Factors Affecting Consumer Perceptions of Brand Name Food in Japan: An Ordered Probit Analysis

Miao Li, Dr. Milton Boyd, and Dr. Jeffrey Pai, University of Manitoba, Winnipeg, Canada

ABSTRACT This study examined consumers perceptions of brand name food in Japan. A model was developed using a number of factors to explain consumers perceptions of the importance of brand name food in Japan. Consumer survey data from 140 respondents in Japan was used, and the model was estimated using an ordered probit model. Socio-demographics appear to impact consumers perceptions on brand name food in Japan, and results show that young Japanese consumers prefer brand name food products, and one reason is because they are more brand conscious and trust brands more. Food attribute results show that taste/flavor is important in explaining desire for brand name food, indicating that consumers placing more importance on taste/flavor also favored brand name food. Also, Japanese consumers desire high quality food, and are often willing to pay a higher price for brand name food products, and results indicate that consumers who are willing to pay a high price for food also have a high preference for brand name food. In addition, the labeling attribute of traceability shows a negative relationship with brand name food. This result shows that consumers who prefer brand name food have a less explicit desire for traceability, likely because much of the important product details such as traceability may already be implied in the brand name. These results should be helpful for food marketing firms in Japan in order to better understand the complex role of brand name food in consumer purchasing decisions INTRODUCTION Japanese Food Market Profile. This study attempts to examine factors that may influence consumers desire for brand name food in Japan. Brand name often refers to having a well known or highly regarded or marketable name (Merriam-Webster, 2009). Japan is the second largest economy in the world with approximately 8 percent of world GDP. Japan is also the largest food importer in the world, importing about $60 billion U.S. annually in food, accounting for about 60 percent of its food consumption (USDA, 2009). The life span in Japan is longer than that of any other country, and the traditional Japanese diet consists of rice, fish, vegetables and soy products. Japanese consumers also prefer purchasing fresh, natural, healthy, and safe food (Kuhlmann and Jones, 2006). In addition, Japanese consumers prefer purchasing fresh food on a daily basis, and compared with other countries, the Japanese food market is very unique, and complex, and food quality expectations of Japanese consumers are among the highest in the world. Role of Brand Name Products in Japan. Self-concern, fashion, strong self-expression, and stimulation, describe lifestyle characteristics of young people in Japan (Klintenberg, 2003). Brand name products have become more and more popular in Japan, and young Japanese consumers often prefer brand name products, and consumers often prefer the brands with an image of a high price (Kaiser et al., 1997). Approximately one third of the worlds luxury designer brand name products such as hand bags are sold in Japan, and owning a well-known brand named hand bag often represents social standing, and personality (Chadha and Husband, 2007). At the high end for food, in some department stores, highest quality fruit may be displayed and packaged in luxury fashion. A highest quality apple may sell for $US 5 to $US 10 or more. A highest quality melon may sell for $US 50 to $US 100, or more. These luxury fruits might typically be given as gifts, to friends, family, business associates, or those in ill heath. Brand Name Food. Regarding food, a brand name allows consumers the ability to identify products and determine certain food attributes before purchasing, and allows a firm to differentiate the product. Also, a study of branded and unbranded products food found that branded products had a higher market share than unbranded products, as well as being higher quality products (Apelbaum, 1999). A study of food products in Italy showed that brand names have a significant effect for consumers when making purchasing decisions (Boccaletti et al., 2003). Also, a study on brand awareness among undergraduate students, found that 76 percent of students often shop for food products by brand name, and those brand name food products had a relatively high degree of familiarity, as consumers at this age group (18-25) are easily influenced by their friends and classmates (Radder and Huang, 2008).

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A trusted brand name may also make new products more acceptable in the food market, and food producers may convey quality, reputation, and reliability of their products to consumers through a brand name (Antle, 2001). One study found that the brand name of products was more important to assure quality of food products than were seals, certifications, and labels, and that younger consumers trusted brand name more than older consumers (Berges and Casellas, 2006). Another study found that brand name accounts for more than 40 percent for a products success or failure in the market (Alashban et al., 2002). Also, a company may earn quality assuring price premiums on its products through a well known brand name (Klein and Leffler, 1979). A powerful brand name may provide a quality guarantee and product satisfaction to consumers, which brings purchasing confidence to consumers (Solomon et al., 2005), and a brand name may capture a consumers attention more than a products physical exterior (Dawer and Parker, 1994). Perception regarding brand name is important for understanding consumers food purchasing behavior. Therefore, the purpose of the study is to explain the factors affecting consumers preferences for brand name food in Japan, through factors such as sociodemographics, perception of overall food attributes, and labeling attributes. The introduction here is followed by sections on past literature, description of the data, methodology, results, and a summary. PAST LITERATURE Brand Literature. Kotler (2000 p.396) defines brand name as the name associated with one or more items in the product line, that is used to identify the source or character of the item. According to the American Marketing Association (Kotler, 2000 p.404), a brand name is the name, term, sign, symbol, or design, or a combination of them, intended to identify the goods and services of one seller or group of sellers and to differentiate them from those of competitors. Keller (2003) points out that whenever a marketer creates a new name, logo, or symbol for a new product, he or she has created a brand. Kapferer (1997 p.28) concludes that a brand name also performs an external function, to disclose the hidden qualities of the product which are inaccessible A brand can be considered to be created when three essential activities occur: product identification and differentiation, product consistency, and communicating the existence of the product and attributes to the consumer (Pennington and Ball, 2009). Historically, brands can be traced as far back as wines. Duguid (2009 p. 435) explains that branding as in the physical act of marking a container, came naturally to wine shippers, who had long forged iron brands to mark their casks, generally putting their own mark at one end and that of the recipient on the other. Brands can also be viewed from a financial perspective, and the value of brands can be measured by brand equity. Simon and Sullivan (1993) define brand equity as the incremental cash flows which accrue to branded products over and above the cash flows which would result from the sale of unbranded products. Srivastava and Shocker (1991) define brand equity as the incremental value a brand name grants a product, and Farquhar (1989) considers brand equity to be the added value it provides to the product. Brands may serve a variety of functions regarding the consumer, according Kapferer (1997), and these functions may include identification, practicality, guarantee, optimization, characterization, continuity, hedonistic, and ethical function. First, the identification function serves to ensure that the product offered is clearly seen by the consumer. Second, practicality provides saving of time and energy for the consumer through repurchasing of the product, once it is identified as acceptable for repurchase. Third, the guarantee ensures that the consumer will always find the same quality, regardless of where the product is purchased. Fourth, optimization ensures the consumer that the product is the best for their purpose. Fifth, characterization ensures that the image of the product is suitable for the consumer. Sixth, continuity ensures satisfaction for the consumer derived from familiarity due to repeated purchasing by the consumer. Seventh, the hedonistic function provides satisfaction through attractiveness of the brand, or its image, including its logo. Eighth, the ethical function serves to provide satisfaction to the consumer through the brands positive relationship to society. Kapferer (1997) also divides the eight brand functions into three different groups, based on their functions. The first group is made up of the Identification and practical functions, which are mechanical functions that facilitate choice and save time. The second group, guarantee, optimization, and characterization, are risk reducing functions that reduce the perceived risk of the consumer. Finally, the third group, continuity, hedonistic, and ethical, relate to the pleasure function of the brand. Socio-demographics and Brand Name. Socio-demographic information may be an important factor affecting brand name food preference. Previous studies have found that socio-demographic characteristics can

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influence consumer preference of brand name products (Bagnara, 1996). For example, educated young consumers with higher incomes were more interested and more likely to purchase brand name products (Peng et al., 2005). Verbeke (2005) found age to explain purchasing decisions regarding food products, and age was also found to explain preference of brand name food products (Banterle and Stranieri, 2008). Results also showed that young consumers believe brand name is important in food purchasing (Boccaletti et al., 2003) Taste/Flavor and Brand Name. Previous studies indicate that consumers do not purchase a food product if they do not like its taste/flavor (Liu et al., 2006). Food taste/flavor is also important for a meal planner such as a parent or restaurant manager, and research showed that more than 16 percent of meal planners believe taste/flavor is the most important food attribute (Drichoutis et al., 2006). Another study found that 46.5 percent of consumers preferred functional food because of favorable taste (Verbeke, 2005). Therefore, taste/flavor may also be an important factor related to Japanese consumers perception of brand name food. Price and Brand Name. A higher price can be charged to brand name products, and consumers were found to be more likely to pay a premium for electronics made by brand name firms such as Sony and Panasonic (Holbrook, 1992). Research showed 58 percent of consumers would pay from 10 to 12 percent more on brand name food products, and many consumers believed that unbranded products are actually worth 30 to 40 percent less (Bagnara, 1996), and much of the price of a product is based on quality and brand name (Holbrook, 1992). Consumers in other studies were also found pay a premium price on brand name food products, and would pay more for a product with quality guarantees (McCluskey et al., 2003; Lusk et al., 2002; Lichtenberg, Heidecke, and Becker, 2008). Traceability and Brand Name in Japan and Europe. Traceability is the entire information record for the food production and has been defined as the ability to track any inputs, such as food products, feed, or material that is used in any phase of food production process, or distribution chain (Grossman, 2007). While Japanese and European consumers appear to appreciate traceability, it has been less popular in other areas of the world, including North America. Traceability has had a significant presence in the Japanese beef and pork market, and it could be useful method to provide food safety (Caswell and Souza-Monteiro, 2004). In Japan, many supermarkets show traceability information to consumers. For example, Jusco Supermarkets, a large Japanese chain, has provided detailed traceability data on higher value beef products by showing pictures with the producers, their farm location, etc. (Clemens, 2003). Consumers are more likely to choose a well known brand name because it provides a guarantee of higher quality (Giraud and Halawany, 2006), and this may be associated with better traceability. Brand names become even more important when product information is not fully available or costly. For example, consumers in Spain were willing to pay a premium for high quality food products (Giraud and Halawany, 2006). DATA The data is from a survey questionnaire which took place in the fall of 2003. The survey was collected from 140 primary food shoppers in two major cities of Japan, Tokyo, the capital city of Japan, and Osaka, the second largest city of Japan (N = 140). Survey results showed 72.86 percent of Japanese purchase food at supermarkets, 17.14 percent of food consumers shop at Coop stores, 5 percent of consumers choose convenience stores, 2.86 percent of consumers shop at specialty stores, and 1.43 percent of consumers shop at department stores regularly. Questionnaires included consumer socio-demographic characteristics, importance of food attributes, and labeling attributes. A Likert scale was used where 1 = the least important to 5 = the most important. METHODOLOGY: ORDERED PROBIT MODEL Ordered probit regression is often used for estimating categorical dependent variables, when order is involved (Green, 2003). The data for this study include a rank in order from 1 = most important to 5 = least important, and the dependent variable in this study is importance of brand name. Lancasters conceptual approach is used here where utility is based on the characteristics of product (Chen et al., 2002). In this context, a consumers utility from a brand name is based on various product characteristics such as food product attributes. Similar to Chen et al., 2002, the model can be specified as: U = X + , ~ N (0, 1) (1)

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where

U: the latent variable of utility from brand name. X: the vector of consumers ranking of selected importance of food product attributes, and other factors. : the coefficients of the explanatory variables (X). : the error term, which is assumed to have standard normal distribution N(0,1).

The error term () is assumed under a normal distribution for the ordered probit model. Consumer is utility function (Ui) is unobservable, however, it is derived from the preference rating vector, R (where R = 0, 1, 2, , j). 0 1 R= 2 if if if ... ... if U0 0 < U 1 1< U 2 (2) j-1 < U

where i (i = 0, 1, 2, , j) are the estimated cutoff points, which represent the values of an underlying latent variable crossing particular points (Borooah, 2002). Every cutoff point is varied because of the difference of consumers preference. From equation (2), Prob (R = i) Prob (i-1 < U i), where U = X + . Then, Prob (R = i) Prob (i-1 < U i) = Prob (i-1 < X + i) Subtracting X at the both sides of i-1 < X + i, Prob (R = i) = Prob (i-1 X < i X) = Prob ( i X) Prob ( i-1 X) This shows the cumulative probability function of a normal distribution over the range of utility for the representative consumer, denotes as (). The probability of the individual consumers preference, such as the importance of brand name can then be observed as: Prob (Ri = 0) = ( X) Prob (Ri = 1) = (1 X) ( X) Prob (Ri = 2) = (2 X) (1 X) . . . .Prob (Ri = j) = 1 - (j-1 X)

(3)

where is the coefficient vector, and 1, 2, , j are estimated with an ordered probit model using Maximum Likelihood Estimation (MLE), which is ln max = ln imax = ln Prob (Ri = j). RESULTS The dependent variable of this study is the importance of brand name with a scale of 1 = least important to 5 = most important.
Independent Variables Socio-demographic Age Importance of Food Attributes Taste/Flavor Price Importance of Labeling Attributes Traceability Table 1. Variable Codes of the Independent Variables Definition and Codes 1 = below 25, 2 = 25-34, 3 = 35-44, 4 = 45-54, 5 = 55 and over 1 = least important, , 5 = most important 1 = least important, , 5 = most important 1 = least important, , 5 = most important

Four independent variables were categorized into three different groups, which are socio-demographic, importance of food attributes, and importance of labeling attributes, and 140 observations used (N=140). Table 1 shows the codes of independent variables. Ordered Probit Results. The results of the ordered probit regression model are shown in Table 2. The goodness-of-fit, measured by the McFadden R-Squared is 0.162, which is reasonable. One of the four variables

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showed statistical significance at 10 percent level or better, and three of the variables are significant at the 1 percent level or better. Socio-demographic. The variable of age shows a negative coefficient (0.148) as expected, and may be interpreted as younger consumers believing that food brand name is more important than do older consumers. As well, this coefficient shows statistical significance better than the 10 percent level, and previous research has shown these younger consumers to be more brand conscious and trust brands more. Younger Japanese consumers may use brand name as an important source for food purchase information to reduce information search costs, rather than using friends or colleagues, print media, internet, TV and other sources, and may prefer spending more time with their friends rather than on grocery shopping. When they are shopping for food, the most efficient way may be by selecting brand name products, if the brand represents characteristics such as quality and safety. This may reduce time and costs for information search.
Parameters Table 2. Estimates of the Ordered Probit Model: Importance of Brand Name a, b Importance of Brand Name Coefficients S.E.

Significance Socio-demographic Age 0.148* 0.086 0.083 Importance of Food Attributes Taste/Flavor 0.233*** 0.082 0.004 Price 0.273** 0.081 0.001 Importance of Labeling Attributes Traceability 0.339*** 0.090 0.000 ***Statistically significant at the 0.01-level; *significant at 0.10 level. S.E is standard error. a. Mcfadden R-Square = 0.162. b. A Likert scale is applied for importance of brand name, the dependent variable, 1 = least important and 5 = most important.

Importance of Food Attributes. The two important food attributes included are taste/flavor (0.233), and price (0.273) and both have positive signs as expected. The estimate shows taste/flavor and price of food have high statistical significance of 0.004, and 0.001. The result shows that perception of importance of taste/flavor is a related to importance of brand name. Japanese consumers have relatively higher income, they are often particular and looking for high quality food, and are willing to pay a premium or higher price for brand name food products. Japanese consumers often associate high price with high quality and brand name. They often consider higher priced products to be higher quality, and may be reluctant to purchase lower priced products, due to perceptions of lower product quality. Importance of Labeling Attributes. As consumers become more concerned about food safety, traceability has been displayed on a number of product labels. Results show that traceability has a coefficient of 0.339, and significant at the 1 percent level or better. This negative sign could be interpreted that food consumers do not think traceability is important for brand name food because consumers who purchase brand name food products already trust the brand name, because it may represent quality and safety. Therefore, traceability and other details of the product become less explicitly important for brand name food because they may already be included or implied in the brand name. Traceability may instead be more useful for unbranded products, including fresh products such as meat, fish, fruits, and vegetables. SUMMARY A model was developed using a number of factors to explain consumers perception of the importance of brand name food in Japan. Consumer survey data from 140 respondents in Japan was used, and the model was estimated using an ordered probit model. Socio-demographics appear to have effects on consumers perceptions on brand name food in Japan, and results show that young Japanese consumers prefer brand name food products, and one reason is because they are more brand conscious and trust brands more. Food attribute results show that taste/flavor is important in explaining desire for brand name food, indicating that consumers placing more importance on taste/flavor also favored brand name food. Also, Japanese consumers desire high quality food, and are often willing to pay a higher price for brand name food products. Results indicate that consumers who are willing to pay a high price for food also have a high preference for brand name food. In addition, the labeling attribute of traceability shows a negative relationship with brand name food. This result shows that consumers who prefer brand name food have less explicit desire for traceability, likely because

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much of the important product details such as traceability may already be implied in the brand name. Therefore, it may be unnecessary for these consumers to explicitly focus on these product details, such as traceability, because traceability may be more important for unbranded products, including fresh products such as meat, fish, fruits, and vegetables. The information from this study should be helpful for food marketing firms in Japan in order to better understand the complex role of brand name food in consumer purchasing decisions. REFERENCES
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