Business and Management Research Module
Part II – Mini Report on Collected and Analyzed Data based on Evaluated
Published Research
Executive Summary
Using 5-point likert scale survey questionnaires, this study aims to
determine how the marketing mix (4P’s) could affect perceived quality in a
Starbucks coffee, brand association, brand awareness, and brand loyalty and how
these four factors affect consumers’ response
Using structural equation modelling (SEM) method, descriptive statistic, and
SPSS 11.0, this study concludes that marketing mix (4Ps) could affect brand equity
in a positive way and that brand loyalty (β=0.472) has the strongest link to
customer response followed by perceived quality (β=0.439), brand association
(β=0.428), and brand awareness (β=0.410).
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Table of Contents
Executive Summary ………………………………………………….........….
9
Table of Contents ………………………………………………….........…….
10
I.
Introduction ………………………………………………………
11
II.
Literature Review ………………………………………………...
11
a.
Significance of Marketing Mix (4P’s) in Brand Equity ..
11
b.
Importance of Perceived Quality in a Product, Brand
III.
Association, Brand Awareness and Brand Loyalty .....
11
Research Methodology ………………..……………………….
12
a.
Research Framework ..............................................
12
b.
Research Hypothesis ...................................................
13
c.
Research Survey Questionnaire Design ......................
14
d.
Target Population, Sample Size and Research Venue .
14
e.
Research Evaluation Method ………………………….
15
IV.
Analysis of Research Findings and Results ……………..…..
15
V.
Conclusion, Limitations and Recommendations ……………
18
Appendix I – Summary of Structural Research Framework .........................
19
Appendix II – Research Survey Questionnaire ............................................
20
Appendix III – Reliability Analysis with the Use of Cronbach’s Alpha
Coefficient .............................................................................
22
Appendix IV – Levene’s Test Results ......................................................
23
Appendix V – Summary of Levene’s Test ...............................................
24
Appendix VI – Summary of Income Distribution ......................................
25
Appendix VII – Summary of Mean and Standard Deviations ....................
26
Appendix VIII – Summary of Fit Indices ...................................................
27
Appendix IX – Summary of Standardized Structural Coefficient .............
28
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Appendix X – Summary of Standardized Structural Coefficient ..............
29
Appendix XI – Summary of Multiple Regression ....................................
30
Appendix XII – Summary of Multiple Regression ...................................
31
References ………………………………….……………………..........…… 32 – 33
Chapter I – Introduction
Brand management is one factor that contributes to the success of a
business. Managers could increase a company’s brand equity by preventing the
business from becoming vulnerable to market competition (Yoo et al. 2000).
Marketing activities increases brand equity. Using Levene’s test on the
homogeneity of variances, this report will examine how the marketing mix (4P’s)
could significantly affect perceived quality in a Starbucks coffee, brand association,
brand awareness, and brand loyalty. Eventually, relationship between product,
brand association, brand awareness, and brand loyalty with the consumers’
response will be identified.
Chapter II – Literature Review
Significance of Marketing Mix (4P’s) in Brand Equity
Brand equity is referring to positive perception consumers have over a given
brand. In line with this, marketing managers can contribute to satisfied consumers
through effective marketing intervention (Keller 2003). In a market place that is
readily accessible to consumers, the ability of marketing manager to offer high
quality product at a reasonable price could significantly increase consumers’
perceived quality, brand association and brand awareness (Ailawadi, Lehmann
and Neslin 2003).
Yoo et al. (2000) revealed that perceived quality, brand loyalty, brand
association, and brand awareness are parts of developing a strong brand equity.
In line with this, marketing managers can effectively create brand awareness by
creating attractive store image or by offering affordable prices of goods. As a result
establishing a strong brand equity, companies are able to keep their target
consumers loyal with the brand.
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Importance of Perceived Quality in a Product, Brand Association, Brand
Awareness and Brand Loyalty
Perceived quality in terms of product and services enables retailing
companies enjoy economies of scale since more customers would purchase
homogenous product retailers that offers high quality product with competitive
services at a much cheaper price other retailers of homogenous product could
offer. According to Moilanen and Rainisto (2009, p. 12), perceived quality could
increase customers’ satisfaction. Since perceived quality is one factor that
consumers consider when deciding to purchase a product, the ability of marketing
managers to increase perceived quality increases the ability of the retailers to
compete within the national retailing industry.
As explained by McLoughlin and Aaker (2010, p. 179), “brand association
is anything that is directly or indirectly linked in the consumers’ memory to a brand”.
It means that each time a consumer creates a positive perception with a product,
the buyer also creates a strong association with the brand. Even before consumers
establish brand association, target consumers should be introduced to a brand. By
continuously promoting a brand, marketing managers contribute to increase in
brand awareness (McLoughlin and Aaker 2010, p. 176). As soon as consumers
could develop a strong brand association, consumers can become loyal to the
brand. Since satisfied customers can promote a brand through word-of-mouth,
retail companies could enjoy the benefit of long-term profits (McLoughlin and Aaker
2010, p. 103; Wiegandt, 2009, p. 98).
Chapter III – Research Methodology
Research Framework
A structural framework was designed to summarize how the primary
research study will be conducted. Based on the assumption, marketing mix (4P’s)
contribute to the increase in perceived quality in Starbucks coffee, brand
association, brand awareness, and brand loyalty.
In relation to the marketing mix, exogenous variables includes: the level of
pricing, images of stores, product distribution, money spent on advertisements,
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and price promotion whereas endogenous variable(s) that contributes to higher
brand equity includes: perceived quality, association with the brand, creation of
brand awareness, and brand loyalty. Given that the elements of marketing mix is
composed of exogenous and endogenous variables, dimensions of brand equity
will be considered as mediator variable in the model whereas other variables will
be treated as latent variables.
Aside from examining the relationship between endogenous variables (i.e.
perceived quality) with the establishment of brand association, awareness of the
brand, and brand loyalty (Joon-Wuk Kwun and Oh 2007), this study will determine
the impact of market mix (4Ps) on exogenous variables (i.e. brand equity and
consumer response) (Engle, Hendry and Richard 1983). (See Figure I – Summary
of Structural Research Framework on page 19)
Research Hypothesis
The following research hypothesis will be tested in this study:
List of Hypothesis
 H1: Higher the brand price leads to higher perceived quality (γ1)
 H2: The better the store image, the higher the brand perceived quality
(γ2)
 H3: Frequent use of price discount leads to lower the perceived quality
(γ3)
 H4: Frequent use of price discount leads to negative brand association
(γ4)
 H5: Frequent use of marketing activities leads to increase in perceived
quality (γ5)
 H6: Frequent use of marketing activities leads to increase in brand
association (γ6)
 H7: Frequent use of marketing activities leads to increase in brand
awareness (γ7)
 H8: Frequent use of marketing activities leads to increase in brand loyalty
(γ8)
 H9: Higher perceived quality leads to positive consumer response (β1)
 H10: Higher brand association leads to positive consumer response (β2)
 H11: Higher brand awareness leads to positive consumer response (β3)
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 H12: Higher brand loyalty leads to positive consumer response (β4)




H13: Higher brand price leads to better consumer response (α1)
H14: Better store image leads to better consumer response (α2)
H15: Frequent price discount leads to negative consumer response (α3)
H16: Frequent use of marketing activities leads to better consumer
response (α4)
Yoo et al. (2000) explained that consumer’s perception on brand will be
measured based on the product prices, image of the store, market distribution,
money spent on advertising and price discount. Likewise, this study will measure
these variables by distributing a research survey questionnaire that is composed
of 5-point likert scale questions. In line with this, 5 means “strongly agree” whereas
1 represent “strongly disagree”. (See Appendix II – Research Survey
Questionnaire on page 20)
Research Survey Questionnaire Design
The research survey questionnaire design for this study will be divided into
four major parts. The first part will gather the research respondents demographic
information which includes gender and monthly income.
The second part which is represented by questions 3 to 12 measures the
impact of Starbuck’s marketing activities. In line with this, questions about how the
research respondents feel about Starbuck’s store image, advertising expenditure
and its effectiveness in terms of capturing the interests of its target consumers,
and consumer’s attitude with regards to the market price of Starbucks coffee will
be addressed in this section.
Represented by questions 13 to 25, the third part of the questionnaire
focuses on measuring Starbuck’s customers’ point-of-view with regards to
perceived quality, brand association, brand awareness and brand loyalty.
Represented by questions 26 to 28, the last part focuses on measuring consumer
response to Starbucks coffee particularly with regards to brand recommendation.
Target Population, Sample Size and Research Venue
Regardless of age, sex, cultural background and nationality, target
population for this study includes coffee drinkers in UK. In line with this, the
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personal opinion of the randomly selected target population will be used in
enabling the researcher determine the significance of marketing mix (4Ps) with the
development of perceived quality in a Starbucks coffee, brand association, brand
awareness, and brand loyalty.
According to Kline (1998), the use of structural equation modelling (SEM)
method in research requires a large number of sample size in order to avoid
coming up with invalid research findings. For this reason, the researcher will exert
extra effort in gathering and invite a minimum of 200 highly qualified research
survey respondents.
According to Saunders, Lewis and Thornhill (2003), convenience sampling
means the researcher will gather sample population that is readily available or
accessible to the researcher. Using convienience sampling method, the
researcher will conduct the actual research study at ______ between the 1 st of
January to 22nd of January 2011.
Research Evaluation Method
Descriptive statistic, multiple regression (SPSS 11.0), and structural
equation modelling (SEM) methods were used in this study. In examining the
validity and reliability of the test, the value of Cronbach’s Alpha should be higher
than 0.71. To examine homoscedasticity of relationship between and among the
variables being tested (Levene 1960), Levene’s homogeneity of variance test was
utilized. Descriptive statistics measures the frequencies and percentages whereas
SEM statistical method measures not only regression but also analyzes the
confirmatory factors. To determine the relationship between each of the elements
in marketing mix with brand equity, marketing mix with customer response, and
brand equity with the customer response, SPSS 11.0 will be utilized to enable the
researcher measure multiple regression.
Chapter IV – Analysis of Research Findings and Results
1
High value suggests that the questionnaire is highly consistent with the research
topic (Nunnally 1978, p. 25).
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The researcher was able to randomly invite a total of 232 highly qualified
research respondents. However, a total of 14 research survey forms were
disregarded due to input errors coming from the research respondents. To avoid
misrepresenting the research study findings, the researcher decided to disregard
survey questionnaires with invalid answers. i.e. some research respondents
provided two answers in a single question.
According to Nunnally (1978, p. 25), higher than 0.7 Cronbach’s Alpha value
means that the questionnaire is highly consistent with the research topic. Based
on the computed Cronbach’s Alpha Coefficient, the variables being tested in the
survey questionnaire is reliable. Almost all the variables being tested in this study
is highly acceptable in terms of its consistency except for brand association with
0.68 Cronbach’s Alpha result. Given that this figure is close to 0.7, this variable will
still be included throughout the primary research study. (See Appendix III –
Reliability Analysis with the Use of Cronbach’s Alpha Coefficient on page 22)
Upon measuring paired variables gathered from the research survey
questionnaire, Levene’s test show that paired variables tested were non-significant
because the values were below 1.0. It means that the research hypothesis being
tested in this study should be accepted. (See Appendix IV – Levene’s Test Results
on page 23; Appendix V – Summary of Levene’s Test on page 24)
A total of 120 and 98 out of 218 research respondents were male (55%)
and female (45%) respectively. In line with this, research respondents are earning
below £1,000 (60.6%), £1,001 - £2,000 (29.8%), and £2,001 - £3,000 (9.6%). (See
Appendix VI – Summary of Income Distribution on page 25)
In general, the higher the mean value indicate that the research
respondents agree that the said variable has a significant impact over brand equity.
Upon analyzing the figure presented on Appendix VII, the standard deviations of
brand loyalty, brand awareness and brand association are 1.05, 1.21, and 1.20
respectively. Since a high value of standard deviation of more than 1.0 means that
the data being tested is not close to the mean, it means that the research
respondents do not agree that these three variables has a significant impact over
brand equity. (See Appendix VII – Summary of Mean and
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Standard Deviations on page 26)
According to Mckone, Schroeder and Cua (2001), SEM method allows
researcher to have better understanding with regards to the nature of relationship
between two variables. When measuring goodness-of-fit index (GFI) and
comparative fit index (CFI), x2 of GFI and CFI should be equal or greater than 0.9
(Bentler and Bonett 1980). Upon testing the structural framework concerning the
effects of the marketing mix on brand equity and consumer response, the result is
not so good since the GFI and CFI values are 0.868 and 0.853 respectively. Since
these figures are close to 0.90, it is still safe to consider the test results as fairly
acceptable.
When measuring root mean residual index (RMR) and root mean square
error of approaximation (RMSEA), value should be less than 0.1 such that 0.05
suggest good fit is present in the research model (Steiger 1990). Since the test
result of RMR and RMSEA is 0.028 and 0.054 respectively, it means that the
structural framework is a very good fit. (See Appendix VIII – Summary of Fit Indices
on page 27)
Using p<0.05, direct link between the variables that was identified in H1 to
H5 and H7 to H16 were statistically significant at the probability level of one out of
1,000 chances of occurence. In general, p-value close to 0 given that p<0.001
means hypothesis is “null”; therefore needs to be rejected. Even though the
standardized structure coefficients of H3 and H4 is -0.23 and -0.20 respectively,
both hypothesis should still be accepted since price discounting does not
necessary lead to decreased in perceived quality. Likewise, the use of price
discounting does not necessarily lead to decrease in brand association. Using
p<0.05, H1, H2, H5, H6, and H7 – H12 should be accepted since the value of
standardized structure coefficients is higher than the probability level of 0.05. (See
Appendix IX – Summary of Standardized Structural Coefficient Results of H1 to H
12 on page 28)
With regards to indirect causes of marketing mix on consumer response,
H13 (0.10), H14 (0.07), and H16 (0.12) should be accepted since the results of the
standardized structure coefficients is higher than 0.05. Even though the coefficient
Page 9 of 25
value of H15 is -0.09, the said hypothesis should still be accepted since H15 states
that price discount could lead to negative consumer response. It only means that
offering price discount will not lead to negative consumer response. (See Appendix
X – Summary of Standardized Structural Coefficient Results of H13 to H16 on page
29)
With regards to multiple regression of correlation coefficients, R2 presented
between 0 to 1 should be close to 1 since value close to 0 represents a poor model
(Steiger 1990). With R2 = 0.715, regression model is statistically significant. In line
with this, advertising expenses (β=0.420) is closely link to brand equity followed by
Starbucks’ store image (β=0.374), market price (β=0.173), market distribution
(β=0.158), and price discounting (β=-0.135). (See Appendix XI – Summary of
Multiple Regression on page 30)
With R2 = 0.702, regression model is statistically significant. In line with this,
brand loyalty (β=0.472) has the strongest link to customer response followed by
perceived quality (β=0.439), brand association (β=0.428), and brand awareness
(β=0.410). (See Appendix XII – Summary of Multiple Regression on page 31)
Chapter V – Conclusion, Limitations and Recommendations
This study concludes that marketing mix (4Ps) could affect brand equity in
a positive way. Given that H1 revealed that a high market price of Starbucks coffee
improves brand equity, parts of the marketing mix could decrease brand equity
such that a lower market price of Starbucks coffee could lead to lesser brand
equity.
This study is limited in terms of discussing how marketing managers could
make use of marketing mix to improve brand equity. To improve brand equity,
future study recommendation should focus on identifying how marketing managers
could maximize the use of marketing mix.
*** End ***
Page 10 of 25
Appendix I – Summary of Structural Research Framework
Page 11 of 25
Appendix II – Research Survey Questionnaire
Demographic Information
1. Your gender
2. Your income
male □
female □
below £1,000
£1,001 - £2,000
£2,001 - £5,000
£5,001 - £10,000
Above £10,000
Strongly
Disagree
3
4
5
6
7
8
9
10
11
12
□
□
□
□
□
Disagree
Neutral
Agree
Strongly
Agree
Marketing Mix
Price of Starbucks coffee is high
Price of Starbucks coffee is
expensive
Price of Starbucks coffee is low
Starbucks coffee shops offer high
quality products
Starbucks coffee shops is wellknown
Starbucks coffee products is readily
available in different areas
Starbucks coffee is dependent on
advertisement
Starbucks coffee advertisement is
expensive
Starbucks coffee advertisement can
be seen anywhere
Starbucks coffee offer price discount
Brand Equity
13
I am loyal to Starbucks coffee brand.
14
Starbucks coffee is my first choice.
I will not purchase other coffee
brands if the Starbucks coffee brand
is available.
I will purchase Starbucks coffee
again.
I recognize Starbucks coffee among
other brands.
I am aware of Starbucks coffee
Brand.
Starbucks coffee brand has good
public reputation.
Starbucks provides consumers with
excellent coffee quality.
15
16
17
18
19
20
Page 12 of 25
21
22
23
24
25
26
27
28
Starbucks coffee brand is very
trustworthy.
Starbucks brand gives best valuefor-money.
You like Starbucks coffee brand.
Starbucks coffee brand is a social
status symbol.
Starbucks coffee brand products is
recommended by famous people
with whom you identify.
Consumer Response
You are willing to pay a higher price
for Starbucks coffee than for other
competitive brands.
I promote Starbucks coffee to my
friends.
If someone consults me, I would
advise the person to buy Starbucks
coffee brand products.
Page 13 of 25
Appendix III – Reliability Analysis with the Use of Cronbach’s Alpha Coefficient
Variable
Cronbach’s Alpha Coefficient
Price
0.86
Image of Starbucks Store Outlets
0.78
Market Distribution
0.73
Advertising Expenditure
0.83
Price Discount
0.83
Perceived Quality
0.85
Brand Association
0.68
Brand Awareness
0.73
Brand Loyalty
0.73
Consumer Response
0.70
Page 14 of 25
Appendix IV – Levene’s Test Results
Variables Pairs
Significance (p)
Market Price of Starbucks coffee & perceived quality
0.30
Image of Starbucks store outlet & perceived quality
0.16
Price discount & perceived quality
0.07
Price discount & brand association
0.13
Frequency of marketing activities & perceived
0.25
quality
Frequency of marketing activities & brand
0.32
association
Frequency of marketing activities & brand
0.15
awareness
Frequency of marketing activities & brand loyalty
0.18
Perceived quality & consumer response
0.25
Brand association & consumer response
0.10
Brand awareness & consumer response
0.22
Brand loyalty & consumer response
0.11
Page 15 of 25
Appendix V – Summary of Levene’s Test
Page 16 of 25
Appendix VI – Summary of Income Distribution
Page 17 of 25
Appendix VII – Summary of Mean and Standard Deviations
Mean and Standard Deviations of Variables
Variable Items
Mean
Standard Deviations
Market Price
2.58
0.9
Image of Starbucks Store
2.63
0.92
Market Distribution
2.58
0.9
Advertising Expenses
2.64
0.86
Price Discount
2.22
0.99
Brand loyalty
2.26
1.05
Perceived quality
3.38
0.72
Brand awareness
3.49
1.21
Brand association
3.41
1.20
Price premium
2.21
0.73
Brand recommendation
2.84
0.89
Marketing Mix
Brand Equity
Consumer Response
Page 18 of 25
Appendix VIII – Summary of Fit Indices
Index
Index Value
Goodness-of-Fit Index (GFI)
0.868
Adjusted Goodness-of-Fit Index (AGFI)
0.806
Comparative Fit Index (CFI)
0.853
Root Mean Square Residual (RMR)
0.028
Root Mean Square Error of Approximation
0.054
(RMESEA)
Page 19 of 25
Appendix IX – Summary of Standardized Structural Coefficient Results of H1 to
H12
Hypothesis
Parameter
Standardized
Structure
coefficients
Results
H1: Higher the brand price
γ1
0.25*
Accept
leads to higher perceived
quality.
H2: The better the store image,
γ2
0.16*
Accept
the higher the brand perceived
quality.
H3: Frequent use of price
γ3
-0.23*
Accept
discount leads to lower the
perceived quality.
H4: Frequent use of price
γ4
-0.20*
Accept
discount leads to negative
brand association.
H5: Frequent use of marketing
γ5
0.23*
Accept
activities leads to increase in
perceived quality.
H6: Frequent use of marketing
γ6
0.10**
Accept
activities leads to increase in
brand association.
H7: Frequent use of marketing
γ7
0.25*
Accept
activities leads to increase in
brand awareness.
H8: Frequent use of marketing
γ8
0.15*
Accept
activities leads to increase in
brand loyalty.
H9: Higher perceived quality
β1
0.42*
Accept
leads to positive consumer
response.
H10: Higher brand association
β2
0.40*
Accept
leads to positive consumer
response.
H11: Higher brand awareness
β3
0.28*
Accept
leads to positive consumer
response.
H12: Higher brand loyalty leads
β4
0.45*
Accept
to positive consumer response.
* Standardized structural coefficients are statistically significant at a level p<0.001.
** Standardized structural coefficients are statistically significant at a level p<0.05.
Page 20 of 25
Appendix X – Summary of Standardized Structural Coefficient Results of H13 to
H16
Standardized
Structure
Coefficients
Hypothesis
Parameter
Results
H13: Higher brand price leads to
better consumer response.
α1
0.10*
Accept
H14: Better store image leads to
better consumer response.
α2
0.07*
Accept
H15: Frequent price discount
leads to negative consumer
response.
α3
-0.09*
Accept
H16: Frequent use of marketing
activities leads to better
consumer response.
α4
0.12*
Accept
* Indicators of indirect impact are statistically significant at a level p<0.05.
Page 21 of 25
Appendix XI – Summary of Multiple Regression
Variables
Market
Price
Standardized
Coefficients
0.173*
Starbucks
Store
Image
0.374*
Market
Distribution
0.158*
Advertising
Expenses
0.420*
Price
Discounting
-0.135
F
51.586*
RSquare
0.715
(β)
* Indicate p﹤0.05
Predictors: Market Price, Starbucks Store Image, Market Distribution, Advertising Expenses,
and Price Discounting.
Dependent Variable: Brand Equity
Page 22 of 25
Appendix XII – Summary of Multiple Regression
Variables
Brand
Loyalty
Brand
Awareness
Brand
Association
Perceived
Quality
F
RSquare
Standardized
Coefficients
(β)
0.472*
0.410*
0.428**
0.439*
140.444*
0.702
* Indicate p﹤0.05
* *Indicate p﹤0.015
Predictors: Brand loyalty, Brand awareness, Brand associations, Perceived quality,
Dependent Variable: Customer response
Page 23 of 25
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