Browsing by Author "Allan, Meredith Leigh"

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    Price versus brand : assessing the role of price and brand in low-income consumer decision-making
    (Stellenbosch : Stellenbosch University, 2014-03) Allan, Meredith Leigh; Gerber, Charlene; Eggers, Felix; Stellenbosch University. Faculty of Economic and Management Sciences. Dept. of Business Management.
    ENGLISH ABSTRACT: Growing competition, fuelled by globalisation, has increased the number of alternatives across almost all product categories, leaving consumers overloaded with information and overwhelmed for choice. Brand and price represent two cues that have been found to influence consumer decision-making and which can be used in marketing strategies to create value, and differentiate from competitors in this increasingly competitive climate. Responding to the misconceptions surrounding the decision-making of individuals classified in the low-income market segment, and in light of the significance of Bottom of Pyramid (BOP) supported by Prahalad (2002), this study was undertaken to assess the perceived importance of price and brand in low-income consumers’ decision-making process, and thereby examine the effect of different prices and brands on low-income consumers’ product preference. Primary causal research using a choice-based conjoint (CBC) analysis was conducted on a judgement sample of black female adults. A total of 209 questionnaires were completed through fieldwork of personal interviews in informal settlements in Gauteng. The study used a 5 price presentation (R18.99; R24.99; R28.99; R33.99; R42.99) by 5 brand presentation (Ace, Iwisa, White Star, Mnandi, Ritebrand) between-subjects design in the maize meal product category. The hierarchical Bayes procedure and multinomial logit model were used to analyse the primary data. Results of the descriptive and inferential analysis of the CBC showed that brand was perceived as more important, attributing to 65 per cent of low-income consumers’ decision-making process, opposed to the 35 per cent attributed to price, and that prices and brands had varying effects on low-income consumers’ purchase probabilities. Although lower prices did have higher perceived utilities, the price-sensitivity of low-income consumers was found to be less influential at lower price ranges, suggesting the stronger influence of brand and brand associations on their evaluation of alternatives. Familiar brands (White Star, Ace and Iwisa) were seen to positively influence low-income consumers’ purchase probability by reducing perceived risk, further enhanced by brand credibility as found with Iwisa (which indicated consistent quality) resulting in higher purchase probability. Unfamiliar brands (Mnandi and Ritebrand) were perceived as having low levels of utility, attributed to higher levels of perceived risk and unclear quality inferences. The research conclusions, drawing from secondary research, proposed a model of low-income consumer decision-making that is influenced by various factors, including aversion to loss, and the desire to satisfy aspirations. Varying levels of brand knowledge, brand quality and credibility as well as symbolic value attached to different brands as perceived by low-income consumers, are argued to influence both individuals’ aversion to loss, as well as their aspirational desires, and thus influence the decision-making process. Price and price–quality inferences, brand familiarity, brand–quality inferences, psychological factors and those surrounding the purchase context were found to have influence over the decision-making process of individuals within this market segment. Managerial recommendations emphasise the significance of the BOP as a viable market segment, warn marketers of low-cost pricing strategies, and discuss the importance of employing value-based strategies and leveraging brand to attract, satisfy and retain consumers in this market segment. Managers are challenged to find a balance between perceived quality and reliability and affordable price, in order to operate successfully in the low-income market and offer effective value propositions that provide customer satisfaction while allowing for sustained sales and profits for the firm.