Thesis: Branding & Its Impact on the Consumer Decision Making Process (iTunes Case Study) - Dec 2005

BRANDING IT’S IMPACT ON THE CONSUMER PURCHASE DECISION-MAKING PROCESS

KURT VON MOOS DECEMBER 2005 EURPOEAN BUSINESS SCHOOL LONDON 1

ACKNOWLEDGMENTS

Writing this dissertation has been an extraordinary journey that ended one chapter in my life, only to begin another. This journey could never have been completed without the love and support of the special people that surround my life. First and foremost, I would like to thank my mother, Maureen von Moos. You have given me so many opportunities in life. I have come to owe you so much, that all I can offer you is my unconditional love and gratitude. To my Grandparents, Nazek & Ben, not a day goes by that my soul does not miss you. I hope you can look down today, and finally be proud of me. I would like to also thank Burton Paul, for inspiring me to achieve more. Thank you for being the older brother I always wish I had. To my dear friends, Nicolas & Peter, your friendship and support have meant the world to me. You two will always have a special place in my heart. I would like to extend a very special thank you to David & Birgit. Your constant support and friendship was instrumental in me preserving my sanity. Thank you both so much. And to Natasha…you’ve changed my life. I love you.

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EXECUTIVE SUMMARY

Modern day marketing has greatly evolved. Companies now use consumer driven approaches to further their abilities to satisfy the countless emerging needs and wants of the modern consumer. Amongst these consumer driven approaches, branding has emerged as one of the crucial activities required in the building of a loyal customer base and the creation of an effective brand image. The main aim of this research paper is to ascertain what the main impacts of branding are on the consumer based purchase decision-making process. In doing so, the author aims to determine the extent of the correlation between the activities of branding and consumer purchasing as well as put into perspective the main functions and values branding can offer companies in terms of guiding valued customers through the often complex process of purchase decision-making. The author has set out to use the example of Apple Computers, Inc.’s iTunes Music Store UK as a real life study of how the UK’s leading legal online music provider applies these concepts. Via the use of an online survey and various economic models used to ascertain the external and internal factors affecting the iTunes Music Store UK, the author has determined that iTunes Music Store has focused on the enhancement and extension of its brand image to cater to the learning process, attitudes formation process and perception of consumers in the UK market for digital music industry. In doing so, iTunes UK has secured a 85% market share in the United Kingdom. Their success can be attributed to their use of branding to create a loyal and in some instances, fanatical following of digital music lovers. As a direct result, Apple as contributed to the fight against online music piracy, which as resulted in a 10% decrease of illegally downloaded music. This dissertation has found that branding has an large impact on the learning and attitudes formation process that takes place during consumer purchasing activities. As a direct result, consumers form meaningful links to a brand image, brand name or company, that leads to sustainable sales as well as the sustainable satisfaction of consumers wants and needs. 3

TABLE OF CONTENTS

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Chapter 1 - Introduction

1.1

Introduction

1.2

Research Aims & Objectives

2

Chapter 2 – Literature Review

2.1

Introduction

2.2

Understanding Branding

2.2.1 Branding in Today’s Markets 2.2.2 The Development of Brand Equity 2.2.3 The Competitive Advantage of Brand Loyalty 2.3

Branding’s Influence on Consumer Purchasing Behaviour

2.3.1 Impact on the Consumer Learning Process 2.3.2 Impact on the Consumer’s Perception of Brands 2.3.3 Impact on Consumers’ Attitude Towards Brands 3

Chapter 3 - Methodology

3.1

Introduction

3.2

Defining Research Methodology

3.3

Research Aims

3.4

Research Philosophy

3.5

Research Approach

3.6

Execution of Strategy

3.6.1 Survey

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4

Chapter 4 – Analysis & Findings

4.1

Introduction

4.2

The Questionnaire

4.2.1 Respondent Profile 4.2.2 Brand Attributes 4.2.3 Brand Benefits 4.2.4 Brand Values 4.2.5 Brand Cultures 4.2.6 Brand Identity 4.2.7 Conclusions Drawn from the Survey 4.3

External Analysis of The Legal Music Downloads Industry in The United Kingdom

4.3.1 Market Overview 4.3.2

P.E.S.T.L.E. Analysis of the Digital Music Industry

4.3.2.1 Political 4.3.2.2 Economical 4.3.2.3 Social 4.3.2.4 Technological 4.3.2.5 Legal 4.3.2.6 Environmental 4.3.3 Porter’s 5 forces 4.3.3.1 Threat of New Entrants 4.3.3.2 Threats of Substitute Products 4.3.3.3 Bargaining Power of Buyers 4.3.3.4 Bargaining Power of Suppliers 4.3.4 Listing of Opportunities and Threats 4.3.4.1 Opportunities 4.3.4.2 Threats 4.4

Internal Analysis of Apple Computer’s iTunes Music Store UK

4.4.1 ITunes Music Store UK Company Overview 4.4.2 ITunes UK’s Strategic Capabilities and Competitive Advantage Model 4.4.3 Resource Audit 5

4.4.3.1 Physical Resources 4.4.3.2 Financial Resources 4.4.3.3 Human Resources 4.4.3.4 Intangible Resources 4.4.4 Strengths and Weaknesses 4.4.4.1 Strengths 4.4.4.2 Weaknesses

5

Conclusions and Recommendations

5.1

Recommendations

5.2

Conclusion

6

Bibliography

7

Appendix A

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CHAPTER 1 INTRODUCTION

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CHAPTER 1: INTRODUCTION 1.1 Introduction Modern times reflect key changes in the marketing strategies employed by companies seeking to sustain competitive advantage. The financial health of these companies is now dependent on the amount of information that is collected in regards to consumer purchasing habits. These companies have resorted to the adoption of behavioural and sociological studies in order to collect this pertinent data and to further the corporate understanding of consumer purchasing patterns. The study of these fields are an attempt to establish a correlation between consumer spending and the key factors involved in consumer preferences in terms of attitudes, cognition, perception and learning. Companies shifting their focus from a product/market driven line of attack to consumer driven marketing activities reflect this evolution of marketing. As a direct consequence of this shift, companies are now attributing much more importance on the reaction consumer display in regards to the 4Ps (product, price, promotion and place) and have further implemented three additional Ps, physical layout, process and people (Kotler, 1999). Current market trends show that the homogeneity of product has increased, meaning that few functional differences between key competitors currently exists in most highly competitive markets. This decrease in product differentiation is considered to be the direct result of high levels of competition that exists within today’s markets, as well as the technological advances of production and distribution methods. Because these advances have diminished the ability of technological innovations to offer sustainable competitive advantage and have made product differentiation extremely difficult (Levitt, 1983; Kotler, 2000) As a direct consequence, branding has emerged as a significant feature of contemporary marketing strategies and is now considered a key organizational asset (Kotler, 2000). The symbolic values associated with brand names have become the basis for product differentiation,

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with leading strategies attempting to emulate key factors that are conductive to key behaviours associated with consumer purchasing patterns. An example of the impact branding has on the consumer purchasing decision process, is how branding is applied to the legal music downloads industry. With nearly 230 providers online, it is a highly competitive industry that is still expanding at a furious pace. With over 180 million music tracks purchased online in the first quarter of 2005 alone, (IFPI National Groups, 2005), web based giants such as Apple’s iTunes Music Store, Napster, Tesco, Emusic and Kazaa are all competing for domination in this digital marketplace. Only one however, the iTunes Music Store, has achieved near domination with 8o% market share in the UK in 2005 (OCC, 2005). With the advent of the iPod digital music player and the iTunes Music Store, Apple has become one the most followed companies of the 21st century. Steve Jobs, CEO of Apple, is seen as being a key contributor to Apple success story, by transforming and further developing Apple’s brand image, by making it more accessible to a wider audience and extending the Apple brand into the legal music download industry. Spotting a gap in the market and considering that record companies were loosing an estimated 4.6 billion dollars annually (RIAA, 2005) with illegally pirated music files being downloaded via file-sharing servers, Apple pioneered the sale of legal music on the Internet, via their iTunes Music Stores. This has earned Apple 240 million dollars in revenue from music sales in the second quarter of 2005 alone and has lead to the sale of an estimated 30 million iPods since its launch in 2001. By the beginning of 2006, it is predicted that Apple will sell its 1 billionth song (Smith 2005) The following dissertation aims to ascertain the theoretical impact of branding on the consumer decision-making process as well examine its impact in real-life, via a critical evaluation of Apple’s use of branding to influence the consumer decision-making process of consumers in the legal music downloads industry in the United Kingdom.

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1.2 Project Aims and Objectives As the author as established, the importance of understanding branding and its impact on modern day markets is vital to the health and growth of most industries. The aim of this thesis is to put into perspective the functional values of branding as well as assess its role in the consumer purchase decision-making process. In order to further understand consumer behaviour with regards to branding, this research paper aims to gain an in-depth understanding of the process and attributes that lead to the customers’ evaluation of brands and the key drivers to building brand loyalty. This will be brought into focus by a critical evaluation of how Apple has used this process to secure an 80% market share in the legal music downloads sector in the United Kingdom. In order to meet these outcomes, the author has set the following research question: “ Determine the impact branding has on the consumer purchase decision-making possess by assessing its use by Apple Computers, Inc. to influence the purchase decision-making process of consumers in the legal music downloads industry in the United Kingdom. “ In order to fully answer this research question, the following objectives have been set:

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Set a valid and sustainable research question in order to achieve a non-bias and accurate understanding on the topic in question;

•

Present the key concepts behind branding, its values and its usage in modern day marketing campaigns by reviewing current literature pertaining to the subject matter;

•

Determine whether a correlation between consumer identities and perceived brand identities is present;

•

Determine the impact of branding on the consumer purchase decision-making process;

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Evaluate Apple’s iTunes Music Store UK’s current situation by conducting both external and internal analysis;

•

Critically assess the impact of branding via an evaluation of Apple’s usage of branding to secure its market presence in the legal music downloads industry in the United Kingdom.

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CHAPTER 2 LITERATURE REVIEW

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CHAPTER 2: LITTERATURE REVIEW

2.1 Introduction In this chapter, the author seeks to establish an academic foundation from which both further research will be built upon. Its purpose will be to enhance the readers understanding of the various concepts that branding involves, as well as its theoretical impact on the consumer purchase decision-making process. The chapter is written under Murphy’s (1992) findings that stipulates that as distinguishing characteristics of products becomes less noticeable, the likelihood of consumers using branding related cues rises. offerings, 2.2 Understanding Branding To gain a clear insight into the definition of “branding”, one must first clarify what this literary review refers to as “products”. Referring to Baker (2000), one can consider a product as being anything that can satisfy the economic, psychological or functional needs of a potential customer. Baker (2000) furthers this definition by stating that the extent of which a “product” meets the above-mentioned needs, is determines the product’s “value”. The often-complex process of branding is a need that has been inspired from the highly competitive nature of most modern day industries. This competition has lead to product offerings that have become increasingly difficult to differentiate for reasons stated in Chapter 1. In order to address this problem, branding has become a widespread tool used by companies to highlight their products in increasingly saturated markets. In doing so, companies enable themselves to showcase their core competences that they feel are needed by consumers (Hamel and Prahalad, 1994). In modern day marketing, it has now become the brand itself that differentiates a company’s products available for purchase (Levitt, 1983). If one looks at Apple Computers as an example, many claim that a shift towards brand orientated marketing techniques have allowed them to break into the digital music market and further their presence in the IT market. However others 12

believe that this is by no means a new “shift” but rather the efficient furthering of an already effective brand image. Considering that Apple has always been at the forefront of creative advertising and brand associative techniques, with publicity stunts such as the “1984”1 commercial, the “Think Different. Think Apple”2, advertising campaign or the more recent “iPod+iTunes” commercials involving celebrity endorsements. So what exactly is branding? Kotler (1999), defines branding as a “name, term, sign, symbol or design, or a combination of these, intended to identify the goods or services of one seller or group of sellers and to differentiate them form those of competitors.” Feldwick (1995) furthers the concept of differentiation that Kotler (1999) touches on, by comparing a brand to “a recognizable and trustworthy badge of origin and a promise of performance.”. His research emphasizes the relationship between the product and the consumer as being instrumental to the branding process and the positioning of offerings within the social environment. He considers that a brand reflects a company’s intangible guarantee that the product will meet consumers’ expectations. So far, the above-mentioned literature restricts the effects of branding to a consumer’s interpretation of how a specific brand relates to his or her personality based traits. Macrae (1996) however, elaborates by introducing the additional element of “Brand Essence”, which he defines as being the soul or very reasons for being of a company. Macrae (1996) furthers this definition, by stating that a company must consider its own employees with the same importance as its targeted consumers, because both are of equal importance. He justifies this by shedding light on the fact that it is the employees that promote the products or services in direct sales situations, not the company. This concept of branding establishes a clear link between a company’s internal working with the outside world of consumers, via their brand.

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Aired during the 1984 Super Bowl in the USA, the “1984” Apple commercial was a big budget advertisement themed after the George Orwell novel, 1984. This commercial was groundbreaking in that it was the first to establish personal computers as commodities, rather than simple office tools. 2 Groundbreaking marketing campaign that established and contrasted Apple computers from competitors and illustrated consumer usage of computers for the first time. This campaign was replaced in 2003 by the “Switch” campaign, that incites users to “switch” from Windows based computers to Mac OSX based computers.

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If one examines Apple Computers, one can easily see Macrae’s (1996) definition in practise. The famously relaxed and welcoming atmosphere of the “Apple Stores”3 is produced by the trained staff, who must all be proficient in the employee-training manual which reinforces the importance of employees sharing the same level of brand commitment as consumers. This allows consumers and staff to interact seamlessly and has turned Apple Stores into both a place of business and a cultural hotspot for the 16 – 35 year old market segment (Bajarin, 2005). In modern day branding, the creation of tangible values as well as intangible values is quintessential in allowing customer the means to distinguish one brand from another (Hankinson and Cowing, 1993). The reader will appreciate that it is this ability in particular, that separates a “brand” from a mere “product”. King (1991) captures this by defining a product as a factorymade tangible that can readily be copied by competitors. King (1991) continues with his distinction by clarifying that a brand is an intangible asset that is unique and timeless. This simple yet powerful definition insinuates that a brand is the core identity of a product. Kotler (1999) expands on the concept of identity by stating that a brand is capable of conveying up to six different levels of meaning to a targeted audience. This is known as the “Six Dimensions of The Brand” Attributes

A brand will communicate specific attributes, such as prestige

Benefits

A brand strengthens a product’s attributes by communicating a set of benefits that makes it more

attractive

Values

A brand represents a company’s core values and belief system

Culture

A brand is representative or target a target audiences sociocultural characteristics

Personality

A Brand can project behavioural personality patterns of targeted consumers

User

The brand, in some cases, can emulate the end user

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There are currently over 125 Apple retail stores spanning the USA, Canada, Japan and the UK. They continue to be a driving force behind the company’s most recent success, with sales revenue of over 663 million dollars in the last quarter

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Kotler’s (1999) extensive work on the understanding of branding can be seen as the middle ground between Macrae (1996) and Feldwick’s (1995) schools of thought. Despite Kotler’s initial definition seeming overtly simplistic, his expanded definitions and views on the various dimensions of brands, provide a deeper understanding of how branding can be so much more than simply symbols, designs and catchy slogans. Kotler establishes branding as the creation of a deep bond between the company and the consumer. From the consumers’ perspective, brand names are as fundamental as the product itself in the sense that they simplify the purchasing process, guarantee quality and at times form as a basis of self-expression. Hence, should a company market a brand name as nothing more than “just a name”, it would be missing the entire purpose of product branding. The challenge lies in developing a deep set of meanings for the brand. Once a target market segment can visualise all six dimensions of the brand, it will have established a strong rapport within the consumers’ purchase decision-making process. 2.2.1 Branding in Today’s Markets A central function of branding is the facilitation of the consumer choice process. Due to the complexity of having to select a product amongst thousands of similar offerings, consumers will instinctively attempt to simplify their choice process by selecting brands that have satisfied them in the past. Assael (1993) supports this concept by stating that consumers, especially in situations of low-involvement, heavily rely on previous consuming experiences when attempting to select a product to satisfy their present needs. Thus, one can conclude that pleasant past experiences is highly conducive to consumers associating benefits to a brand. One can conclude that a central function of branding, is its ability to negate the need for a consumer to seek out information when a need or a want has been recognized, but rather, lead him to a brand that has been satisfying in the past. One must acknowledge however, that frequent purchasing of a brand can not always be linked to previous experiences, but can alternatively be formed by embedded perceptions. A consumer might strongly favour a brand with no prior purchasing experience. This type of consumer 15

behaviour is based on stimulus provided by direct exposure to advertising campaigns, a company’s PR efforts or even a high concentration of local distribution in an area that is in close proximity to a consumer (Assael, 1998). In terms of companies’ views on branding, it can induce the natural differentiation of their offerings, which ultimately, will produce a state of competitive advantage. According to Adcock (1998) differentiation is the process of creating a set of unique differences so as to separate one company's products from another. The value of this uniqueness will determine the level of its said “differentiation”. This in turn will allow companies to seek out higher asking prices. It must be noted however, that differentiation comes at a cost. Therefore, differentiation can only allow for competitive advantage if the cost of differentiating is significantly lower than the revenue earned by the sales. Differential advantage allows companies to showcase their offer in respects to other competitors in the same marketplace. A competitor could easily copy a digital music player. However, competition will not be able to copy the personality that is associated with the brand name of, for example, Apple’s iPod4. Porter (1980) clearly established the importance of differentiation by stating that one of the main requirements needed for acquiring said “competitive advantage” in an industry, is by differentiating one’s product line. Should a market’s segment players hold no differential advantage, consumers would likely revolve their decisions around pricing. (Foxall and Goldsmith, 1994). Branding is not the sole source of differential advantage, as it can be obtained by the efficient implementation the 4Ps of the marketing mix (Diaz de Rada, 1998). However studies have shown that the most efficient and long lasting strategy that is easily accessible to any company is to focus on brand differentiation, rather than the development of pricing policies as a sole way of reaching profitability (East, 1997).

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Apple’s iPod is the current best selling digital music playing devices. Designed for seamless integration with the iTunes music store, the iPod is a light weight portable hard drive capable of holding up to 15000 songs, 25000 photos and 150 hours of music.

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2.2.2 The Development of Brand Equity The amount of clout controlled by different brands will vary. Some are deeply embedded in global culture and are thus, highly recognizable, whilst other are virtually unknown to consumers. When attempting to place a value on a brand, one refers to “brand equity”. Chay (1991), defines brand equity as a “set of associations and behaviours on the part of a brand’s customers, channel members, and parent corporation that permits the brand to earn greater volume or greater margins than it could without the brand name and that gives the brand a strong, sustainable, and differential advantage over competitors” (Chay, 1991, p.30). This explanation creates a clear link between a product’s value, be it financial or intangible, and a brand name. Aaker (1991) furthers delves into the subject matter, distinguishing between several perspectives from which one can view brand equity. These include, amongst others, the financial perspective, the consumer-based perspective and finally the brand extension perspective. Using the financial perspective, one measures brand equity by determining how much more consumers are willing to pay in direct relation to the brand name. This gives marketers essential insight into the financial value of the brand. When viewing brand equity from this perspective, one must naturally consider overhead, such as costs of advertising. Using the consumer-based perspective entails considering how the attitude strength of a consumers is directly influenced by the brand name. This perspective operates under the assumption that the consumer has had extensive experience with the product in question. Viewing brand extension from the brand extensions perspective involves evaluating whether a brand is strong enough to launch as a launching pad for an extended product range. If one considers Apple Computers, the success of the iPod music player was largely dependant of the high brand equity of the brand name and more specifically, their brand image. According to Alreck and Settle (1999), the consideration and development of brand equity is vital as its benefits are wide reaching. One can consider brand equity as an asset, as it can increase cash flow via the widening of a company’s market share and the allowance of higher pricing policies.

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2.2.3 The Competitive Advantage of Brand Loyalty Meenaghan (1995) states that there is a palpable correlation between the efficient branding of a product or service, and the display of brand loyalty in consumer purchasing patterns. In this instance, loyalty is defined by Oliver (1999) as a “deeply held commitment to rebuy or repatronize a preferred product/service consistently in the future, thereby causing repetitive same-brand or same brand-set purchasing, despite situational influences and marketing efforts having the potential to cause switching behaviour" (Oliver, 1999, p.34). In considering Oliver (1999), one can conclude that brand loyalty is a direct consequence of the ability to better satisfy the desires of a customer that main competitors do. Therefore, Oliver assumes that one can estimate the extent of loyal that can be achieved by understanding the personal characteristics of the targeted consumer market segment. Building on this concept, Quester and Smart (1998) have questioned this, by suggesting that it is not uncommon to find irrational attachments to products in humans, as a people. Levitt (1983), however, counters this by putting forward his findings suggesting that consumers form attachments to specific products as a direct result of a company’s effort to create a personable link between them and the consumer. These links are essentially induced by the creation of attributes that stem from the appearance of the product, the design and outer package of the product, or even the identity emulated by the brand itself. Coupled with the fact that past experiences heavily influence consumers, Levitt (1983) concludes that there is nothing irrational at all in consumers forming deep seeded attachments to certain brands. He continues by stating that the very existence of these attributes are key in providing competitive advantage, seeing as without them, competitive pricing would become the only factor used by consumers to distinguish company offerings. It now becomes clear that a modern day marketer’s principal objective is to build sustainable forms of loyalty between a company and its consumers, instead of focusing solely on the individual sale of products. According to Oliver (1999), a loyal customer is one who will prove his commitment by spending additional time, money and effort to obtain the brand of his preference. If one looks at Apple, with its recent success with the iPod music player, one might immediately recognize the effects of customer loyalty. Despite offering songs only playable on 18

iPods, the iTunes music store sales represent 80% of the legal music downloads market in the UK (Smith 2005). Despite constant rumours of new entrants, and vain attempts by Napster or Virgin, customer loyalty to the iTunes music store remains unshaken. (Smith 2005) This real life example is reflected in Alreck and Settle’s (1999) statements which outline how the formation relationships that are conducive to consumer loyalty, are achieved via the creation of a strong link between the consumer and the brand. If sustainable, a loyalty that can isolate rival competition will be created. A potent brand image or brand name will sustain what is referred to as a “consumer franchise” that will expand, once the number of customers that become loyal to that brand and refuse a rival products (irrespective of varying pricing policies), reaches a predetermined number. According to Kotler and Cox (1980) and Cowley (1996), companies with a strong consumer franchise, will experience a degree of isolation from its competitors The financial implications of selling and promoting products to a new consumer is estimated to be six times grater than that of maintaining a loyal and returning customer database. (Thakor and Kohli, 1996). Thus, it is easy to understand why it would be more profitable for companies to focus on the creation of such a loyal customer following. Other benefits include a rising value of brand equity experienced by companies who maintain customer loyalty by implementing a series of strategic marketing campaigns that focus on achieving dominant market share in a specific industry (Cowley, 1996; Kapferer, 1995;Kotler, 1999) Dun (1997) and Chevron (1998) both suggest that modern day marketing has become a quest to gather as much information pertaining to consumer behaviour as is possible. The continue to state that this quest will eventually lead to information that will enlighten companies on how to accurately tailor to specific needs and wants of their consumers by considering purchasing behaviour. Graham (2001) believes that in doing so, product offerings will be more efficiently targeted, as this is vital to the success of branding, for branding is only efficient with a specific segment of consumer and not the entire market. This can be illustrated by considering the legal music downloads industry. When some people think of iTunes, the online legal music download store, the words “quality legal music” flashes through their minds, while others could think differently associating the online store with a high priced, limited content provider.

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2.3 Branding’s Influence on Consumer Purchasing Behaviour The preceding section of this literature reviewed has sought to define the term branding and explain its functions and values as an instrumental marketing tool used in attaining differential and competitive advantage. The following section of this literature review will seek to enlighten the reader on the impact branding has on the consumer decision-making process. The author seeks to achieve this via the use of consumer decision making academic models. First however, one must gain clear insight into the definition of consumer buying behaviour in order to understand the impact branding has on it. In defining “consumer buying behaviour”, one may refer to Assael (1987) who distinguishes four types of consumer buying behaviours (See figure 1). He bases these four consumer types on the varying degrees of involvement and the degree of differentiation amongst the brands in question.

Figure 1: (Assael, H, 1987, Consumer Behaviour and Marketing Action, 6th edition, p. 67

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Consumers who are described as displaying complex buying behaviour will expand their beliefs regarding a particular product as a starting point. This stage will eventually lead them to develop positive attitudes regarding the product. This intermediary stages lead them to the final stage of their behavioural pattern, where they consciously make the choice of purchasing the product. Referring to the Assael’s model, one will notice this type of consumer engages in highly involved purchasing experiences being fully aware of the range of brands available and their levels of differentiation. Assael (1987) classifies consumer who exhibit Dissonance-reducing behaviour as consumer who are highly involved in the purchasing experience, however see few differences between brands. For this reason, the consumer will seek information on the differentiation of the product offerings and will not be particularly price sensitive when seeking functionality. In the event that this consumer finds him or herself in a market that displays low levels of differentiation, the consumer might result to purchasing influenced by convenience. Like consumers who display complex buying behaviour, consumers with dissonance-reducing behaviour will seek to establish personal beliefs regarding the product. If fostered adequately, these beliefs with eventually transform into attitudes regarding the product offerings. These attitudes, if favourable, will lead to a thoughtful purchase. Assael (1987) considered consumes displaying habitual buying behaviour as consumers who did not experience the same sequence as the previous two behavioural types. Instead of basing their decision-making process on seeking product information pertaining to functionality or characteristics, this type of consumer will purchase based on information gathered passively, via the company’s promotional efforts, by it through the medium of television, radio or print advertising. This behavioural type, as can be seen on Assael’s (1987) model, with low-level involvement products. Differentiating this consumer type is the fact that they being the process with beliefs already embedded in their mind, which they have learnt passively, rather than actively. Variety-seekers are the last behavioural type contained in Assael’s (1987) model. Their typical buying situation is summarised by low-level involvement in a market that displays high levels of 21

product differentiation. Common to this type of consumer, is “brand switching”, in order to satisfy their need for diversification. In order for the reader to fully ascertain the effects that branding has on the consumer decisionmaking process, the author has selected an academic model that explains not only the process of consumer decision-making during purchasing activities, but one that facilitates the understanding of pre and post purchasing activities as well. Thus, the author has selected the Howard-Sheth Decision-making model by Howard and Sheth (1969).

The model’s core assumption lies in that the key to determining behaviour exhibited by consumers is to fully understand the consumer thought process. The Howard-Sheth model illustrates that cognitive decision-making is the process in which consumers mentally process information that influences his or her selection of brands. For the purpose of this research, the author shall focus on the final three variables of the model, as it is of most relevance in determining the effects of branding on the consumer decision-making process. 22

2.3.1 Impact on The Consumer Learning Process At its most basic definition, one can define the consumer learning process as being a time period in which a customer is heavily exposed to the branding process of a product or service. The branding process can include any aspect of the promotional strategy, including audio/visual forms of promotion. By learning from this information, whether it is a conscious process or not, the consumer will develop strong feelings towards a brand. For marketers, branding has a vital effect on the learning process, because it is self-growing. Once consumers start to purchase product, others will vicariously learn from them. Vicarious learning is when consumers begin to copy the behavioural patterns of their peers by making changes in their own lives to reflect what they have “vicariously” learnt (Bandure,1977) If one considers the legal music downloads industry, one might struggle to understand why a consumer would be willing to pay for a musical track, on say the iTunes Music Store, when he or she could just as easily obtain the same track, for free, via the may file-sharing softwares that exists. Apple’s use of celebrity endorsements has caused of movement of loyal consumers who in essence, vicariously learn from both the celebrities that endorse the services and the lifestyle it offers, as well as family and friends who have adopted the product as well (Thurrott, 2004). In searching for a more academic view on consumer learning, one can understand the process as modifications to a consumer’s behavioural patterns that are the direct consequence of either past experiences or information gathered during all aspects of the purchase decision-making process. These modification are caused by information that has essentially been saved as a set of meaningful associations in the consumer’s mind. (Dodds,1991). Foxall and Goldsmith (1994) elaborate on this by implying that these above-mentioned associations provide the consumer with a link to the brand image of offerings in respects to the promotional tools used to further this brand image. These tools include both physical characteristics of the product as well as pricing policies. All the elements that are retained by the consumer stem from what they have been exposed to during their individual learning process. This is ultimately, what will shape their views and attitudes in regards to brands.

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It has been found that the learning process discussed above acts as a catalyst in creating emotional and evaluating responses. These responses are embedded in the consumer’s memory span, which will be recalled when faced with a purchase decision-making process. Thus, understanding the learning process is key to marketers who seek to efficiently use promotional methods to influence consumers, because the imprints they create in the mind of consumer will later on be recalled when selecting a product or brand (Conoway, 1994) 2.3.2 Impact on Consumers’ Perception of Brands One may refer to Foxall (1980), where Engel defines perception as “the process whereby stimuli are received and interpreted by the individual and translated into a response” (Foxall, 1980, p.29). At this point, it is important to note that this process is unique to each individual, as perception is highly dependant on a consumer’s individual beliefs structure. Foxall (1980) states that perception is crucial in the decision-making process. In a market where branding is used, products are no longer only purchased for their functional characteristics, but primarily for the social or in some cases, psychological identity they express (Foxall, 1980). Building on these concepts, One can elaborate on these concepts by outlining two determinants that influence a consumer’s perception of brands. These two factors are stimulus discrimination and stimulus generalisation (Erdem 1998) Erdem (1998) raises a fundamental question by asking whether a consumer has the ability to “discriminate” between the various methods used to stimulate a consumer. His findings show that when a customer is introduced to a brand, whether this is done via advertising, packaging, word of mouth marketing or any other form of stimuli that affected them during their decision-making process, their levels of awareness of the brand will gradually increase via their ability to learn. Once their levels of brand awareness has increased, Erdem (1998) continues to say that their purchase decision-making process will be influenced by their perception of the brand in question. An excellent example is that of Apple Computers. Many believe that it is the iPod and the iTunes music store that saved the company from financial ruin (Haddad, 2003). During the launch of the 24

iPod, heavy importance was placed on advertising and promotion. As brand awareness levels rose, consumers quickly adopted the iPod as the defacto digital music player of this century. The strong brand presence had far reaching effects. With the launch of the of the iTunes music store, which was designed to work specifically with the iPod, consumers perception of Apple and their infamous iPod had a direct influence on them when selecting a online music store.

The perception of brands is crucial to both the marketer and the customer. If one considers that frequency of purchases varies from consumer to consumer, one can understand that the influence of perception is vital. By providing relevant information for the consumer market, marketers enable the creation of symbolic links between the consumer and the brand image. Thus, consumers will have the relevant tools needed to distinguish between the brands on offer and therefore be persuaded in their selection. In the event that a consumer is a new user with no product experience, he or she will not be able to make relevant decisions based on the actual product. Thus, the brand image again, become vital in directing the consumer to a specific product. In order to better understand the relevance of branding on the consumer purchase decisionmaking process, the author refers to Cherantony (1993), who has suggested that four key factors are responsible for directing a potential consumer towards a particular brand. Perceived Quality

In time, consumer will have faith in a brand’s integrity via their perceived quality of the brand in question When a company implements excellent after service sales, this endorses the perceived quality of the brand and facilitates

Building Excellent Service

activities in the pre and post purchase moments of the decision-making process. As discussed previously, this is key in the creation of loyal customers.

Standing Out in the Consumer’s By striving to differentiate one’s brand from another, mind

companies hope to become embedded in the users culture and mind. This is the most effective way to insure consumers 25

positively perceive the brand and product. This eventually leads to extremes forms of competitive advantage. Investing

in

Markets

Differential When one seeks to establish a brand, it is essential to select a market in which it is possible to create differentiation. Otherwise, the concepts of branding will not be possible.

Brands have a large impact on the perceived risks consumers associate with the consumer purchase decision-making process. The author has found there to be six risks that are perceived by consumers during all aspects of the decision-making process and further outlines how brands can appease the consumer’s mind in regards to these perceived risks (Keller, 1998). The first perceived risk a consumer might encounter is one of a functional nature. The consumer might worry whether the product will meet his or her expectations. In the creation of a trustworthy brand, marketers seek to raise the level of perceived quality in order to specifically address this risk. Consumer might also perceive a physical and/or psychological risk that might dissuade them from continuing the purchasing decision-making process. For instance, in the download of illegally distributed music, the consumer might face ethical problems in committing copyright infringement or might worry about the risk of being jailed if caught. Thus, one can understand why the iTunes music store so heavily emphasises the legality of their services, as well as the superior quality of their products of badly copied music, distributed illegally. A fourth possible risk that might be perceived by the consumer, is one of an economic nature. Price sensitive consumers will question whether the product is in fact properly valued at the quoted asking price. Again, marketers will strive to counter this by highlighting the perceived value of a product in the branding process. If properly done, consumer can become price insensitive by forming a strong bond to a brand and therefore isolating him or herself from competitors.

26

Socially speaking, a fifth risk a consumer might perceived to be detrimental to the buying process is whether his or her selection of a brand will cause embarrassment in a social setting, amongst his or her peers. Marketers address this issue in the creation of the brand image. By emulating current market trends and fashions, marketers strive to identify and differentiate their products as being the selected choice of revered people. Thus, one can now explain the use of celebrity endorsements, such as the iPod commercials used by Apple to further their social standing amongst consumers. Yet another economic risk consumer might consider, is the opportunity cost of seeking out alternative products, should the selected one fail to satisfy their needs and wants. Reflected in a loyal consumer base, is a brands ability to deliver on the satisfaction guarantee. Thus, one can understand that branding is key in addressing this issue in the consumer’s mind. 2.3.3 Impact on Consumers’ Attitudes Towards Brands Carpernter and Nakamopto (1989) consider a consumer’s attitude towards a brand to be his or her final evaluation of the brand in question. An attitude can be considered to be either positive or negative, depending on the outcome of their learning and evaluating process. The evaluation of consumer attitudes towards brands has quickly become a major part in conducting marketing research. Briggs and Cheek (1986) explain this by having found a correlation between consumers having positive attitudes towards a brand and that same consumer deciding to purchase the said brand. Therefore it is fair to assume that the development of positive attitudes towards brands can lead to not only the sustaining of competitive advantage, but in the bettering of the financial health of a company. According to Chay (1991) and Muehling (1987) branding has been fount to be key in formation of positive attitudes towards products, especially those involving low-levels of consumer involvement. However it has been noted that there are factors that might negate the effects of the formation of positive attitudes. One being that the effects of positive attitudes can dissipate should the consumer not purchase the product within a certain timeframe. Another factor that might negate the effects of positive attitudes might be an overtly high pricing policy, which might 27

have a contrary effect to the consumer’s positive attitudes towards the brand and result in a nonsale. A real life situational example of this can been seen in the promotion of the iTunes Music Store and its pricing policy. Offering amongst the cheapest legal music downloads in the UK, iTunes uses heavy marketing campaigns to build strong positive attitudes in the minds of consumers. They have further strengthened these attitudes by highlighting the ease of access of their service as well as their stringent pricing policy, keeping rates at £0.79 per song since their launch in 2001. This has inspired a level of trust in the consumer and has therefore created a loyal customer base for Apple’s online music services as well as their other product lines. In considering attitudes towards brands, one must ponder whether theses attitudes all remain at a conscious level, or whether branding can instigate attitudes at a sub-conscious level. Vecchio (1992) has raised Sigmund Freud’s theory that individuals are rarely aware of how their own psychology shapes their visual behavioural patterns. This suggests that at an unconscious level, consumer might have beliefs that shape their attitudes towards products. By acknowledging Freud’s theories, one can conclude that branding can be used to target sub-conscious desires that rest at a primal level. This can explain the use of primal sexual imagery, or the frequent use of age discrimination to insight target segments of the consumer market to associated themselves with particular brands.

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CHAPTER 3 METHODOLOGY

29

3

CHAPTER 3: METHODOLOGY

3.1 Introduction In order for the reader to understand the methodology used to compile this dissertation, the author has included this chapter in order to clarify how an effective methodological philosophy can contribute the successful production of a un-bias and critically dissertation, as well as comprehend the process underwent by the author to reach the pertinent conclusion outlined in chapter 5. This chapter also serves the purpose of justifying and authenticating the research procedures employed by the author in order meet the set objectives and answer the main research question of this thesis. 3.2 Defining Research Methodology Wikipedia.com defines “research” has being is “an active, diligent, and systematic process of inquiry in order to discover, interpret and/or revise facts. This intellectual investigation should produce a greater understanding of events, behaviors, or theories, or to make practical applications with the help of such facts, laws, or theories. The term research is also used to describe a collection of information about a particular subject” (www.wikipedia.com) Methodology is considered to be the “way in which information is found or something is

done. The methodology includes the methods, procedures, and techniques used to collect and analyze information.”(www.google.com) 3.3 Research Aims As outlines in chapter one, the author has clearly defined the research question : “ Determine the impact branding has on the consumer purchase decision-making possess by assessing its use by Apple Computers, Inc. to influence the purchase decision-making process of consumers in the legal music downloads industry in the United Kingdom” . In order to achieve pertinent conclusions, the author set the following objective to be met in order to produce a non-bias 30

dissertation that provides the world of academia with a critical assessment of the said research question. The objectives outlined in chapter one were as follows:

•

Set a valid and sustainable research question in order to achieve a non-bias and accurate understanding on the topic in question;

•

Present the key concepts behind branding, its values and its usage in modern day marketing campaigns by reviewing current literature pertaining to the subject matter;

•

Determine whether a correlation between consumer identities and perceived brand identities is present;

•

Determine the impact of branding on the consumer purchase decision-making process;

•

Evaluate Apple’s iTunes Music Store UK’s current situation by conducting both external and internal analysis;

•

Critically assess the impact of branding via an evaluation of Apple’s usage of branding to secure its market presence in the legal music downloads industry in the United Kingdom.

In order to meet the above objectives, the author outlines a systematic and methodologically sound action plan : !

Explore literature pertinent to the key concept of branding and its impact on the consumer decision-process. Literature to be used include books, journals, research papers, websites and any other source of literary knowledge that can provide an un-bias and relevant view on the relevant concepts

!

Conduct a survey using two groups of respondents. Group A is to contain iTunes Music Store UK users and group B is to contain non-iTunes users. Both groups must be composed of respondents that are actively and currently consuming digital music over the Internet at least two times a month. The author will then conduct a survey pertaining to their views on iTunes UK and how its brand image has effected their purchase decision process.

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!

Critically evaluate external and internal environmental factors that affect Apple Computers. This is to be achieved via the use of academically proven business models, in order to ensure the validity and reliability of the produced information.

!

Use the information gathered from the internal and external environmental analysis an relate this information to Apple’s use of the branding process in order to influence the consumer purchase decision-making process.

3.4 Research Philosophy The author has chose to incorporate two research philosophies in order to effectively meet the set outcomes. Firstly, the author has employed a philosophy of positivism, in the sense that the observance of social realities pertaining to the effects of branding on consumers in a real life market will be conducted. The compiling of this methodology and the lengths to which this methodology has been structures is all derivative of a positivistic research philosophy. The author will also use a form of realistic philosophy in that the author will aim to understand external realities in order to understand the causes of influential and behavioural characteristics in the consumers of legally downloadable music over the Internet. 3.5 Research Approach The author’s approach to research will essentially by inductive, in the sense that via an extensive literary review, as well as in depth industry analysis, the author will see to understand the impact of branding on the consumer purchase decision-making process, rather than test a pre-conceived hypothesis. The author did have the option to use a deductive approach in which he would test a preconceived hypothesis. However, it is of the author’s opinion that this would limit the scope of research, by focusing too much on the hypothesis and not enough on all other factors that might influence the consumer decision-making process.

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3.6 Execution of Strategy . 3.6.1 Survey The author has compiled a survey to be used to determining the effects of branding on the consumer purchase decision-making process. The first step was creating a survey that could adequately gage the impact of branding specifically on the consumer decision process. Thus, the author used Kotler (1999) model of six dimensions of meaning for a brand in order to create a survey that could reflect the various elements of learning, perception, and attitude formation in the consumers mind. The second step, was finding the appropriate group of individuals for the survey. For these purposes, the author created a chain email that was sent via the www.hi5.com network. The author chose this particular network as it contains individuals whom are frequently on the internet and thus have access to the iTunes Music Store and the various techniques of branding used by Apple. The initial email was sent out to a network of over 2000 people, in which it outlines this dissertation, as well as stipulated the requirements sought in a survey group. The requirements were listed as follows: “Searching for individuals who actively seek digital music online . This music can be of a legal or illegal origin. If you meet the following requirement, please reply to this email for you chance to take part in a study that will determine how iTunes Music Store UK has used branding to affect YOUR purchase decision process! Do you : !

Seek and download music at least twice a month online?

!

Use the Apple iTunes Music Store UK?

!

NOT use the Apple iTunes Music Store UK?

!

Are the bill payer of any legal purchases of music? 33

!

Have 5 minutes to spare in order to contribute to a university level dissertation?

If you have answered yes to all of theses questions, please reply to this email for your chance to take part in this study” Once the authored had received replies from fifty people who actively used iTunes UK and fifty people who did not use iTunes UK, the survey was forwarded to them via email for completion.

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CHAPTER 4 ANALYSIS & FINDINGS

35

4

CHAPTER 4: FINDING & ANALYSIS

4.1 Introduction In the first three chapters of this dissertation, the author aimed to provide a solid academic foundation on the subject of branding, its value, its many functional uses in a modern day economy and finally, its theoretical impact on the consumer purchasing decision-making process. This was achieved by reviewing published academic research on the subject matter and putting it in to context by using real life examples. In order to ascertain the impact of branding on a real life consumer market segments, the author set a research question that entailed the critical evaluation Apple Computer’s, Inc. use of branding to influence the purchase decision-making process of consumers in the legal music downloads industry in the United Kingdom. This chapter is essentially structured in four parts. The first section will determine the effects of branding on both frequent users of the iTunes music store, and non-users of the iTunes music store UK by analyzing result from a questionnaire provided to two sample groups, iTunes UK customers and non-users of the iTunes UK service. The second part of this chapter will determine external industry factors affecting Apple. This will allow the author to determine how Apple has configured their approach to branding with respects to the above-mentioned external factors In section three of this chapter, the author will examine the internal factors affecting Apple, in order to determine how Apple has approach the branding process with regards their internal capabilities and resources. In the final section of this chapter, the author will determine how Apple’s branding process has been affected by external and internal forces and how in turn, this has affected the consumer with regards to his or her purchase decision-making process.

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4.2 The Questionnaire The following section presents the findings from the questionnaire distributed (Please refer to Appendix 1). In the analysis, the author seeks to highlight how Apple’s means of branding has affected both users and non-users of the iTunes UK service. 4.2.1 Respondent Profile The first section of this questionnaire aims to ascertain the key demographic information that makes up the respondent’s profile. The results have be divided into two groups, users and non users of iTunes UK. The sample size of each group was caped at 50 respondents. In the first group , which were users of iTunes, respondents were composed of 67% males, indicating a more male orientated sample group with 45% being between the age of 21 to 30. The dominant consumer behaviour type for iTunes users the complex buying group, closely followed by the habitual buying group. For the second group of non iTunes users, this sample group was predominantly female, at 58% with the majority being between the ages of 21 to 30. The main buyer behaviour for this group was the complex buying group, closely followed by the dissonance-reducing buying behaviour type. By looking at the respondents profiles from one group, one can initially conclude that there is a slight penchant for males to favour iTunes. It is clear that the target age group is between the ages of 21 to 30 and that both group, are mainly composed of complex buying behaviour types, suggesting that both groups have indeed for a set of beliefs and attitudes towards iTunes, and have chose accordingly whether to favour the brand or not.

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4.2.2 Brand Attributes In terms of how the perceived brand attributes affected both groups of consumers, iTunes users strongly believed in the importance of a recognizable brand, suggesting they favourably viewed iTunes as a brand that could satisfy their needs. 71% of respondents confirmed this by clearly stating that the saw great importance in being associated with a famous brand. The non-iTunes users on the other hand did also favoured being associated with a famous brand, with 54$% of respondents claiming that being linked to a famous brand was important for them. However, in choosing iTunes, only less than half of the respondent group, at 43%, admitted that the iTunes brand was important to them choosing whether to use the service or not. It becomes clear that the majority of iTunes users heavily favoured the brand before hand, confirming dominance in complex buyer types within the group. It also become clear that Apple’s efforts to portray their brand image as reputably as possible, clearly was a factor in whether or not to chose the service. 4.2.3 Brand Benefits 82% of iTunes UK users felt that added functionality was important in them choosing to use iTunes, whereas only 46% of non iTunes users found functionally important. Quality was also much less of an issue for non users with only 21% of non users sitting that quality was an important factor for them. The iTunes users group however found that 63% of them considered quality to be a determining factor in the purchase decision process. This suggests that the iTunes user base perceived the brand to have high levels of quality, whereas non users where not particularly focused on this dimension of the product. The relatively his percentage of users seeking out functionality and quality also suggest that Apple has placed particular emphasis on the dimension of benefits.

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4.2.4 Brand Values 85% of respondents felt that the iTunes brand image conveyed a sense of excellence whilst 61% claimed to have felt more secure shopping on iTunes than on another provider. These statistics are interesting in that they show that a strong sense of brand value has been created amongst this sample group. If one considers the process of consumers forming beliefs, attitudes and finally adopting the product, once can see that the brand image of iTunes has instilled a sense of security and guarantee in quality. Both factors are conducive of brand loyalty and competitive advantage. 4.2.5 Brand Culture 86% of iTunes users found that the brand image iTunes portrayed exuded excellence compared to a much lower 59% of non-users. What is interesting to note, is that even though the majority of non-users think iTunes it’s a good brand, they still chose not to use it. This is perhaps partially explained by only 19% of non users thinking that shopping on iTunes would make them safer than anywhere else, compared to a much higher 66% positive response from iTunes users. It is particularly clear in these two statistics that non-iTunes users have less brand culture than users. This perhaps explains their choice of non-purchase. 4.2.6 Brand Identity The final two questions of the survey reflected the sense of brand identity felt by iTunes UK consumers and non-consumers. For the sample group who were iTunes users, 78%% believed that the brand image of iTunes UK matched their own identity whilst only 39% of non-users felt the same way. This perhaps can explain their choice of non-purchase. The questionnaire continues to reveal that 40% of users don not care whether purchasing on iTunes is safer, leaving only 12% on non-users stating that they would feel safer. When compared to a iTunes users, 28% felt safer with 26% not caring. This section of the survey was fairly indicative of the fact that the very large majority of iTunes users felt a strong sense of personal identity in the iTunes brands, which has clearly influenced their purchase decision. Whilst a low 39% of non-users feeling a link in terms of identity clearly shows a correlation between perceptions of brand identify on active consumers of iTunes UK services. 39

4.2.7 Conclusions Drawn from the Surveys The survey conducted was clearly indicative of the importance that branding has on the consumer purchase decision-making process. A clear majority of respondents who feel a bond between themselves and the iTunes brand have chose to become consumers. Non-users clearly have little emotional or personal investment in the brand and seem to not have perceived or transformed any mental associations into desires to become consumers. One must therefore conclude that the six dimensions of meaning of a brand has a pertinent impact on how consumers view brands. It must also be duly noted that there exists a clear discrepancy between the consumer behaviour types contained in each group of respondents. Although the dominant consumer behaviour type in both groups was the complex behaviour type, which indicates that this is the dominant type for digital music consumers, there was a higher percentage much higher percentage (27% vs 17%) of habitual buyer types in the group of iTunes users than there was in the non iTunes users. This is suggestive of the fact that consumer behaviour types react differently to the various dimensions of meaning that are portrayed by products. 4.3 External Analysis of The Legal Music Downloads Industry in The United Kingdom 4.3.1 Market Overview In 2001, it was estimated that record companies lost 4.6 billion dollars in annual revenue as a direct result of illegal music sharing over the Internet (RIAA 2005). The widespread popularity of illegal music downloads was largely attributed to the lack of music providers online and high compact disk prices. Youths and elders alike flocked to the Internet in order to fill their hard drives with illegally obtained music for their enjoyment. Having spotted a gap in the industry, Apple Computers, Inc. launched in 2001 the iTunes Music Store in the United States of America in an attempt to curb the circulation of pirated music on the Internet by offering a legal source of digital music downloads. Having negotiated agreements with key players in the music industry, such as Warner Music Group, EMI, BMG, Universal 40

Music Group, Sony Music and several other independent labels, Apple secured the rights to distributed via the means of an online music store, an extensive catalogue of music, available to purchase via download, at the flat rate of $0.99 per song. The launch of the iTunes music store was coordinated with the launch of the iPod, a revolutionary new digital music player that offered seamless integration with the iTunes music store. This combination enabled users to purchase music online and seamlessly integrate it on to their iPod using the straightforward synching capabilities of iTunes. This move by Apple created a new industry that would prove to raise much controversy since its creation: The legal music downloads industry. By the 15th of June, 2004, Apple expanded its Music store to cater the UK market by opening a iTunes Music Store UK, which provided residence of the United Kingdom with a UK billing address legal digital music solutions. ITunes UK began offering single track downloads for £0.79 per song.(www.apple.com) In November of 2005, the International Federation of Phonographic Industries (www.IFPI.com) announced that over 16.9 million single tracks have been downloaded in the first 9 months of 2005. The IFPI continues to say that the figure represents a large rise in legal music downloads, compared the 2.7 million tracks legally downloaded during the same period of 2004. (De Freitas, 2005) Compared to 1.1 billion downloads in 2003, this figures seems insignificant. However, several companies in the UK, including Apple Computers, saw this in a different perspective. To them, it was 1.1 billion possible customers. In 2005, the IFPI confirmed the viability of the legal music downloads industry by declaring a 10% fall in illegal music downloads between 2003 and 2005 (De Freitas, 2005) In 2005, the viability of the legal music downloads industry has been recognized by several companies around the UK. This has sparked intense competition for market share domination and is largely seen as a battle of the brands. In order to secure more new customers and more importantly retain a loyal consumer database of returning customers, companies such as Apple Computers, Napster and Tesco’s have resulted in reassessing their branding strategy in order to influence the purchase decision-making process of consumers in this industry. 41

4.3.2 P.E.S.T.L.E. Analysis of the Digital Music Industry in the UK In assessing the external environment that surrounds the iTunes Music Store UK, the author has conducted a P.E.S.T.L.E. analysis in order to determine the key external factors that have a significant influence on the current market for legally downloadable music in the UK P.E.S.T.L.E. provides a framework from which to consider these external factors, by dividing the analysis into key categories. These categories include political, economical, social, technological, environmental and legal aspects. 4.3.2.1 Political !

The European Commission has been referred a case by the British Office of Fair Trade regarding the discrepancy of pricing policies of digital music provider in the UK. Online music providers have justified this by quoting varying prices of distribution due to the conversion of currencies across international borders

!

Despite being part of the European Union, the UK has retained its currency, the British Pound. Political debates on whether the UK should join are rampant. Should the UK adopt the Euro currency by joining the Euro zone, possible complications could ensue regarding the pricing policy of digital music providers in the UK. One must consider current UK status in the EU

!

Current political hot topics, such as the war on terrorism and homegrown attacks have had a detrimental effect on the economy. Because the purchase of musical tracks is considered a luxury purchase, one must consider consumer spending trends in relation to disposable income in the UK

!

Increasing pressure from the US Government to root out internet piracy and ongoing investigations being carried out have caused a consumer views on illegal music to drastically shift since 2003

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4.3.2.2 Economical !

The difference in currency exchange rates makes it difficult to define a single pricing policy that would be fair to both global and UK users. This sense of unfairness can lead consumers to seek alternatives, such as illegal files sharing over the internet

!

Heavy financial losses in CD sales have forced Record Companies to embrace to arrival of legal online music distributors. Because there now exists a necessity to establish some form of online distribution of music, record companies will be more willing to negotiate distribution rights with legal online music providers

!

Unchanging interest rates in the UK allow record companies to more readily offer price cuts to online music distributors. This will enable providers to offer a wider catalogue of musical content in order to reach a wider segment of music lovers in the UK

!

The financial risk of being sued over Internet piracy is conductive to consumers choosing legal music providers as an alternative to Internet file sharing

4.3.2.3 Social !

A noticeable change in consumer lifestyle dictates that more shopping is being performed at home. Therefore, an increase in online music sales has become noticeable in both the UK and international markets

!

An aging population in the United Kingdom is having a wide effect on the types of music in demand in the music industry in the United Kingdom.

!

As digital equipment is becoming more embedded in the average consumer’s lifestyle, the demand for easy access to online distributors of music is increasing

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4.3.2.4 Technological !

Technological developments in Internet connections available in the United Kingdom and the wider availability of high speed Internet access is enabling more people to connect to online music retailers

!

Growing sales of portable digital music players are making more consumers seek out higher quality music downloads and other forms of digital suppliers

!

The increasing levels of technological knowledge amongst consumers are raising the standard in music quality sought by the seekers of digital music. As expertise in the area of online music progresses, consumers are becoming more demanding.

!

An increase in the amount of viruses that are rampant on the internet are dissuading users from downloading pirated music and favoring the use of legal and trustworthy suppliers of digital music

!

The increasing trend of Internet connection providers to limit the amount of information that can be downloaded over a given period of time over users internet connections are limiting the capabilities of consumers to download the desired amount of music

4.3.2.5 Legal !

Increasing court cases regarding the piracy of digital music are forcing consumers to seek new methods of acquiring music online. Namely, through the channels of online music providers. With increasing court cases appearing in France, Switzerland, Germany, the UK and Finland, these scare tactics have essentially contributed to the reducing internet piracy by nearly ten percent

!

Antitrust laws in the United Kingdom limit the opportunity for companies to merge in order to provide fuller and more divers catalogues of music. 44

!

Increasing knowledge of copyright law amongst consumers are pushing consumers to seek more ethical way to procure copyrighted materials such as music

4.3.2.6 Environmental !

Increasing concern about the environment is pushing consumers to seeking more digital alternatives to commonly consumed products, such as music.

!

With a rise in ecological awareness, consumers are displaying increased loyalty to companies who are implementing efficient environmental polices regarding the production and distribution of their products.

4.3.3 Porter’s 5 Forces Porter (1985) states that their exists five forces in any industry that drive competition. These forces include competitive rivalry, threat of new entrants, threat of substitute products, bargaining power of suppliers and bargaining power of buyers. In creating the five forces model, he allows one to outline the competition. The author has used this model bellow to determine the extent and threat of competition in the legal music downloads industry

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Threat of New Entrants (Low-Medium) Increasing agreements between providers of musical content are creating more competition Record Companies might mobilize to set up their own online music stores

•

Bargaining Power of Suppliers (Low to Medium) •

•

•

For the moment, Record Companies have no choice but to help online music providers due to internet piracy Record Companies could collude to ask for higher royalties

Bargaining Power of Buyers (High)

Competitive Rivalry (High) •

•

High levels of competition in the UK, including Napster, MSN Music, HMV, and Tesco’s. Retailer of hard copy music, including Amazon.com, Tesco’s, HMV, Virgin Mega Store

•

Music is available free on the internet, although illegal

•

Highly Competitive rivalry offers choice and lower prices

Threats of Substitute Products (High) •

•

Free but ILEGAL Pirated Music High Street Music Stores

Source: Adapted from M.E. Porter, Johnson et al (2005), Exploring Corporate Strategy, Prentice Hall, ed 7:

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4.3.3.1 Threat of New Entrants Increasing pressure from record companies on online distributors of music have spawned rumours of that record companies will soon chose to no longer provide online distributors with content. Should this happen, records companies could merge together in order to create their own source of distribution for online music. Antitrust laws would most likely prevent such a monopoly from forming, however the law would not prevent trade agreements to be formed by record companies, a system of royalties payments could be established. Another factor that should be considered is increasing agreements between companies that are seeking to break into the industry are being formed. With companies such as Virgin and HMV are forming partnerships that could lead to price war which would result in the survival on the fittest. 4.3.3.2 Threats of Substitute Products The most competitive substitute to legal music is illegally pirated shared files that can be trade via file sharing servers over the Internet. This substitute is currently more popular that legal music and is costing the music industry an estimated 4.6 billion dollars a year. Other competitors are high street music stores that sell CDs and music DVDs. Competitors such as Virgin, HMV, WHSmith and Tesco’s provide users with an alternative to digital music: a tangible hardcopy in the form of a CD. This threat is relatively low however, as the proliferation of free pirated music has caused immense financial troubles in this industry.

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4.3.3.3 Bargaining Power of Buyers Buyers bargaining power is high. This can be justified by the fact that music can be obtained free of charge over the internet. Coupled with the fact that there now exists a multitude of online providers, buyers have the choice and freedom to freely chose amongst the multitude of companies that offer the same products at cheaper prices. Therefore, companies are now heavily depending on branding and other forms of promotion to desensitize consumer from price and attempt to create loyalty based on advanced functionality and a more extensive selection of hard to find music tracks. 4.3.3.4 Bargaining Power of Suppliers This threat is low to medium. Record companies are forced to embrace the arrival of legal retailers of digital music, as it is currently the only alternative to illegal music downloads. For the moment, record companies will seek to expand agreements with legal music providers such as iTunes or Napster in order to increase revenue of music sales as this source of income is becoming increasingly difficult to maintain with the existence of music piracy.

4.3.4 Listing of Opportunities and Threats In this section, the author aims to provide a listing of external opportunities and threats relevant in the legal music downloads industry 4.3.4.1 Opportunities !

Consumers are more willing to explore alternatives to illegal music downloading in search for better quality musical recordings as their understanding of the varying qualities of digital recording increase

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!

Record companies are more willing to establish working relationships with online music providers in order to further music sales as internet piracy takes its toll on the industry. At the moment, online legal music stores provides the sole means for which record companies can efficiently provide music to internet users

!

Increasing access to the internet in the United Kingdom provides consumers with more opportunities to download music

!

Increasing technological awareness is pushing internet users to seek more functionality out of their browsing experience. Online music retailers can provide consumers with more options in regards to music consumption than illegal providers can. Such functionality can be seen in users reviews of music, the creation of online playlists or the option to give music as a gift by purchasing gift vouchers redeemable at online stores

!

Increases in viral infections of computers are forcing consumers to seek safer sites on which to download music. Current providers of illegal downloadable music cannot guarantee the privacy nor the technological safety of the user

!

Current market trends show consumers are more willing to purchase digital music as it is easier to store than CDs and cheaper to acquire in the long run, as online providers allow the purchase on single tracks as opposed to then entire album

!

Increasing pressure from the United States of America are resulting in the conviction of users of pirated music. This is having an effect of dissuading the average user from downloading illegal music as the consequences now involve jail time

!

The success of digital music players are creating a higher demand for digital music, as consumers seek to fill their players with desired musical tracks. With the advent of the iPod, digital music as now become of sought after fashionable accessory

49

!

An increase in consumers shopping from home suggest there now exists a wider market to market legally downloadable music. More users are investing in high speed internet access which is facilitating the process of seeking music

!

Higher levels of digital integration now exist. For the average consumer, this means that he or she can more easily incorporate digital music into his or her lifestyle by either containing it in a portable music player, a computer or a telephone

!

Increasing endorsements from celebrity musicians fearing that their copyrighted material will be pirated are facilitating the branding process, making both digital providers of music and the digital music tracks themselves more attractive to the consume

!

Globalization is reducing the geographical boundaries of musical tastes, resulting in more consumers seeking a wider variety of music to be purchased. Due to the high cost of distributing all musical materials internationally, legal digital music downloads would provide a cost efficient way of satisfying the evolving musical tastes of modern consumers

4.3.4.2 Threats !

Record companies are becoming increasingly frustrated with online music store policies. These companies may seek to create their own online music store in an effort to raise revenue and cut distributor fees

!

The illegal music download industry currently represented an estimated 1.1 billion downloads in 1993. Although it slightly decreased to 900 million downloads in 2005, it still represents the majority of all music downloads on the Internet. Being free, illegal music is highly attractive to the average consumer. Therefore the only means of competitive differentiation of legal providers, rests in the effective branding of their offerings, added functionality and security. Unfortunately, these are factors that are readily looked over by most consumers of digital music

50

!

A current lack of payment options dissuades many consumers from purchasing legal music online. Seeing as the majority of downloaders are younger customers who have limited methods of payment

!

An increasing trend of Internet services providers to limit the amount of information that can effectively be downloaded during a set timeframe limits the ability of consumers to download the desired amount of music. This in turn, limits the potential amount of sales that can be experienced by legal providers of digital music

!

Most digital music players have no restrictions on the type of music files that it can play. Therefore, the average consumer can still easily play either legal or illegal music on them. This incites consumers to use legal providers of music in a limited capacity, as the will use illegal providers for the bulk of their needs, and legal providers in the rare instances when they cannot find the desired music

4.4 Internal Analysis of Apple Computer’s iTunes Music Store 4.4.1 ITunes Music Store UK Company Overview The iTunes Music Store UK is currently the industry leader in legal music downloads. Offering a range of over 1.5 million music tracks, iTunes commands a 80% market share in the United Kingdom. Designed to be used with the iPod, the iTunes music store offers seamless integration for users seeking to purchase and store music on their computer or digital music player, share recommended mixed tape style playlists online or offer the gift of music via the purchase of online virtual girft vouchers. Launched in 2001, iTunes Music Store UK was the first in a series of European iTunes music stores to offer a legal alternative to pirated music on the Internet and is said to have pioneered the industry for legally downloadable music.

51

4.4.2 ITunes UK’s Strategic Capabilities and Competitive Advantage Model In order to determine iTunes UK’s key strategic capabilities and sources of competitive advantage, the author will us the strategic Capabilities and Competitive Advantage model (Johnson, 2005). This will enable the reader to gain a clear understanding of how iTunes UK compares to competitors in the market place and its key components that allows it to experience competitive advantage

Resources

Competences

Threshold capabilities

!

Online catalogue of over 1.5 million !

Music catalogue expands on a

downloadable track

daily basis

!

Easy to use interface

!

Seamless Integration with iPod and personal computer

!

Instant Download Capabilities

!

Owns songs rather than lease

!

Leading development team

!

Perceived as a fashionable brand

!

Offers

exclusive

pre-release

downloads !

Offers celebrity endorsed mixed tape style playlists

!

Offers access to a library of local artists as well as international

!

Employs a stringent flat fee policy of £ 0.79 per song

!

Allows the download of individual tracks

52

Capabilities !

for Competitive Advantage

!

Comprehensive agreement with key !

Guarantees

record companies

downloads

CEO Steve Jobs is an integral part of !

Ensures user privacy

the company

!

high

quality

Formed high levels of consumer

!

Excellent Brand image

!

Loyal Customer Base

!

Agreement with television studios !

State of the art search engine

for future sales of TV shows and

enabling consumers to find tracks

music videos

easily

loyalty !

Has 80% market share

Source: Adapted from Johnson et al (2005), Exploring Corporate Strategy, Prentice Hall, ed 7

4.4.3 Resource Audit

4.4.3.1 Physical Resources !

The iTunes Music Store UK specializes in the sales of intangible music tracks via and intangible online music store. Thus, has no physical resources

4.4.3.2 Financial Resources !

Apple Computer’s financial resources are at the iTunes Music Store UK’s disposition

!

Pepsi Cola “Song for a Pepsi” scheme

4.4.3.3 Human Resources !

Steve Jobs, CEO of Apple Computers

!

Celebrity Endorsers

53

4.4.3.4 Intangible Resources !

The iTunes Online Store

!

Extensive catalogue of Music

!

Loyal consumer database

!

Effective Brand Image

!

Support of various donation funds, such as the Hurricane Katarina fund

!

Access to exclusive content

!

Excellent working relationship with Record Companies

!

IPod integration

!

Access to music videos and TV shows

!

Extensive search engine allows users to find music easily

!

User rating system

4.4.4 Strengths and Weaknesses 4.4.4.1 Strengths !

Allows users to own music as opposed to leasing it. Most competitors offer a monthly subscription with access to a limited catalogue

!

The iTunes Music Sore UK’s content is updated daily

!

ITunes UK has achieved contractual agreements with record companies in order to secure content

!

Offers a straightforward pricing policy of £0.79 per song

!

Allows users to download single tracks as opposed to the whole album

!

Offers exclusive content 54

!

Enables users to create custom profiles in order to facilitate finding music that is relevant to personal tastes

!

Offers state of the art search engine that allows users to easily find the requested music

!

The iTunes music store has a strong brand image that communicates the strong identities formed by Apple Computers

!

Offers the possibility of purchasing gift certificates that are redeemable online

!

Access to specialized visual content such as music videos and television shows

!

Offers educational discounts

4.4.4.2 Weaknesses !

Tracks cost £0.79 to purchase as opposed to being free illegally

!

Tracks only playable on iPods, thus offer little compatibility

!

Offers little live customer support, although help is available via email. However this process can be time consuming

!

Does not provide a customer log, in the event that the customer accidentally deletes of loses his purchased tracks

!

Content is restricted by geographical location

Limited methods of payment can be restrictive towards younger customers

55

CHAPTER 5 CONCLUSIONS & RECOMMENDATIONS

56

5 Conclusions and Recommendations 5.1 Recommendations Following the analysis of this dissertation, the author has determined the impact of branding on several aspects of the consumer decision-making process. In lights of the conclusions drawn, the author can now make the following pertinent recommendations. !

The process of branding has proven to have a large impact on the consumer decision-making process. However, in order to be most effective, it is recommended to ensure that the branding strategies are targeted at specific consumer behavior types, as the complex behavior type, dissonance-reducing buying behavior types, habitual buying behavior type and varietyseeking behavior type all react independently and differently to various modes of branding stimuli. The author as shown that this was reflected in the primary research conducted.

!

In light of the previous point, the author recommends further research into the variations discovered between consumer behavior types. This would be essential in determining which consumer behavior types react most productively to which branding strategies. The results could be used by iTunes Music Store to create more meaningful promotional activities that would positively affect the learning, perceiving and habit forming aspect of the consumer decision-making process.

!

The author further recommends to Apple Computers, Inc. to conduct regular surveys pertaining to consumer behavior, in order to ascertain the effectiveness of the branding strategies over established periods of time. As it has been shown, stimuli can lose its effect if purchasing activities are not followed shortly after the stimuli has been experienced

!

The iTunes music store is clearly branded to reflect brand benefits, brand values and brand identity. However this is not reaching consumer who show little interests in such meanings and are more concerned with price. It is the recommendation of the author that iTunes lower online prices to reflect the popularity of individual songs rather that maintain a flat price 57

policy, in order to incite users of illegally obtained music to seek alternatives to pirated music. This would allow for an expansion of the iTunes consumer database as well as widen the appeal of its brand image, by maintaining reassuringly moderate prices for those consumer types interested in importance of a reputable brand image. 5.2 Conclusions The purposes of this dissertation was to establish the impact branding has on the consumer purchase decision making-process, as well as determine how Apple Computers, Inc, via the techniques of branding, affect the consumer purchase decision-making process of consumers of legally downloadable music. It has been found that there is indeed a correlation between the effects of branding and the consumer purchase decision-making process. It is apparent in how branding influences the process of learning, the creation of beliefs and the formation of attitudes in various types of consumer purchasing behaviour. However, it must be noted that is also evidence to suggest that the four different types of consumer purchasing behaviour, namely the complex behaviour type, dissonance-reducing buying behaviour types, habitual buying behaviour type and variety-seeking behaviour type, all exhibited different reaction to branding stimuli. Therefore, one can conclude that it is essential that marketers individualise the branding process in regards to these four types of consumer behaviour in order to achieve maximum efficiency. In terms of how Apple’s iTunes Music Store uses branding to influence its consumers purchase decision-making process, it has been found that Apple has chosen to focus on the meanings exhibited by brand benefits, brand values and brand identity. They have achieved this by extending the already existing brand image of Apple Computers and the ensuing brand image of the iPod, to the iTunes Music Store. This has effectively lead to the domination of the UK market for digital music. However, the author must question the sustainability of such branding, as its link to Apple computers does not satisfy in any long term way, the needs and wants of the 58

consumer of digital music exclusively. It does satisfy however, the Apple Computers and related products friendly consumer of digital music. This exclusion of Apple unfriendly music consumers has lead to iTunes forming an iPod exclusive customer base. Seeing as the iPod is also the dominant digital music player in the industry, this has extended to the dominating iTunes market share. However, with the advent of new digital music players as well as the emergence of new online music providers, this strategy will have long-term sustainability. Thus, the author has concluded that it is essential to the long-term health of Apple Computers to segregate its iTunes brand image and Apple Computers brand image in order to widen the appeal of their brand identity to meet the needs, wants and expectations of not only the non-iTunes user group who participated in the primary research of this dissertation, but the rest of the consumer market segment of legally downloadable digital music.

59

CHAPTER 6 BIBLIOGRAPHY

60

. BOOKS

Aaker, D. (1991) Managing brand equity: capitalizing on the value of a brand name, New York: Free Press. Aaker, D. (1996) Building strong brands, London: The Free Press. Adcock, D. et al. (1998) Marketing Principles and Practice, London: Pitman Publishing. Assael, H. (1993) Marketing principles and strategy, New York: The Dryden Press. Assael, H. (1998) Consumer behaviour and marketing action, 8th Edition, Boston: Kent Publishing Company. Baker, M. (2000) The marketing book, 4th Edition, Oxford: Butterworth-Heinemann. Bandura, A. (1977) Social learning theory, US: Prentice Hall. Cowley, D. (1996) Understand brands, London: Kogan Page. East, R. (1997) Consumer behaviour: Advances and applications in Marketing, London: Prentice Hall. Foxall, G. (1980) Consumer behaviour – A practical guide, Guildford: Biddles Ltd. Foxall, G. and Goldsmith, R. (1994) Consumer psychology for marketing, London: Routledge. Hankinson, G. and Cowking, P. (1993) Branding in action, Maidenhead: McGraw-Hill.

61

Hamel, G. and Prahalad, C. (1994) Competing for the Future, Massachusetts: Harvard Business School Press Boston. Howard, J and Sheth, J. (1969) The theory of buyer behaviour, New York: John Wiley. Johnson G & Scholes K. (2002). Exploring Corporate Strategy, London:Prentice Hall Kapferer, J. (1995) Strategic brand management, London: Kogan Page. Keller, K. (1998) Strategic brand management, New Jersey: Prentice Hall. Kotler, P. et al. (1999) Principles of Marketing, 2nd Edition, Europe: Prentice Hall. Kotler, P. (1997) Marketing Management: Analysis planning and implementation, US: Prentice Hall. Kotler, P. (2000) Marketing management, Millennium Edition, US: Prentice Hall. Kotler, P. and Cox, K. (1980) Marketing management and strategy, US: Prentice Hall. Murphy, J. (1992) Branding a key marketing tool, London: Macmillan Press. Porter, M. (1980) Competitive Strategy, London: Macmillan Press. Vecchio, R. (1991) Organisational behaviour, 2nd Edition, US: The Dryden Press.

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Journals

Alreck, P. and Settle, R. (1999) Strategies for building consumer brand preference, Journal of Product and Brand Management, Vol. 8 Issue 2, pp.130-144. Carpernter, G. and Nakamopto, K. (1989) Consumer preference formation and pioneering advantage, Journal of Marketing Research, Vol. 26, pp.285-298. Carpernter, G. and Nakamopto, K. (1996) Impact of consumer preference formation on marketing objectives and competitive second mover strategies, Journal of Consumer Psychology, Vol. 5 Issue 4, pp.325-358. Chay, R. (1991) How marketing researchers can harness the power of brand equity, Marketing Research, Vol. 3 Issue 2, pp.30-37. Chevron, J. (1998) The Delphi process: A strategic branding methodology, Journal of Consumer Marketing, Vol. 15 Issue 3, pp.254-264. Cheratony, L. (1989) Understanding consumers’ perception of competitive tiers, Journal of Marketing Management, Vol. 4 Issue 3, pp.12-19. Cheratony, L. (1993) Marketers and consumer concurring perceptions of market structure European, Journal of Marketing, Vol. 23 Issue 1, pp.156-157. Conoway, F. (1994) The mature consumer, Discount merchandiser, Vol. 34 Issue 5, pp.150-153. Dodds, B. (1991) Effect of price, brand and store information on buyers product evaluations, Journal of marketing Research, Vol. 26, pp.307-319.

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Diaz de Rada, V. (1998) A simple consumer or different types of consumer: An analysis of social types according to their consumer habits, British Food Journal, Vol. 100 issue 7, pp.326336. Dun, G. (1997) Brand management, Harvard Business Review, Vol. 75 Issue 2, pp.9-11. Erdem, T. (1998) An empirical analysis of umbrella branding, Journal of Marketing Research, Vol. 35 Issue 3, pp.339-351. Graham, J. (2001) If there’s no brand, there’s no business, Canadian Manager, Vol. 26 Issue 1, pp.25-27. King, S (1991), Brand Building in the 1900’s, Journal of Marketing Management, Vol.9, pp3-13 King, S (1989) Brands on the Balance Sheet, The Economist, March Levitt, T. (1983) The globalization of markets, Harvard Business Review, May/June, pp.23-26. Meenaghan, T. (1995) The role of advertising in brand image development, Journal of Brand and Product Management, Vol. 4 Issue 4, pp.23-24. Muehling, D. and Laczniak, R. (1991) The moderating effects of ad message involvement: A reassessment, Journal of Advertising, Vol. 20 Issue 2, pp.29-38. Muehling, D., Stoltman, J. and Mishra, S. (1989) An Examination of the cognitive antecedents of attitude-toward-the-ad, Current Issues & Research in Advertising, Vol. 12 Issue 1, pp.95-118. Quester, P. and Smart, J. (1998) The influence of consumption situation and product involvement over consumers' use of product attribute, Journal of Consumer Marketing, Vol. 15 Issue 3, pp.220-229.

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Thakor, M. and Kohli, C. (1996) Brand origin: Conceptualization and review, Journal of Consumer Marketing, Vol. 13 issue 3, pp.27-32.

Websites

www.apple.com www.google.com www.hi5.com www.ifpi.com www.riaa.com www.wikipedia.com

Web-Based Magazines

Bajarin, T (2005) Redefining Computer Retail, TechoPundits, March De Freitas, V (2005) Legal Music Downloads Take Off, Webuser, November Haddad, C (2003) How Apple Spells Future: I-P-O-D, BusinessWeekOnline, Jully Thurrott, P (2004) With iPod Success, Apple Takes "Network Effect" from Microsoft, Paul Thurrott;s Wininfo, November

65

Appendix A SURVEY

66

Survey for iTunes Users 1.

Gender

a)

Male

b) Female 2.

8.

67%

Age Group

a)

Under 20

45%

c)

25%

31 to 40

9.

15%

b) 21 to 30

Select you buying behavior (Refer to Page 2)

a)

Complex Buying Behavior

31%

b) Dissonance-Reducing Buying behavior 23% c)

Habitual Buying Behavior

d) Variety-Seeking Buying Behavior 4.

Yes

b) No 5.

86%

b) No

14%

Would purchasing music on iTunes UK give you an element of comfort, as opposed to purchasing music elsewhere online?

69% 31%

Yes

66%

b) No

34%

10. When choosing wether to use iTunes for the first time, did you consider any previous information you had heard about iTunes UK?

a)

Yes

b) No

97% 3%

11. Do you perceive the iTunes UK brand image to match your own identity?

a)

Yes

78%

b) No

22%

12. Would purchasing music at the iTunes Music Store UK make you feel more distinguished as person than if you were to purchase or download music elsewhere ?

Yes

71%

a)

b) No

29%

b) There are a lot of safe place to buy music online. iTunes is not the only one 42%

Where functional features important to you when deciding to purchase on iTunes UK?

a)

7.

19%

Would you say that being associated to a famous brand is important to you?

a)

6.

27%

When deciding wether or not to choose iTunes UK, was it important to you that it have a reputable brand name?

a)

Yes

a)

d) 41 & above 15% 3.

Do you think the iTunes UK brand image conveys excellence in terms of quality ?

a)

33%

page 1 of 2

Yes

82%

b) No

18%

Was the audio quality of the music being better than substitutes a deciding factor in you choosing to purchase on iTunes UK?

a)

Yes

63%

b) No

37%

c)

I think I would trust iTunes more

I dont trust iTunes.

d) I could not care less

28%

4% 26%

THANK YOU FOR YOU TIME. TO SEE THE RESULTS OF THIS SURVEY, PLEASE VISIT WWW.JUSTLOOKINGPICTURES.COM

Survey for iTunes Users

page 2 of 2

COMPLEX BUYING BEHAVIOR

When choosing a product, you firstly begin to have certain beliefs about it. You then form specific attitudes towards it and then, maybe purchase it

DISSONANCE-REDUCING BUYING BEHAVIOR

You spend a lot of time researching different products online or in stores. You will most likely be attracted to expensive products, because they usually are more functional or of better quality. You will buy the product first and form your attitudes to it later. HABITUAL BUYING BEHAVIOR

You dont really shop around a lot, nor do you extensively research online or in stores products that you are interested in. You usually just stick to your brand you know, cause you always read or hear about them. So you assume they must be good.

VARIETY-SEEKING BUYING BEHAVIOR

You switch between brands ALL THE TIME. Nothing makes you happier than trying something new.

Survey for NON iTunes Users 1.

Gender

a)

Male

b) Female 2.

8.

58%

Age Group

a)

Under 20

41%

c)

17%

31 to 40

9.

19%

b) 21 to 30

Select you buying behavior (Refer to Page 2)

a)

Complex Buying Behavior

35%

b) Dissonance-Reducing Buying behavior 27% c)

Habitual Buying Behavior

d) Variety-Seeking Buying Behavior 4.

5.

Yes

43%

b) No

57%

59%

b) No

41%

Would purchasing music on iTunes UK give you an element of comfort, as opposed to purchasing music elsewhere online?

Yes

19%

b) No

81%

10. When choosing wether to use iTunes for the first time, did you consider any previous information you had heard about iTunes UK?

a)

Yes

74%

b) No

26%

11. Do you perceive the iTunes UK brand image to match your own identity?

a)

Yes

39%

b) No

61%

12. Would purchasing music at the iTunes Music Store UK make you feel more distinguished as person than if you were to purchase or download music elsewhere ?

Yes

62%

a)

b) No

38%

b) There are a lot of safe place to buy music online. iTunes is not the only one 46%

Where functional features important to you when deciding to purchase on iTunes UK?

a)

7.

21%

Would you say that being associated to a famous brand is important to you?

a)

6.

17%

When deciding wether or not to choose iTunes UK, was it important to you that it have a reputable brand name?

a)

Yes

a)

d) 41 & above 23% 3.

Do you think the iTunes UK brand image conveys excellence in terms of quality ?

a)

42%

page 1 of 2

Yes

46%

b) No

54%

Was the audio quality of the music being better than substitutes a deciding factor in you choosing to purchase on iTunes UK?

a)

Yes

21%

b) No

79%

c)

I think I would trust iTunes more

I dont trust iTunes.

d) I could not care less

12%

2% 40%

THANK YOU FOR YOU TIME. TO SEE THE RESULTS OF THIS SURVEY, PLEASE VISIT WWW.JUSTLOOKINGPICTURES.COM

Survey for NON iTunes Users

page 2 of 2

COMPLEX BUYING BEHAVIOR

When choosing a product, you firstly begin to have certain beliefs about it. You then form specific attitudes towards it and then, maybe purchase it

DISSONANCE-REDUCING BUYING BEHAVIOR

You spend a lot of time researching different products online or in stores. You will most likely be attracted to expensive products, because they usually are more functional or of better quality. You will buy the product first and form your attitudes to it later. HABITUAL BUYING BEHAVIOR

You dont really shop around a lot, nor do you extensively research online or in stores products that you are interested in. You usually just stick to your brand you know, cause you always read or hear about them. So you assume they must be good.

VARIETY-SEEKING BUYING BEHAVIOR

You switch between brands ALL THE TIME. Nothing makes you happier than trying something new.