Master Thesis
The Effect of Co-Branding on the Fashion Luxury Consumer’s Brand Equity:
Comparison between the Generations Y and X.
Authors: Fernández Hidalgo, Cristina – 930803 – cf222gn@student.lnu.se Mikano, Larry - 860922 –
lm222mh@student.lnu.se Vermeersch, Tom – 911026 –
tv222bu@student.lnu.se Supervisor: Setayesh Sattari Examiner: Anders Pehrsson Date: 05/27/2016 Subject: Business Administration with major within Marketing, Degree Project
Level: Master (1 year) Course code: 16VT-4FE15E
Acknowledgement
This thesis was conducted in the scope of the Marketing, Master Program during the spring semester of 2016 at Linnaeus University.
The successful completion of this thesis would not have been possible without the support of multiple individuals. Therefore, first of all, we would like to express our gratitude to our mentor Prof. Setayesh Sattari who was always available for us with experience, guidance and necessary criticism for all our ideas and questions. Also, we want to give thanks to Prof. Anders Pehrsson who was there for us with critical thought and theoretical support during the seminars in the early stages of our thesis.
We would also like to express our gratitude to the General Manager at Harvey Nichols, Simon Youden, who was kind enough to make the London Knightsbridge store available for us to conduct our survey. We owe the strength of our collected sample and data to his support and insight in the potential importance of our research.
Finally we; Cristina, Larry and Tom would like to thank the entire marketing department of the Linnaeus University. The entire school and staff stimulated our knowledge, ambitions, skills and passions in marketing during the entirety of the master program and created a wonderful environment for us as students to prepare ourselves for our professional careers.
Abstract
The co-branding strategies are gaining attention from research due to the special difficulties of implementing a collaborative strategy. Hence, this paper evaluates the effect of the co-branding strategy between a luxury brand and a high-street retailer on the luxury consumers’ brand equity of the luxury brand post-co-branding. Additionally, this study aims to find differences between the generation Y and X cohorts in terms of brand equity impact from co-branding.
This effect was evaluated from three brand equity dimensions: perceived quality, brand image and brand loyalty. To conduct this research the data was collected at the department store Harvey Nichols in London where luxury fashion brands are sold. Later the data was analyzed with a regression, analysis and t-test.
The consumers showed differences in terms of their attitude towards the co-branding strategies between a luxury fashion brand and a high-street retailer. In addition, this research found that all the brand equity dimensions suffer a direct influence from the attitude towards co-branding for all the consumers in the study. Direct influence means that the co-branding strategies may cause positive or negative spillover effects. Moreover, the results conclude that there is only a difference in the brand equity dimension of brand loyalty between the generation cohorts Y and X.
Keywords
Co-branding, Luxury Fashion, Brand Equity, Consumer-based, Collaboration, Perceived Quality, Brand Image, Brand Loyalty, Generation Y, Generation X, Information Integration Theory London.
Content
1 Introduction ... 6
1.1 Background ... 6
1.2 Problem Discussion ... 9
1.3 Research Purpose ... 11
1.4 Delimitations ... 11
1.5 Report Structure ... 12
2 Theoretical Background ... 13
2.1 Co-branding ... 13
2.2 Attitudes towards Co-branding ... 15
2.3 Brand Equity ... 17
2.3.1 Perceived Quality ... 19
2.3.2 Brand Image ... 20
2.3.3 Brand Loyalty ... 22
3 Opperationalization and Conceptual Framework ... 24
3.1 Conceptual Framework ... 24
3.2 Operationalization ... 26
4 Method ... 29
4.1 Research Approach ... 29
4.2 Research Design ... 29
4.3 Data Sources ... 30
4.4 Population and Sample ... 30
4.5 Data Collection ... 31
4.5.1 Data Collection Instrument ... 31
4.5.2 Data Collection Procedure ... 32
4.5.3 Pre-test ... 33
4.6 Quality Criteria ... 33
4.7 Data Analysis Method ... 34
5 Results and Analysis ... 37
5.1 Descriptive Data of the Respondents ... 37
5.2 Factor Construction ... 38
5.3 Reliability ... 39
5.4 Hypotheses Testing ... 41
5.4.1 Attitudes towards Co-Branding between the Generations Y and X ... 41
5.4.2 Attitudes towards Co-Branding’s Influence on Perceived Quality ... 42
5.4.3 Attitudes towards Co-Branding’s Influence on Brand Image ... 45
5.4.4 Attitudes towards Co-Branding’s Influence on Brand Loyalty ... 48
5.4.5 Hypotheses Acceptance ... 50
6 Discussion ... 52
7 Conclusion ... 56
8 Managerial Implications ... 58
9 Limitations and Further Research... 60
References ... 63
Appendices ... 76
Appendix A - Descriptive Statistics ... 76
1 Introduction
This chapter will introduce the topics of the co-branding and the value of the brands, showing an existing problem in the market that needs to be addressed by research. Through this problem: a purpose, research questions and some delimitations are drawn.
1.1 Background
Despite the world financial and economic crisis, the overall luxury market exceeded $965 billion in 2014 with an industry comprising of nine segments in total (Cheah et al., 2015; Bain & Co., 2014). Personal luxury goods prevails amongst these nine segments as an important category and remains the core of the luxury market ― specifically luxury fashion brands helping to propel the upward growth (Bain & Co., 2014). The industry of luxury fashion has been showing a positive- escalating tendency. Even more, during the first half of this decade it has grown more than a 46%
in worldwide value (Statista, 2016). As of 2015, Louis Vuitton currently is the most valuable luxury brand in the world followed bybrands such as Hermes, Gucci and Chanel (Statista, 2016).
Although, interestingly the value of the biggest brands in the luxury fashion industry is comparable to high-street brands also known as fast-fashion brands that strategically compete differently and target a different consumer segment. For instance, according to Interbrand (2016), Louis Vuitton has a similar brand value to H&M ― around the 22.250 million U.S. dollars.
Within the fashion industry, luxury brands differentiate themselves by emphasizing, between others, the image status, the exclusivity and the premium pricing (Esmaeilpour, 2015; Cheah et al., 2015). Hence, they provide a mix of pleasure and unavailability for the mass that serves the luxury consumers with social salience and identification (Chattalas and Shukla, 2015). In addition, Liu et al. (2012) proposed five values that a brand should have to be considered luxurious: conspicuous, unique, social, hedonic and quality. Consumers of luxury products can be characterized today as coming from all different social and income classes, using prestige products to elevate their confidence and also because they enjoy wearing well-known brands (Husic and Cicic, 2009).
Over the years, the luxury fashion industry has evolved and changed. Presently, luxury goods are no longer solely exclusive to the rich and elite society (Yeoman and McMahon-Beattie, 2006;
Wiedmann et al., 2009) but have become more accessible to the demand of people that can occasionally afford the brands (Yeoman, 2011; Wiedmann et al., 2009). This can be seen as the democratization phenomenon which describes the inaccessible becoming accessible as luxury goods are now widely available to more consumers thanks to mass premium brands, second lines and designer collaborations (Okonkwo, 2007; Silverstein and Fiske, 2003; Twitchell, 2002).
In addition, consumer behavior patterns are also changing. Looking at generation cohorts, generation theorists propose that due to changes in macro-environment, people are influenced as a result of the specific time period they are born into which imprints a specific and similar purchasing and consumption behavior (Howe and Strauss, 2000). For instance, the consumers in the generation Y differ in comparison to those of previous generations (Tomkins, 1999), and young consumers’ perception of luxury subsequently has a different meaning to that of generation X (Hauck and Stanforth, 2007). Thus, several authors agree that both generations Y and X differ in values, characteristics and behavior (Gurău, 2012). As a response, brands have been compelled to “re-position themselves to attract the new, niche luxury market that employs a different way of thinking to traditional ‘old luxury’ (de los Santos, 2009, p.2) and brands now must adapt to the ever-changing lifestyles of customers (Fredlund et al., 2006). Moreover, according to So et al. (2013, p.404), “luxury firms are gradually shifting their corporate branding focus from ‘building social status’ to ‘customer emotional attachment’ in an effort to cultivate enduring loyalty”. The emotional and availability factors would allow brands to capitalize long- term relationships with a wider number of consumers (Cheah et al., 2015; Hanslin and Rindell, 2014).
Strategies to enter or target new markets are becoming more important than ever for the luxury fashion firms (Oeppen and Jamal, 2014; Hennigs et al., 2013). Some of these strategies which can be considered a form of brand extension includes: line and category extensions, franchising and co-branding all of which take advantage of leveraging the parent brand name recognition and image (Aaker and Keller, 1990; Pitta and Katsanis, 1995; Stegemann, 2006; Hennigs et al.,
2013). When looking at brand extensions, one of the most commented strategies is co-branding (Oeppen and Jamal, 2014; Okonkwo, 2007; Hanslin and Rindell, 2014). Co-branding, also known as brand alliances, is defined by Motion et al. (2003), as a corporate brand partnership, in other words it is the collaboration between two or more different brands. This means that different brands with different sets of values have to adapt to each other to create a new brand with qualities from all the co-branding partners (Motion et al., 2003; Rao et al., 1999).
Today, designers and retailers have followed this example and high-street brands like Adidas, TopShop and frequently H&M have become known for these occasional practices partnering up with luxury brands (Okonkwo, 2007; Hirschmiller, 2014). Looking at the other side of the spectrum, luxury fashion designers like Stella McCartney, Versace or Valentino have also adopted co-branding strategies with high-street retailers as an opportunity to bring their products into wider distribution (Doran, 2012; Hirschmiller, 2014). Collaborations include Karl Lagerfeld for H&M, Stella McCartney also for H&M and Yohji Yamamoto for Adidas (Ahn et al., 2010).
Kapferer and Bastien (2009, p. 311) stated that "luxury is everywhere" which as a basic meaning still presents challenges in the management of luxury brands (Hennigs et al., 2013) who operate in important fashion capital centers such as London (Godart, 2012) where this research was conducted.
Despite the common use of co-branding strategies involving luxury brands and the popularity as a brand management strategy (Wang et al., 2012; Wason, et al., 2015), luxury firms are faced with the consequences of a spillover effect which can be positive or negative. This can be down to the collaborative relationship which involves brand associations derived from consumers based on the brand fit between the luxury brand and high-street retailer. In addition, Brand equity is said to play an instrumental role in consumers’ decisions to purchase certain brands over others (Swait et al., 1993). Therefore, luxury brands face compromising brand equity dimensions such as the brand image as well as the relationship and brand loyalty of customers ― generation Y and X where generational differences in consumer purchase patterns have been shown to exist (Norum, 2003).
1.2 Problem Discussion
The reasons why fashion companies utilize co-branding have been explained from different perspectives. From the romantic reason of Karl Lagerfeld of taking the fashion to the streets, to the studied reason of creating a brand experience that would attract young consumers who dream about having a real piece of luxury fashion (Okonkwo, 2007). In any case, research shows that the branding strategies in the fashion industry are relevant study topics due to the market value and the fast changes the industry faces (Hanslin and Rindell, 2014; Oeppen and Jamal, 2014;
Okonkwo, 2007; So et al., 2013; Fionda and Moore, 2009). Researchers like McColl and Moore (2011) established the need of more understanding about the industry, especially from the consumers’ point of view. Hence, collaborations between brands has attracted several researchers, as reasoned by Oeppen and Jamal (2014, pp.925-926) who states that “luxury fashion brands, in particular, face additional pressure of expanding their consumer base and brand awareness, while retaining exclusivity, uniqueness and in turn premium prices”.
The co-branding strategy has been generally accepted in terms of consumer-based brand equity studying the co-branded product (e.g. Washburn et al., 2000) or the co-branding as a brand (e.g.
Motion et al., 2003) but there is little research covering the resulting consumers’ perceived brand equity of the constituents brands (specifically the luxury brand) post-co-branding. To the authors’
knowledge, Wang et al. (2012) is one of the few studies that have attempted to examine the effects of a co-branding strategy between luxury brands and retailers on consumers evaluation of the luxury brand’s image. Despite the results, limitations have called for further research. Other studies, such as Hanslin and Rindell (2014) found that lower-profile line extensions, similar to the co-branding strategies between brands of the same sector, can lead both to positive and negative brand perceptions. These perceptions can play a big role on the loyalty or enmity of the consumers towards the brand (Wang et al., 2012; Hanslin and Rindell, 2014). Hanslin and Rindell (2014) also showed that some consumers were ashamed to admit they liked the brand extensions as they must show that they can afford more expensive lines, exemplifying a problem of adjustment in the mindset of the consumers.
Despite other co-branding studies focusing on the perspective of the consumer (e.g. Besharat, 2010; Wang et al., 2012 or Ahn et al., 2010), no attempts have been made to discover the existence of age clusters for the perception of the constituent brands (luxury brand) after the co- branding strategy occurs. As mentioned, luxury is no longer limited to the wealthy older consumers (Jackson, 2011; Shea, 2013; Silverstein and Fiske, 2008). Today’s luxury client is said to also be most likely a member of generation Y or generation X (Stein and Sanburn, 2013;
Giovannini et al., 2015, p.4). The younger generation, so called generation Y or millennials are those consumers who were born between 1980’s and middle 1990’s and they come after generation X who were born between the years 1961 and 1981, (Weidmer, 2015; Robinson, 2015).
Generation Y have become a focal point for luxury brands and are at the forefront for luxury consumption (Timperio et al., 2015; Chu and Kamal, 2011). Younger individuals have been discovered to find luxury brands a way or substitute to reassure and consolidate their unsure identity (Piacentini and Mailer, 2004), and as a result may spend considerable amounts of money on luxury goods (Wong and Ahuvia, 1998). They have also been known to be more brand conscious (Loroz and Helgeson, 2013) and can be characterized as status-seeking fashion innovators (Hanslin and Rindell, 2014). In contrast, generation X or older luxury consumers are shown to be more brand loyal when purchasing an assortment of brands which represent different price points and prestige (Little, 2012; Richie, 1995). They have been identified as high-earners due to the point in their lives and characterized as having affinity for nicer things which makes them an ideal target for luxury companies (Lamb, 2016). Additionally, generation X are known to be more value oriented and use an analytical approach when making purchases towards brands (Reese, 1997). Research has identified the importance for luxury brands to preserve their high- end images by retaining a sense of exclusivity to brands focal demographic segments, such as affluent middle-to-old age adults (Wang et al., 2012).
1.3 Research Purpose
Hence, this current study proposes that different generations of consumers will perceive the co- branding strategy differently leading to positive or negative responses. Therefore, the purpose of this research paper is to evaluate the effect of the co-branding strategy between a luxury brand and a high-street retailer on the luxury consumers’ brand equity of the luxury brand.
Additionally, the paper seeks to make a comparison between generations Y and X through assessing customer-based brand equity variables of perceived quality, brand image and brand loyalty post-co-branding towards the luxury brand.
Therefore, this study asks the following research questions:
Q1: How does the co-branding strategy at the luxury fashion market influence consumers’ brand equity dimensions towards the luxury brand?
Q2: How does the co-branding strategy at the luxury fashion affect differently the consumers’
brand equity dimensions towards the luxury brand between generations Y and X?
1.4 Delimitations
Although co-branding does not imply a step-down line extension or the collaboration of two brands of the same sector such as luxury fashion and high-street fashion, this paper will examine that specific case. In addition, in this research paper, co-branding portrays the pairing of two branded products (constituent brands) to form a separate and unique product (composite brand).
Researchers will attempt to see this corporate partnership from the point of view of the consumers’ brands chosen that belong to the luxury fashion industry in London.
Additionally, the theoretical background is based on the consumer-based brand equity and excludes any other kind of brand equity such as financial-based or company-based. Lastly, for the sake of the paper and as method choice, the brand awareness and the other utilitarian assets which is part of the consumer-based brand equity conceptual framework were not deemed as necessary
to include. Specifically for the case of brand awareness, the respondents did not need to answer about this variable since they were free to choose a brand they were already aware of in the beginning of the questionnaire.
1.5 Report Structure
In order to achieve its purpose, this paper exposes a number of academic articles and other literature to provide a perspective of the co-branding, the brand equity and the analysis methods.
It also proposes an operationalization and a model with some hypotheses to be tested and answered at the analysis, providing results where the regression analysis and the t-test were employed. Thereafter, the paper will gather all the previous and new information into a discussion and a conclusion of the results. Finally this paper will end formulating implications for managers and marketers, pointing out the limitations of the study and proposing further research to be conducted.
2 Theoretical Background
This chapter will expand the understanding of co-branding and the attitude formation over this strategy, while also explaining in depth the evidence of the influence of a branding strategy on the brand equity dimensions. In addition, it gives insights into the different perceptions of the brand equity dimensions by the generations Y and X.
2.1 Co-branding
The theoretical basis of co-branding’s impact on customers are derived from theories on signaling (Rao and Ruekert, 1994; Rao et al., 1999) as well as from attitude formation (Anderson, 1981;
Hillyer & Tikoo, 1995). The past decades have seen a huge increase of cooperative branding activities with co-branding progressively becoming an effective strategy to leverage a new or unfamiliar brand (Rao et al., 1999; Voss & Gammoh, 2004; Washburn et al., 2000). Co-branding or brand alliances has also been mentioned in luxury fashion literature as a widely developed strategy (Cho and Fiore, 2015; Wang et al., 2012) and research on brands and branding shows it as increasingly prevalent (Keller and Lehmann, 2006).
Hanslin and Rindell (2014) and Kim and Lavack, (1996) refer to co-branding as a collaborative step-down line extension because it implies the elaboration of a similar product that respects all the characteristics of the other lines but the price range and quality. This paper exemplifies the case of a step-down line extension focusing on the downgrade collaboration of luxury to high- street in contrast to a step-up line extension of high-street to luxury (Kim et al., 2001).
Rao and Ruekert (1994) previous studies suggest partner brands are favorable if they can signal high-quality cues that transmit to the host brand or provide information on product attributes which ultimately benefits the alliance. Whereas, Blacket and Boad (1999, p.118) also states that the success of brand alliances or partnerships can be attributed to each partner having the generic values that enable their brand to enter the co-brand category and compete effectively. This ultimately is down to commonality and synergy existing between both brands which will then
lead to a constructive relationship (Motion et al. 2003). The main reason for co-branding as mentioned by Keller (1998) is to transfer the positive associations of a partner’s brand to one’s own brand. In the case of luxury and high street collaboration positive associations for the luxury brand would demonstrate affordability as well as accessibility.
However, co-branding has been shown to come with a variety of risks which can be down to pairing a partner that can damage the existing product's robust brand equity (Washburn et al., 2000). Wang et al. (2012) shows how consumers can respond negatively to co-branding, which highlights the potential complexity and risks of brand alliances if poorly chosen. Wang et al.
(2012, p.5) also proposes that "a poor brand or product fit can result in tarnished brand equity and possibly a loss of luxury image". Ultimately, this can explain why designers abandon the idea of launching a second line (Menkes, 2012), and why leading luxury fashion brands express their pessimistic views on extending a brand downwards (Lutz, 2012).
Additionally, evaluations of consumer attitudes toward co-branding conclude that prior attitudes towards the constituent brands as well as both product and brand fit can be linked to attitudes to the partnership (Simonin and Ruth 1998; Keller and Lehman, 2006). Simonin and Ruth (1998) research also showed that brand familiarity plays a significant role in comprehending brand alliance evaluations and their spillover effects (Wang et al., 2012, p.9). Considering how a brand alliance affects perceptions of the parent brands, Helmig et al. (2007) has shown that spillover effects are often asymmetrical, with one brand gaining more from as a result of the partnership.
Lebar et al. (2005) study which included the use of ten different partnership scenarios with actual brands discovered that co-branding led to a decreased brand esteem weighing up average scores.
It was also recommended that high-esteem brands be cautious if they decided to pursue a brand alliance (Watson and Charlton, 2015). Despite this, most studies have demonstrated the positive spillover effects that happens to constituent brands in the aftermath of co-branding (Baumgarth, 2004; Simonin & Ruth, 1998; Washburn et al.,2000). Swaminathan et al. (2012) also found positive spillover effects but showed this only happening where the perceived brand fit was comparatively high in the co-branding partnership. This corroborates Xiao and Lee (2014)
research which introduced brand identity fit as instrumental to influencing a successful co- branding strategy.
Overall, the importance of belonging to certain social ranking and maintaining a precise image among peer groups has become important as well as increased the need to own luxury products even among young consumers in addition to the older generation (Okonkwo, 2007; Phau and Cheong, 2009; Truong et al., 2009). Therefore luxury firms seeking to participate in a co- branding strategy must consider both the short-term and long-term, positive and negative spillover effects towards the luxury brand, based on their different demographic consumer groups they cater to.
2.2 Attitudes towards Co-branding
As this research attempts to understand and evaluate the attitude change and formation of consumers in the aftermath of co-branding transpiring, the authors adopts the theoretical foundation of Anderson's (1971) Information Integration Theory (IIT). IIT explores how attitudes can be formed and altered through the integration of new information in the midst of existing cognitions or thoughts (Wang et al., 2012). Carlson and White (2008) describes IIT as the ways in which people accumulate and organize information to form attitudes toward an assortment of concepts including individuals, objects, situations, or ideas. According to IIT, each significant piece of new information formed has two qualities: value and weight (Wang et al., 2012). Value can be favorable or unfavorable and weight can be measured as a result of its overall importance so therefore new information acquired from those new pieces of information will ultimately affect attitudes, but don't replace existing attitudes (Wang et al., 2012). Thus, the fundamental concept of the theory is built around stimulus integration (Carlson and White, 2008) and the integration processes describes several diverse stimuli being united and organized in order to determine an overall response (Anderson 1974; Anderson 1991). The foundations of information integration theory can be linked to the field of psychology (Carlson and White, 2008), although Wang et al. (2012) recent study on co-branding between luxury brands and retailers also adopts the use of this theory. This follows earlier studies that have examined
specific aspects of consumer attitudes using IIT (Bettman et al., 1975; Herrmann and Wricke 1998; Smith 1993). IIT has contributed to resolving a variety of methodological and theoretical problems, in addition to unifying several lines of thought previously isolated (Shanteau, 1985).
"Much of the research examining attitude formation and change can be directly applied to the field of marketing and consumer behavior" (Carlston and White, 2008, p.1), which in this case can be linked with brand extension strategies such as co-branding. Hence, the theory adds to the overall conceptual framework of this study and has been applied in a vast array of research areas ranging from personality impression formation and attitude change to psychophysics and decision making (Anderson, 1968; Shanteau, 1985; Simms, 1978). IIT allows the authors to develop a unified theory of judgment and behavior as a result of co-branding between luxury brands and high-street brands. In the case of brand alliances, one brand is presented in the context of another brand which will likely result in consumer judgments about the alliance being predisposed to prior attitudes towards both brands, and then judgments about each brand is subsequently affected by the context of the other (Simonin and Ruth, 1998). Looking at generational cohorts Y and X, similar life experiences that represents each individual group has been said to cause them to form similar attitudes and beliefs (Meriac et al., 2010). Ultimately, this results in differences in characteristics developed (Kupperschmidt, 2000). For example, past research posits that generation Y consumers respond to brands in ways that are unseen (Phau and Cheong, 2009;
Bakewell and Mitchell, 2003) and describe this segment as more comfortable with brands than previous generations (Merrill, 1999). In addition, Phau and Cheong (2009) study discovered that young status consumers may be willing to substitute luxury brands for step-down line extensions.
Therefore, contrasting beliefs, expectations, views and consequently behavior acquired through life (Lancaster and Stillman, 2002; Dries et al., 2008) suggests both generation cohorts attitudes will differ in the aftermath of co-branding ― with generation Y likely having a more positive attitude towards co-branding than generation X.
H1: The attitude towards co-branding is more positive for generation Y than for generation X.
2.3 Brand Equity
Brand equity can be seen as a key issue in marketing (Bull et al., 2013) and ultimately building a strong brand with considerable equity can assist in equipping a firm with a host of benefits (Keller, 2001). Keller (2001) also suggests actual benefits include greater customer loyalty and less vulnerability to brand extension opportunities in addition to other beneficial examples. Thus, brand equity can be defined "as the set of brand assets and liabilities linked to the brand, it is the name and symbols that add value to, or subtract value from, a product or service to a firm or to that firm's customers” (Aaker, 1991, p.15). Keller (1993, p.2) proposes a comparable meaning which can be characterized as the differential effects of brand knowledge in relation to the consumer reaction to the brand. Aaker’s (1991) definitions has been widely accepted in past research (Buil et al., 2013) and the notion of a brand as a representation of values has been accompanied by accepting that branding adds value to a company through the creation of brand equity (Aaker,1996; Barwise, 1993; Keller, 1993, 2000; Olins, 2000; Srivastava et al., 1998).
In addition, research also proposes that brand equity may contribute in consumers' choice to purchase certain brands over other competitors (Swait et al., 1993), and firms understanding of brand equity can assist in creating effective marketing strategies (Keller, 1993). Subsequently, Swait et al. (1993) suggests that brand equity can play a central role in explaining the nature of brand and line extensions, which this study also deems important to explaining the act of co- branding. In the situation of luxury and high street partnerships, a well-known brand name (luxury) is paired with another brand name (high-street) which can help enhance the lesser known composite product. At the same time, co-branding comes with many risks and Washburn et al.
(2000) notes that the risk lies in one partner damaging the existing products strong equity which in this case the authors refer to the luxury brand equity post-co-branding. Therefore, as suggested by Rao and Ruekert (1994), brand names ultimately indicate quality to customers because customers believe that firms that do not live up to their quality claims will face negative repercussions (Washburn et al., 2000, p.4). So, Luxury fashion goods (in this case brands) seen as perfect examples of “symbolic consumption” goods due to associations of high quality,
exclusivity, high price, and social visibility (Giovannini et al., 2015, p.5) can face being exposed to such risks as a result of co-branding negatively influencing equity.
A number of researchers are aware of the relationship that exists between the brand management and customer management perspectives (Ambler et al., 2002). Thus, recognizing the value of brands as intangible assets further emphasizes attempts to better understand how to build, measure, and manage brand equity (Kapferer 2005; Keller 1993, 2003). Keller and Lehman (2006) recommend that to manage brands properly, marketers should have a holistic understanding of the equity that exists within brands. Initial studies focused on brand equity from the consumer behavior perspective which emphasized the “consumer response to the marketing of the brand” (Keller, 1993, p.8). However, despite the broader principal perspectives extension of brand equity (financial-based and company-based), consumer-based brand equity has been adopted and deemed appropriate for this study. Also utilized by Washburn et al. (2000), this allows for the examination of how generation cohorts’ perceptions of brand alliances (in this case luxury to high-street) affect their attitudes towards the luxury brand based on brand equity dimensions.
Consumer-based brand equity has been built around brand equity dimensions of measuring awareness, attitudes, associations, attachments and loyalties consumers ultimately have towards a brand (Keller and Lehmann, 2006; Bull et al., 2013, p.116). This perspective is grounded on the earlier conceptual framework of both Aaker‘s (1991) brand equity and Keller‘s (1993) consumer- based brand equity theories (Cho, 2011, Bull et al., 2013). According to Aaker (1991), five measurement components of brand equity have been identified which includes brand loyalty, brand awareness, perceived quality, brand associations, and other proprietary brand assets. In contrast, Keller's (1993) conceptualization model acknowledges brand knowledge which involves two key components highlighted: brand awareness and brand image (Bull et al., 2013). Based on these theoretical proposals, a large number of studies have also measured brand equity utilizing brand awareness, perceived quality, brand associations and brand loyalty (Cobb-Walgren et al., 1995; Yoo et al., 2000; Yoo and Donthu, 2001; Washburn and Plank, 2002; Ashill and Sinha,
2004; Pappu et al., 2005; 2006; Konecnik and Gartner, 2007; Tong and Hawley, 2009; Lee and Back, 2010).
As a result, following onwards from both widely adopted approaches by Aaker and Keller and from all previous studies, this paper will espouse the independent consumer-based brand equity variables of perceived quality, brand image and brand loyalty. Brand awareness will not be presented in this chapter but yet it will not be omitted in the paper, as it is not going to be tested but it sets the premise of the data collection process.
2.3.1 Perceived Quality
Consumers hold many attitudes towards brands, but the most important relates in various ways to the perceived quality of the brand to consumers (Keller, 2001). Perceived quality can be defined as a "global assessment of a consumer's judgment about the superiority of a product or a brand"
(Zeithaml , 1988, p.4). Aaker and Keller believed perceived quality from a branding perspective can be identified both by consumers’ perception of overall quality and an intangible, overall feeling about the brand (Hsu et al., 2011, p. 83). In this study, the authors associate the quality offered solely to luxury brands and not the product. In addition, as part of brand responses in Keller (2001) model, other recognized attitudes that can be associated with quality include the perception of value and satisfaction experienced by consumers. Perceived brand value is shown to be relatively more important when it comes to luxury brands because consumers acknowledged purchasing luxury brands that they linked with perceived sufficient value that countervail higher price points (Chung et al., 2014). Though, research from Aaker and Keller (1990) postulates that quality perception can be seen as one of the consumers’ evaluations determinants towards brand extensions, which in this study relates to co-branding. Perceived quality can also link to the credibility a brand has with customers that is built on trust worthiness as well as other sub-constructs (Keller, 2001). Corporate credibility can be seen as how far consumers believe that a company is willing and able to deliver products and services that satisfy needs and wants (Keller and Aaker, 1992, 1998; Erdem and Swait, 2004). From a consumer perspective, according to Wiedmann et al. (2007, 2009) luxury brands can satisfy functional
needs related to value added which can be attributed to quality or uniqueness gained by products (in this case brands). Subsequently, consumers will transfer the quality perception of the original brands (luxury and high-street) in the brand alliance extension creating either positive or negative associations (Sujian, 1985) or attitudes. Considering both generation Y and X, results from Hennigs et al. (2012) suggests millennials can be identified as cosmopolitan in terms of luxury value perception suggesting that they perceive the same driver of luxury value as other customers. Taking into account the relationship between brand prestige and its perceived quality, if generation Y’s consumers believe a brand is represented by prestige, they expect it to be of a higher quality (Esmaeilpour, 2015) similar to that of generation X customers. This supports past research that proposes "one of the reason consumers buy luxury brands is for superior quality reflected in the brand name" (Hanzaee et al., 2012, p.2). In addition, past research on status consumption of generation cohorts concluded that although their differences in the level of status consumption by individual cohorts, differences didn't reach a significant amount between generation Y and X (Eastman and Liu, 2012). Therefore the effects of co-branding in the aftermath will be likely comparable for both generations in regards to the perceived quality towards the luxury brand.
H2a: Attitude towards co-branding of luxury brands with high-street brands has a direct influence on luxury brands’ perceived brand quality.
H2b: Attitude towards co-branding of luxury brands with high-street brands has a similar influence on luxury brands’ perceived brand quality for generation Y and generation X.
2.3.2 Brand Image
According to Keller (1993), one way that successful brands build and maintain a positive relationship with customers is through developing a favorable brand image. This can also be applied to luxury brands and to their consumers. As a component from the brand knowledge conceptualization, brand image can be defined as the perceptions that consumers associate with a particular brand (Keller, 1993) usually in some meaningful way (Yoo and Donthu, 2001).
Another view of brand image sees it as consumer‘s perceptions and feelings reflected towards a
brand formed by direct and indirect encounters, which is represented by cognitive, sensory, and emotional aspects (Cho, 2011, p.21). In looking at both generations, although preserving high- end images towards older generations has been deemed essential for luxury brands, past research suggests that brand image has a greater significance for generation Y consumers due to their use of brands for self-expression (Lippe, 2001; Belk, 1985). The brand image of fashion products (in this case fashion brands) is shown to hold significant influence over consumers who utilize the richness and symbolic meaning of brands to express self-identity (Bearden and Etzel, 1982;
Escalas and Bettman, 2005). Prior research has also indicated brand image as a strong component (Esch et al., 2006) and showed indirect positive effects of brand image linked to purchase intention for apparel brands (Kim et al., 2009). Thus, consumers are more probable to obtain fashion brands that assist them in creating a desirable image (Escalas and Bettman, 2005).
O’Cass and Frost (2002, p. 82) study of young status conscious consumers, discovered that younger generations “are more likely than older generations to be affected by a status brand’s symbolic characteristics, by feelings evoked by the brand and by the degree of congruency between the brand-user’s self-image and the brand image.” In addition, Lazarevic (2012) suggests that for younger generations the brand image must be something that they want to be associated with as a result of a variety values held (Fernandez, 2009) which includes social consciousness. In contrast, generation X consumers are characterizedas non-conformist (Portolese Dias, 2003) and consider brands as not reflecting their identity or personality (Lager, 2006). This shows that differences in brand ideals and priorities ultimately affects how both generation cohorts place the importance of brand image. Therefore, as luxury products (brands) provide esteem and a sense of prestige to the holder (Nia and Lynne Zaichkowsky, 2000), co- branding spillover effects can ultimately alter the brand's image perceived by the consumers of luxury brands weighing favorably or unfavorably ― specifically more so with generation Y.
H3a: Attitude towards co-branding of luxury brands with high-street brands has a direct influence on luxury brands’ brand image
H3b: Attitude towards co-branding of luxury brands with high-street brands has stronger influence on luxury brands’ brand image for generation Y than generation X
2.3.3 Brand Loyalty
Aaker (1991, p. 39) defines brand loyalty as "the attachment that a customer has to a brand."
Other research has described brand loyalty as a mixture of favorable beliefs and attitudes for a particular brand (Keller, 1993; Oliver, 1999) which involves repeat purchase behaviors over time (Aaker, 1991) irrespective of changes in price or product features (Reisenwitz and Gupta, 2011).
Brand loyalty can be separated and characterized in terms of attitudinal and behavioral perspectives (Dick & Basu, 1994; Keller, 2001). From a behavioral perspective loyalty can be associated with the actual action of re-purchasing brands (Yang and Peterson, 2004; Lee and Back, 2009; Chahal and Bala, 2010). Whilst, from an attitudinal perspective loyalty links to strong cognitive elements (Chahal and Bala, 2010) which ultimately leads to affective loyalty over time and not just limited to single purchases (Bandyopadhyay and Martell, 2007). Both loyalty perceptions are essential for both generation Y and X customers as behavioral loyalty alone is not enough to explain buying the same brand in different circumstances and therefore must be assisted with a positive attitude or attitudinal loyalty (Esmaeilpour, 2015). Thus, brand loyalty can be seen as kind of a affective commitment (Kumar et al.,1994), and Hansen and Hem (2004) indicates high affective commitments to brands could create a long lasting relationship transpiring between consumers and brands. Past research shows that when consumers acquire more positive perceptions towards a brand, loyalty subsequently follows (Oliver, 1999). Keller and Lehmann (2003) research illustrates brand associations and perceived quality as the previous steps leading to building brand loyalty. Keller’s (1993, 2001) study also recommended that a strong link existed between a positive brand image and brand loyalty (Cho, 2011, p.52).
Therefore, high levels of perceived quality and positive associations combined with brand image can enhance brand loyalty (Keller, 1993; Chaudhuri, 1999; Keller and Lehmann, 2003; Pappu et al., 2005). Looking at both cohorts, generation Y consumers have been shown to present a particular challenge due to their resistance to traditional marketing efforts in addition to being difficult to capture and retain as loyal consumers (Bush et al., 2004; Megehee et al., 2003;
Wolburg and Pokrywczynski, 2001). Foscht et al. (2009) discovered that feelings of loyalty amongst younger consumers were greatly associated solely to just repurchase intentions. In
addition, research identifies generation Y as notoriously disloyal to brands (Sebor, 2006; Wood, 2004; Syrett and Lammiman, 2004) in contrast to generation X consumers who have been deemed as very loyal and committed to brands (Richie, 1995). Therefore, generational differences in attitudes and behavior related to loyalty shown from existing studies suggest that in the case of co-branding generation X are less likely to be affected and will still remain loyal towards the luxury brand.
H4a: Attitude towards co-branding of luxury brands with high-street brands has a direct influence on luxury brands’ brand loyalty.
H4b: Attitude towards co-branding of luxury brands with high-street brands has stronger influence on luxury brands’ brand loyalty for generation Y than generation X.
3 Opperationalization and Conceptual Framework
In this chapter the variables that were explained during the literature review are shaped into a model representing the proposed influences. In addition, some items for the survey are selected, following the line of the variables in the model.
3.1 Conceptual Framework
This model shows how the attitude toward co-branding will have an influence over the brand equity dimensions that were relevant for this study. In addition, as a moderator, the generations Y and X were included proposing that the attitudes towards co-branding will have a different effect on the brand equity components for generation Y and X as well as showing differences between both groups. This ultimately is down to differences in values, characteristics and behavior (Gurău, 2012) adopted amongst both groups. Hence, looking at generation Y and X attitudes towards co-branding, a difference in perception can be shown regarding both brand image and brand loyalty towards the luxury brand in the aftermath of a co-branding strategy. Whereas, in the case of perceived quality towards the luxury brand, attitudes to co-branding can be expected to have a similar influence for both generation cohorts.
Figure 1: Framework
3.2 Operationalization
Variable Variable definition
Operational definition
Items References
Attitudes toward co-branding (Co-
branding and IIT)
One brand is presented in the context of another brand which will likely result in consumer
judgments about the alliance being predisposed to prior attitudes towards both brands, and then judgments about each brand is subsequently affected by the context of the other (Simonin and Ruth, 1998)
How do the consumers perceive the co-branding between a luxury and an non- luxury brand is positive, good or fits
ACB1: I think it is positive that a luxury brand can reduce prices sometimes through co-branding with high-street brands
ACB2: I think it is positive that a luxury brand can be sold in any store through co- branding with high- street brands
ACB3: I think that co- branding is useful for me
ACB4: I am in favor of co-branding ACB5: I have a positive attitude towards co-branding
(Besharat, 2010)
Perceived brand quality (Brand equity)
Perceived quality can be defined as a "global
assessment of a consumer's
How are affected the standards and
credibility of
PQ1: I believe this brand will still have the same quality standards, even after co-branding
(Keller, 2001;
Besharat, 2010; Aaker, 2009 and
judgment about the superiority of a product or a brand."
a luxury brand post- co-branding on the consumer’s mindset
PQ2: I don’t care about seeing this brand widely
available through co- branding
PQ3: I think that this brand is still credible, even after co-branding PQ4: I trust that this brand is still good, even after co-branding PQ5: I think that the general quality of the brand will not be affected by co- branding
Jung et al., 2014)
Brand image (Brand equity)
Perceptions that consumers associate with a particular brand (Keller, 1993) usually in some meaningful way (Yoo and Donthu, 2001)
How is the post-co- branding image that the consumer would have of a luxury brand
BI1: I think it is good that the brand can be identified through co- branding
BI2: I would still perceive the brand to be exclusive, even after co-branding BI3: I would still show that I purchase this brand to others, even after co-branding BI4: I think the brand has not lost its
sophistication through co-branding
BI5: I think it is good that everybody could
(Giovannini, Xu, and Thomas, 2015 and Eastman and Liu, 2012)
afford this brand through co-branding
Brand loyalty (Brand equity)
Aaker (1991, p.
39) defines brand loyalty as "the attachment that a customer has to a brand.'' Other research has described brand loyalty as a mixture of favorable beliefs and attitudes for a particular brand (Keller, 1993;
Oliver, 1999)
How endures the
consumer’s loyalty after a co-
branding on a luxury brand
BL1: I will not think about switching to another brand after co-branding BL2: This brand remains special to me, even after co-branding BL3: I will continue to buy this brand, even after co-branding BL4: I still identify myself with this brand, even after co- branding
BL5: I would still recommend this brand, even after co- branding
(Keller, 2001;
Besharat, 2010 and Choi et al., 2010)
Table 1: Operationalization
4 Method
The methodology chapter aims to explain the research approach, design, method and process in addition to establishing the guidelines or criteria for the analysis.
4.1 Research Approach
In this quantitative study, the aim of the researchers is to explore the new perception shown by generation cohorts of generation Y and generation X when a co-branding strategy has taken place between a luxury brand and a high-street retailer towards the luxury brand.
A deductive approach is used when primary data is explored by researchers through means of theories (Saunders et al., 2007). The researchers used this approach as they selected suitable theories for this research in order to collect their primary data. Testing the relationships between theory and research is the main focus of deductive research (Bryman, 2016). Therefore, to explore the perceptions by the generation cohorts towards co-branding strategy, the selected theories were used to find the hypotheses of this research.
4.2 Research Design
The research design works as a guide for the research linking every aspect of the research with the research purpose (Aaker et al., 2011). The main goal of descriptive reserach is to describe something that gives insight into a particular part of the research field, which is founded on past research (Malhotra and Birks, 2007; Malhotra, 2010). It is characterized as pre-planned and structured, that clearly defines the needed information for the research by formulating specific hypotheses and research questions (Malhotra and Birks, 2007).
As this study is based on prior theories and research, the researchers opted to use a descriptive design. Considering this design allowed the researchers to plan and formulate research questions and hypotheses to collect specific information that answered the research purpose.
4.3 Data Sources
For the conducted research, primary as well as secondary data was collected. The researchers collected primary research data through the use of street face-to-face surveys. On the customer’s perspective, this gave the researchers insight into their varied perceptions towards co-branding strategies between luxury brands and high-street retailers. This primary data is collected in one of the world’s largest cities for luxury goods: London, U.K. (JLL Real Views, 2015) which has great fashion equity (Breward and Gilbert, 2006). The value of the luxury market in London rounded €10 billion in 2015, partly thanks to the attraction of consumers from all over the world due to a visa simplification policy for luxury consumers (JLL Real Views, 2015). The well- grounded perception of London as one of the top four global fashion capitals as well as destinations for fashion week shows makes it the perfect field to conduct this study and target our population (Godart, 2012, p.51, and 2014; The Global Language Monitor, 2016).
The secondary data came from a variety of sources. This data enriched the research regarding the current luxury fashion landscape and included current as well as prior fashion co-branding collaborations.
4.4 Population and Sample
The population and sampling are one of the most important issues of a research since they will determine partly the error (Aaker et al., 2011; Malhotra, 2010). The population can be defined by a number of characteristics that all the elements involved in the purpose must have. While the sample is always smaller and it defines the actual target of the research, in other words, that part of the population that is going to be studied (Malhotra, 2010).
Since the luxury fashion consumers are so dispersed in the world, the research takes place in one of the most important markets in luxury fashion: London. In fact, because London is known for its attraction of luxury consumers worldwide, it is going to be selected as one of the population delimitations. Hence, the population of this study is luxury fashion consumers that belong to the generations Y and X that purchase luxury brands in London.
In addition, the data gathering is going to be conducted in a department store in London, where several fashion luxury products and brands are sold to the consumers that belong to our population. Therefore the sample of this study is consumers of the generations Y and X that are purchasing luxury brands within the department store Harvey Nichols in London.
Also, due to the dispersion of the population, probability sampling techniques could not be used, specifically the simple random sampling, since not all the elements of the population have the same probability to be selected. Therefore, the sample is going to take the form of convenience sampling which consists on the selection of the respondents because they are in the place at the time in which the data is gathered (Malhotra, 2010). That place, for this study, is going to be the department store Harvey Nichols, situated in London.
4.5 Data Collection
4.5.1 Data Collection Instrument
The study of human perceptions is a complicated issue. There are certain methods used to explore what people think, feel and perceive. Some of the most popular methods are focus groups, in- deep interviews or surveys. The different approaches provide something different that will be appreciated in different kinds of studies. In this case, the purpose of this research is descriptive which is usually related to quantitative research (Malhotra, 2010).
The most popular quantitative research method is the use of surveys also known as questionnaires. Some of the positive characteristics of the questionnaire are the convenience, the cost-efficiency (Malhotra, 2010), the time efficiency, the variety of places they can be conducted at, the respondents’ anonymity and the closed number of questions (Gray, 2014). Surveys can be taken in a variety of forms, such as being self-administered, web-based, face-to-face, etc. (May, 2011; Malhotra, 2010). The characteristics that define the form of the survey in this study are computer based, street interviewing, face-to-face, and with closed questions (Malhotra, 2010).
These characteristics allow for the gathering of standardized data whilst at the same time the interviewer can observe the physical and verbal reactions of the respondents to the issues
included (May, 2011). It will also take place where the population can be found which provides more convenience to the respondents but might limit the number of questions to ensure an appropriate response rate (Gray, 2014).
As can be seen in the operationalization, most of the items included in the survey were directly related with the theoretical chapter and these items were transformed into constructs to be tested on the regression analysis. In addition to all of those items, the survey also includes a question about the age group that would categorize the consumers on generations to be compared. Since there might be more information not included directly on the theory that affects how the main constructs operate, this study includes also a number of control variables to complete the picture.
These control variables are: the attitude towards the luxurious brand chosen (ALB), the income, the distance of the residence, and their luxury purchase history (LPH).
4.5.2 Data Collection Procedure
The questionnaire was conducted in a luxury fashion department store in London, called Harvey Nichols. Consumers shopping in the store were selected, approached and then were explained to how the survey was composed of four different steps to follow. The first step consisted on choosing a luxury brand from the department store. It could be the one they are purchasing, they like better, or maybe one of the brands that were given as examples. This step continued with the control variable about their attitude toward that brand. On the second step, the consumers were introduced to co-branding and on their survey they could see some written and illustrated examples of co-branding between luxury brands and high-street brands. With these examples in mind, the consumers were asked to express their attitude toward co-branding strategies. On the third step, the consumers were asked to imagine that the brand they have chosen was collaborating in a co-branding strategy with a high-street brand. At this step, some high-street fashion retailers with which luxury brands could collaborate in London were mentioned to avoid misleading the respondents. The questions that were answered during this step were the ones related to the brand equity variables after the co-branding had occurred. The fourth and final step was simply composed of personal questions such as sex, income, age, etc.
The data collection process concluded with 121 answers from different respondents from which 119 were effectively used on the analysis since they belonged to the generations Y and X. The detailed information of these respondents can be found on the analysis and results chapter.
4.5.3 Pre-test
The pretest or pilot testing is a common method to identify and eliminate potential problems (May, 2011; Malhotra, 2010). Their utility relies on the way data is gathered with a survey, which once launched the problems cannot be solved (Gray, 2014). It is usually composed by a small representative sample of the population. To get the best results out of a pretest, it is usually recommended to conduct the survey face to face, so that way the respondents can explain their thoughts or problems properly (Malhotra, 2010). In addition, it is usually recommended to study the results of the pretest to ensure the proper construction of the survey for the study (Malhotra, 2010; Gray, 2014).
The pre-test was conducted in the same department store that was selected for the study and it included 8 respondents. The results of the pre-test showed that the wording of some questions could be improved for two reasons. The first reason was related to the comments of some respondents that did not completely understand what was being asked, specifically the older consumers. The second reason was that some items that should have a strong correlation did not show it, which led the researchers to assume and conclude that the wording was misleading.
4.6 Quality Criteria
The quality criteria can be studied from two different perspectives: the validity and reliability.
Both perspectives are related to the method used in the research, which in this case is a face-to- face survey with a closed-answer questions approach.
This paper examines the three kinds of validity in a questionnaire: content, criterion and construct validity. The content validity examines if the scales are adequate to describe the items, the criterion validity examines if the scales work or behave as expected, and finally the construct
validity examines if the items cover the entire construct (Malhotra, 2010). To ensure the validity of the survey, researchers are supporting the items and constructs with a theoretical background in addition to conducting a pre-test that allows testing the behavior of the items and their adequacy to the constructs.
According to Gray (2014), reliability ensures that what you are measuring today is not going to change if you measure it tomorrow, assuming that the object of the measurement stays the same.
To ensure the reliability of the constructs this research applies the Pearson’s r and the Cronbach Alpha. This statistic studies the strength and direction of the correlations between the variables in the questionnaire (Robson, 2011). According to Brace et al., (2012), the r can take positive and negative values from 0 to 1, which as a general rule, from 0 to 0.2 is considered weak, from 0.3 to 0.6 moderate and from 0.7 to 1 strong. But usually this strength alone is not enough by its own, and the significance of the statistic is also taken into account (Brace et al., 2012). In addition, the Cronbach Alpha studies the reliability as the share of the validity in the responses that are the result of differences between the responses. Therefore, high reliability will be achieved with alpha values over 0.8. if the value is between 0.6 and 0.79 the reliability is moderate, while lower is unacceptably low (Cohen et al., 2011).
4.7 Data Analysis Method
Attitudes are the way people picture and structure a certain topic to establish the way they respond to it (Aaker et al., 2011). The best way to evaluate attitudes and feelings is through Likert scale which consist on choosing a certain point between two opposite options such agree/disagree, like/dislike or favorable/unfavorable (Aaker et al., 2011; Malhotra, 2010). The Likert scale is a close-ended ordinal kind of scale that allows a numerical approach since the values of the scale are related to a degree in which the respondent identifies with a statement (Dillman et al., 2009). The convenience of this scale resides precisely in the fact that the numerical approach behind it does not tire the consumers as much as other methods and allows it to be analyzed with a variety of quantitative methods (Robson, 2011).
Once the data was collected the scale items of the questionnaire were transformed into construct using the factor analysis and, in the case of the attitudes towards co-branding, a construct was also extracted from the average of the items. The factor analysis is a method to reduce the number of variables transforming the original items into one or more uncorrelated new variables called factors. The factor analysis is usually applied with the principal components analysis and a varimax rotation method to ensure the adjustment form the old to the new variables (Aaker, 2011). As this paper has pre-selected the items that are shown in the operationalization, this method was used exclusively to reduce the number of variables and with no exploratory purposes. Therefore, the items from each construct were included separately in the analysis which made it not necessary to use the varimax rotation (Robson, 2011). The number of factors selected from each construct of items was determined by the K1 rule. K1 establishes that the final number of factors depends on how much separate information they contain. This information is shown in the eigenvalues that must be over one to include the factor (Field, 2013). In order to evaluate the quality of the new factors, the measure in which the original variance is represented by the items or the total variance explained (Robson, 2011) according to Cohen et al., (2011), is satisfactory when it reaches approximately 60%.
This paper is going to use two quantitative methods to test the hypotheses: the regression analysis and the analysis of variance or ANOVA. In regards to the regression analysis, it is a statistical technique that allows the prediction of the value of one variable basing it on the values of other variables, and describing whether there is a relationship that exists between them (Brace et al., 2012; Malhotra, 2010; Aaker et al., 2011). It is composed of a metric dependent variable, which is the one to be predicted, and one or more independent variable that are the ones to predict the dependent variable (Brace et al., 2012; Malhotra, 2010). The linear regression analysis allows testing the significance of the influence of the independent variables on the dependent variable, in general and one by one. It also permits to see the adequacy of the independent variables to explain the variation of the dependent variable (Aaker et al., 2011).Apart from the dependent and independent variables, some control variables were included in the regression analysis in order to complete the general picture and add more insight. The process followed by the regression
analysis includes two different outputs of models. The first model shows the control variables influence on the regression since the independent variable is not included. The second model shows the same regression with the independent variable augmenting the percentage of variance explained. This procedure raises the relevance of the independent variable since when it is introduced, the change in the R squared can be observed (Aaker et al., 2011).
The other analysis used which is the analysis of variance, explores the differences between the means of a scale variable included under different conditions established by the cases of an ordinal variable (Robson, 2011). The dependent variable in this case will be the ordinal used for grouping while the independent is the scale variable (Malhotra, 2010). When the dependent variable compares only two cases, it is recommended to use a two-group t-test as it has the same premise as the general ANOVA but limits the groups (Robson, 2011).
5 Results and Analysis
This chapter exposes the results of the research through tables and it analyzes them according to the previous research which was gathered in the literature review, either accepting or rejecting the previously formulated hypotheses.
5.1 Descriptive Data of the Respondents
Table 2: Descriptive Data of the Respondents
The total number of responses gathered was 121, from which 119 were used to draw the conclusions of the study. The two left out respondents belonged to a different generation cohort than Y and X. Looking over all the respondents, the majority are male with 67 responses and 54 females. The large majority was employed by someone else (74.4%), the second largest group being the self-employed (16.5%), and also a majority of those individuals admitted to earn between 15,000 and 29,000₤ per year (54,5%) and are living in London (79.3%).
In addition, the consumers were asked about the number of purchases they make per year which showed that our sample is distributed almost equally: 30,6% of the respondents admitted buying luxury fashion rarely, other 33.9% occasionally and a 30.6% very often. Moreover, only 5% of the respondents only purchase luxury fashion on rare occasions, such as for weddings.
5.2 Factor Construction
Table 3: Component Matrix with Eigenvalues and Total Variance Explained for each Factor.
