
5.4 Conclusions ..................................................................................................................65
5.5 Recommendations ........................................................................................................66
REFERENCES .................................................................................................................68
APPENDICES ..................................................................................................................74
APPENDIX I: COVER LETTER ..................................................................................74
APPENDIX II: QUESTIONNAIRE ..............................................................................75
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LIST OF TABLES
Table 2.1: Types of Risk .................................................................................................... 26
Table 4.1: Average level of Kimbo Premium Awareness ................................................. 40
Table 4.2: Average level of Awareness of Kimbo Premium by Gender ........................... 41
Table 4.3: Cross Tabulation of Awareness and Willingness to Purchase.......................... 42
Table 4.4: Chi-Square Test for Independence Results ....................................................... 43
Table 4.5: Cross Tabulation of Gender and Willingness to Purchase ............................... 44
Table 4.6: Chi-Square Test for Independence ................................................................... 44
Table 4.7: Chi-Square Test for Independence ................................................................... 45
Table 4.8: Cross Tabulation of Age and Willingness to Purchase .................................... 45
Table 4.9: Bidco Brand Trust Measurement ...................................................................... 46
Table 4.10: Bidco Brand Identity Measurement ................................................................ 47
Table 4.11: Parent Brand Trust Measures .......................................................................... 48
Table 4.12: Parent Brand Trust Statistics .......................................................................... 48
Table 4.13: Chi-Square test for Independence ................................................................... 48
Table 4.14: Cross Tab Analysis between Kimbo brand Trust and willingness to adopt
Kimbo Premium ......................................................................................................... 49
Table 4.15 : Level of Consumer Innovativeness ............................................................... 50
Table 4.16: Risk Propensity ............................................................................................... 50
Table 4.17: Case Summary of Risk Taking Propensity by Gender ................................... 51
Table 4.18: Chi-Square Test for Independence ................................................................. 52
Table 4.19: Financial Risk Measurement .......................................................................... 53
Table 4.20: Chi-Square Test for Independence ................................................................. 54
Table 4.21: Cross Tab Analysis between Financial Risk and Gender ............................... 54
Table 4.22: Psychological Risk.......................................................................................... 56
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LIST OF FIGURES
Figure 2.1: Hem and Chernatony Model 1 ........................................................................ 11
Figure 2.2: Technology Acceptance Model ....................................................................... 20
Figure 2.3: Consumer Adoption Process ........................................................................... 21
Figure 4.1: Gender of Respondents ................................................................................... 37
Figure 4.2: Age Distribution .............................................................................................. 37
Figure 4.3: Monthly Income Distribution .......................................................................... 38
Figure 4.4: Marital Status .................................................................................................. 38
Figure 4.5: Shopping Frequency ........................................................................................ 39
Figure 4.6: Preferred Brand of Cooking Oil ...................................................................... 39
Figure 4.7: Kimbo Premium Awareness ............................................................................ 40
Figure 4.8: Willingness to purchase Kimbo Premium ....................................................... 42
Figure 4.9: Kimbo Brand Value......................................................................................... 47
Figure 4.10: Adopter Characteristics ................................................................................. 52
Figure 4.11: Social Risk Measurement .............................................................................. 55
Figure 4.12: Performance Risk .......................................................................................... 56
Figure 4.13: Information Seeking ...................................................................................... 57
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CHAPTER ONE
1.0 INTRODUCTION
1.1 Background of the Problem
The importance of marketing in today’s world is undeniable. (American Marketing
Association, 2005). Marketing plays a big part in economic growth and development.
Perreault and McCarthy (2003) asserts that marketing stimulates research and new ideas,
resulting in innovative goods and services. It is indeed the heart of the business because
without marketing potential customers would not know about the products and services
offered by a firm. Marketing gives customers a choice among products and is defined as a
set of activities done by an individual organization to satisfy the customers that it serves.
For the individual organization to succeed therefore, it ought to offer the right product,
one that meets the needs of consumers and to pursue the right marketing strategies which
will solidify the message that the product is the best for the consumer. This is essentially
a brand strategy.
Pearson (1996) defines a brand as a combination of features (what a product is), customer
benefits (what needs and wants the product meets) and values (what the customer
associates with the product).The concept of the brand is at the center of marketing theory
and practice. Branding is an important concept that explains why some people like
choosing brands more than others when there is no physical difference between them
(Hao, 2010). A brand is a name, word, symbol, indication, design, or a mix of these
which is intended to identify the products and services of a company and to distinguish
them from those of rivals (Afzal, 2013). Koschate-Fischer and Gartner (2015) stated that
brands identify the source of a product and allow consumers to assign responsibility to a
particular manufacturer. Therefore, to make efficient choices amongst alternative
products, customers need information and brands communicate information in a
shorthand summary.
A brand is created when marketing adds values to a product and in the process
differentiates it from other products with similar features and benefits (Hao, 2010). He
goes on to say that brands take on a meaning for consumers as a result of past experiences
therefore, brands simplify product-buying decisions. A brand name is the most
significant, fundamental long lasting asset of a firm (Chernatony, Christodoulides, &
Stuart, 2008).
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Marketing managers are always seeking ways to enhance the value of brands by
leveraging this value through existing brands. According to Hardie, et al., (2009) when a
company wants to launch a product, it has to decide on whether to introduce a new brand
name or use an existing brand name.
Brand extensions are a popular way of introducing new products to the organizations’
portfolio (Nijssen, 1997; Saha, 2014). Brand extension is defined as the use of established
brand names to enter new product categories or classes (Keller & Aaker, 1992). They
state that brand managers perceive brand extensions as a low cost and low risk way to
meet the needs of various customer segments. By providing a wide variety of goods under
a single brand, companies can satisfy consumers’ desires. Brand extensions also tend to
give a company a competitive edge as it faces increased competition in distribution
channels. It is a strategy that dates back from the 1960s and has since become a popular
marketing strategy. According to Keller (2003), up to ninety percent of new products get
launched in one year as an extension of a brand.
Fast Moving Consumer Goods (FMCG) sector is one of them main sectors that employ
brand extension strategies (Saha, 2014). The FMCG goods sector feature relatively
cheaper products that have a short shelf life and are purchased by consumers on a regular
basis (KPMG, 2014). Profit margins on these products are usually low for manufacturers
and retailers who then offset this by selling large volumes (KPMG, 2014).Within
categories, FMCG products are often near identical and for this reason price competition
among brands can be intense, margins are squeezed to their minimum levels and the least
efficient companies get pushed out of business (Saha, 2014).
The consumer is also exposed to several brands fulfilling the same need, this has led to an
increase of FMCG companies exploiting existing brands to reach the consumer’s mind
across different product categories. Unilever, for example, has a total brand portfolio of
400 products but it has 1,600 products. It uses established brand names to venture into
new product categories (Unilever , 2016). New product planning in FMCG companies
also remains difficult as there are shorter product cycles which mean shorter time to
market for organizations. Brand managers in FMCG companies leverage the existing
brands to limit the introduction costs of new products (Saha, 2014). Firms may consider
brand extensions when competition is high or when consumers’ desire for variety is great
(Nijssen, 1997).
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Used as a strategy to grow the market, brand extension adds variety to existing product
for the sake of reaching a more diverse customer base and enticing customers with new
options (Martinez & Pina, 2010).
Mars is a well-known brand in the sweets product category, but it also offers ice cream
products to consumers (Mars, 2016). What drives adoption of the ice cream products is
the fact that Mars is an already well-known brand name and therefore consumers perceive
it to be of good quality. Hollis (2012) infers that consumers are less reluctant to try out a
new product if it is associated with a well-known brand. Dettol is another FMCG
company that has successfully utilized the brand extension strategy (Jaiswal, Srivastav, &
Kothari, 2009). There is Dettol bath soap, Dettol antiseptic cream, Dettol pain relief
spray, Dettol adhesive bandage, Dettol liquid hand wash, Dettol shaving cream and Dettol
sanitizer.
There are countless cases that can be listed as successful brand extension examples, but
despite the benefits that brand extensions afford to FMCG companies, there are reported
risks to this strategy. Statistics show that an unexpected 84% brand extensions fail and in
cases where they succeed, they do not always generate extra profits (Hardier, et al., 1994;
Hollis, 2012). The flip side of a brand extension strategy is that it can weaken the image
of the main brand (Mather, 2011). He goes on to say that positive and negative
consequences are reciprocity effects, which is defined as “a change in the initial
customer’s behavior regarding the brand, after an extension”. He explains that a brand
extension can damage the brand. A dilution of the brand capital can happen by the
occurrence of undesirable associations or by the weakening of existing associations.
When a new brand extension is launched, consumers evaluate it on the basis of their
attitude towards the parent brand and not the extension category (Vukasovic, 2012).
If a consumer does not know the parent brand and its products at all, he/she will evaluate
the new extension solely based on his/her experience with the extension category
(Palmeira, 2013). Aaker (2004) further argues that the associations created by an
extension can fuzz a sharp image that had been a key asset and at the same time reduce
the brand’s credibility within its original setting.
Brand extensions can cannibalize the existing products of the brand when they are
positioned in a close market. The brand extension’s sales will increase while those of the
existing brand will follow an opposite curve (Aaker, 2012).
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Taylor (2004) highlights this risk as well and like Aaker says that when extensions are
“brand clones”, they cannot be differentiated from existing products. Each introduction
will compete for the same usage occasion and therefore cannibalize existing products.
Brand extension can affect brand loyalty more so if the new brand extension fails to
satisfy. Customers’ attitudes towards other products carrying the same brand name may
be damaged (Aaker, 1990; Hardie, et al., 1994).
Other researchers have considered market related factors such as of level of competition
to have a major impact on brand extension success (Nijssen, 1997).Competitors can often
react to new product launches by offering a better price and this causes new product
success to erode quickly (Nijssen, 1997). He goes on to say the fact that brand extensions
are characterized by a close relationship with their parent brand’s product, they are
particularly easy to imitate. His research discovered that the higher the competition, the
quicker and more severe the competitor reaction will be and the shorter the extensions’
success.
Specific buying behaviors also interplay in a consumer’s judgment of brand extensions.
The economic value that a purchase offers a customer is an important factor in many
purchase decisions, but many behavioral dimensions influence consumers (Perreault &
McCarthy, 2003). Consumers’ variety seeking behavior in the brand category also affects
brand extension success (Nijssen, 1997). He explains that buying situations characterized
by low consumer involvement and many competitive products as is the case with FMCG
sector encourage variety seeking behavior. Changes in taste and income will also
encourage variety seeking behavior. Some company related factors such as advertising
expenditure was also found to affect the success of brand extensions. Increased
advertising expenditure influences brand extensions’ success positively because one of
the hardest tasks in brand extensions is to make the consumer aware that the brand is in
the market in a new product form.
What must FMCG companies do then? Brand extension strategies are the only recourse to
the introduction of new products especially in today’s business environment where
change is constant. How do FMCG companies weigh the pros and cons of brand
extensions and make the right decisions for success? A growing body of literature has
examined the determinants of brand extension success (Aaker, 1990; Chernatony,Iversen
& Hem, 2003;Volckner & Sattler, 2006).
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According to Aaker and Keller (1990), the success of a brand extension often depends on
certain assumptions about consumer behavior such as: A consumer holds positive beliefs
and favorable attitude towards the original brand in memory and these positive
associations facilitate the formation of positive belief and favorable attitudes towards the
brand extension. According to Volckner and Sattler (2006), brand extension success
depends on parent brand’s relative strength and symbolic value, the extension’s order and
sequence of entry, support for the extension, firm size and a firms’ distinctive marketing
competencies. According to (Chernatony et al., 2003), brand specific associations such as
brand attitude, brand trust, brand equity and perceived fit between a parent brand and a
brand extension have also been found to affect brand extension success.
Volckner and Sattler (2006) stated that the fit between the parent and the extension
product is the most important driver of brand extension success. For example, the Dettol
brand has received immense trust and loyalty from consumers (Jaiswal et al., 2009).
Reckitt Benkister has managed to leverage on the strong brand equity of Dettol to extend
into related product categories. Dettol soap and Dettol liquid hand wash are some of the
most successful well thought out brand extensions to date. Dettol as a brand has been
positioned as ideal for germ protection and therefore all its subsequent brand extensions
are positioned the same way. The packaging of all its products are distinct in their own
way with green and white colors and the sword as symbols for fighting germs and
infections. The reason for Dettol brand success is because of the strategic fit between the
parent brand and the brand extension (Jaiswal et al., 2009). The brand extensions of soap
and liquid hand wash were successfully adopted by customers because the product
maintained the core value of protection against germ protection. The overarching
principle then is for a brand extension strategy to succeed it must leverage, protect and
reinforce the brand equity (Czellar, 2002; Aaker, 2012).
Kenya is a price sensitive market with majority of the population at the lower half of the
economic pyramid (Kenya National Bureau of Statistics, 2016). FMCG companies
therefore employ brand extension strategies by using the same brand name for a group of
products which then give them a good opportunity to decrease the cost of marketing a
new brand name. For example Ushindi -a brand of PZ Cussons industries has recently
been extended into dish washing liquid soap and detergents.
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Bidco Oil Refineries Limited, the largest oil refining company in East & Central Africa is
a major player in the FMCG industry in Kenya. It is well known for its edible oils and
popular brands include Kimbo, Golden Fry, Chipsy, Soya Gold, and Bahari Fry among
others. It recently introduced Kimbo Premium Cooking Oil, which is an extension of the
original Kimbo cooking fat brand. Kimbo is a well-known brand and consumers can
easily relate to the new product and form expectations based on prior experience with the
brand. There is also a strategic fit between the parent brand and the brand extension so
this will guarantee it some success to a certain point based on Volckner & Sattler (2006)
assertions that fit between parent and the extension product is the most important driver
of brand extension success. However this fit, between parent and brand extension cannot
be considered the only determinant of success of a brand extension.
Previous research on brand extension success has primarily examined how parent brand
evaluation, brand extension characteristics and market related factors can influence brand
extension success. However, this research does not examine the readiness of consumers to
switch once a brand extension strategy meets all the requirements such as parent brand fit
and right product category.
1.2 Statement of the Problem
Brand extensions are increasingly being used by FMCG companies in Kenya. What has
necessitated this strategy is the fact that established brands are threatened as never before
by a new and hostile marketing environment. Competition is the main stay of every
industry and more so in the FMCG sector. The fiercest new competition comes from
retailer private label brands. Nakumatt introduced its own store brand “Nakumatt Blue
Label” cutting across different product categories. It includes food, beverages, personal
care and home care products which have little to no differentiation across manufacturers.
Nakumatt products are priced relatively cheaper than other products and command
greater shelf space.
To compete, we have seen managers of FMCG companies choosing to extend and
leverage on their brand power by offering a variety of products at an attractive price.
Managers of these companies therefore ought to understand the parent brand, market
related and consumer related factors that lead to success of brand extensions in order to
make the right decisions and position themselves for success.
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The past 15 years have witnessed the progress of an important body of experimental
evidence on consumer attitudes towards brand extensions (Czellar, 2003). It is Aaker and
Keller (1990) influential study that is the first logical research on consumer behavior
towards brand extension. However, understanding how Kenyan consumers evaluate brand
extensions is hampered by lack of research in this area. Several studies of Aaker (1990)
model have been conducted in different parts of the world including in developing
countries. Saha (2014) did a study on brand extensions in the FMCG segment in India.
Afzal (2013) also did a study in Pakistan on factors influencing successful brand
extension into related and unrelated product categories. There exists little research done
in Kenya on the factors that drive consumer adoption of brand extensions yet
understanding these factors will enable FMCG companies employ effective marketing
strategies to promote brand extensions.
1.3 Purpose of the Study
The purpose of the study was to determine to what extent consumer related characteristics
brand trust, perceived risk and consumer innovativeness affect consumer adoption of
brand extensions in Kenya.
1.4 Research Questions
1.4.1 To what extent does brand trust influence consumer adoption of brand
extensions?
1.4.2 To what extent does consumer innovativeness influence consumer adoption of
brand extensions?
1.4.3 What is the influence of perceived risk on consumer adoption of brand
extensions?
1.5 Significance of Study
This study will provide important implications to both academia and the FMCG industry.
Due to the limited amount of research in Kenya on the extent to which consumer related
factors drive consumer adoption of brand extensions, this study addresses a big gap in
literature.
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1.5.1 Bidco Oil Refineries
Brand extensions can be used as a growth strategy; therefore, Bidco will be able to use
the results of this study to find out how best to extend their product portfolio into new
categories.
1.5.2 Marketing Professionals
Identifying the factors that drive consumer adoption of brand extensions will present
insights into how marketers and manufacturers of brand extensions, could improve their
marketing strategies of brand extensions in order to increase sales and market share
across diverse product categories.
1.5.3 The Academia
The research findings will also add on to the body of knowledge and academicians will be
able to understand the extent to which consumer related factors, drive consumer adoption
for brand extensions in Kenya as well as pave the way for further research.
1.6 Scope of Study
This study focused on Bidco Oil Company which employed a brand extension strategy
with its brand Kimbo. (Bidco Group, 2016) Indeed, it is only for Kimbo Premium that
Bidco decided to use brand extension otherwise it prefers creating new brands. Empirical
data was collected from shoppers drawn from 4 major supermarket chains in Nairobi.
Nakumatt, Tuskys, Naivas and Uchumi, particularly Nakumatt Mega, Tuskys Pioneer,
Naivas Mountain Mall and Uchumi Sarit. The data was collected in the month of June
2016 and was analyzed using descriptive and inferential statistical techniques.
1.7 Definition of Terms
1.7.1 Brand
Name, term, design, symbol, tagline, catch phrase, graphics, shape, color, initials or any
other feature that identifies one seller’s good or service as distinct from those of other
sellers (Koschate-Fischer & Gartner, 2015).
1.7.2 Brand Extension
It is the use of established brand names to enter new product categories or classes (Keller
& Aaker, 1992).
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1.7.3 Parent Brand
The brand that gives rise to a new product under its name is called” The Parent Brand
(Keller, & Aaker, 1992).
1.7.4 Brand Trust
The willingness of the average consumer to rely on the ability of the brand to perform its
stated function (Chaudhuri & Holbrook, 2001).
1.7.5 Consumer Innovativeness
This is the tendency to buy new products in a particular product category soon after they
appear in the market and relatively earlier than most other consumers in the market
segment (Li, Zhang, & Wang, 2014).
1.7.6 Perceived Risk
Consumer’s perceptions of the uncertainty and adverse consequences of engaging in an
activity (Campbell & Goodstein, 2013).
1.7.7 Consumer Adoption
Psychological, social and physical behavior of all potential consumers as they become
aware of, evaluate, purchase, and consumer products and services (Nito, 2005).
1.8 Chapter Summary
This chapter introduced the subject matter of this research and highlighted background
information of the research area, paving the way for the research questions and
objectives. The relevance of this research along with its theoretical and practical
implications has also been justified. The chapter also defined the scope and operating
terms.
Chapter two will review the pertinent literature regarding the influence of brand
personalities on consumer choice, whereas chapter three will describe the research
methodology that will guide the entire study. Subsequently, chapter four will present the
analysis of findings and lastly chapter five discusses the findings, draws conclusions and
makes recommendations of the study.
.
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CHAPTER TWO
2.0 LITERATURE REVIEW
2.1 Introduction
This chapter provides information from previous research related to this research topic. It
examines literature of brand trust, consumer innovativeness and perceived risk from
various scholars and authors. This study replicated the model developed by (Chernatony,
Iversen, & Hem, 2003). The model discusses four components influencing the
acceptability of brand extensions and allows the researcher to examine the previously
reported findings on brand extensions in the context of local FMCG companies. The
chapter ends with a chapter summary.
2.2 Brand Trust Influence on Brand Extensions
2.2.1 Brand Extension Theory
Keller and Aaker (1992) proposed a theory of brand extension saying that the original
brand quality and the congruence or “fit” between the original brand and the extension
concept, influence brand extension evaluation. They went on to elaborate that the “fit”
attributes are complementarity, substitutability, transferability and difficulty and that all
these attributes have a direct effect on the preference for the new brand extension. Aaker
and Keller (1992) drew their reason from the categorization theory that suggest that affect
transfer from a familiar category to a new object is facilitated when the new object is
perceived as having characteristics that are similar to those associated with the category.
Categorization theories in social cognition research establish that an individual’s
experience over time leads to the formation of distinct categories in memories (Miller,
Malhotra, & King, 2006). According to Keller and Aaker (1992), in the context of
products, an individual forms categories that consist of products that share common
features. They go on to say that when a new product is encountered, categorization
theories suggest that rather than evaluate the specific attributes of the new product, the
individual will first attempt to evaluate the product thorough categorization. The
individual will attempt to classify the object into a known category store in memory. If
the product is determined to fit into a known category, then the affect attached to that
category is transferred to the new product (Keller & Aaker, 1992).
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However, if an adequate fit to a known category is not perceived then the attributes of the
product are evaluated individually and this exerts information processing demands upon
the individual. Research has shown that individuals will prefer a process of category
based affect transfer in evaluating an object given its lower information processing
demands (Miller et al., 2006).
This associative- network memory theory serves as the overarching theory for
understanding brand extension evaluations (Keller & Aaker, 1992). They examined the
effects of perceived similarity between the parent brand category and extension category
on the transfer of affect from the parent to the extension. Their study suggests that
consumers use a brand name as a means of aggregating their knowledge regarding a
brand. This information is the basis of their overall impression or affect toward the brand
extension. Therefore, the evaluation of the brand extension is influenced by the evaluation
of the parent brand. Parent brand represents the basis for the extension. According to
Volckner and Sattler (2006), a strong brand makes it easier for consumers to accept a
brand extension.
Brand extensions can be categorized into vertical and horizontal extensions. According
to Xie (2008), a variation on quality levels of product within a category is referred to as a
vertical extension whereas a variation on the function or category of the product is
referred to as a horizontal extension.
2.2.1.2 Hem and Chernatony Model of Brand Extension Success
Figure 2.1: Hem and Chernatony Model 1
Source: Chernatony et al. (2003)
Perceived Similarity
Brand Reputation
Brand Extension
Success Perceived Risk
Customer
Innovativeness
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2.2.2 Brand Trust
To investigate brand trust, the concept of brands and the theories behind branding will be
explained. The conceptualizations of brand trust according to brand trust literature review
is largely categorized into antecedents and outcomes of brand trust. Brand trust is at the
heart of customer-brand relationship. Such trust is important because it goes beyond
satisfaction suggesting that its worth more than just a transaction (Chaudhuri & Holbrook,
2001). It is a central driver in consumer decision-making, particularly in relation to
consumers’ brand and relationship (Srivastava, Dash, & Mookerjee, 2015).
According to Chernatony et al. (2008), the brand is the target for the trust and it is
important to be aware of the components brands are built of. Components of brand such
as personality and image therefore affect the perception of the brand. Keller and Lehmann
(2006) define trust as a generalized expectancy held by an individual that the word of
another can be relied on. It is the extent to which a person is confident in and willing to
act on the basis of the words, actions, decisions of others (Elliot & Yannopoulou, 2007).
In the context of an organization, it is the willingness of the average consumer to rely on
the ability of the brand to perform its stated function (Chaudhuri & Holbrook, 2001).
Trust is developed with customers through competence, which is the ability for a
company to do a job well. To earn trust, it is important that consumers believe that they
can trust your decisions and judgment even when there are changes (Chernatony et al.,
2008). They argue that trust is also built on expectation that something or someone will
act in the way they need want, desire or crave. They go on and say that when individuals
put trust in someone or something, they believe that their expectations will be met and
they will not have to deal with the disappointment of their expectations not being
fulfilled. When expectations are met trust is built however, if there are unfulfilled
expectations the result is lost trust. Expectations are connected to three central modes of
trust. In process based trust, the person’s willingness to trust is based on the outcome of a
prior exchange. Therefore firms make investments in process based trust by creating
positive brand names and building a positive reputation (Chernatony, Christodoulides, &
Stuart, 2008).
According to Reast (2005), individuals only participate in transactions when their level of
trust exceeds their personal threshold. Meaning that individuals purchase goods or
services only when their trust meets their personal standards.
13
Determinants of a person’s threshold can include the potential cost and the risk involved.
Reast (2005) says the threshold is high if the value of the transaction is high, while the
threshold will be low if the individuals have a history of satisfactory experiences.
Therefore, whether a consumer will trust a brand enough to buy it depends on if the
individual’s trust is greater than the benefits that the brand is going to offer as well as the
risk that they are taking. Furthermore, the level of trust consumers have for a brand in
order to buy it will depend on how much potential risk and benefits are involved as well
as who is manufacturing the brand.
Aaker and Biel (2004) studied the relationship between consumers and corporate brands
and found two key components for successful relationships; brand trust and customer
satisfaction with the brand. According to Aaker and Biel (2004), the relationship between
the consumer and the brand will be successful if the consumer trusts the brand and is
satisfied with it.
Trust for brands is also defined by the following equation:
Trust= Risk* credibility*intimacy
Source (Shaw, 1996).
The greater the level of risk that consumers perceive the less they will trust in the brand.
With higher perceived risk, consumers will try to lower the risk by gathering more
information (Chaudhuri & Holbrook, 2001). Trust in a brand is dependent on credibility
which is the image created through dependability and reliability (Louis & Lombart,
2010).Trust is also dependent on the created intimacy, which is a measure of the brand’s
success in creating a personal and emotional bond with the consumer.
According to Reast (2005), consumers are willing to try brand extensions as long as the
brands are highly trusted and regarded. Volckner and Sattler( 2006) also agree when they
state that consumer knowledge of and belief in strong brands when evaluating brand
extensions may compensate for a consumer’s lack of direct product knowledge. Reast
(2005) had conducted a research on real and fictitious brands within low involvement
products and services categories and found that brands with higher trust ratings tended to
have significantly higher brand extension trust ratings for line, related and unrelated
extension concepts. His research findings match Aaker and Keller (1992) who also found
a significant association between “company credibility” and brand extension acceptance.
In (Reast, 2005) the research methodology was a one stage area sampling utilizing
random selection of post code blocks from the Royal Mail Database. However, his
14
research only focused on low involvement, low risk, and low complexity goods and
services categories which obviously already had a high brand familiarity. His research
therefore cannot be inferred to higher involvement high risk complexity goods.
2.2.3 Brand Identity an Antecedent of Brand Trust
Brand identity is something that exists in the minds and hearts of consumers. It is the
identity of the brand which provides the real strength of the business. After studying
related literature, brand identity represents the public image of a product, line or service.
A brand identity will include brand names, logos, positioning, brand associations and
brand personality (Keller & Aaker, 1992).
The personality and the positioning of the brand make up the brands’ identity and image.
Brands are built by creating a strong brand personality or a set of brand values and
positioning the brand by creating a favorable perception in the mind of the target
audience. The brand’s identity is the total proposition that a company makes to consumers
or the promise it makes and is everything that the company wants to be seen as. The
company needs to achieve harmony between the brand identity and the brand’s image by
creating good experiences (Carlotti Jr, Coe, & Perrey, 2004). According to Volckner and
Sattler (2006), brand extension success depends heavily on extension fit. Out of all the ten
drivers of brand extension success, these authors find that the fit between the parent brand
and an extension product is the most important factor. They conclude that customers tend
to respond more favourably to extensions that fit with their perceptions of the parent
brand.
Brand trust is built on brand identity. If a consumer’s perception of the brand’s image is
different than how the company has built the brand’s identity, the consumer will not see
the brand as credible (Chernatony et al., 2008). Cognitive brand trust is defined as
knowledge- driven trust in a brand where faith is developed on the basis of “ good
reasons” for which the brand is chosen.
It is the outcome of rational evaluations of the merits of brands. Johnson and Grayson
(2005), in a study of financial services asserted that accumulated knowledge allows one to
build confidence that the brand will meet expectations.
Changes in identity may lead to suspicion of stability and constancy as well as on honesty
of the brand, which in turn can decrease the intensity of the relationship between target
15
customers and brand. Hence, it can be said that trust is a substantial factor in creating
committed relationships and reputation has a positive correlation with trust. Brand
identity must be considered in brand extensions because it reduces uncertainty and risk in
purchasing (Johnson & Grayson, 2005).
2.2.4 Brand Positioning an Antecedent of Brand Trust
Building a strong brand is the objective of many organizations (Viot, 2011). Brand
positioning is the process by which a company offers its brands to the consumer.
Positioning is not about what you do to a product, but what you do to the mind of the
prospect. This simply means the way products are positioned in the mind of prospects.
According to Keller and Lehmann (2006), brand positioning refers to both the process
and the end result of building or rebuilding an image for a brand relative to a target
market segment. However, Kotler (1999) explains that a product position is defined as the
way the product is envisioned by consumers on important characteristics as well as the
mental thinking that the consumer has for the product relative to competing products.
Successful brand positioning leads to stronger brands. Therefore positioning focuses on
gaining a share of the consumer’s minds rather than the share of the market. By a
company focusing on this they strongly develop a good image or reputation that stands
out from competition and gains the trust of consumers.
2.2.5 Brand Value an Antecedent of Brand Trust
Value is the tradeoff between what a consumer gives and gets from a brand. Intangible
values are the benefits that customers experience that are not functional or physical
aspects of the brand which can include the aspects of the brand personality (Chun, Whan,
Eisingerich, & Maclnnis, 2015).
Brand identity enhances brand value and a brand with a strong commercial identity
accommodates customer’s needs for uniqueness and self-enhancement. Brand value
characteristics of the brand cannot be seen, tasted, felt, heard or smelled before they are
bought (Chernatony et al., 2008). For example, trust, freedom, power and excitement.
However, tangible values are the benefits that the customer experiences such as
functional or physical aspects of the brand.
These characteristics of the brand can be seen, tasted, felt, heard or smelled before they
are bought. Chernatony et al. (2008) state that perceived value is the consumer’s overall
16
evaluation of the benefits of a product which is based on what they receive- for example
quality, satisfaction or convenience vis a vie what is given for example, price, time and
effort. Perceived value is completely based on the individual. Perceived quality is the
consumer’s perception about a products overall excellence or superiority in comparison to
other products.
2.2.6 Brand Perception an Antecedent of Brand Trust
Perception is the way in which individuals select, organize and interpret information in
order to create a meaning for themselves (Barrett, Lye, & Venkateswarlu, 1999).
Furthermore, individuals will have different perceptions about the same stimulus due to
three perceptual processes. Selective attention, this is the tendency for individuals to
screen out most of the information to which they are exposed. Selective distortion which
is the tendency for individuals to adapt information to personal meanings and selective
retention which is the tendency of individuals to retain only part of the information that
they are exposed to which usually supports their attitudes or beliefs (Mather, 2011).
Today’s brands are commonly seen as a reflection of feelings that the company wants to
stimulate in which the consumer perceives the brand from an emotional standpoint. For
example, a consumer who wears NIKE buys into the attitude of being a professional
athlete which includes power, athleticism and accomplishment in reaching the highest of
one’s potential, all in which Nike has portrayed as a brand. Therefore, one can see that
perception is based on the attributes of a brand that is relevant and directly stands out in
the mind of each and every individual. A brand with a stronger identity tends to enhance
value perception (Srivastava et al., 2015). According to Kaul and Nair (2012), strong
brands beget strong brand extensions. In their survey of brand extensions among FMCG
companies in India, they found that when the parent brand was a leader in the category,
59% of brand extensions were also successful.
2.3 Consumer Innovativeness Influence on Brand Extensions
2.3.1 Consumer Innovativeness
The classification of consumers’ receptiveness to new products, services and practices is
called consumer innovativeness which is considerable to the ultimate success of brand
extensions (Xie,2008). This is a concept that represents the consumer’s propensity to buy
new products and consider new ideas. It can also be conceptualized as the tendency to
buy new products in a particular product category soon after they appear in the market
17
and relatively earlier than most other consumers in the market segment (Li, Zhang, &
Wang, 2015) Many researchers have identified consumer innovativeness as a personality
trait (Park, Burns, & Rabolt, 2007). They regard consumer innovativeness as one of the
most essential indicators of consumer behavior.
Innovative people are more risk prone and show better attitude toward brand line
extensions regardless of the perceived risk. According to Roerich (2004) need for
stimulation, novelty seeking, independence toward others and need for uniqueness are the
four dimensions of consumer innovativeness. Consumer innovativeness as a need for
stimulation is expressed by the idea that new products can help to maintain individual
stimulation on the optimal level. Innovativeness as novelty seeking can refer to the
acquisition of new information about a new product, adoption of new products, using
existing products in a new way, acquiring knowledge about all possible ways of utilizing
an existing product (Manning, Bearden, & Madden, 1995).
Researchers Li, Zhang, & Wang (2015) posit that consumer innovativeness is part of the
broader, more general category of innate innovativeness and connotes that innovative
consumer behavior as independence toward others, i.e. the ability to make innovative
decisions independently, whereas innovativeness as a need for uniqueness can be
expressed through acquiring rare items, confidence in own ideas, and breaking the rules.
Need for stimulation can be also classified as hedonic innovativeness while the need for
uniqueness is considered as social innovativeness. Consumer innovativeness is significant
in the process of adoption and diffusion of new innovative goods and services (Kaushik &
Rahman 2014). Diffusion of innovations can be explained as the process of
communication of innovation and hence there is a significant role of social factors and
social influences in the spread of innovations in society.
Some researchers have found out that higher consumer innovativeness increases
perceived quality and purchase intention of new services (Volckner & Sattler, 2006).
2.3.2 Diffusion of Innovation
Brand extension is a type of innovation pursued by organizations attempting to create
superior economic returns. Organizations innovate by designing products that will satisfy
a consumer’s desires and deliver value to him or her. Innovation is the engine of business
18
strategy and success. It is defined as an idea, practice or product perceived to be new by
the relevant individual or group (Hawkins & Mothersbaugh, 2010).
A successful innovation is a product or service that provides comprehensive solutions to a
consumer’s needs and connects to consumers emotionally, cognitively and economically.
Although several studies show that product innovations can help a firm obtain revenue, an
innovative product does not always guarantee a high market acceptance rate. Many
companies struggle to deliver a successful innovation that presents “high potential
product opportunities that companies can introduce in the market place and make a profit.
According to (Hawkins & Mothersbaugh, 2010), whether or not a given product is an
innovation, it is determined by perceptions of the potential market and not by an objective
measure of technological change.
2.3.3 Diffusion of Innovation Process
The diffusion process is the means in which innovations spread throughout a market. Like
with all other innovations, the diffusion process follows a similar pattern over a period of
time where there is relatively slow growth, followed by a period of rapid growth and
finally followed by a period of decline (Nito, 2005).
There are consumers who will purchase innovations very quickly whereas others will
show no inclination to purchase an innovation. These consumers are termed as innovators
who are the venturesome risk takers and are capable and willing to absorb the financial
and social costs of adopting an unsuccessful product. There also exists early adopters,
early majority and late majority (Nito, 2005).
In determining the rate at which an innovation is diffused Hawkins & Mothers Baugh
(2010), considered types of groups and concluded that some groups are more accepting of
change than others. It concluded that in general, young, affluent and highly educated
groups accept change including new products readily.
Therefore, the target market for the innovation will be an important determinant of the
rate of diffusion. Nijssen (1997) also justifies through his research that brand extensions
as a type of innovation will be diffused faster depending on marketing effort. The rate of
diffusion is also influenced by its relative advantage. The better the innovation is
perceived to meet the relevant need compared with existing products and services, the
more rapid the diffusion. Perceived risk also affects the rate of diffusion. The more risk
19
associated with trying an innovation, the slower the diffusion. Risk can be financial,
physical, and social.
Perceived risk is a function of three dimensions: The probability that the innovation will
not perform as desired, the consequences of it not performing as desired and the ability
and cost to reverse any negative consequences (Simcock, Sudbury, & Wright, 2006).The
more difficult the innovation is to understand and use, the slower the diffusion. Ease of
use is important in accepting new technologies. Understanding whether and why
consumers will adopt a new product or service is a critical insight for managers involved
in marketing innovations (Arts, Frambach, & Bijmolt, 2011).
2.3.4 Consumer Adoption Theories
Information technology acceptance and its use have been the focal point in many studies
for well over a decade. Several theoretical models have been used to study user
acceptance and the usage behavior of emerging technologies, including Roger’s diffusion
theory, the theory of reasoned action and the theory of planned behavior (Williams,
Nriprendrao, & Yogesh, 2015) .These theories and models focus on people’s intention to
engage in a certain behavior (i.e. adopt and use technology) as a major theoretical
foundation (Baaren, Wijngaert, & Huizer, 2011). The basic assumption is that people
consciously determine whether they engage in or do not engage in a certain behavior. In
this sense, the adoption and use intentions are usually conceptualized as a major outcome
variable that is influenced by various independent variables (Baaren et al., 2011).
2.3.4.1 Technology Acceptance Model
From the stream of research of adoption theories, the technology acceptance model
(TAM) has emerged as a powerful model that represents the background of technology
usage through beliefs related to perceived usefulness and perceived ease of use of
technology (Rondan-Cataluna et al., 2015).
The TAM model suggests that two specific beliefs; perceived ease of use and perceived
usefulness determine one’s behavioral intention to adopt a technology. Perceived ease of
use can be defined as the extent to which a person believes that using a technology will be
free of effort. It is thus a construct tied to an individual’s assessment of the effort
involved in the process of using the system whereas, perceived usefulness is defined as
20
the degree to which a person believes that using a particular technology will enhance their
performance (Rondan-Cataluna et al., 2015).
TAM provides a basis with which one traces how external variables influence belief,
attitude and intention to use. According to TAM, one’s actual use of a technology system
is influenced directly or indirectly by the user’s behavioral intentions, attitude, perceived
usefulness of the system and perceived ease of the system (Williams et al., 2015).
Figure 2.2: Technology Acceptance Model
Source: Davis et al., (1989)
Even though TAM was found to be a valid theoretical framework in studying technology
adoption and use, it has been criticized for its several limitations. For researchers who
seek to understand the full process of technology diffusion, the technology acceptance
model is limited in scope (Williams et al., 2015).This is because this model treats
perceptions of usefulness and ease of use as independent factors.
2.3.4.2 Consumer Adoption Process
Adoption process is a series of stages through which a customer goes through in adopting
a new product or service (Manning, Bearden, & Madden, 1995). Innovation adoption can
be defined as the consumer’s decision to make full use of an innovation (Shams, Alpert,
& Brown, 2015).
It implies both purchase intention and actual purchase behavior.Adoption intention refers
to a consumer’s expressed desire to purchase a new product in the new future. It relates to
the consumer’s state of mind before actual purchase behavior has occurred and is based
on the information and perceptions the consumer has at that time (Nito, 2005).
External
variables
Perceived
Ease of Use
Perceived
Usefulness
Attitude
toward
Behavior
Behavioral
Intention
Actual
Behavior
21
Figure 2.3: Consumer Adoption Process
Source: Nito (2005)
Nito (2005) states that at the awareness stage, a consumer will have to be aware of the
product before forming a purchase intention. Once a consumer is aware of a product, they
will search for information on it or try and read more about the product. For example, in a
store, a consumer might pick a new product of interest to read about its features. After the
interest stage, the consumer evaluates whether the purchase will add any benefit if
actually purchased. What is the value of picking one product over the other and what need
do they hope to satisfy from that product?
The second last stage is the product trial, where a consumer is given a product to try to
ease the process of evaluation. The last stage is the adoption stage; this is the actual
adoption of the product. The process might end in rejection where not enough interest is
generated to warrant adoption. Consumers tend to show higher levels of adoption
intention for innovations that are more complex, better match their needs and involve
lower uncertainty. In the innovation adoption literature, characteristics of the (potential)
adopter and perceived characteristics of the innovation are found to be major drivers of
innovation adoption (Shams et al., 2015).
Adopter characteristics capture the personal traits that describe the (potential) adopter of
an innovation, which can then be divided into socio-demographics and psychographics
(Nito, 2005). Innovation characteristics refer to the attributes consumers use to evaluate
an innovation. In the innovation adoption literature, these are generally represented by the
consumer’s perception of the relative advantage, compatibility, complexity, trial ability,
observability and uncertainty or risk of the innovation.
22
2.3.5 Consumer Behavior in Adoption Process
Consumer behavior is the study of individuals, groups, organizations and the processes
they use to select, secure, use and dispose of products, services, experiences or ideas to
satisfy needs (Perner, 2009). Consumer behavior concerns mental and physical acts,
including the motives and causes of individuals and groups regarding orientation,
purchase, use, maintenance and disposal of house-hold goods and services from the
market sector (Wells, 2014). From the above definition, we learn on one hand, that
consumption is concrete (it involves the purchase of an item) and on the other hand it is a
mental process that cannot be observed. Consumption can also be the result of a reasoned
or deliberate decision.
Consumers make purchasing decision according to their own perception and value.
(Johnson et al., 2015). Consumer research is located at the nexus of theory and practice
and at the intersection of several different research traditions (Wells, 2014). According to
Wells (2014), two of the primary source disciplines are psychology and economics
although methodology, particularly quantitative modeling from statistics and management
science also plays an important role. Her argument on the source of disciplines guiding
consumer research was based on the pattern of cross citation for three psychology
journals and four of the leading journals in marketing. Most citations in consumer
research drew knowledge from social psychology.
2.3.6 Model of Consumer Behavior
Individuals develop self-concepts and subsequent lifestyles based on a variety of internal
(mainly psychological and physical) and external (mainly sociological and demographic)
influences (Hawkins & Mothersbaugh, 2010). It is these self-concepts and lifestyles that
produce needs and desires, many of which require consumption decisions to satisfy
(Johnson et al., 2015).
It is the self-concept and lifestyle caused by internal influences and external influences
which affects customer decision process. According to Hawkins & Mothersbaugh (2010),
individuals develop self-concepts and lifestyles based on external and internal influences.
From these self-concepts and lifestyles, consumers derive different needs and desires
which in order to be fulfilled require certain consumption decisions.
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2.3.6.1 Consumer Decision Making Process
A view from economics suggests that consumers would choose a product solely based on
value maximization. Consumption decision involves selecting the best choice across all
possible consumption choices (Johnson, Pham, & Johar, 2015). They posit that there
exists an “as-if” model which is termed as value maximization from economics. It is the
normative benchmark for other decision processes, and it is the source of many of the
models that managers use to predict consumer choice and design new products. With this
model, consumers behave as if they were examining all relevant attributes of all products.
They choose as if they know all available relevant information. They do not pick the best
product according any criteria, but they maximize their choice across all possible
consumption choices both now and given their best predictions about what will happen in
the future.
2.3.6.2 Consumer Heuristics
Many scholars have developed descriptions of choice processes that simplify the decision
process (King & Slovic, 2014). These simplifications try to maintain the ability to make
good choices at substantial savings of effort. King et al. (2014) gave an example saying
that one tends to eliminate any product that is outside the budget even though the
eliminated product would be so much better on attributes. According to theory, shoppers
would consider buying the brand name of a product if they are aware of, have a “mental
account” of the trade-offs that the brand provides.
A central part of the marketing process is to understand why a customer or a buyer makes
a purchase (Wells, 2014).Without such an understanding, marketers will find it hard to
respond to customers’ needs and wants. The basic outcome of a firm’s marketing strategy
is its product position- this is an image of the product or brand in the consumer’s mind
relative to competing products and brands.
2.4 Perceived Risk Influence on Brand Extensions
2.4.1 Perceived Risk
The notion of perceived risk was first introduced into marketing literature by Raymond A
Bauer in the 1960s. Since then a large number of researchers have focused on the
considerable power of risk perception on consumer behavior. Perceived risk is likelihood
24
of uncertainty and unlikable consequences headed for a purchase in consumer research. It
is the dominating factor which affects buying decisions (Amin & Mahasan, 2014).
Uncertainty and consequences are two components of perceived risk and five possible
losses involved. Sources of perceived risk are financial loss, physical loss, time loss,
social loss, psychological loss and performance loss. One or more of these sources may
drive consumers’ overall perceptions of risk or the risk may be derived from just one or
from a combination.
The approach of Mitchell (1999) is similar, he defines perceived risk as a decision
maker’s weighted subjective assessment of the expected value of inherent risk in each of
the possible choice alternatives for a give decision goal. Yeung and Morris (2008) define
risk perception as the individual judgment of the likelihood that a consequent loss could
occur and the seriousness of its likely consequences.
In literature the construct of risk is specified within two major components; the
probability of loss and the importance of loss expected in decisions under uncertainty.
2.4.2 Perceived Risk and Consumer Evaluations
We will consider a portion of research that is directly relevant to consumers’ evaluations.
Consumers’ perceptions of risk are considered to be central to their evaluations, choices
and behaviors (Mitchell, 1999). Consumer researchers have defined perceived risk in
terms of uncertainty and consequences, with perceived risk increasing with higher levels
of uncertainty and or the chance of greater associated negative consequences. Perceived
risk tends to produce risk aversion and often will lead to a variety of risk handling
activities (Dowling & Staelin, 1993). It has an impact on a variety of consumer behaviors
such as new product adoption, brand loyalty and reliance on well-known brands.
In the context of brand extension, the use of a well-known brand is effective to risk averse
consumers because this strategy allows them to stick with the known brand rather than
explore new brands. Sharma & Srivastava (2011) show that when consumers perceive
the risk of purchasing a new product to be high, they are more likely to choose a well-
known brand than a new brand. Overall this research suggests that higher risk inhibits
exploratory tendencies and leads consumers to prefer familiar options than unfamiliar
ones. Thus when perceived risk is high, consumers become more wary and risk averse.
Additionally, they propose that under high risk, consumers will prefer familiar options to
25
novel options. Mitchell (1999) classifies perceived risk in brand extensions into category
risk and product risk.
Product category risk is defined as the person’s perception of riskiness of buying an
average product in the product classes, while product risk reflects the perceived risk of
the specific alternative being considered. He goes on to say that a brand extended into
new product category offers a different alternative and consumers tend to perceive the
extension as more or less risky. In the evaluation of a brand extension, both types of risks
are relevant. This is because consumer will face difficulty in evaluating a new product
category and in assessing how well the extended product will perform in the new product
category (Amin & Mahasan, 2014).
2.4.3 Relationship between Perceived Risk and Brand Attitudes
Brand names are often viewed as schemas containing brand attributes and beliefs about
brand related experiences (Chaudhuri & Holbrook, 2001). Consumers use a brand name
as a heuristic to reduce the perceived risk associated with purchase decisions (Campbell
& Goodstein, 2013). An established brand will provide an implied promise to consumers
that the purchase outcomes will be consistent with the beliefs and expectations that
consumers have historically associated with the brand. A number of studies suggest that a
successful and established brand is perceived less risky because of its high quality which
increases the likelihood of product trail (Chernatony et al., 2003). A favorable brand has
also been shown to positively influence perceptions of quality. A consumer purchasing a
well-known brand is effectively employing a risk reducing strategy.
The literature relating to brand extensions is consistent with this and suggests that a
recognized brand is often relied upon by consumers as a means of coping with perceived
risk (Chernatony et al., 2003). A brand which is extended into a new product category
offers a new alternative to consumers but also impacts consumers’ perception of risk.
Based on literature, a well-known brand is a risk reliever and enhances the likelihood of
product trial. In the case of brand extension, consumers are able to draw on their
knowledge and beliefs about the parent brand to make inferences about the experience
they are likely to have with the extensions (Sharma & Srivastava, 2011).
Sharma et al.(2011) go on to affirm that even if consumers do not have personal
experiences with a brand, the brand name will still serve as a vehicle for reducing risk.
26
When a company extends an established brand name to a new product category, the
company is using the brand as an implicit bond for the quality of the product which will
reduce the risk associated with the new product (Sharma & Srivastava, 2011). They also
established a link between perceived risk and consumers acceptance of brand extensions
and concluded for a given brand extension category, low perceived risk will increase the
chances of acceptance whereas high perceived risk will decrease it.
2.4.4 Types of Risk
There are three types of risk that are commonly associated with purchase decisions.
Financial, performance and psychological (Dowling & Staelin, 1993).Sharma &
Srivastava(2011) measured three widely recognized types of risk that vary across product
categories and examined how each type of risk perceived by consumers, affected
evaluation and willingness to purchase the brand extension.
Table 2.1: Types of Risk
1. Financial
2. Social
3. Performance
4. Psychological
5. Time
6. Physical
Source: Sharma & Srivastava (2011)
2.4.4.1 Financial Risk
Financial risk refers to the economy outlay that may be lost if a product does not perform
adequately (Simcock, Sadbury, & Wright, 2006). Consumers will perceive less financial
risk for extension category because of an established brand name which will increase
their willingness to try the new extensions (Simcock et al., 2006).
2.4.4.2 Performance Risk
This is defined as the loss incurred when a brand or product does not perform as expected
(Mitchell, 1999). As opposed to financial risk which reflects the cost of product
replacement, performance risk arises when the product does not perform as desired and
does not deliver the promised benefits (Turhan, 2014). The likelihood of negative
27
performance related outcomes increases the performance risk, however if it is a high
quality brand name, it itself signals consumers that a new product will perform as
expected. Sharma & Srivastava (2011) conclude that if consumers perceive less
performance risk for the extension category, it will enhance the favorable attitude toward
brand extensions.
2.4.4.3 Psychological Risk
As opposed to financial and performance risks which are related to the product,
psychological risk is related to consumers’ peace of mind and self-concept (Sharma &
Srivastava, 2011). Psychological risk arises when consumers’ self-esteem or perceptions
of self are harmed by product consumption. Psychological risk perception is defined as
the experience of anxiety or psychological discomfort arising from the purchase of
proposed brand extension (Mitchell, 1999). The results of Sharma & Srivastava (2011)
point out that the three dimensions of perceived risk, namely performance, financial and
psychological are strong determinants of the brand extension evaluation. It concludes that
consumers’ attitude toward brand extension depends on their perception of risk associated
with the new category. The lower the perception of risk for a brand extension, the more
favorable the attitude towards a brand extension.
2.4.4.4 Social Risk
Social risk is characterized as the adverse consequences associated with unfavorable
opinions or judgments of significant other people on account of use and purchase of a
product or brand (Dholakia, 2001).
2.4.5 Perceived Risk and Customer Involvement
According to Turhan (2014), previous studies dealing with the success of brand
extensions have paid little attention to the role of risk perceptions in consumer evaluation.
Consumers who purchase an extension product experience uncertainty about the
consequences of the purchase. Perceived risk is mostly strongly felt when consumers
cannot be certain if planned purchasing will be able to meet some of their main goals. If
so we expect that consumer’s willingness to purchase an extension product will vary
depending on the perceived risk associated with a new purchase (Turhan, 2014). Risk
importance is the other risk component.
Like risk probability, the importance weight is also consumer specific hence each loss
will carry different weights under consumer perceptions (Campbell & Goodstein,
28
2013).Accordingly as a multiplicative function of the probability and the importance of
loss expected from extension product purchase and use, risk perception is subjective in
nature. The results from Amin & Mahasan (2014) study on the link between perceived
risk and consumer trust, and how these two factors influence consumer decision suggest
that risk is highly influenced by trust. This same assertion is proven in Turhan (2014)
study which also considered perceived risk and perceived trust in evaluating brand
extension success.
Amin and Mahasan (2014) find that there is a linkage between perceived risk and
consumer trust because both are emotional rather than rational components. The
consumer’s involvement with the purchase decision influences the person’s perception of
risk. Consumers evaluate the attributes of the specific product being considered, the
relevant factors associated with the usage situation relative to their purchase goals and
what they about products (Dowling & Staelin, 1993).
Specific antecedents for overall perceived risk vary from situation to situation. Levels of
attributes of the specific product considered such as price and quality rating and the
likelihood of failure that will lead to negative consequences. Consumers are likely to
engage in risk reducing activities such as information search to reduce their perceived risk
level (Chernatony, Iversen, & Hem, 2003). The probability of loss can be reduced by
obtaining information from a friend who has used the product and limiting the set of
alternatives to well-known brands or trying the product prior to purchase.
For a brand extension, the total amount of perceived risk is composed of the risk
associated with buying any particular product in the category and the risk specific to the
item being considered (Amin & Mahasan, 2014). Search activity will be done with the
intention of lowering the person’s overall perceived risk level.
2.5 Chapter Summary
This chapter reviewed literature on brand trust, customer innovativeness and perceived
risks. The decision to pursue a brand extension strategy is a complex one as there are
many factors that influence its’ success. Consumers as the main target for brand extension
strategies need to be studied in order to understand their behavior in purchasing brand
extensions. Understanding key elements like brand trust, customer innovativeness and
29
perceived risk will enable brand marketers to make the right decisions in positioning a
product towards a specific target segment.
Several studies on brand extension success have focused on parent brand characteristics
proving that consumes’ associations with the current brand can be transferred to the
extension and thus fostering its success. This implies that evaluations of brand extensions
are largely based on previous experience with the parent brand. There is limited research
on consumer evaluation of brand extensions where there is no previous experience. The
next chapter will look into the research methodology. This will include the research
design, population and sampling design, data collection, research procedure and data
analysis.
30
CHAPTER THREE
3.0 RESEARCH METHODOLOGY
3.1 Introduction
The purpose of the study was to determine to what extent consumer related characteristics
affect consumer adoption of brand extensions by examining three related consumer
factors; brand trust, perceived risk and customer innovativeness. This chapter will
describe the research design, target population, sampling technique, data collection
instruments and techniques for data analysis that was used to carry out the study.
3.2 Research Design
Research design guides the collection and analysis of data. It is defined as the framework
or plan for the study, used as a guide in collecting and analyzing data. Kerlinger (1974)
defines research design as a plan and a structure of investigation conceived to obtain
answers to research questions. Malhotra (2013) defines research design as the blueprint
used to specify where the study starts and where it ends. He equates a research design to
an architectural design of a house.
The research design adopted was a descriptive research design. According to Cooper &
Schindler (2014), a descriptive research design is concerned with finding out the; who,
what, where, when and how. Furthermore, descriptive research is defined as a research
design in which the major emphasis is on determining the frequency with which
something occurs or the extent to which two variables co-vary. It was the most suitable
research design because the researcher sought to determine whether brand trust, consumer
innovativeness and perceived risk influence consumer adoption of brand extensions. It
also sought to examine the resultant effect, did the consumer characteristics increase
adoption or reduce adoption. This involved evaluating evidence for and against brand
trust influence, consumer innovativeness and its influence on brand extensions and then
coming up with a measured conclusion as to the degree of agreement.
This research started off with the assumption that brand trust, consumer innovativeness
and perceived risk influence adoption of brand extensions however, the purpose of the
research was to determine to what extent, that is whether it was to a great extent or not a
significant extent.
31
The researcher recognized that there are other factors that influence adoption of brand
extensions such as parent brand fit, brand extension characteristics as discovered from
reviewing literature. These factors are a critical element in adoption of brand extensions,
however, this research wanted to prove that consumer characteristics also play a
significant role in adoption of brand extensions especially in fast moving consumer
goods. This research had quantitative and qualitative aspects to it. It was inferential, in
that a sample of the population was selected, questioned and the results of the sample
inferred to that of the population.
3.3 Population and Sampling Design
3.3.1 Population
A population in a study comprises of a group of individuals who share a common
characteristic. It is defined as the aggregate of all the elements sharing some common set
of characteristics. The target population for this study was shoppers from the following
chain stores: Nakumatt, Tuskys, Naivas and Uchumi in Nairobi namely: Nakumatt Mega,
Tuskys Pioneer, Naivas Mountain Mall and Uchumi Sarit. These particular chain stores
were selected as a representation of the top supermarkets in Kenya and customer’s traffic
flow, and the target population was consumers who frequently purchase and use FMCG
brands.
3.3.2 Sampling Design
Sampling is defined as the process by which a subset of a population is drawn from a
defined sample frame (Sontakki, 2010). To effectively carry out this research, the
researcher followed the sampling design process which entails defining the population,
determining the sampling frame, selecting a sampling technique, determining the sample
size and executing the sampling process.
3.3.2.1 Sampling Frame
A sample frame is the listing of all the elements in the population from which the sample
will be drawn from (Malhotra, 2013). The sampling frame for the purposes of this study
were shoppers from Nakumatt, Tuskys, Naivas and Uchumi chain stores in Nairobi.
Shoppers from Nakumatt Mega Tuskys Pioneer, Naivas Mountain Mall and Uchumi Sarit
were sampled randomly. In this study, the sample size was 50 shoppers drawn from each
store.
32
3.3.2.2 Sampling Technique
Sampling is a procedure that entails utilizing a small number of units in a given
population as a basis for drawing conclusions regarding the whole population (Kuada,
2012). In this study, stratified random sampling technique was used. This is a probability
sampling procedure in which the target population is divided into a number of strata, and
a sample drawn from each stratum. This study grouped shoppers into four strata in the
form of chain stores, Nakumatt, Tuskys, Naivas and Uchumi stores in Nairobi namely:
Nakumatt Mega branch, Tuskys Pioneer, Naivas Mountain Mall and Uchumi Sarit
Center.
The sampling method utilized for this research was a probability sampling method where
the chance of selection of a population element is known. The researcher employed
random sampling in each stratum, where each member of the population had an equal
chance of being selected as a subject. This method was selected because it is was the most
ideal given the limitations of time and resources.
3.3.2.3 Sample Size
In deciding what sample size to use, a researcher ought to consider the level of precision,
the level of confidence or risk and the degree of variability in the attributes being
measured (Fox & Bayat, 2007)The question of an adequate size depends on a number of
factors connected to the research which needs to be borne in mind and weighed up by the
researcher in the process of reaching a decision about the necessary size of the sample.
According to Fox and Bayat (2007), the choice of sample size is regulated by four
parameters: The level of certainty of the collected data, the accuracy required as the basis
for the estimates made for the sample and the type of analysis that will be used.
Denscombe (2003) acknowledges that a survey rarely achieves a response from every
contact. Therefore the researcher ought to predict the kind of response rate he or she is
likely to achieve, based on the survey being done and build that into the sample size as
allowance for non-responses. The study adopted the Cochran formula for sample size
according to Bartlett, Kotrlik, and Higgins (2001)
n0 = (t)2 *(p)(q)
(d)2
Where t= Value of the selected alpha level of 0.025 in each tail, equivalent to 1.96.
33
(p)(q) = estimate of standard deviation in the population.
(d)= acceptable margin of error for proportion being estimated. The estimated margin of
error for this research was estimated to be equal to 0.07
Substituting for the formula above, the sample size for the study was calculated as
follows:
no = (1.96)2 * (.5) (.5)
(0.07)2
n0= (3.8416 *0.25) = 0.9604
0.0049 0.0049
n0 = 196
The researcher assumed a 93% confidence level which meant that 93% of the samples
had a true population value within a range of precision specified. The margin of error
allowed for this research was 7%.
3.4 Data Collection Methods
The study used primary data. Primary data according to Kothari (2004), is the data
collected a fresh for the first time while secondary data is that data that has already been
collected and passed through statistical process. The main survey instrument used for
collection of this data was a questionnaire consisting of 3 sections with both open and
close ended questions. Questionnaires were considered appropriate because they reduce
bias, i.e. the researcher’s own opinions did not influence the respondents to answer
questions in a certain manner (Malhotra, 2013). Section 1 asked demographic questions
that pertain to participant’s age, gender, income, marital as well as participant’s shopping
frequency, favorite brands among cooking oils.
This demographic information was useful in segmenting the respondents. Section 1
sought to determine respondent’s awareness and knowledge of brand extensions and also
determine purchase intentions if the respondent was aware of a brand extension.
There were branch questions that arose from respondent’s responses if they answered yes
or no to a specific question.
Section 2 was a Likert scale to determine attitudes and opinions which form the basis of
predicting future behavior. They were measured on a 1-5 Likert scale where 1 indicates
strongly disagree and 5 indicates strongly agree.
34
3.5 Research Procedure
After developing the questionnaires, the researcher conducted a pilot test to test the
reliability and validity of the instrument. The questionnaire was pre-tested by 5 shoppers
from Nakumatt South C. To determine the validity of the research instrument, the
researcher sought opinions of experts in the field of study especially the supervisor.
Prior to data collection an authorization letter from the University was sent to the head
offices of these supermarkets seeking permission to carry out the research. To ensure
equal representation and faster collection of data, the questionnaires were evenly
distributed across the supermarket chain outlets. To ensure a higher response rate, the
researcher incentivized the respondents by giving away free T-shirts. This encouraged
respondents to complete the questionnaires. The researcher started collecting data from
Nakumatt Mega. This was followed by Uchumi Sarit Center, Tuskys Pioneer and finally
Naivas Mountain Mall.
3.6 Data Analysis Methods
Kothari (2004) indicates that analysis of data is a process of inspecting, cleaning,
transforming and modeling data with the goal of highlighting useful information,
suggesting conclusions and supporting decision making. Once the data was collected, the
questionnaires were edited for accuracy, consistency and completeness. Before the
analysis was performed, the data was cleaned to eliminate discrepancies.
Data was then analyzed using Statistical package for Social sciences (SPSS) at three
different levels. The first level of analysis involved the use of descriptive statistics such as
percentages, weighted mean scores, and standard deviations to provide respondents’
demographic background profiles. This was made possible due to quantitative coding of
the qualitative data. For numerical data such as age, the researchers used mean to describe
the sample.
The second level of analysis was done to test the hypothesis. A hypothesis is defined as a
tentative assumption about the distribution of a phenomenon that the researcher intends to
establish.
The following were the hypothesis for this study;
H0- Brand trust does not significantly influence consumer adoption of brand extensions.
35
H1- Brand trust significantly influences consumer adoption of brand extensions.
The researcher used Chi-Square test and regression analysis to examine to what extent
brand trust, consumer innovativeness and perceived risk influence consumer adoption of
brand extensions. Data was then presented in tables and figures.
3.7 Chapter Summary
This chapter identified the key issues to consider when collecting and analyzing data.
These were the target population, the sample frame and the sample size. A major
assumption and limitation of this study was that the sample represented the population,
and results from the sample population will be inferred to be that of the population yet
sample size was very small. There were problems in regards to validity and reliability of
the research. Validity being will people be able to believe the research results as
presented? And reliability being would a different researcher get the same results if they
repeated the research? In the next chapter, a detailed analysis will be done and findings
presented by the use of tables and figures.
36
CHAPTER FOUR
4.0 RESULTS AND FINDINGS
4.1 Introduction
This chapter presents the data analysis and interpretation of the findings. The purpose of
this study was to determine to what extent consumer related characteristics affect
consumer adoption of brand extensions by examining three related consumer factors;
brand trust, perceived risk and customer innovativeness.
The first section presents the general information that is, the gender of the respondents,
the age group of respondents, marital status of the respondents, and income level of the
respondents. Section 4.3 covers consumers’ responses on brand trust. Section 4.4 covers
consumers’ responses on customer innovativeness. Section 4.5 covers consumers’
responses on perceived risk and section 4.6 outlines chapter summary. The questionnaires
were administered between May and June 2016. Data was collected from one hundred
and seventeen respondents (117) out of the one hundred and eight five (185) targeted,
indicating a 63% response rate. The response rate was therefore sufficient for analysis and
reporting. The results are presented below
4.2 General Information
This section presents the general information on: gender of the respondents, the age group
of respondents, marital status of the respondents, and income level of the respondents,
frequency of shopping, brand of cooking oil used, general awareness of Kimbo premium
and intention to purchase Kimbo Premium.
4.2.1 Gender of the Respondents
The study sought to determine the gender of the respondents and the findings in Figure
4.1 shows that 49% were male and 51% were female.
37
Figure 4.1: Gender of Respondents
4.2.2 Age of the Respondents
The study sought to establish the age of the respondents and the findings in Figure 4.2
show that the respondents aged between 15-25 years were 55%, between 26-35 years
were 25%, between 36-45 years were 12% and 46 years and above were 7%.
Figure 4.2: Age Distribution
38
4.2.3 Income of the Respondents
The study sought to establish the income level of the respondents and the findings in
Figure 4.3 show that 48% of the respondents were earning less than Ksh 50,000, 12%
were earning in the range of Ksh 50,000-100,000, 9% were earning in the range of Ksh
100,000-150,000, 4% earned above Ksh 200,000. 9% of the respondents were students
and therefore had no income.
9%
48%
12%
9%
4%
0% 10% 20% 30% 40% 50% 60%
No Income
Below 50,000
50,000-100,000
100,000-150,000
Above 200,000
Monthly Income(KES)
Figure 4.3: Monthly Income Distribution
4.2.4 Marital Status of the Respondents
The study sought to establish the marital status of the respondents and the findings in
Figure 4.4 shows that 58% were single, 38% were married and 4% were divorced.
Married38%
Single58%
Divorced4%
Figure 4.4: Marital Status
39
4.2.5 Shopping Frequency
The study sought to establish how frequently the respondents shopped for household
goods. The findings in Figure 4.5 show that 15% of respondents shopped on a daily basis.
28% of respondents shopped on a weekly basis and 56% shopped on a monthly basis.
0%
50%
100%
Daily Weekly Monthly Other
15% 28%56%
1%
Figure 4.5: Shopping Frequency
4.2.6 Preferred Brand of Cooking Oil
The study sought to establish the brands of cooking oils that respondents preferred to use.
The findings in Figure 4.6 show that 29% of respondents exclusively used Bidco Cooking
oils, 4% exclusively used Kapa Cooking oils and 65% used both brands of cooking oils.
Figure 4.6: Preferred Brand of Cooking Oil
40
4.2.7 General Awareness of the Brand Extension
The study sought to determine whether the respondents had heard or seen the extended
brand of Kimbo- Kimbo Premium.
The findings in Figure 4.7 show that 72% of the respondents were aware of the new brand
Kimbo Premium and only 28% of respondents were not aware of the new brand Kimbo
Premium.
Figure 4.7: Kimbo Premium Awareness
The study also established that the average level of awareness of Kimbo Premium. The
findings in Table 4.1 show that the average level of Kimbo Premium awareness was
(M=1.37)
Table 4.1: Average level of Kimbo Premium Awareness
The study sought to establish if there were different levels of brand extension awareness
between men and women. The findings in Table 4.2 show that women were more aware
of the brand extension Kimbo Premium, their level of awareness had a mean value of
Descriptive Statistics
N Minimum Maximum Mean Std.
Deviation Skewness Kurtosis
Statistic Statistic Statistic Statistic Statistic Statistic Std. Error Statistic
Std. Error
Have Seen Kimbo Premium
117 1 11 1.37 1.005 7.755 .224 73.549 .444
Valid N (listwise)
117
41
(M= 1.47), standard deviation of ( SD=1.334). The level of awareness for Men had a
mean value of (M= 1.26) which is lower than the average value of (M= 1.37)
Table 4.2: Average Level of Awareness of Kimbo Premium by Gender
Descriptives
Gender Statistic Std. Error
Have Seen
Kimbo
Premium
Male Mean 1.26 .059
95% Confidence
Interval for Mean
Lower
Bound
1.15
Upper
Bound
1.38
5% Trimmed Mean 1.24
Median 1.00
Variance .197
Std. Deviation .444
Minimum 1
Maximum 2
Range 1
Interquartile Range 1
Skewness 1.105 .316
Kurtosis -.809 .623
Female Mean 1.47 .172
95% Confidence
Interval for Mean
Lower
Bound
1.12
Upper
Bound
1.81
5% Trimmed Mean 1.30
Median 1.00
Variance 1.779
Std. Deviation 1.334
Minimum 1
Maximum 11
Range 10
Interquartile Range 1
Skewness 6.394 .309
Kurtosis 45.860 .608
4.2.8 Willingness to purchase Kimbo Premium
Figure 4.8 shows that 70% of the respondents were willing to purchase Kimbo Premium,
the brand extension of Kimbo whereas 30% of the respondents were unwilling to
purchase Kimbo Premium.
42
Figure 4.8: Willingness to purchase Kimbo Premium
4.2.9 Cross Tabulation Analysis between Awareness and Willingness to Purchase
The study sought to establish whether there was an association between awareness of the
brand extension and willingness to purchase the brand extension. Cross tabulation
analysis between the variables; “I have seen Kimbo Premium’’ and ‘I can buy Kimbo
Premium’’ was made and analyzed through chi-square statistics (χ2) to determine whether
the variables are statistically independent or whether the variables are associated.
The relationship is observed by comparing the column total percent “I can buy Kimbo
Premium” to the cell percent of the row total “I have seen Kimbo Premium"
From the findings in Table 4.3, we observe that customers who were aware of Kimbo
premium 79.3% were willing to buy Kimbo premium 71.8%.
Table 4.3: Cross Tabulation of Awareness and Willingness to Purchase
Have Seen Kimbo Premium * Can buy Kimbo Premium Cross tabulation
Can buy Kimbo
Premium
Total
Yes No
Have Seen
Kimbo
Premium
Yes Count 65 19 84
% within Have Seen Kimbo
Premium
77.4% 22.6% 100.0%
% within Can buy Kimbo
Premium
79.3% 54.3% 71.8%
No Count 17 16 33
% within Have Seen Kimbo
Premium
51.5% 48.5% 100.0%
% within Can buy Kimbo
Premium
20.7% 45.7% 28.2%
Total Count 82 35 117
% within Have Seen Kimbo
Premium
70.1% 29.9% 100.0%
% within Can buy Kimbo
Premium
100.0% 100.0% 100.0%
43
The findings in Table 4.4 (χ2) =7.560, p=0.06 tells us that there is a statistically
significant association between awareness and willingness to buy a brand extension.
Table 4.4: Chi-Square Test for Independence Results
Chi-Square Tests
Value Df Asymp. Sig.
(2-sided)
Exact
Sig. (2-
sided)
Exact
Sig. (1-
sided)
Pearson Chi-Square 7.560a 1 .006
Continuity Correctionb 6.377 1 .012
Likelihood Ratio 7.237 1 .007
Fisher's Exact Test .008 .007
Linear-by-Linear
Association
7.496 1 .006
N of Valid Cases 117
a. 0 cells (0.0%) have expected count less than 5. The minimum expected count is
9.87.
b. Computed only for a 2x2 table
4.2.10 Cross Tabulation Analysis between Gender and Willingness to Purchase
The study also sought to establish whether there was an association between gender of the
respondents and willingness to purchase the brand extension. Cross tabulation analysis
between the variables; gender and I can buy Kimbo Premium was made and analyzed
through chi-square statistics (χ2) to determine whether the variables are statistically
independent or whether the variables are associated. The relationship is observed by
comparing the column total percent “I can buy Kimbo Premium” to the cell percent of the
row total “Gender"
From the findings in Table 4.5, we observe that 48.8% of men were willing to buy Kimbo
premium and 51.2% of women were willing to buy Kimbo Premium
44
Table 4.5: Cross Tabulation of Gender and Willingness to Purchase
The findings in Table 4.6 (χ2) =0.000, p=0.983 tells us that there is no statistically
significant association between gender and willingness to buy a brand extension.
Table 4.6: Chi-Square Test for Independence
4.2.11 Cross Tabulation Analysis between Age and Willingness to Purchase
The study also sought to establish whether there was an association between age of the
respondents and willingness to purchase the brand extension. Cross tabulation analysis
between the variables; age and I can buy Kimbo Premium was made and analyzed
through chi-square statistics (χ2) to determine whether the variables are statistically
Gender * Can buy Kimbo Premium Cross tabulation
Can buy Kimbo
Premium
Total
Yes No
Gender Male Count 40 17 57
% within Gender 70.2% 29.8% 100.0%
% within Can buy
Kimbo Premium
48.8% 48.6% 48.7%
Female Count 42 18 60
% within Gender 70.0% 30.0% 100.0%
% within Can buy
Kimbo Premium
51.2% 51.4% 51.3%
Total Count 82 35 117
% within Gender 70.1% 29.9% 100.0%
% within Can buy
Kimbo Premium
100.0% 100.0% 100.0%
Chi-Square Tests
Value df Asymp. Sig.
(2-sided)
Exact Sig.
(2-sided)
Exact Sig.
(1-sided)
Pearson Chi-Square .000a 1 .983
Continuity
Correctionb
.000 1 1.000
Likelihood Ratio .000 1 .983
Fisher's Exact Test 1.000 .572
Linear-by-Linear
Association
.000 1 .984
N of Valid Cases 117
a. 0 cells (0.0%) have expected count less than 5. The minimum expected count is 17.05.
b. Computed only for a 2x2 table
45
independent or whether the variables are associated. The relationship is observed by
comparing the column total percent “I can buy Kimbo Premium” to the cell percent of the
row total “Age"
The findings in Table 4.7 (χ2) = 1.646, p=0.649 tells us that there is no statistically
significant association between age and willingness to buy a brand extension.
Table 4.7: Chi-Square Test for Independence
Table 4.8: Cross Tabulation of Age and Willingness to Purchase
Age * Can buy Kimbo Premium Cross tabulation
Can buy Kimbo
Premium
Total
Yes No
Age 15-25
years
Count 42 22 64
% within Age 65.6% 34.4% 100.0%
% within Can buy Kimbo
Premium
51.9% 64.7% 55.7%
26-35
years
Count 22 7 29
% within Age 75.9% 24.1% 100.0%
% within Can buy Kimbo
Premium
27.2% 20.6% 25.2%
36-45
years
Count 11 3 14
% within Age 78.6% 21.4% 100.0%
% within Can buy Kimbo
Premium
13.6% 8.8% 12.2%
46 and
above
Count 6 2 8
% within Age 75.0% 25.0% 100.0%
% within Can buy Kimbo
Premium
7.4% 5.9% 7.0%
Total Count 81 34 115
% within Age 70.4% 29.6% 100.0%
% within Can buy Kimbo
Premium
100.0% 100.0% 100.0%
Chi-Square Tests
Value Df Asymp. Sig. (2-sided)
Pearson Chi-Square 1.646a 3 .649
Likelihood Ratio 1.674 3 .643
Linear-by-Linear
Association
1.166 1 .280
N of Valid Cases 115
a. 2 cells (25.0%) have expected count less than 5. The minimum expected count is 2.37.
46
4.3 Effect of Brand Trust on Consumer Adoption of Brand Extensions
4.3.1 Brand Trust Evaluation
The study sought to establish the respondents’ reactions towards the parent brand using
attitudinal statements. The researcher employed 5 Likert scale items to measure attitudes
towards the Parent Brand. Trust is a multi-dimensional construct and the respondents
were asked to indicate their level of agreement as to whether they trust the parent brand,
whether they find it dependable and to what extent they think it is a quality brand. The
findings in Table 4.9 show that 28% strongly agreed that Bidco was a trustworthy brand.
34% agreed that Bidco was a trustworthy brand. 26% were not sure if Bidco was a
trustworthy brand. 9% disagreed that Bidco was a trust worthy brand. 3% strongly
disagreed that Bidco was a trustworthy brand. Brand trust had a mean (M=3.77) and
standard deviation (SD=1.037)
Table 4.9: Bidco Brand Trust Measurement
Responses Distribution
Frequency Valid Percent
Strongly Disagree 3 3
Disagree 10 9
Neutral 31 26
Agree 40 34
Strongly Agree 33 28
Total 117 100.0
4.3.2 Parent Brand Value Evaluation
The study sought to determine the parent brand Kimbo-perceived value. The findings in
Figure 4.9 show that many respondents were neutral about whether Kimbo brand is the
best cooking oil in the market. 47% of respondents neither agreed nor disagreed that
Kimbo was more superior to other brands, whereas 39% neither agreed nor disagreed that
Kimbo brand was the best.
47
Figure 4.9: Kimbo Brand Value
4.3.3 Brand Identity Evaluation
The study also sought to establish the brand identity of Bidco in the minds of the
respondents. The respondents were asked to indicate their level of agreement with the
statements: Bidco meets my expectations and Bidco products are healthy. Findings in
Table 4.10 show that Bidco is a strong brand in the minds of the consumer. 48% of
respondents identify with the brand, 15% strongly identify with the brand. 27% of the
respondents are neutral whereas 37% of the respondents do not identify with the brand.
Brand identity had a mean of (M=3.67) and a standard deviation of (SD=0.851)
Table 4.10: Bidco Brand Identity Measurement
Responses Distribution
Frequency Percent
Disagree 12 10
Neutral 32 27
Agree 56 48
Strongly Agree 17 15
Total 117 100.0
4.3.4 Kimbo brand Trust Evaluation
The study sought to establish the level of trust for the parent brand Kimbo. The findings
suggest that there was a somewhat high level of trust for Kimbo. 56% of respondents
agree that they would recommend Kimbo if asked.
48
Table 4.11: Parent Brand Trust Measures
Strongly
Disagree
Disagre
e
Neutral Agree Strongly
Agree
I would recommend Kimbo 7.1% 12.5% 23.2% 37.5% 19.6%
Kimbo brand is the best 3.5% 17.5% 38.6% 26.3% 14.0%
Kimbo brand is superior 3.6% 18.2% 47.3% 23.6% 7.3%
Table 4.12: Parent Brand Trust Statistics
Descriptive Statistics
N Minimum Maximum Mean Std. Deviation
Parent Brand Trust 58 1.00 5.00 3.2672 .98771
Valid N (list wise) 58
4.3.4.1 Cross Tabulation Analysis between Parent Brand Trust and Willingness to
Adopt Brand Extensions
The study also sought to establish whether there was an association between parent brand
trust for Kimbo and willingness to purchase the brand extension i.e. Kimbo premium.
Cross tabulation analysis between the variables; I would recommend Kimbo brand to
someone and I can use the new Kimbo Premium cooking oil was made. The relationship
is observed by comparing the column total percent “I would recommend Kimbo
Premium” to the cell percent of the row total “I can buy Kimbo Premium"
The data was then analyzed through chi-square statistics (χ2) to determine whether the
variables are statistically independent or whether the variables are associated. The
findings in Table 4.13 (χ2) = 19.236, p=0.001 tells us that there was a significant
association between parent brand trust and willingness to buy a brand extension.
Table 4.13: Chi-Square test for Independence
Chi-Square Tests
Value Df Asymp. Sig. (2-sided)
Pearson Chi-Square 19.236a 4 .001
Likelihood Ratio 20.548 4 .000
Linear-by-Linear Association 18.719 1 .000
N of Valid Cases 113
a. 2 cells (20.0%) have expected count less than 5. The minimum expected count is 3.01.
From the findings in Table 4.14, we observe that customers who would recommend
Kimbo Premium 44% were willing to buy Kimbo premium 69.9%.
49
Table 4.14: Cross Tab Analysis between Kimbo brand Trust and willingness to
adopt Kimbo Premium
Can buy Kimbo Premium * I would recommend Kimbo Cross tabulation
I would recommend Kimbo Total
Strongly
Disagree
Disagree Neutral Agree Strongly
Agree
Can buy
Kimbo
Premium
Y
e
s
Count 3 5 21 29 21 79
% within Can
buy Kimbo
Premium
3.8% 6.3% 26.6% 36.7% 26.6% 100.0%
% within I
would
recommend
Kimbo
27.3% 50.0% 65.6% 76.3% 95.5% 69.9%
% of Total 2.7% 4.4% 18.6% 25.7% 18.6% 69.9%
N
o
Count 8 5 11 9 1 34
% within Can
buy Kimbo
Premium
23.5% 14.7% 32.4% 26.5% 2.9% 100.0%
% within I
would
recommend
Kimbo
72.7% 50.0% 34.4% 23.7% 4.5% 30.1%
% of Total 7.1% 4.4% 9.7% 8.0% .9% 30.1%
Total Count 11 10 32 38 22 113
% within Can
buy Kimbo
Premium
9.7% 8.8% 28.3% 33.6% 19.5% 100.0%
% within I
would
recommend
Kimbo
100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
% of Total 9.7% 8.8% 28.3% 33.6% 19.5% 100.0%
4.4 Effect of Consumer Innovativeness on Adoption of Brand Extensions
4.4.1 Consumer Innovativeness Evaluation
This section presents the findings on the effect of consumer innovativeness on adoption
of brand extensions. It specifically looks at consumer attitudes towards adoption of new
brands.
4.4.1.2 Trying New Brands
The respondents were asked to indicate their level of agreement with the question as to
whether they like trying out new brands of household products. Table 4.15 shows that
16% were strongly against trying new products. 15% were against trying new brands of
household products. 16% of the respondents were neutral; they neither agreed nor
disagreed with the statement that they like to try new brands of household products. 28%
50
of respondents agreed that they like trying new brands of household products and 16% of
the respondents strongly agreed that they liked trying new brands of household products.
Table 4.15: Level of Consumer Innovativeness
Distribution
Frequency Percent
Strongly Disagree 19 16
Disagree 17 15
Neutral 19 16
Agree 33 28
Strongly Agree 19 16
Total 117 100.0
4.4.1.3 Risk Taking
The respondents were asked to indicate their level of agreement with the statement- I am
a risk taker. Table 4.16 shows that 30% of the respondents did not consider themselves as
risk takers. 20% were unsure and 49% of the respondents considered themselves as risk
takers. (M=3.22)
Table 4.16: Risk Propensity
The study sought to establish whether there were differences in risk taking behavior
between men and women. Grouping the responses by gender, Table 4.17 illustrates that a
majority of women consider themselves as risk takers with mean of (M=3.22) more than
men with mean of (M=3.21).
Responses Distribution
Frequency Percent
Strongly Disagree 19 16
Disagree 16 14
Neutral 23 20
Agree 35 30
Strongly Agree 22 19
Total 117 100
Descriptive Statistics
N Mean Std.
Deviation
Skewness Kurtosis
Statist
ic
Statistic Statistic Statist
ic
Std.
Error
Statistic Std.
Error
I am a risk
taker
115 3.22 1.356 -.340 .226 -1.084 .447
Valid N
(listwise)
115
51
Table 4.17: Case Summary of Risk Taking Propensity by Gender
Gender Statistic Std. Error
I am a
risk
taker
Male Mean 3.21 .185
95% Confidence
Interval for Mean
Lower Bound 2.84
Upper Bound 3.59
5% Trimmed Mean 3.24
Median 3.50
Variance 1.917
Std. Deviation 1.385
Minimum 1
Maximum 5
Range 4
Interquartile Range 2
Skewness -.358 .319
Kurtosis -1.107 .628
Female Mean 3.22 .174
95% Confidence
Interval for Mean
Lower Bound 2.87
Upper Bound 3.57
5% Trimmed Mean 3.24
Median 3.00
Variance 1.795
Std. Deviation 1.340
Minimum 1
Maximum 5
Range 4
Interquartile Range 2
Skewness -.330 .311
Kurtosis -1.052 .613
4.4.1.3 Adopter Characteristics
The study also sought to establish whether the respondents exhibited early adopter
characteristics. Figure 4.10 shows that a majority of respondents liked surprises- 32%, but
most of them prefer to buy new brands after recommendation from a third party. 48% of
the respondents were unwilling to try newer brands if they were expensive and 36% were
undecided on whether they will have to sample cooking oil first before buying.
52
Figure 4.10: Adopter Characteristics
4.4.2 Chi- Square test on Consumer innovativeness and Brand Extension Adoption
The study also sought to establish whether there was a significant association between
willingness to try new brands and willingness to purchase the brand extension i.e. Kimbo
premium. Using the chi-square test of independence to determine the significance of the
association between consumer innovativeness and willingness to adopt the brand
extension, findings as presented in Table 4.18 shows (χ2) = 2.610, p=0.625. This tells us
that there was no significant association between willingness to try new brands and
willingness to buy a brand extension.
Table 4.18: Chi-Square Test for Independence
Chi-Square Tests
Value Df Asymp. Sig. (2-sided)
Pearson Chi-Square 2.610a 4 .625
Likelihood Ratio 2.774 4 .596
Linear-by-Linear Association .065 1 .800
N of Valid Cases 107
a. 1 cells (10.0%) have expected count less than 5. The minimum expected count is 4.93.
53
4.5 Effect of Perceived Risk on Adoption of Brand Extensions
This section presents the findings on the effect of perceived risk on adoption of brand
extensions. It specifically looks at financial risk, social risk, performance risk and
psychological risk.
4.5.1 Financial Risk
The study also sought to establish whether the respondents were sensitive to price and
whether that would influence their decision to try new brands. The respondents were
asked to indicate their level of agreement with the statement of whether they will consider
price first when buying a new brand of cooking oil, and whether they would consider a
newer brand even if it was relatively more expensive.
Table 4.19 shows that only 14% of the respondents did not consider price before buying a
new brand. 32% of the respondents were neutral and neither agreed or disagreed with the
statement that they consider price before buying a new brand. 41% of respondents agreed
that they consider price first before buying a new brand. 48% were not willing to consider
new brands if it was relatively more expensive, 26% were neutral and neither agreed or
disagreed with the statement. Only 22.81% agreed that they would consider new brands
even if it was relatively more expensive.
Table 4.19: Financial Risk Measurement
Responses
Strongly
Disagree Disagree Neutral Agree
Strongly
Agree
I consider Price first 14% 11% 33% 33% 9%
Try new brand even if expensive 19% 30% 26% 23% 2%
4.5.1.2 Chi-Square test for Financial Risk and Gender
Using the chi-square test of independence to determine the significance of the association
between financial risk and gender. As presented, findings in Table 4.20 show that (χ2) =
5.077, p=0.279. This tells us that there was no significant association between financial
risk and gender.
54
Table 4.20: Chi-Square Test for Independence
Chi-Square Tests
Value Df Asymp. Sig. (2-sided)
Pearson Chi-Square 5.077a 4 .279
Likelihood Ratio 5.249 4 .263
Linear-by-Linear Association 3.710 1 .054
N of Valid Cases 116
a. 0 cells (0.0%) have expected count less than 5. The minimum expected count is 5.79.
From the findings in Table 4.21, we observe that women to a greater extent considered
price first before buying a new brand.
Table 4.21: Cross Tab Analysis between Financial Risk and Gender
Gender * I consider price first before buying new brand Cross tabulation
I consider price first before buying new brand
Total
Strongly
Disagree Disagree Neutral Agree
Strongly
Agree
Gender Male Count 5 5 18 18 10 56
% within Gender 8.9% 8.9% 32.1% 32.1% 17.9% 100.0%
% within I consider
price first before
buying new brand
26.3% 41.7% 54.5% 52.9% 55.6% 48.3%
% of Total 4.3% 4.3% 15.5% 15.5% 8.6% 48.3%
Female Count 14 7 15 16 8 60
% within Gender 23.3% 11.7% 25.0% 26.7% 13.3% 100.0%
% within I consider
price first before
buying new brand
73.7% 58.3% 45.5% 47.1% 44.4% 51.7%
% of Total 12.1% 6.0% 12.9% 13.8% 6.9% 51.7%
Total Count 19 12 33 34 18 116
% within Gender 16.4% 10.3% 28.4% 29.3% 15.5% 100.0%
% within I consider
price first before
buying new brand
100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
% of Total 16.4% 10.3% 28.4% 29.3% 15.5% 100.0%
55
4.5.2 Social Risk
The study also sought to establish the level of social risk. The respondents were asked to
indicate their level of agreement with the statement; I worry about what people think of
me if I choose a different brand of cooking oil. The findings in Figure 4.11 show that
62% of respondents did not worry about what people will think if they chose a different
brand of cooking oil. 18% were unsure neither agreeing nor disagreeing with the
statement and only 10% of respondents agreed with the statement that they would worry
about what people will think.
Figure 4.11: Social Risk Measurement
4.5.3 Psychological Risk
The study also sought to measure psychological risk, respondents were asked to indicate
their level of agreement with the statement, and I would be annoyed with myself if I
chose the wrong brand of cooking oil. The findings on Table 4.12 show that 30% of
respondents disagreed that they would be annoyed with themselves if they chose the
wrong brand of cooking oil. 19% of respondents were neutral neither agreeing nor
disagreeing and 51% of respondents agreed that they would be annoyed with themselves
if they chose the wrong brand of cooking oil
56
Table 4.22: Psychological Risk
Responses Strongly
Disagree
Disagree Neutral Agree Strongly
Agree
I would consult first before
buying a new brand
14% 16% 29% 30% 11%
I will be annoyed with self if I
chose the wrong brand of
cooking oil
18% 12% 19% 28% 23%
I can only buy cooking oil
approved by family and friends
21% 23% 28% 19% 9%
4.5.4 Performance Risk
The study sought to determine the level of performance risk, the respondents were asked
to indicate their level of agreement with the statement of whether they think about taste
before buying a new brand of cooking oil. The findings in Figure 4.12 show that 19%
disagreed with the statement I think about taste before buying a new brand of cooking oil.
20% were neutral, neither agreeing nor disagreeing with the statement whereas 59% of
the respondents agreed that they think about taste before buying a new brand of cooking
oil.
Figure 4.12: Performance Risk
4.5.5 Information Seeking Behavior
The study also sought to establish how the respondents lower perceived risk. Respondents
were asked whether they read product information labels before purchasing a new brand.
57
Findings in Figure 4.13 show that 67% of respondents read information labels before
purchasing a new brand. 23% of respondents were neutral about whether they read
product information labels before purchasing a new brand and only 10% do not read
product information labels before purchasing a new brand.
Figure 4.13: Information Seeking
4.6 Regression Analysis
A set of hypotheses were developed and tested by regression analysis to investigate the
effect of factors such as brand trust, perceived risk and consumer innovativeness on brand
extension adoption in FMCG.A set of 36 questions and a 5 point Likert scale, 5 being the
highest and 1 being the lowest score (1=strongly disagree, 5=strongly agree) measured
and assessed consumer responses on brand trust, consumer innovativeness and perceived
risk.
Based on literature studied the following hypotheses were established.
H1: The higher the brand trust for the parent brand, the more positive the brand extension
adoption is.
H2: The higher consumers’ innovativeness, the more positive the brand extension
adoption is.
H3: The lower the perceived risk associated with the extension is, the more positive the
brand extension adoption. A multiple regression was used to determine the association
58
between the independent variables (trust, risk and innovativeness) and the dependent
variable (willingness to adopt brand extension)
In this case: Willingness to adopt Kimbo premium was the dependent variable: YBrand
Trust, Consumer innovativeness and perceived risk are the independent variables
Regression outputs of Independent variables on willingness to adopt brand extension.
Co-efficient of correlation r= 0.322
Co-efficient of determination= 10%
This means that only 10% variation in the willingness to adopt the brand extension
Kimbo Premium can be explained by variations in brand trust, consumer innovativeness
and perceived risk. This means that there is a 90% unexplained variation in the
willingness to adopt brand extension Kimbo premium, showing that there were some
significant variables missing in the model.
Model Summary
Mo
del
R R
Squ
are
Adjuste
d R
Square
Std.
Error of
the
Estimate
Change Statistics
R
Square
Change
F
Change
df1 df
2
Sig. F
Change
1 .32
2a
.10
4
.053 3.920 .104 2.048 3 5
3
.118
a. Predictors: (Constant), Consumer Innovativeness, Perceived Risk, Brand Trust
59
Equation on Willingness to Adopt Kimbo Premium is given by the following equation
Willingness to adopt= b0+ B1BrandTrust+ B2ConsumerInnovativeness+B3Perceived Risk
B0= 7.663
B1= -0.263
B2= -0.278
B3= -1.529
4.7 Chapter Summary
This chapter presents the findings of the study. It discusses the general information about
the respondents and examines their responses on brand trust, customer innovativeness and
perceived risk. Chapter five discusses the findings presented in chapter four, conclusions
that can be drawn from the findings and recommendations there-to.
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CHAPTER FIVE
5.0 DISCUSSION, CONCLUSIONS AND RECOMMENDATIONS
5.1 Introduction
This chapter presents the summary and discussions of the key findings, conclusions
drawn based on the findings and the recommendations. This chapter also discusses the
need and areas for further research owing to the limitations of the study.
5.2 Summary
The purpose of this study was to determine to what extent consumer related
characteristics affect the consumer adoption of Kimbo Premium by examining three
related factors; brand trust, perceived risk and consumer innovativeness. Thus, the study’s
objectives were to determine to what extent brand trust influences consumer adoption of
brand extensions, identify whether consumer innovativeness influences the consumer
adoption of brand extensions and to assess the extent to which perceived risk will
influence consumer adoption of brand extensions. This study contributes further to the
literature on brand extensions by examining, replicating and extending the model of
Chernatony et al. (2003) in Kenya. This study provided support for one out of four
hypotheses of the Chernatony and Hem model.
The study adopted a descriptive research design to be able to actualize the study’s
objectives. The study’s population was shoppers from 4 major supermarket chains in
Nairobi. The study used stratified random sampling technique and came up with a sample
size of 196 respondents. Primary data was collected through the use of structured
questionnaires. Data was analyzed on SPSS using descriptive and inferential statistics
such as mean, standard deviation, frequencies and percentages. The findings from the
study were presented using tables and figures.
Although this study offered several important findings, it should be noted that there were
several limitations. First, the sample size was too small, the researcher only managed to
interview 117 respondents out of the targeted 196 respondents. Another limitation was the
data collection instrument which utilized a Likert scale. It was noted that most
respondent’s responses were homogenous. This study needs to be replicated in different
product categories with more representative samples for it to be conclusive.
61
The findings established that there was a high level awareness of the extended brand-
Kimbo premium with a majority of respondents expressing interest in the product. There
was a positive brand attitude towards the parent brand- Kimbo and mother brand Bidco
with most respondents believing that Bidco products are quality products.
Respondents generally showed a high interest in this product because of its novelty with
70% responding that they can consider purchasing Kimbo Premium. The findings
additionally showed that consumers are not tied to only one brand of cooking oil. Most
respondents preferred to have at least 3 or four regular choices from Bidco, Kapa oil and
Pwani oils. Respondents cited that some oils are good for certain foods. For example
Ufuta is ideal for deep frying whereas Elianto is good for shallow frying. These findings
explained why respondents, did not think that Kimbo brand as the most superior brand of
cooking oil.
The findings also revealed that consumer innovativeness was generally very high with
many respondents responding positively on measures that indicate consumer
innovativeness. The findings also revealed that some not all types of risks were relevant
to consumers when evaluating a new product. Performance risk was the most significant
followed by financial risk. Social risk showed no significance whatsoever in brand
extension evaluation
5.3 Discussion
5.3.1 Effect of Brand Trust on Consumer Adoption of Brand Extensions
The findings established that there was a high level of brand trust for Bidco brand among
the respondents. Chaudhuri & Hoibrook (2001) define brand trust as the willingness of
the average consumer to rely on the ability of the brand to perform its stated function.
Their conceptualization focused on the performance dimension. This study like Koschate-
Fischer & Gartner ( 2015) conceptualized brand trust as multidimensional. Brand trust
therefore comprises of three dimensions; brand loyalty, brand satisfaction and reliability.
Koschate-Fischer & Gartner (2015) intimated that brand trust is a predictor for brand
satisfaction, and this research findings showed that the respondents who trusted in the
Bidco brand were also satisfied that it could meet expectations.
62
Brand trust has a continuance commitment, and the findings reveal that consumers who
trusted the Bidco brand also found the brand dependable. Brand trust also had an effect on
the affective commitment as the findings reveal that there is a direct significant
relationship between trust for the parent brand and willingness to adopt the brand
extension. The support that the brand gives to the new product often leads to a change in
brand image associations (Martínez & Pina, 2010). They go on to say that the affection
and the specific knowledge associated with the brand and the new product are
interchanged in a consumers’ mind.
There was a fit and quality perception of Kimbo Premium which according to Aaker &
Keller (2003) is a success factor for any brand extension. According to Volckner &
Sattler (2006), consumers use their beliefs about the parent brand to draw conclusions
about an extension product. Aaker & Keller (2003) conclude that the degree to which
brand associations(attributes, benefits and attitudes) are transferred to the extension
depends on the level of perceived fit between the brand and the extension product, and
that high quality perceptions of the parent brand tend to increase the extension’s
perceived quality. According to reviewed literature, the core parent brand experience
positively influences the probability of extension trial. Results from the chi-square test
reveals that consumers who trusted Kimbo and were willing to recommend it were also
willing to try the new brand extension Kimbo premium.
Chernatony et al. (2003) established that perceived similarity is the extent to which a
consumer perceives the extension as similar to other product affiliated with the brand.
Perceived similarity between the parent brand category and the category of the extension
enhances the evaluation of FMCG brand extensions. From the findings of the research it
was evident that there was similarity between the original brand Kimbo and its extension
Kimbo Premium. Kimbo premium is cooking oil whereas Kimbo is a cooking fat. There
is perceived similarity as one can be substituted for the other.
5.3.2 Effect of Consumer Innovativeness on Consumer Adoption of Brand
Extensions
Consumer innovativeness is a personality trait, and refers to an individual’s receptivity to
new ideas and willingness to try new practices and brands (Hem et al., 2003; Afzal, 2013)
It is the “consumption of newness”, and refers to the tendency of consumers to buy new
products more often and more quickly than others (Li et al., 2015).
63
Some studies have posited that consumer innovativeness is a primary driver of the
adoption and diffusion of new products.
The findings of the study revealed that most respondents considered themselves risk
takers and were willing to try out new brands of household products. The results of the
study however, showed negative association between willingness to try new brands and
willingness to adopt the brand extension Kimbo premium. These findings contradict
Rogers (1983) who concluded that one of the most salient traits of consumer innovators is
the comfort they gain from taking risk. Findings from previous researches also suggest
that individuals high in innovativeness are more venturesome and more willing to try new
brands. Women had a higher risk propensity for new household brands than men.
This study findings were in line with Xie (2008), who contradicted most researchers by
stating that innovative consumers will have a high level of desire for innovation and
newness, and therefore tend to try new brands without existing associations. He
concluded that innovative consumers may have a higher tendency to seek new brands
than extended brands. The researcher therefore concludes that a brand extension is not to
be considered an innovation. To support this claim, the researcher focuses on two product
attributes, originality and usefulness which are the two main product dimensions
identified in literature as sources of new product success (Li et al., 2015).
Li et al. (2015) define product usefulness as the consumer’s perception that a product or
service provides a benefit that fulfills his/her needs. Product originality is defined as a
product’s perceived newness or uniqueness according to the consumer relative to
previous offerings. Kimbo Premium is not unique in any way because there are a variety
of liquid cooking oils in the market. Consumers therefore do not perceive it as new. As
far as product usefulness is concerned, several respondents were willing to try the new
brand extension because they perceived it as advantageous and compatible with their
needs. Therefore product usefulness is what makes consumers want to try the new brand
extension.
The findings further revealed that a majority of respondents were in the first stage of the
consumer adoption process, the awareness stage. This assertion holds true because
findings revealed that a majority of the respondents would look for information first
before trying out new products. According to Xie (2008), innovative consumers desire to
obtain information about new and different products. He further goes on to explain that
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consumers use information sources in a distinctive way to reduce the uncertainty
associated with the product or service.
5.3.3 Effect of Perceived Risk on Consumer Adoption of Brand Extensions
Perceived risk is defined as a consumer perception of the uncertainty and unfavorable
consequences of purchasing an item for consumption or services (Staelin, 2015). The
focus of this research was on FMCG, which are generally known as low involvement
goods. Previous research has shown that different product classes have different levels of
perceived risk. The researcher identified five risk dimensions, including psychological,
financial, performance, physical and social risk. Risk perceptions occur through cognitive
evaluation (Dholakia, 2001).
Findings revealed that performance of a new brand of cooking oil was a key concern,
thus, indicating that performance risk was cognitively evaluated as being important.
Majority of consumers responded that they would consider taste first before buying new
cooking oil. The findings of the study also revealed that price consideration was also an
important factor. Consumers were not willing to pay more for a new brand of cooking oil,
especially if the current cooking oil was much more affordable. This also indicates that
financial risk was a major consideration in the evaluation of the brand extension, Kimbo
Premium.
According to Dholakia (2001), social risk is concerned with the adverse consequences
associated with unfavorable opinions of significant other people on account of purchase
or use of the product. The findings revealed that there was no social risk associated with
purchasing of a new brand of cooking oil. This finding confirms what Dholakia (2001)
intimates when he says that social risk is particularly salient in the case of socially
conspicuous products such as cars.
In this research, psychological risk was viewed as the experience of anxiety or
psychological discomfort arising from anticipated post behavioral affective reactions such
as worry and regret from purchasing and using the product (Dholakia, 2001). The
findings of the research showed that psychological risk was salient in consumer adoption
of new cooking oils.
65
A well- known brand is a risk reliever and boosts the probability of product trial.(Hem et
al., 2003). The findings suggest that respondents were only keen on picking brands that
they have used before as well as indicating that the brand name was important to them
when trying out a new product. The Kimbo brand alleviates performance risk. The
findings also reveal that because Kimbo was a well-known brand from a well-known
mother brand- Bidco. This effectively reduced performance and psychological risk as a
majority of respondents stated that they were willing to try the new brand extension.
5.4 Conclusions
5.4.1 Brand Trust Influences Adoption of Brand Extensions
This study found that brand trust is a crucial factor in the evaluation of brand extensions.
Trust was multi-dimensional. From the findings, we saw that customer satisfaction with
the parent brand influences the likelihood of a successful brand extension. Consumers
were willing to try brand extensions because the parent brand was highly trusted and
regarded. FMCG companies can build brand trust by seeking to create a personal and
emotional bond with the customer.
5.4.2 Consumer Innovativeness Does Not Influence Adoption of Brand Extensions
This study revealed that consumers are not risk takers when it comes to household goods,
preferring, instead, to pick brands that they are familiar with. Literature on consumer
adoption of innovation has highlighted that need for stimulation, novelty seeking,
independence towards others and need for uniqueness are the four dimensions of
consumer innovativeness. This study also revealed that consumer innovativeness did not
have a strong association with consumer willingness to try brand extensions. This was
attributed to the fact that even though brand extensions are new products, consumers do
not necessarily view them as unique.
5.4.3 Perceived risk Influences adoption of Brand Extensions
This study has revealed that there are some dimensions of perceived risk that influence
adoption of brand extensions. The three major dimensions of perceived risk were
financial, performance and psychological. The study revealed that consumers were
willing to try new cooking oils as long as it didn’t involve an extra cost and considered
the taste of food as a major concern in purchasing new brands of cooking oil.
66
The greater the level of risk that consumers perceived, the less likely they were to adopt a
new brand extension.
5.5 Recommendations
5.5.1 How to Improve Adoption of Brand Extensions
5.5.1.1 Leverage on Brand Trust
Kimbo enjoys 100% awareness however, Kimbo Premium awareness remains low. Bidco
should leverage on the fact that Kimbo is known to market Kimbo premium to
consumers. There is already a high level of brand trust for Kimbo with several
respondents willing to recommend it to someone who seeks advice. Consumers felt that
Bidco cooking oils are healthy and its brand reputation influenced purchase decisions for
cooking oil. This implied that Bidco has a strong brand identity in the minds of its
consumers.
Bidco can employ a messaging strategy that encourages consumers to also trust the new
brand-Kimbo premium.
5.5.1.2 Drive Product Trial
The study revealed that even though respondents were aware of the extended brand, they
had not formed purchase intentions. This indicates that consumers had not moved from
the product awareness stage as per consumer adoption process. Bidco should, therefore,
direct its market efforts to nudge consumers to find out more about the brand and to
evaluate it by considering the benefits of the product.
A marketing promotion that drives trials would be ideal. Bidco can carry out promotions
in the key supermarkets and educate consumers about the benefits of Kimbo premium,
while giving customers the cooking oil to sample at home. These efforts will be
rewarding as most consumers were willing to try the new brand. Bidco has so far been
unsuccessful in proving that a consumer can get value from picking Kimbo premium over
another brand.
5.5.1.3 Reduce Perceived risk
This study revealed that consumers were willing to try new cooking oils as long as it
didn’t involve an extra cost. Bidco can reduce the financial risk by positioning Kimbo
premium at the right price point. Bidco should also work on its product messaging, use
67
words like tasty in its product labels. This would work to reassure customers who
prioritize taste before buying a new brand of cooking oil.
5.5.2 Recommendations for Further Studies
The research conducted led to some useful results and conclusions on brand extension
adoption; however, it has also uncovered many areas that need additional study. Further
research is needed to test whether the findings presented here are also valid for brand
extensions in other industries. Cross –industry research need to be conducted to see if
there is any difference between adoption of brand extensions in FMCG sector and
adoption of brand extensions in the service sector. An obvious extension of my study
would be to increase the number of possible factors that may influence adoption such as
advertising efforts of the Brand; competitor activities in reaction to the brand extensions.
68
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APPENDICES
APPENDIX I: COVER LETTER
Date: …. /…../……
Dear Mall Manager,
RE: REQUEST FOR PERMISSION TO CONDUCT RESEARCH
I am a registered graduate student in Chandaria School of Business at the United States
International University –Africa (USIU). I am conducting a study on brand extensions in
Kenya, specifically on how FMCG companies can drive adoption of brand extensions.
I am hereby seeking your consent to conduct this research in your mall. I will be targeting
shoppers from the supermarkets. The research will be conducted over a period of four
weeks from 1st to 30th June. To assist you in reaching a decision, I have attached an
introduction letter from the university.
Should you require any further information, please do not hesitate to contact me or my
supervisor. Our contact details are as follows:
Ida Rasanga [email protected] +254 724 969 511
Dr Peter Kiriri- Supervisor [email protected] +254 722 988777
Your permission to conduct this study will be greatly appreciated.
Yours sincerely,
Iddah Rasanga
75
APPENDIX II: QUESTIONNAIRE
Kindly take some time to fill out below questions as accurately as possible. Information
provided will be treated with the outmost confidentiality
Section A: General Information
(Tick where appropriate)
1. Gender: Male Female
2. Age bracket
15 – 25 years 26 – 35 years 36 – 45 years 46 & above years
3. What is your level of income per month?
Below 50,000 Ksh 50,000-100,000 Ksh 100,000-150,000
Above Ksh 200,000
4. What is your marital Status?
Single Married Divorced
5. Do you have children?
Yes No
6. How often do you shop for household items?
Daily Weekly Monthly Other
7. How often do you shop for household items?
Daily Weekly Monthly Other
8. Do you buy branded cooking oils YES NO
76
9. Have you heard of/ or seen Kimbo Premium?
Bidco Cooking Oils Premium Oils Elianto
Kimbo Premium
Olive Gold
Soya Gold
Sun Gold
Vegetable Oils Golden Fry
Bahari Fry
Ufuta
White Fats Chipo
Mallo
Kimbo
Yellow Fats Chipsy
Cowboy
Yellow Go
Kapa Cooking Oils Edible Oils Olivia
Rina
Rinsun
Captain Cook
Cooking Fats Kasuku
Tilly
Alpa
Rina Deep Frying
White Gold
Kapa Ghee
Seagull
Pwani Cooking Oils Edible Oils Salit
Popco
Fresh Fri
Cooking Fats Fry King
Mpishi Poa
Fry Mate
YES NO
9. (b) If Yes…Have you used this product?
YES NO
9 (c) If No Would you consider buying this product?
YES NO
Why/ Why Not?
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
77
SECTION B: CONSUMER RELATED CHARACTERISTICS
Please indicate your level of agreement by ticking your responses below
1 = Strongly Disagree 2 = Disagree
3 = Neutral 4 = Agree 5 = Strongly Agree
A. Brand Trust
1 2 3 4 5
I have trust in Bidco’s cooking oils
I believe that Bidco ‘s cooking oils are quality cooking oils
I believe Bidco’s cooking oils are prices fairly.
Bidco cooking oils meet my expectations
I know the Kimbo Brand
I have used Kimbo cooking fat
I would recommend Kimbo brand to someone who seeks
my advise
I can use the new Kimbo Premium cooking oil
Bidco’s brand reputation influences my decision to buy any
of its products
Bidco is dependable
I only buy Bidco Cooking Oils
Kimbo brand is the best
I find Kimbo brand superior than others
Bidco cooking oils are healthy
78
Consumer Innovativeness
= Strongly Disagree 2 = Disagree 3 = Neutral 4 = Agree 5 = Strongly Agree
1 2 3 4 5
I like trying out new brands for household products
I am a risk taker
I can use any cooking oil to cook food
I have to sample food cooked by a new brand of cooking
oil before buying it
I buy new brands only after recommendation
I look for information first before trying out new brands
Brand name is more important to me when trying out a
new product
I like surprises
I have tried out all Bidco cooking oils
I would consider a newer brand even if it was relatively
more expensive.
C: Perceived Risk
1 = Strongly Disagree 2 = Disagree 3 = Neutral 4 = Agree 5 = Strongly Agree
1 2 3 4 5
When I am shopping for cooking oil I only pick the
brands that I have used before.
I can buy any cooking oil.
I consider price first when buying a new brand of cooking
oil.
Kimbo premium cooking oil is as good as Elianto
Cooking oil.
I think about taste before buying a new brand of oil
Cooking oil.
79
1= Strongly Disagree 2 = Disagree 3 = Neutral 4 = Agree 5 = Strongly Agree
1 2 3 4 5
I worry about what people will think of me if I choose a
different brand of cooking oil
What people say about a brand of cooking oil will
influence my purchase decision.
I can only buy cooking oils that are approved by my
friends and family
I only buy cholesterol free cooking oils
I will be annoyed with myself if I chose the wrong brand
of cooking oil.
I would consult first before buying a new brand of
household product
I read product information labels before purchasing a new
brand of household product