ZADÁNÍ BAKALÁŘSKÉ PRÁCE

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TECHNICKÁ UNIVERZITA V LIBERCI Hospodářská fakulta

Katedra podnikové ekonomiky Akademický rok: 2007/2008

ZADÁNÍ BAKALÁŘSKÉ PRÁCE

pro Barboru H R A B A L O V O U

program č. B 6208 Ekonomika a management obor č. 6208R085 Podniková ekonomika

Vedoucí katedry Vám ve smyslu zákona č. 111/1998 Sb. o vysokých školách a navazujících předpisů určuje tuto bakalářskou práci:

Název tématu: Investigation of the student´s brand preferences for fast-food restaurants

Pokyny pro vypracování:

1. Teoretický rozbor spotřebitelského chování zákazníka

2. Charakteristika značky a procesů, které souvisí s jejím budováním a šířením 3. Metodologie výzkumu

4. Výsledky výzkumu

5. Zhodnocení výsledků studie a návrhy pro zlepšení

Rozsah práce: 50 - 70 stran textu + nutné přílohy Forma zpracování: tištěná

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Seznam odborné literatury:

Blackwell, R.D. & Miniard, P.W. & Engel, J.F. (2001), Consumer Behaviour, 9th ed., Harcourt Inc. USA

Hawkins, D.I. & Best, R.J. & Coney, K.A. (2001), Consumer Behavior, Building Marketing Strategy, 8^th ed., The McGraw-Hill Companies, Inc.

Jones, P. & Hillier, D. & Shears, P. & Clarke-Hill, C. (2002), Customer Perceptions of Services Brands: A case study of the three major fast food retailers in the UK, Management Research News, Vol. 25, No. 6/7, pp. 41-49

Kara, A., Kaynak, E. and Kucukemiroglu, O. (1995), “Marketing strategies for fast- food restaurants: a customer view”, International Journal of Contemporary Hospitality Management, Vol. 7 No. 4, pp. 16-22.

Keller, K.L. (2003), Strategic Brand Management: Building, Measuring, and Managing Brand Equity, 2^nd ed., Pearson Education, Inc., Upper Saddle River, N.J.

Kotler, P. & Armstrong, G. & Saunders, J. & Wong, V. (1999) Principles of Marketing, Prentice Hall, Europe.

Saunders et al. (2003) Research Method for Business Students Essex, Pearson Education Limited, 3^rdedition

Vedoucí bakalářské práce: PhDr. Ing. Jaroslava Dědková, Ph.D.

Konzultant: Dr. Damian Casserly (University of Huddersfield) Termín zadání bakalářské práce: 31.10.2007

Termín odevzdání bakalářské práce: 29.04.2008 L.S.

Doc. Dr. Ing. Olga Hasprová Doc. RNDr. Pavel Strnad, CSc.

děkanka vedoucí katedry

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Technická univerzita v Liberci Hospodářská fakulta

Studijní program: 6208- Ekonomika a management Studijní obor: Podniková ekonomika

Investigation of the student´s brand preferences for fast-food restaurants

Průzkum preferencí studentů vůči značce s ohledem na fast-food restaurace

BP-KMG-2007-01

Barbora Hrabalová

Vedoucí bakalářské práce: PhDr. Ing. Jaroslava Dědková, Ph.D. – katedra marketingu Konzultant: Dr. Damian Casserly, ve spolupráci s University of

Huddersfield, VB

Počet stran: 91

Datum odevzdání: 29. 04. 2008

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Prohlášení

Byla jsem seznámena s tím, že na mou bakalářskou práci se plně vztahuje zákon č.

121/2000 Sb. o právu autorském, zejména § 60- školní dílo.

Beru na vědomí, že Technická univerzita v Liberci (TUL) nezasahuje do mých autorských práv užitím mé bakalářské práce pro vnitřní potřebu TUL.

Užiji-li bakalářskou práci nebo poskytnu-li licenci k jejímu využití, jsem si vědoma povinností informovat o této skutečnosti TUL; v tomto případě má TUL právo ode mne požadovat úhradu nákladů, které vynaložila na vytvoření díla, až do jejich skutečné výše.

Bakalářskou práci jsem vypracovala samostatně s použitím uvedené literatury a na základě konzultací s vedoucím bakalářské práce a konzultantem.

Datum: 29. 04. 2008

Podpis:...

Barbora Hrabalová

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Abstrakt

Cílem této studie bylo zkoumání preferencí studentů vůči značce s ohledem na fast-food restaurace a zda-li tyto preference ovlivňují vnímání několika dalších zkoumaných faktorů. Vztah mezi preferencemi vůči značce a vnímavostí spotřebitelů vůči reklamě, vnímanou důležitostí informovanosti o daném podniku a důležitostí ceny byl statisticky testován. Výsledky testu potvrdily existenci středně silného vztahu mezi těmito faktory.

Loajalita ke značce byl dalším z testovaných faktorů. Kromě skutečnosti, že spotřebitelé byli především oddaní restauracím, jejichž značky preferovali, výsledky také ukázaly, že významné množství respondentů pravidelně nakupovalo hned několik značek ve svém repertoáru, jimž se zdáli být věrní. Takováto skutečnost je v literatuře popsána jako loajální parita.

Mimo jiné tato studie analyzovala důležitost několika faktorů, které ovlivňují spotřebitelovo rozhodnutí o výběru restaurace a zabývala se veřejností vnímanými výhodami značkových fast-food restaurací nad neznačkovými.

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Abstract

The aim of this study was to investigate students´ brand preferences for the fast-food restaurants and if they influence perceptions of several other factors. The relationship between brand preferences and the receptiveness to advertising, the perceived importance of knowledge or the perceived importance of price were statistically tested.

The results confirmed the existence of modest relationships. The brand loyalty was another tested factor. Besides the fact that customers were mainly loyal to those restaurants they had the preferences for, the results indicated that a significant number of respondents seemed to distribute their purchases over a couple of brands of their repertoire to which they were loyal. This is called loyalty parity.

Moreover this study analysed the importance of particular factors that influence the consumer’s choice of the outlet and the perceived advantages the branded fast-foods have over the unbranded ones.

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Investigation of the students´ brand preferences for fast-food restaurants

By Barbora Hrabalova

Dissertation submitted to the University of Huddersfield for the

degree BA (Hons) European Business 2008

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List of tables and figures

Table 3.1.1: Eating at fast-food...45

Chart 3.1.1: Gender ...46

Chart 3.1.2: Average income ...47

Chart 3.1.3: Frequency of visits ...48

Table 3.1.4: Purpose...48

. Chart 3.1.4: Purpose...49

Table 3.1.5: Email ...49

Table 3.2.1: Cross tabulation advertising/preferences ...51

Table 3.2.2: Cross tabulation advertising/preferences ...51

Table 3.2.3: ANOVA test for advertising/preferences ...53

Chart 3.2.3: ANOVA test for advertising/preferences...53

Chart 3.2.4: Frequency of brand preferences ...54

Table 3.2.5: Importance of information/brand preferences ...55

Table 3.2.6: Importance of information/brand preferences ...56

Table 3.2.7.: ANOVA test: importance of information/brand preferences...56

Chart 3.2.8: Brand preferences/loyalty ...59

Table 3.2.8: Brand preferences/loyalty ...60

Chart 3.2.9: Brand preferences/loyalty ...61

Chart 3.2.10: Brand preferences/price ...62

Chart 3.2.11: Brand preferences/price ...63

Table 3.3.1.1: Factors of influence...64

Chart 3.3.1.1: Factors of influence...65

Table 3.3.1.2: Perceived advantages ...66

Chart 3.3.1.2: Perceived advantages ...67

Page 1: pilot questionnaire...83

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Acknowledgements

First of all, I would like to thank all students who participated in the survey and made this research possible.

Furthermore I would like to thank Tim Hennig and my friends for a psychical support and my personal tutor for useful advices.

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Introduction

To provide a little insight into the topic, the introduction chapter is included. This can be divided into three main parts. At first we will describe how the fast-food industry developed to the current position at the market, after that the previous research that was done on fast-foods will be mentioned and finally the aims and the structure of this study will be explained.

Raise of the fast-food industry

The fast-food industry forms a significant part of the national economies. It contributes with estimated £7.82 billion to the British economy every year. This corresponds to

£20/month spent per adult on average (Schröder et al., 2005).

It is very difficult to say where the fast-food industry has its root. Inconsistent opinions can be found in the literature supposing that quite every culture had its typical fast-food in the past as well as opinions claiming that the “modern” history of fast-food began in the United States of America. In my opinion both theories are right. There is a reason to suppose that the “modern” history started in the USA as it is famous for the fast-food evolution that spread to other cultures. The evolution is said to have started on 7th July 1912 when the first fast-food restaurant called Automat was opened.

Automat remained very popular during 1920s and 1930s, although there was a competitor called White Castle since 1921 coming with an idea allowing customers to see the food being prepared.

McDonald’s which is said to be one of the largest fast-food restaurants worldwide was founded 1940, starting as a barbecue drive-in, converting within 8 years to a restaurant focused mainly on burgers and French fries.

The nowadays trend in most of the industrial world is the “eating out” lifestyle. As published in a study by Kara et al. (1995) one out of every two-and-a-half meals is eaten

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from 1975 to 1980 and by another 7% within the next 10 years. Another research suggests that the fast-food market grew of 19 per cent since 1998 (Schröder et al., 2005). This extreme growth originates mainly from the busy lifestyles.

Previous research

Many definitions can be found for fast food in the literature. The Data Monitor’s (2005) survey described the fast food as the possibility to acquire drinks and food that can be consumed immediately either in the outlet or somewhere else. Bender and Bender (1995) looked at the term from a more technical view and defined it as a “general term used for a limited menu of foods that lends themselves to production-line techniques;

suppliers tend to specialize in products such as hamburgers, pizzas, chicken, or sandwiches”.

Several studies have been done so far concerning the fast-food industry. Kara et al.

(1995) investigated the perceptions of the consumers as well as consumers` preferences for fast- food outlets in Canada and the US. The study of Brown et al. (2000) examined the importance of the nutritional awareness and explained the preferences the young consumers have in their adolescent years. Goyal and Singh (2007) dealt with the perceptions of consumers about fast food in India and Davies and Smith (2004) proved the necessity of nutritional values. Nutritional value by fast-food has been analysed many times also by other authors as Adams (2005) or Boyle (2004). Most of the studies mentioned in this paper use British, American, Canadian or Indian consumers for their investigation.

Focus of this study

This study will analyse the preferences for the fast- food restaurants of the young adults represented by university students in Huddersfield, whereas Huddersfield represents a typical town with branded and unbranded fast food restaurants, where unbranded restaurants have the typical handicap of missing resources for marketing activities.

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Furthermore this study will determine what factors are crucial for choosing fast- food outlets and will examine the relationships between brand preferences and brand loyalty, advertising or knowledge. This peace of work attempts to fill a gap in the literature describing the behaviour of young adults as representatives of wide public, who are the most receptive to marketing influence and at the same time very sensitive to price policies.

This paper contains 5 chapters. The first chapter introduces the reader to the topic by providing information gained from the literature of other authors. At the end of the chapter, research objectives and hypotheses are deducted. Chapter 2 describes methods used by this research and its limitations. Chapter 3 discusses the results of the research and explains how this was analysed. These results were consequently discussed in the chapter 4 and compared with the hypotheses stated in the chapter 1. Possible reasons for these findings were explained. The last chapter concludes the whole study and evaluates the previously mentioned objectives.

1. Literature review

This chapter describes the work of other authors to provide an insight into how the consumers behave. Two areas were chosen, which are of a particular interest to us, consumer behaviour and a brand. The first part, consumer behaviour provides some theories to how consumers acquire products and services whereas the second part concentrates on the role of a brand. Finally, the findings are summarized in the conclusion and objectives and hypotheses of this study are determined.

1.1 Consumer behaviour

If we want to know why people buy and how they decide to buy, understanding consumer behaviour is the key to this task. That’s why it is so important to people who might try to influence the others.

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Engel et al (1995) defines consumer behaviour as: „ those activities directly involved in obtaining, consuming, and disposing of products and services, including the decision processes that precede and follow these actions“, later edition Blackwell at al (2001) added a more simply definition as just „why people buy“. Solomon (2002) uses similar words to define consumer behaviour. For him „it is a study of the processes involved when individuals or groups select, purchase, use or dispose of products, services, ideas, or experiences to satisfy needs and desires.“ Other authors as Peter et al (2005), Hoyer et al (2007) or Hawkins et al. (2001) use analogous definitions to describe the term.

1.1.1 Consumer decision process

Free choice is the key principle in Straughan´s (1995) article. He claims that this is what makes the consumers so powerful. This plays an important role in the economics because it calls up for the efficiency of the producers and points the attention to the needs of consumers (Barents, R., 1990). Since the consumer has such power, understanding them is critical for doing a good business.

Understanding consumer decision process means to understand how consumers decide what products and services to buy and where to buy them. Blackwell et al. (2001, p. 71) claims that this process has seven stages:

• Need recognition

• Search for information

• Pre-purchase alternative evaluation

• Purchase

• Consumption

• Post-purchase alternative evaluation

• Divestment

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1.1.1.1 Need recognition

According to Blackwell at al (2001) the need is recognized when the individuals realize a difference between what they have now and what they would like to have. Hawkins at al (2001) supports Blackwell’s theory with a difference of calling it a problem recognition stage.

Applied to the fast-food industry, the need a human being feels is a need to eat.

According to Hawkins et al (2001) the perceptions of the present state can be influenced through advertisements. This study will provide a little inside into the consumer’s perceptions of advertising.

1.1.1.2 Search for information

If the need is recognized and activated, people start to look for information about products and services to saturate their need. In the best case people should have all available information about options to make the right decisions.

Following the need recognition, people first undertake an internal search, by retrieving knowledge from memory based on previous searches or personal experiences (Hawkins et al, 2001). When consumers need more information, they initiate the external search, looking for the information from the outside sources. According to Hawkins et al.

(2001) there are four major types of external sources. Personal sources, independent sources as paid professionals or government agencies, marketing sources as advertising and experiential sources as trials or direct product inspection. Internet counts to be a special kind of source.

According to Hoyer et al (2007) the extent of external search varies, depending on motivation, ability and opportunity to search. An increased motivation makes the search more intensive. Brand name and price are considered to be the most accessed attributives in an external search.

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Blackwell et al (2001) thinks that the way how people search for information is determined by many factors such as their personality, consisting of beliefs and attitudes, age, consumer’s situation, knowledge about the product or service, consumer’s income, prior brand perceptions, previous experience and satisfaction. In this study fast-food sector was chosen as a suitable environment for analysing these factors. The performed research should examine the perceived importance of such factors when influencing consumers´ decisions about which fast-food to choose.

Blackwell et al (2001) also adds that if the consumer is satisfied with one brand, the motivation to look for new information decreases. If this consumer repeats the purchase more often without previous search, he becomes a brand loyal consumer. Fast-food sector offers a wide range of fast-food restaurants of small and big brands. The previously named factors influence people’s preferences for various kinds of brands.

These preferences will be analysed and the loyalty to each of the brand type will be evaluated.

Information that consumers gain during this stage is crucial for their decision making.

This stage is than extremely important not only for consumers, but also for marketers, who try to understand how consumers look for information to be able to develop their marketing strategies. Attributes that receive the biggest attention during the consumers´

search might be emphasized more strongly in companies´ promotional materials.

1.1.1.3 Pre-purchase alternative evaluation

After finding enough information, consumers compare the options to make a choice at the end. This doesn’t have to be the case if consumer’s choice is habitual, but it concerns all other purchases.

At first the evaluation criteria are determined. These criteria might vary in their dominance and salience and they are influenced by situational, product and individual factors (Edgar et al, 1995). For example an exploratory study of Kara et al. (1995) described the preferences for and perceptions of the fast-foods in Canada and the US.

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This study shows how the preferences, or criteria for evaluation, can differ considering the age and the origin of individuals.

After selecting the criteria it must be decided which alternatives to consider, so that they can be evaluated in the next step. Judgement itself proceeds under consideration of consumer’s limitations. The consumer might for example decide, that he is not going to pay more than 5 pound for his lunch or that his food doesn’t have to contain more than a certain number of calories. These cut-offs must be also taken into account as the evaluation criteria.

1.1.1.4 Purchase and consumption

If the evaluation of criteria shows that no brand of the products or services offered can fill consumer’s demands, the products or services would not be bought or the purchase will be delayed. But if one or more brands fit to the criteria evaluation, several issues as what and where to shop must be answered. According to Blackwell et al (2001) the purchase behaviour can be divided into three categories: unplanned purchases, fully planned purchases and partially planned purchases.

As this study attempts to investigate the criteria for purchase, the purchase and the consumption itself are not fundamental for the research. Therefore they were not further specified.

1.1.1.5 Post-consumption evaluation and divestment

Consumer evaluates a product according to how it meets his expectations. Satisfaction and dissatisfaction are feelings resulting into a reaction. This can be switching the brands, products or stores, warning friends, complaining to the firm or just doing nothing. Satisfying consumers is a primary goal of companies that try to encourage satisfied consumers to be brand loyal and make dissatisfied ones to complain directly to the firm instead of discouraging potential customers (Hawkins et al., 2001).

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1.1.2 Consumer- driven marketing strategy

Straughan, R. (1995) suggests that consumers are very powerful what makes companies try to do as much as possible to gain consumers on their side by developing various marketing strategies.

Blackwell et al (2001) claims that marketing strategy is about allocating resources for the development of products and services in order to offer a better value to the consumer than the one from the competitor. Hoyer et al (2007) adds that all marketing activities also the marketing strategies are designed primarily to fulfil the customers´

needs.

This process of consumer-driven marketing strategy consists of 4 stages (Blackwell et al, 2001, p.36):

• Market Analysis

• Market Segmentation

• Marketing Mix Strategies

• Implementation

1.1.2.1 Market analysis

It analyses the company’s environment, the competitors and the changing consumer trends (Blackwell et al., 2001).

Blackwell et al. (2001) further claims that a new product must be designed to saturate the needs of the consumers and their expectations and wants. To manage this, it is important to understand consumers. The process of consumer exploration is called consumer insight. It is an understanding of all consumer´s needs affecting his choices.

This understanding is a combination of collected facts and intuition. Successful exploration provides the information about potential new products, product innovations, the brand extensions or revised communication plans.

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For even better understanding consumer’s environment must be analysed. This focuses at demographic trends, attitudes and consumer patterns, as well as changing consumer needs and wants which might be caused by the personal or group influences.

Furthermore the motivation, consumer knowledge and lifestyles should be analysed (Blackwell et al, 2001).

1.1.2.2 Market segmentation

A market segment describes a group of consumers that differs from the entire mass market by their similar needs and behaviour (Blackwell et al., 2001). Hawkins et al.

(2001) suggests that the smaller is the segment, its products are more likely to meet the segment’s requirements, but on the other hand this is supposed to be more expensive.

Because people are not the same and have different needs and wants, the market must react to it. The market segmentation should identify groups of consumers, who behave similarly, to create packaging, products and communication strategies that fit them the best and meet their specific needs. This offers also a better chance to sell to this target group (Blackwell et al., 2001). This group is willing to pay higher price for satisfying their needs than the mass market would do. The opposite of the market segmentation is market aggregation or mass marketing.

Intermarket segmentation tries to underline rather similarities than the differences between consumers and countries that became the basis of marketing standardization.

These marketing strategies are based on the principle that people are the same around the world in spite of they may vary in some specific traits. (Blackwell et al., 2001, p.56).

Although fast food can be considered as a „highly standardized“ product, factors as age, gender, income and others still divide this big industry into market segments and those businesses who can afford it heavily invest into research to address these segments with effective advertising messages.

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1.1.2.3 Customer value and customization

To survive an organization must provide more value to its target customers than is provided by its competitors. According to Hawkins et al. (2001) customer value is the difference between all the benefits received with the product and the costs connected with obtaining the product. Schröder (2003) suggests that consumer value is a considered set that includes a wide range of factors related to quality, the process of acquiring the product and other intangible factors like the brand image.

Brand is sometimes perceived as an added value that makes the customer believe that he obtained a good value for the invested money. However this is different by each individual. One consumer might be completely satisfied with the menu purchased at McDonalds whereas another customer might think that too much money was required for it. Such dissatisfaction reduces his customer value. Segmentation should increase both customer satisfaction and the profit of the company.

A possible way how to offer a unique value is the customization. Consumers are becoming more sophisticated and require products that fit to their individual needs, preferences and tastes. Customizing goods or services for individuals is an effective way to increase customer’s satisfaction and to build a good relationship to the brand (Engel et al., 1995). Possibility to put a sandwich together on your own by subway is an example of serving customers with customization.

It is difficult to measure behaviour but easy to measure consumer characteristics as income, age, or gender. Therefore, the basis for developing marketing strategy often relies on these types of consumer characteristics because they indicate probable consumer behaviours.

1.1.2.4 Marketing mix strategies

Marketing Strategies are to answer the question, how to provide the target customers with the best value. They involve the plan to meet the desires and needs of the target markets by offering a better value than competitors. This plan must contain components of the marketing mix known as the four P´s, what means price, place, promotion and product issues as well as so called seven R´s representing reliability, research,

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resources, reward, rate, relationship, and retailing (Blackwell et al., 2001, pp. 46- 49).

The marketing strategies include the combination of these elements to provide their target customers with the customer value they require (Hawkins et al., 2001). For both developing segmentation strategy as well as formulating marketing mix, consumer research is necessary.

Product

Developing or designing a product that meets consumer’s need is critical marketing activity, because consumers are not generally buying physical product attributes, but the need satisfaction.

Murtaugh, (1998) claims that McDonald’s does not only offer the products and services, but a suitable environment for people as well that seek for the escape from everyday responsibilities, worries and stress for a small break.

How will consumer behaviour affect the product? What form of the product best serves consumption patterns for the target segment? What packaging will best attract consumers and satisfy their transportation, usage, and disposal of the product? How will consumers compare this product to competitive or substitute products? To find answer to these questions, consumer research must be applied. The research findings would then provide a basis for such product marketing strategy (Blackwell et al., 2001).

Price

Price is a bundle of costs the consumer must surrender to own or use the product in exchange. These costs do not mean just money, but also psychological risk, inconvenience and the time that is added to the price.

For example as Blackwell et al. (2001) claims that it isn’t so important to have the absolute lowest price, but that the price must be in the range, the consumer expects to pay for the product. Sometimes if the product is priced to low, people might suggest that

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it is a lower quality than more expensive items. Consumers also mostly relate prices that end in numbers such as £.99 to discount items.

The performed research will find out how important the price is for fast-food consumers in selecting their restaurants and if there are some differences in perceptions of the price according to the diverse brand preferences.

Promotion

Hawkins et al. (2001) calls the promotion the marketing communication. In his opinion promotion includes advertising, the sales force, public relations, packaging and other signals how company provides about itself and its products.

To make the promotion effective, companies must determine the message, and the target audience, they must choose the communication means and media and be clear about timing of sent messages that should reach the audience during various stages of the purchase process (Blackwell et al., 2001).

In our research the importance of promotion instruments such as advertising or importance of packaging were asked. The more interesting this is as not all fast-food companies are able to promote themselves equally, some of them just have to rely on word of mouth. However, they might still be successful in reaching their target customers.

Place

The place marketing strategies, also called the distribution strategies, require the knowledge of where target customers shop. This information must be gained from the research again.

Brand strategy

Brand is critically important for successful marketing strategies. Consumers want brands they know and trust and failure to build a brand as well as the failure to invest in the product quality or the customer satisfaction reduces company’s competitiveness.

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1.1.3 Influences

According to Blackwell et al. (2001, p. 7) influences can be divided into two groups:

Consumer influences as culture, personality, age, motivations, attitudes, knowledge, income, values, ethnicity, peer groups, feelings etc. and organizational influences for example advertising, price, promotion, brand, packaging, convenience, quality, loyalty programs, availability, service, product etc. Hawkins et al. (2001) presents a similar division by calling these two parts internal and external influences.

One of the objectives of this study is to find out what factors influence fast-food consumers the most in selecting which fast-food to choose for eating out. Although consumer influences are at least as important as the organizational ones, due to various limitations this paper concentrates mainly at the investigation of organizational influences.

1.1.3.1 Consumer influences

These variables are often used to segment a market. To mention some important ones, demographic, psychographic, personality, values or motivation belong to them.

Demographics monitor the death and birth rates or immigration to examine how the population changes over time.

Psychographics or AIOs measure the operational form of lifestyles (Blackwell et al., 2001) AIOs stand for activities, interests, and opinions, and may be either general or product specific.

To approach the study of personality, three major theories were made. Psychoanalytic, socio-psychological, and trait factor theory (Blackwell et al, 2001, p.212). This is useful in developing a brand personality for instance.

Understanding motivation may offer answers for why people buy. Companies can enhance consumers´ motivation to purchase through price reductions, attractive

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packaging and by knowing consumer’s needs. This knowledge improves their ability to attract and retain customers.

Examining consumer knowledge about the company is important for its positioning success. This enables the company to identify some knowledge gaps or misperceptions due to which consumers do not trust the brand and support the competitors.

Although this study investigates organizational influences more than the consumer ones, demographics as gender or income were needed for better understanding of the results as well as some consumers´ attitudes were asked. Unfortunately this study hasn’t provided enough room for examination of other psychographics as people’s knowledge, motivation or their personality. Especially some information about the respondents’

characters would be very useful for some more in- depth insight into the understanding of various brand preferences.

1.1.3.2 Organizational influences

Brand, advertising or packaging often attempt to influence consumers in their choices.

A culture is a unit of such, ideas, attitudes and values.

Because the culture sets the ideology of consumption, with other words the trends, it is obvious that the power of brands and the success of communication programs are dependent on it (Blackwell et al., 2001).

One possibility how companies try to protect their business from finding themselves out of the trend is creating the trend.

That’s why they present innovations for keeping their consumers interested, otherwise they would not survive. Hence adopting of innovations is crucial for them. As Schröder (2005) notes recent innovative strategies by KFC and McDonald’s are for instance offering healthy products such as fruit bags or pasta salad additionally to their traditional menu or providing nutritional values for each product that can be calculated at their websites (see www.kfc.com and www.mcdonalds.co.uk).

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Consumers making a decision if to reject or adopt the innovation belong to laggards, late majority, early majority, early adopters, or innovators accordingly to their innovation acceptance (Hawkins et al., 2001, p.253). To be able to communicate those target groups well a marketing research is necessary.

Although one could think that the fast-food industry might not be the best example for innovation, if we consider the variety of food that can be offered, the variety of promotion possibilities and the ways how these products and services can be sold, we can see that there is enough space for innovation as well.

This study is not investigating the innovation acceptance, but it tries to define to what factors the respondents pay attention the most, when selecting the outlet. Some of these factors, especially if they were considered as important, would be suitable for innovating. Such innovation might attract new customers and create an advantage against the competitors.

1.1.3.3 Influencing consumers

By influencing consumers companies must take a couple of things into account. Gaining consumer’s attention is crucial for them in being able to influence the customer. “The greater the perceived power and influence of an organization the more likely it is to attract the attention of campaign groups” (Schröder, 2005).

A product’s name, its price, its packaging, its advertising, even free samples, all these can be used to foster favourable opinions. Making consumers to remember these opinions is the key to successful marketing. Remembering and consequently the retrieval of these opinions by consumers can be reached by using reminders, often repetition or easy-to- remember stimuli (Blackwell et al., 2001).

Big differences can be found in the fast-food industry in terms of influencing the customers. Whereas small businesses do not advertise at all, big fast-food corporations

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are running TV ads in many countries. Because of this influence, it can be expected that most of the respondents of this survey will prefer big fast-food corporations.

1.2 Brand

Branding is seen by most of the authors as a principle of marketing activities (Jones et al., 2002) and business strategies (Doyle, 1998). Kotler et al. (1999) claims that professional marketers are recognized because of their ability to “create, maintain, protect, reinforce and enhance brands”.

A brand is mostly a name or symbol that intends to identify the goods and services of the producer in order to differentiate the company from its competition (Keller, 2003).

From the historical point of view, branding started to be significant when the producers were not able any more to take care about the increased number of customers to make sure that they believe in the quality of their products. (Palmer, 2001). First the products gained a lot of attention within the marketing literature. But after the services sector started to shape about 2/3 of the advanced economies, services brands gained on their importance in the literature as well. Fast- food sector represented by world’s leading brands as McDonald’s or KFC is a good example for services branding and offers a suitable ground for analysing the way of how this is perceived by consumers and its implications on the consumers’ choice.

Brands are usually important because of providing information on quality and offering some kind of exclusivity related to the brand image and identity (Jones et al., 2002).

However Simoes et al. (2001) explains the particular importance of services branding more in depth. He points out that branding is of such importance for service companies because it helps consumers to “better visualize and understand the intangible, improve so the customers´ trust in the invisible and reduce the customers´ perceived financial,

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social and safety risk” and he adds that there is a difference between branding of products and services because by services the company embodies the primary brand.

1.2.1 Brand personality

In the view of Biel (1997) brands are made of three components- skills, brand relationships and brand personality. Brand skills fulfil the function of offering a certain brand identity to customers. Brand relationships refer to recruitment, retention and enhancement of relationships between customers and the brand and the brand personality stands for values and various associations with the brand.

Aaker (1997) describes brand personality from a slightly different point of view. He supposes that it is called personality as the brand is associated with human personal characteristics. Moreover he assumes that people tend to prefer brands with which they have personal characteristics in common. The more similar are these common characteristics the stronger is the relationship can be established between the consumer and the brand (Aaker, 1999, Aaker et al., 2004).

The study of Govers et al. (2005) proved that the similarity between the product and the personality shapes the consumer preferences, taking Aaker`s arguments into the account we could assume that this applies to brand-personality congruence as well.

It is very probable that people’s preferences for brands are driven by their personalities.

This concerns not only apparel, where it is obvious at most, but preferences for fast- food brands as well. Unfortunately due to the limited room in this research, it was not possible to include the examination of the relationship between the people’s characters and their preferences for brands in this research.

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1.2.2 Customer-based brand equity

Customer-based brand equity means that the consumer recognizes the brand and is willing to pay a higher price for the product or service. In this case the brand is perceived by the consumers as an “added value” which is worth to pay for (Keller, 2003).

Brand equity may also make consumers to accept new brand extensions or price increases and improve the consumer’s interest in looking for this brand in shops.

“Brands are about creating differences” (Keller, 2003) and these differences result from consumers´ knowledge about the brand. Brand knowledge is based on all kind of information that can be associated with the brand. It can be experienced by seeing, hearing the brand or thinking about the brand, can be perceived through brand name, logo, symbol, packaging, character or slogan which can be promoted in advertising, event marketing, public relations, sponsorship or outdoor advertising (Keller, 2003).

As the knowledge is mostly provided in order to influence the customer, the relationship between the brand preferences and the perceived importance of knowledge will be examined.

1.2.3 Brand awareness and brand image

Knowledge about brands consists particularly of two elements- brand awareness and brand image.

Brand awareness is especially important as it makes the consumer identify the product or service; brand image is then reflected in consumer´s associations with the brand, it is the way how the brand is perceived.

McDonald’s for example aims to make consumers to associate the company with

„service“, „quality“, „value“, „cleanliness“ or others such as „for kids“, although some consumers might connect this with negative associations as „fast-food“ (Keller, 2003).

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Building of brand awareness is crucial for the success of the brand. Couple of studies has been done to this topic. For example the research from Ross and Harradine (2004) suggests that it is important to establish brand awareness as early as possible, the best in the children age, because the associations with the brand are then even stronger when the child becomes an independent consumer. Additionally a research of Poulter (2005) counted that the market value spent by children is worth £30 billion a year.

In the study of Jones et al. (2002) consumers were asked about their perceptions of the three most significant fast food retailers KFC, Burger King and McDonald’s. The research found out that the brand images build in people’s minds correspond to the brand identity and images communicated to them by those companies, but that consumers don’t interpret brands according entirely to advertising, but to all their interactions with the company as well. Therefore the staff’s relationships and interactions with customers are especially important in the services companies in order to influence the brand values and quality (Jones et al., 2002).

1.2.4 Brand Positioning

Brand positioning concerns identifying right place on the market, establishing the values, studying consumers´ perceptions of the brand and comparing the brand with its rivals (Keller, 2003), but as this goes a bit further than this study allows, it won’t be itemized.

1.2.5 Brand loyalty

Brand loyalty is a positive result of the successful brand equity and brand image (Keller, 2003). Favourable associations with the brand can affect consumer’s evaluation as well as perceived quality or acceptable price.

According to MRCA data (Hallberg, 1995) loyal customers are prepared to pay 7-10 percent more on average to buy a brand of their choice rather than the brand available

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As the whole business is dependent on customers and their purchases, it is obvious that the customer loyalty belongs to the most important issues the marketers have to deal with.

Brand loyalty is difficult to determine, it is mostly measured by counting the repeat purchases. Some explanations concerning the type of brand loyalty can be found in the literature.

Blackwell at al. (2001) describes brand loyalty as a kind of habitual behaviour. He claims that it is convenient for a customer to buy the same brand because it saves the time that he would spend by making decisions. Moreover the consumer knows what to expect from the product or service and the fact that he is satisfied with it can result in the repeated purchase. However, repeated buying does not necessarily mean brand loyalty.

Consumers loyal to the brand are more likely to increase the quantity of purchases by price decreases and less likely to switch the brand by price increases (Keller, 2003).

Habitual loyalty reacts different to price changes as well as other changes, for example packaging. If these conditions would change under which buying this product or service was convenient and the consumer is more likely to include other products or services in his new decision making process that might easily result in switching the brand.

Brand loyalty can be also explained by the theory of “double jeopardy”. This theory suggests that “brands with large market shares are more likely to have more loyal customers than brands with small market shares”. As a result products and services of well known brands are purchased more often than those of small businesses (Keller, 2003).

Comparing Keller’s statement about the reaction of the brand loyal consumer to price changes and the double jeopardy theory, Keller (2003) further suggests that “market leaders are relatively immune to price competition from these small- share brands”. In our research we will try to prove the validity of this statement by showing the possible

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relationship between the importance of price and consumer’s brand preferences. The double jeopardy theory will be tested as well.

Marketers are often afflicted by loyalty blindness. They believe that a consumer either belongs to them, or to a competitor, or is a confirmed price-switcher. But brand loyalty is relative rather than absolute. This relativity can be explained by the theory of loyalty parity (Hallberg, 1995).

Most of the consumers don’t have their dominant brand to which they give 50 percent or more of their purchases. More often they distribute their buying across the brands in their repertoire, also called the considered set (Hallberg, 1995). The considered set may differ in a size accordingly to the kind of products and services. For example the study from Dawes (2008) suggests that the repertoire for beer loyalty lies at 4 beers. The author found relevant to enable the respondents of the research to choose such a possibility among the answers when asking about respondents´ loyalty. This should show if the loyalty parity could be applied to fast-food or not.

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1.3 Conclusion

The fast-food industry contributes significantly to towns´ economies and is represented by many branded as well as unbranded restaurants. There is no doubt that both of them have “their” customers, although the unbranded fast-foods have disadvantages compared to the branded ones mostly due to the lack of financial resources.

Various studies were done on consumers´ brand perceptions. The way how companies communicate their brand is the way how they make themselves different from their competitors. Such a difference is crucial for their success. Small businesses are mostly poor in their communication, what makes it much more difficult for them to create a relationship with their customers. Brand loyalty is kind of such relationship. That’s why branded fast-foods are more likely to have brand loyal customers. This is called “double jeopardy” theory (see chapter 1.2.5).

Branded companies are mostly providing some information about the business in order to improve the awareness of the brand. This would make their advertising or other kind of influence more effective as it would be easier to gain the consumer’s attention. On the other hand, brand preferences affect consumer’s response to such marketing activities significantly. A consumer, who doesn’t like branded fast-foods at all, won’t go to try the new “Whopper” after seeing an advert.

Knowledge is an equivalent for brand awareness. Knowledge about the brand increases consumer’s trust into the company and reduces his perceived risk by purchasing. Some consumers feel much more comfortable in visiting a fast-food they already know, or they have some information about. But as before, we expect that this will mostly apply to consumers who don’t have negative brand preferences toward the branded corporations as these are much better in communicating themselves than unbranded ones.

Sometimes such knowledge goes over into brand equity that creates an added value and makes the consumer believe that the products and services of this brand are something special. Strengthening brand equity is a good way how to create brand loyalty, which is

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very advantageous for the business as a brand loyal consumer is much less likely to switch the brand by price increases. Therefore it is suggested that branded fast-foods don’t have to be worry because of the price competition of “cheap” local business.

Besides the brand, factors as cleanliness, opening hours, packaging or appearance of inside premises influence the consumer’s decision. These factors may vary in their importance by each consumer, but some similarities might be found as well. This study will find out, which of them were the most important ones to our respondents.

Five Objectives have been determined for this investigation:

• To analyse the students´ preferences for branded or unbranded fast-foods

• To examine the relationship between the brand preferences and other factors

• To analyse which advantages of branded fast-foods are considered to be the most important ones

• To examine how important are the following factors when selecting the fast- food restaurant: appearance of inside premises, cleanliness, delivery service, friendliness of personnel, information about nutritional value, location of the outlet, packaging, price, seating facilities, service speed, size of menu and variety of food

• To examine students´ loyalty to fast-food restaurants

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According to the research objectives five Hypotheses have been formed:

H1. People who like branded fast-foods are more receptive for advertising then those who don’t like them.

H2. As a result of a marketing influence, most of the consumers will claim to prefer the branded fast-foods.

H3. Consumers, who like to have some information about the fast-foods they visit, will mostly prefer big fast-food corporations.

H4. “Brands with large market shares are more likely to have more loyal customers than brands with small market shares”

H5. “Brand leaders are relatively immune to price competition from small- share brands”.

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2. Methodology

In this chapter the collection of the primary data will be discussed. According to the previously formulated research objectives the reasons for choosing the research strategy and the research method will be explained and the information about population, sampling and the collection method will be given. Moreover the design and the distribution of the questionnaires will be described, the improvements based on the performed pilot study mentioned and the information about the data analysing in SPSS will be provided. Finally, the limitations of the research will be explained.

2.1 Research strategy and research method

Considering the previously formulated research objectives information about people’s opinions and attitudes is needed to be collected. A quantitative research in form of a survey was found to be the most appropriate research strategy. A questionnaire was chosen for the data collection as it appeared to meet the requirements the best. It enables to collect a large number of data in a short time and at relatively low costs (Webb, 2002). These aspects became the second reason for choosing this method.

According to Saunders (2003) there are three basic methods used for surveys: a structured interview, the questionnaire and a structured observation. An important advantage of a questionnaire is a standardization of the collected data that are easily comparable and analysed. Questionnaire is easy to understand and requires a short time to complete, what enables to reach more respondents. On the other hand, there is mostly a limit of the number of questions that is tolerated by respondents; otherwise they are not willing to participate. This limit unfortunately does not enable the deeper insight into the problem. However, the method of the self administrative questionnaire was found out the most appropriate method as it enables to examine the variability and to investigate the relationships between these variables (Saunders, 2003).

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2.2 Distribution of the questionnaire

Two types of distribution were selected. Online distribution by reaching the respondents per e-mail and a personal distribution, where the respondents where asked to complete the questionnaire at the university campus.

E-mail enables to deliver the questionnaire to a quite large number of persons, in our case to students who are all computer-literate. The questionnaire is suitable to be distributed online as it contains mostly simply questions that do not require any explanation. Moreover an online distribution enables the respondents to choose the time that fits them the best to complete the questionnaire. However it is not fully anonymous due to the provided email address and the response rate is generally quite low, in our case 27 % (41 responses).

About 2/3 of the questionnaires were distributed personally at the university campus.

This method is more cost and time consuming but it enables a personal contact that proved to be advantageous, as many students were more willing to participate in the survey when they were addressed personally. Other advantages of this distribution method were a fully anonymity of the results and a high response rate which reached 85% (81 responses were obtained) Moreover no time was required to wait for response as by the online distribution, the questionnaire was completed immediately after the distribution, although the distribution itself of course required some time.

2.3 Population

According to Schröder (2005) the UK fast-food sector mainly targeted consumers between 17-25 years. To provide the best results of this study, students of the University in Huddersfield were selected to participate in the research.

University students not only fulfil the requirements of the needed age but they are a suitable sample for the town’s population as they come from different family backgrounds and have different brand preferences. Furthermore, students have mostly a

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limited budged and what makes them more sensitive for various price policies. Finally, young adults are the most receptive group for the marketing influence.

2.4 Sampling

To avoid any sampling mistakes the questionnaires were distributed in two ways. The online questionnaires were sent to the students of the European business course, who are mostly representatives of various European countries. This group forms about 1/3 of the collected data and should represent the high number of other European citizens living and working in the towns of the UK. The rest, 2/3, were collected personally from other students of the University of Huddersfield regardless to their course.

A non-probability sampling technique was applied to this research, which is characteristic with unpredictable chance of selection of each sampling unit that might make some units more likely to be chosen. Unfortunately it makes the results of this research less suitable to generalise about a population than a probability sampling technique. Convenience sampling was applied to this research as this can be carried out fairly quickly and at low costs, enabling the researcher to collect the information from a

“convenient” population (Webb, 2002).

As some of the respondents didn’t consume at fast-food, their questionnaires were taken out of the consideration (9 questionnaires). After this deduction 113 questionnaires were collected and selected as a sample for this study.

2.5 Design of the questionnaire

12 questions were asked in the questionnaire. ‘Yes’ or ‘no’ questions were used to select students from non-students and fast-food consumers from non-consumers.

Information about the gender offered two possibilities as well.

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Other questions invited respondents to choose only one or more possible answers. There were no open-ended questions used in this questionnaire as they didn’t seem very efficient according to the type of this investigation. Moreover closed-ended questions can be better analysed, compared and are more suitable for testing the hypotheses. They are less time consuming as well (Webb, 2002).

One option questions were used to obtain information about the income, the frequency of respondents´ visits at fast-food, about his or her loyalty to fast-food restaurants and about consumers´ brand preferences. The answers were all prearranged. Respondents could only answer the questions by ticking the relevant box.

Income: Five possibilities were given to respondents that should reflect the respondents´

average income. To make it easier for respondents, the information was given in monthly and weekly incomes at the same time. The categories started by £300 a month and less or £75 a week or less. The last, highest category applied to students whose income was higher than £1000 a month, means £250 a week. Information about the income was needed to identify the possible differences between the income groups in their fast-food choice or brand preferences.

Frequency of visits: It is expected, that there will be some differences in the loyalty between the frequent consumers and less frequent consumers. Higher income groups are also expected to consume more often at fast-food restaurants.

Loyalty: Respondents were asked to which fast-foods they mostly go. There were 3 options that display the loyalty to one or more fast-food restaurants, if branded or unbranded ones and one option that describes the consumer as not loyal to any fast-food restaurant. Information about the loyalty is needed to identify possible relationships with the income or brand preferences.

Brand preferences: This question was very important to identify consumers´

preferences for fast-food brands. From 5 possibilities one should be selected by ticking a box. There was only one exception. If a respondent ticked an answer, where he claims

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to prefer small local business from another reason, he was asked to name the reason or reasons. This possibility was given if no of the selected questions would seem appropriate for the respondent. Brand preferences are expected to determine many of the answers in this questionnaire.

Questions with more possible answers, also known as ’multiple choice’ questions, were used in 2 questions. As by other questions, all answers were prearranged in order to make the completing easier and to save some time. These questions were used to inform about consumers´ perceptions of the branded fast-foods and their possible advantages over the unbranded ones. Moreover information about the purpose of the visit was obtained.

Advantages of the branded fast-food restaurants: The purpose of this question was to find out, what are branded fast-foods better in than the unbranded ones. It is expected that the answers will be influenced by consumers´ brand preferences, but it is assumed that even those who does not support branded fast-foods will realise these advantages.

All ticked answers that reflect the respondents’ opinions can be understood as the advantages for consumers´ attraction.

Purpose of the visit: There were 3 possible answers for this question to choose: for a snack, for a lunch and for a dinner at night. Depending on which of them the respondent uses the most, he might find other factors more important than the other ones. This question was important also from the statistical reason.

In 3 questions the answers were provided by using the five-point Likert scale.

Respondents evaluated the statements by selecting one of the five possible answers from strongly agree to strongly disagree which reflected their attitudes. Likert five-point scale is a very common method especially for measuring people’s attitudes.

This helped to obtain some information about consumers´ sensitiveness to advertising and about the role of knowledge in their decision making process. Furthermore the five- point Likert scale was applied to a list of factors that showed the perceived importance and the possible influence at the consumers´ decision making process.

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Sensitiveness to advertising: The answer to this question should provide information about how effective the advertising seems to be.

Knowledge: Knowledge is said to be an important factor in the decision making process. This question should test its perceived importance.

List of factors: Factors as price, size of menu, cleanliness, opening hours, seating facilities, variety of menu, friendliness of personnel, location of the outlet, service speed, information about nutritional value, delivery service, packaging and appearance of the inside premises were tested on their perceived importance. Respondents were asked to rate each of these attribute 1 till 5, 1 the least important, 5 the most important in influencing their decision about where to eat.

Respondents were also asked to write down their e-mail address if they want to be informed about the results of this research. The author found meaningful to give them the possibility to see the results of the study they participated in. Moreover this provides some additional information about how many respondents were really interested in this investigation.

2.6 Pilot study

A pilot study was carried out in order to detect mistakes in the questionnaire and to improve it. It consisted of two main steps. In the first part the overall clarity of the questionnaire was improved whereas in the second step mainly the technology was tested.

The original questionnaire was first tested on 4 respondents. After a personal consultation with each of them some questions were changed or completely removed as they were found irrelevant for this study. The structure of the questionnaire was changed as well. Some statements were reformed and put together to create the current question 6 regarding the advantages of the branded fast-foods. This question can be easier understood to find out the needed answers.

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In the second question a word “sometimes” was added to make sure, that more respondents are going to continue completing the questionnaire. In the question 8 respondents were given free choice if selecting one or more options, but the word

“mostly” was underlined in the question as it appeared to be unnoticed before. This should improve the clarity of the question.

To make sure that everybody knows what branded and unbranded fast-foods mean a small explanation was added to the questionnaire as well. Finally some expressions have been modified in order to improve the clarity of the questionnaire and thus to increase its effectiveness.

The questionnaire was first designed as a PDF form that looked more professional and only one possible answer could be ticked everywhere where needed. A great advantage of this form was a send button, that would automatically open the email message and it could be sent very easily to the pre-set email address. Furthermore the researcher would receive a small file, that could be easily imported to the excel document without completing it by hand. Unfortunately after this was sent to first 10 respondents for a trial, it was found out, that there is a mistake in the Adobe 7.0 Professional program. All forms made in this program did not work sufficient as they can be sent back to the researcher only by people having the Adobe Professional program, installed Outlook or similar email programs. As the group of students who could complete the questionnaire without problems and send it back to the research would be reduced by distributing this questionnaire, the author decided to design another questionnaire that was sent per email as an attached Word document. The same questionnaire was used in a printed form for the personal delivery.

Both questionnaires can be found in the appendices (Appendix A and B).

2.7 SPSS analysis

All the data collected from the questionnaire were processed in the statistics programme

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