Price and Store Image as Mitigating Factors in the Perception and Evaluation of Retailers' Customer-Based Brand Equity

Developing, improving, and achieving sustainable advantage is becoming more challenging than ever before. This is due in part to the complexity and the rapidly changing marketing environment. No matter how strong brands are, it is getting harder to achieve and sustain brand equity. Increasingly, firms realize that branding is one of the most valuable intangible assets that firms have. This study aims to provide a better understanding of customer-based brand equity (CBBE) in the era of super brands. Consumers often base their buying decisions on impressions of price and store image. The objective of the study was to acquire an understanding of the effects of price and store image on customer-based brand equity, and the differences among perceptions of two major retailers, attributed to price and store image. In addition, this study explored differences in customer-based brand equity based on the characteristics of the retailer's customers. Retailers are an important link between manufacturers, marketers and consumers. The specialty coffee industry is a significant and growing part of retailing in the U.S.; therefore, the study concentrated on Starbucks and McDonalds' McCafe, the two leading coffee retailers in the U.S. In essence, the study aimed to provide a better understanding of how brand equity is affected. This research was a quantitative, non-experimental, exploratory-comparative study using survey research of subjects. Data were collected from 539 students at a regional U.S. university. These students are consumers, and ardent customers of retail coffee shops. Descriptive and inferential statistics including t-tests and three-way ANOVA were used to analyze the data. The results of this study imply that store image can add to brand equity, thus creating a sustainable competitive advantage for products and firms, while allowing them to charge premiums. Price usually is positively related to the perception of quality; the study found that price was not significantly related to customer-based-brand equity in every retail operation. Store image had the strongest association with brand equity followed by perception of price. This study showed that higher levels of education were associated with higher customer-based-brand equity, and gender had a weaker association to customer-based-brand equity. Results indicate that both store image and price might positively influence specialty coffee consumers buying behavior. These results present definite value to retailers. Overall, Starbucks displayed higher brand equity than McDonald's McCafe, somewhat contradicting Interbrand's ranking of global brands where McDonald's, the brand, is ranked 6 and Starbucks, the brand, is ranked 96 among the top global brands (2012). This might be due to the fact that McDonald's is an iconic American brand, occupying a central place in popular culture for over 70 years (Ritzer, 2008), while McDonald's McCafe is a fairly new concept. Starbucks higher brand equity might indicate great brand challenges ahead for McDonald's McCafe. TABLE OF CONTENTS Page ACKNOWLEDGEMENTS ABSTRACT TABLE OF CONTENTS LIST OF TABLES LIST OF FIGURES CHAPTER 1: INTRODUCTION Introduction to the Study U.S. Specialty Coffee Retail Industry Retail Industry and the Marketing Mix Overview of Marketing Overview of Branding Definition of Terms Brand Equity Purpose of the Study Justification Delimitations and Scope CHAPTER 2: LITERATURE REVIEW, THEORETICAL FRAMEWORK, RESEARCH QUESTIONS, AND RESEARCH HYPOTHESES Literature Review Branding Brand Equity Measuring Brand Equity Brand Associations Perceived Quality Brand Loyalty Brand Knowledge Brand Awareness Brand Image The Marketing Mix Price and Brand Equity Store Image and Brand Equity . 11