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Discussion Paper No.

0407

December 2004

DIFFERENTIATING AMONG MAJOR PHILIPPINE TOOTHPASTE BRANDS: A QUANTITATIVE STUDY
by

BEN PAUL B. GUTIERREZ

Note: UPCBA discussion papers are preliminary versions circulated privately for critical comments and are not for quotation or reprinting without prior approval. They are protected by Copyright Law (P.D. No. 49)

Differentiating Among Major Philippine Toothpaste Brands: A Quantitative Study Ben Paul B. Gutierrez
This paper investigates toothpaste brand choice behavior of consumers in urban Philippines. After generating attributes using the Sheth-Newman-Gross (1991) model, a pilot study is conducted to reduce the number of attributes to a manageable level. The main study obtained consumers’ evaluation of toothpaste brands and their preferred brands which were then used to estimate discriminant models. Results indicate that functional, cosmetic and sensory benefits are useful for classifying consumers into their brands. Aside from identifying implications to management, the paper clarifies methodological issues when applying some common statistical analyses used in marketing. Key words: Brand choice; Sheth-Newman-Gross (1991) model; Philippines’ toothpaste consumption

1. The Consumer Market in a Less Developed Country Consumer markets in less developed countries differ from North American or European counterparts in several aspects: average household disposable income is low, income disparity between the rich and poor is high, youths represent more than two thirds of the population, literacy level is low, and access to a wide variety of communication media is poor. According to the 1994 Family Income and Expenditure Survey in the Philippines, rural families have an annual average income of Ps53,483 and an average expenditure of Ps44,427. By contrast, urban families have twice the average income and expenditure of rural families. Urban families have an annual average income of Ps113,121 and an average expenditure of Ps 91,115. In Metropolitan Manila, the most urbanized area, the difference between urban and rural income is more than three times. Families in Metro Manila have an annual average income of Ps173,599 and an average expenditure of Ps138,427. While it is true that the average income is growing, in real terms, this growth is insignificant. In 1994, the average income of Filipino families grew by 27.6 percent to Ps83,161 compared to the 1991 level of Ps65,186. However, net of inflation, the average income actually dropped by 0.2 percent between 1991 and 1994. The last four Family Income and Expenditure Surveys in the Philippines indicated a general trend towards lower spending on food. However, the share of food expenditures is still almost half of the family income at 47.8 percent, dropping to 44.2 percent in Metro Manila (Figure 1). When families have extra income there is a tendency to buy durables rather than consumables, especially in the rural areas as shown by the steady increase in the share of household furnishings and equipment. Spending on personal care and effects1
 *Associate Professor of Marketing, College of Business Administration, University of the Philippines Diliman, Quezon City. (Email:bpbg@up.edu.ph).

Personal care and effects category is composed of the following: beauty aids and toilet articles (deodorant, oil, make-up, toothpaste, shampoo, soap, etc.), personal effects (jewelry, bag, watch, etc.), beauty parlor or barbershop services (haircut, perm wave, manicure, etc.), and other services (sauna, aerobics classes, etc.).

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as compared to national population growth rate of 2. The Objectives of the Study The paper applies discriminant models in investigating brand choice behavior for toothpaste products in Metro Manila. the personal care product market remains attractive to manufacturers and marketers.454.2 grams per year.3 percent (National Statistics Office.7 percent over the 1993 volume because of the entry of lower priced brands. Toothpaste consumption is expected to rise as household incomes increase. 2. Whilst the share of personal care products or toiletries is low.3 is only 3. This volume translates to a per capita consumption of 237. the . Toothpaste can be considered an important personal care product because its usage is independent of age. sex. Series No. 1995 Census of Population). 1994 FILIPINO HOUSEHOLDS’ EXPENDITURE PATTERNS Others 14% Household furnishings 3% Personal Care 3% Clothing 4% Education 4% Food 47% Transportation 5% Utilities 6% Housing 14% Source: 1994 Family Income and Expenditure Survey. Since toothpaste products have high usage and familiarity. The growth rate of toothpaste consumption in the Philippines follows the population growth rate. Moreover. Table E. Philippines. 80. and this could minimize data collection costs.040 grows at 3. xxxvi.000 metric tons grew by 16. Therefore.3 percent per annum. The toothpaste market volume of 14. Figure 1. or disposable income. National Statistics Office. Manila.3 percent in Metro Manila but it has been relatively stable over the last nine years. Metro Manila’s population of 9. it will be easier to obtain survey respondents. Philippines. less than 1 gram per day. Such population dynamics suggests that the growth in the personal care product market would be significant.

First. 1. The scope of the study. Newman and Gross (1991) recommended a choice-based sample where equal numbers of users from each brand are to be used. Newman and Gross (1991) framework the recommended choice-based sample was modified. Philippines. A convenience sample of 105 toothpaste consumers who represent the households was selected in Quezon City. an advertising agency. In this case. In discriminant analysis. the objective is to start with known groups and to determine the factors that describe these groups. Compared to the rural areas. urban communities have higher market potential. this knowledge would benefit manufacturers in the Philippines by improving their performance in marketing toothpaste products. Smaller companies have distribution problems penetrating the rural areas because of the archipelagic nature of the country. Second. Potential respondents were screened for three requirements. The findings of the study will apply to the rapidly urbanizing areas of the country to a lesser degree. In using the Sheth. Sheth. To formulate and estimate the relationship between brand choice and its determinants. the respondent must be a user of shampoo (or toothpaste) and must have purchased the product within the past six months. however. or a marketing research agency.4 investigator has considerable knowledge of the personal care products and their markets. To test the predictive adequacy of the estimated models in terms of prediction rates and statistical information measures. To identify and measure the dominant attributes and situational factors that determine toothpaste brand choice. is delimited to Metro Manila. 2. 3. The comprehensive study of the aggregate toothpaste market attempts to address three specific objectives below. or who influence the buying decision of their respective households were chosen. Finally. new product development and product positioning. a simple . Thus.1 Sampling To limit the choice determinants to a manageable number. Metropolitan Manila is the most urbanized region of the Philippines and all the marketers of the target products have strong marketing presence. the respondent must not have a family member or a close relative working for a toothpaste marketer. only respondents who make the buying decision. The objective of the pilot study is to identify the salient attributes in the brand choice and these salient attributes are eventually used in discriminant and logistic regression analyses. and 3. Moreover. An understanding of brand choice and its determinants would improve decision making in market segmentation. This is appropriate because their objective is to obtain the independent variables to be used in a discriminant analysis later. the Metropolitan Manila region is very important because it accounts for at least forty percent of the sales of most companies. Method 3. having worked with the Philippine marketers for nine years from 1985 to 1993. a pilot questionnaire was administered.

6 persons 7 or more persons Average Monthly Income below Ps5. Interviewers were directed to get only one respondent from a household and the quota allocated for a certain suburb. items enclosed by parentheses are percentage of people responding. the major brands’ attributes arguably stand out more than the smaller brands.5 random sample was considered more representative of the market because the brands do not have equal market shares. The main survey was conducted last July to August 1996 with the assistance of fifteen interviewers. Table 1. A majority of the respondents possess at least 10 years of education. and those under the 26 years of age comprise most of the respondents to the survey.4 persons 5 . 2 Details of the sampling plan and the actual sample obtained from each city/municipality may be obtained from the author.000-15. and earn an average monthly income between Ps5. Except for the response rate.000 above Ps15.000-15.e. Unmarried females. .000. interviewers were selected based on their familiarity to certain suburbs in the sampling area. SAMPLE DEMOGRAPHIC SUMMARY Demographic Variable Number of people surveyed Number responding (percentage) Males Females Respondents under 26 years of age Number of unmarried respondents Education: at least 10 years at least 14 years Toothpaste 500 451 (90 %) 208 (46 %) 243 (54 %) 286 (63 %) 252 (56 %) 449 (99 %) 177 (39 %) 21 117 202 111 ( 5 %) (26 %) (45 %) (24 %) Family Size: 1 . Except for the sampling method.2 persons 3 . Some brands tend to dominate the market and hence by intuition. Table 1 describes the sample.B.2 Respondents were selected by the interviewers from various suburbs in each city or municipality. satisfy the three requirements described above). The composition of the sample is similar to the pilot study sample in many aspects. the characteristics of the respondents in the survey sample are the same as the pilot study (i. To collect the brand choice data. Hence.000 Ps5.000 125 (28 %) 241 (53 %) 85 (19 %) N. the main questionnaire was administered. A total of 451 individuals were selected using a multistage sampling with area quotas to reduce the normal sampling variation associated with simple random sampling and systematic sampling.

3. .9 percent with incomes between Ps12.000 in the Philippines (National Statistics Office. In addition. The questionnaire contains various product attributes and choice situations that may affect brand choice.5 percent of Metro Manila families have monthly incomes below Ps5. 1994 Family Income and Expenditure Survey). In addition. 94-96) model. whereas about 66 percent of the Metro Manila population is aged below 30 years. Both the pilot and main questionnaires were reviewed by Victoria University’s Human Research Ethics Committee prior to their use during the field research. pp. The same survey also found that 23. D.000-12. Whilst the population has almost equal ratio of females to males.500. and E classes. 1995). compared to the Metro Manila average of 4.7 persons (1995 Population Census). 1996). The participants from each group are represented by a broad mix of social classes: from B/upper C (middle class) to C. 34. and only 3.6 At least two-thirds of the respondents belong to a household with 3 to 6 persons. Second. where mothers choose the toothpaste brand of their families (Personal Communication 2. However. First. these biases appear to be in the right direction. starting with the questions outlined by the Sheth-Newman-Gross (1991. These are the dominant attributes previously identified after performing a factor analysis of the pilot study data. Kahn and McAlister 1987. it is generally the females who make the decision in purchasing personal care products like shampoo and toothpaste. more than half of the respondents have incomes that is close to the average monthly family income of Ps9. The pilot questionnaire seeks the opinion of toothpaste consumers on brand purchase and usage issues. To make the attribute listing as extensive as possible. At any rate. With regard to monthly average income. The survey is conducted in two stages. at least 63 percent of the respondents have ages below 26 years. one needs to note two limitations which may result in sampling bias: being too orientated towards females and lower income people. the main survey questionnaire gathers opinions of respondents on a set of alternative brands according to a reduced number of attributes.000.500-42. This is particularly true for toothpaste. the attribute list was 3 Details of the pilot questionnaire may be obtained from the author.7 percent of families have monthly incomes exceeding Ps42. and Ps7. it was supplemented by attributes from other toothpaste empirical studies (Feinberg.000. The moderator of each group attempted to facilitate a free flow of discussion.2 Instrumentation The research design uses the survey method to collect evidence to address the research problem.000. It seems fair to say that the sample is representative of the urban population. Horowitz and Louviere 1995. Three focus group discussions (FGDs) among eight to ten users of three major toothpaste brands were conducted.500 in Metro Manila. 37. Park and Srinivasan 1994).8 percent have incomes between Ps5.3 It contains a large number of product attributes and choice situations that may affect brand choice as obtained from the exploratory focus group studies based on the Sheth-Newman-Gross (1991) model and from a major shampoo and toothpaste manufacturer (Personal Communication 1. the pilot questionnaire seeks the opinion of toothpaste consumers on brand purchase and usage issues.

Finally. as long as one can assume that the distortions introduced by assigning numerical values to ordinal categories are believed to be not substantial. treating ordinal variables as if they are metric variables can be justified (Kim and Mueller 1978. binary scaling approximates the way most people think (Thurstone 1959. . marital status. the respondents were presented with statements on product attributes and choice situations. The number of items belonging to each value in the pilot questionnaire is listed in Table 2. conditional. the respondents stated their preferred toothpaste brands. Factor analysis requires that variables have to be measured at least on the interval scale (Stevens. Such scales have only two possible answers for each question––yes/no. First.. (i) how well do the arbitrarily assigned numbers reflect the underlying true distances. 1995). emotional. Table 2. They cited three reasons for their choice. First. p. The respondents were required to complete three parts of the pilot questionnaire. When ordinal or categorical variables are used. Newman and Gross (1991) are scaled on a dichotomous or binary basis. Second. sex. Kim and Mueller (1978) held that two considerations have to be satisfied. These statements were grouped according to the functional. In a strict sense. and (ii) the amount of distortion introduced in the correlations (which become basic input to factor analysis) by the distortions in scaling. variables with limited categories are not compatible with factor analysis models. NUMBER OF PRETEST QUESTIONNAIRE ITEMS BY VALUES Values Functional Social Conditional Emotional Epistemic Total Toothpaste 33 13 11 10 9 76 The questionnaires of Sheth. and epistemic attributes as suggested by the Sheth-Newman-Gross (1991) model. Coombs 1952. Hence. Expected completion time of the pilot questionnaire is about thirty minutes. the pilot questionnaire obtained the basic demographic profile of the respondents. and monthly income. highest educational qualification. occupation. they wanted to force respondents to take a position in answering each question. 1946). they considered the binary scaling for its simplicity. 74). social.7 reviewed by the marketing research manager of a major Philippine toothpaste manufacturer (Personal Communication 1. Third. they failed to consider some very important conditions when using factor analysis. 1964). Second.. Respondents indicated their agreement or disagreement with the scaled statements as it applied to their preferred brand. These items include age. agree/disagree or most likely/least likely. However.

In terms of social groups that are associated with a toothpaste brand.71). the use of factor analysis may be justified for dichotomous data or variables with limited number of categories. new toothpaste (0.53).0 Results Five separate factor analyses were performed on the toothpaste pilot survey data. when the pilot questionnaire was designed.64). approval of dentists. The first factor (eigenvalue=15. The second conditional factor is dissatisfaction with current brand (10 percent of variance) because of price increase.60). The main questionnaire requires the opinions of respondents on a set of alternative brands according to a limited number of salient attributes. the greater the number of categories.8 Kim and Mueller (1978) further claimed that. two factors are extracted by using the scree plot criterion. Such factor loads high on items such as sales promotion (0.72).70) accounts for 62 percent of the functional value variance. and whitening power respectively. gives shiny teeth (0. Comrey (1993) also advised against the use of dichotomous data variables.63) and friends stop using brand (0. factors 2 to 4 are interpreted as cavity protection. deterioration in quality performance and flavor fatigue. Details of the main questionnaire in Filipino language and its English translation may be obtained from the author. The Kaiser’s measure of sampling adequacy is still high at 0. encourages children to brush their teeth (0. Therefore. 4 . prestigious department store (0. In addition. They concluded that if the researcher’s goal is to search for clustering patterns.6 percent) is identified to be lowincome earners.79). They also argue that nothing can justify the use of factor analysis on dichotomous data except on a purely heuristic set of criteria. The scree plot (Cattel 1966) in Figure 2 shows that up to eight factors can be extracted from the analysis of the 33 variable items. cleans teeth thoroughly (0. With the exception of the third item. The five items with the highest loadings are: makes mouth feel just like coming from a dentist after brushing (0. and long-lasting fresh breath (0. the smaller the degree of distortion. The first factor (91 percent of variance) is labeled as mainstreamers while the second factor (9. Therefore. factor 1 is interpreted as the toothpaste cleaning ability.61). The conditional value analysis obtains promotion (88 percent of variance) as the first factor. 4. in general. Newman and Gross (1991) was replaced by a 7-point Likert scale.90 for the 105 respondents. all items can be associated with the clean teeth and its benefits.75).4 Such attributes were identified from the factor analysis of the pilot questionnaire data. television advertisement (0. Table 3 is the first part of the functional value rotated factor structure.82). the binary scale recommended by Sheth. Using the same procedure.

SCREE PLOT OF EIGENVALUES FOR TOOTHPASTE FUNCTIONAL VALUE | | | | + | 1 | | | + | | | | + | | | | + | | | | + | | | | + | | | | + | | | | + 2 | 3 | 4 5 | 67 | 89 0 12 3 + 4 5 67 89 0 12 34 5 67 89 0 12 3 | | | --------+-------+-------+-------+-------+-------+-------+-------0 5 10 15 20 25 30 35 Number 16 14 12 E i 10 g e n v a 8 l u e s 6 4 2 0 .9 Figure 2.

0 0.71668 0.40 minimum criterion.0 FACTOR3 dentists approval 0.0671 1.79712 0.0527 Eigenvalue Variance Explained *Zeroes replaced all items that failed to hurdle the 0.0 0.0 0.0 0.0 0.0 0.76752483 .0 0.47797 0.40779 0.0847 1.61217 0. Kaiser's Measure of Sampling Adequacy: Over-all MSA = 0.10 Table 3.0 0.0 0.0 0.3358 0.6989 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.63969 0.0 0.0 0.0 0.0 0.0 0.7057 0.41981 0.71527 0.0 0.40117 0.51579 0.62922 0.0 0.0 0.0 0.0 0.81921 0.0 0.1461 0.57665 0.65376 0.0 0.90204418 Eigenvalues of the Reduced Correlation Matrix: Total = 25.0 0.6201 2.0 0.0 0.65081 0.0 0.84359 0.0 0.45461 VARIABLE NAME PROPHYLAXIS FEEL CLEANS TEETH THOROUGHLY ENCOURAGE CHILDREN SHINY TEETH LONG-LASTING FRESH BREATH STRONG TEETH TARTAR REDUCTION ALL DENTAL PROBLEMS HEALTHY TEETH WORKS AFTER BRUSHING FRESH BREATH CAVITY PROTECTION GUM PROTECTION CONFIDENCE DENTAL SEAL DENTISTS RECOMMENDED LEADING MFR SENSITIVE TEETH PLAQUE REDUCTION MOUTH FEELS CLEAN WHITE TEETH TEETH FEEL SMOOTH EVERYDAY USE HAS FLUORIDE 15.0 0.0 0.0 0.0 0.0 0.71400 0.0 0.44349 0.43725 0.0 0.40332 FACTOR4 white teeth 0. PARTIAL ROTATED FACTOR STRUCTURE FOR TOOTHPASTE FUNCTIONAL VALUE PRINCIPAL FACTOR ANALYSIS WITH VARIMAX ROTATION* FACTOR1 cleaning ability 0.57106 0.0 0.0 0.0 FACTOR2 cavity protectn 0.54981 0.53315 0.0 0.0 0.0 0.64849 0.3283194 Average = 0.0 0.0 0.64671 0.0 0.0 0.60651 0.0 0.0 0.0 0.47856 0.0 0.57241 0.42678 0.0 0.0 0.0 0.57487 0.0 0.0 0.0 0.

2. A scale is internally consistent when its items are highly intercorrelated (DeVellis 1991. .40 0. 3. one should consider shortening the scale. between 0. QUESTIONNAIRE ITEMS USED FOR TOOTHPASTE SCALES Questionnaire Itemsa My toothpaste brand.70. 2. 0. is similar to the aspirer mind-set factor in shampoo. It loads high on items such as rich (0. between 0.88 0.90. protects my gums. It is based on the average correlation of items within a test.82 0.84 Factor Loading Scale Name Alpha Whitening power Cavity protection 0. leaves teeth feeling smooth.71 0. much above 0.60. protects my teeth from cavities. DeVellis (1991) formulates these comfort ranges of research scales which may serve as starting point: below 0.65 and 0. attractive (0. makes my mouth feel just like coming from my dentist after brushing with it.1 Reliability Measures The factors and their underlying item variables were subjected to reliability analysis. minimally acceptable. Finally. the novelty items are summarized into two factors: “curiosity. however.80.. The other factor. helps strengthens teeth.58 0. between 0. undesirable. makes my teeth strong and healthy.65. and Cronbach alphas.61). 4. the emotional value analysis highlights two factors. 4.62). 3. Theoretically. their item measures. factor loadings.70 and 0.. a major assumption is that the items on the scale are positively correlated with each other because they are measuring a common entity. 1. 3. unacceptable.65 0. The reliability coefficient of the scale and its items would enable other researchers to duplicate the study later.91. and young (0.61 0. sales promotions or even trying their friends’ different brand.79 to 0. The minimum acceptable alpha varies from 0.90. reduces plaque.76).84 . Cleaning ability 1. if items are standardized. respectable. 1.72 0. Nunnally 1978).70 among researchers.45 0. between 0. and for a “change of pace” mainly to get a better tasting toothpaste. alpha can take values from 0 to 1.50 to 0.80 0. The alpha values range from 0. cleans my teeth thoroughly. packaging redesigns. Alphas were calculated for each labeled factor.11 Furthermore.” brought about by new brands.80 and 0. To test internal consistency the most commonly used is Cronbach’s (1951) coefficient alpha.55 0. Thus. Table 4. helps to keep my teeth white. The first one is labeled confident (88 percent of variance) describing the contented feeling of having clean and healthy teeth. Table 4 lists the scales. very good. helps to make my teeth shiny.60 and 0. 2.

After viewing a convincing television advertisement.63 0.84 Flavor variants Dentists’ approval Price 0. 2. 4. contains fluoride to fight tooth decay.62 0. 3. contented when I use my brand. 3. has a low price.42 0.66 0. Conditions which might cause you to switch to other brands. 1. 3. has attractive paste/gel color. 2.75 0. happy when I use my brand. is good value for money. reduces tartar build-up.42 0.57 0. 1. When a prestigious department store sells another brand.52 0.67 0.63 0. leaves long-lasting fresh breath.40 0.79 0. 2.64 0.46 0.73 Alpha 0. good for sensitive teeth.91 a A seven-point Likert scale (7 = Strongly Agree and 1 = Strongly Disagree) was used to assess the scale items.72 0.86 0. freshens my breath.65 0.12 Scale Name Tartar reduction Fresh breath 1. 1. contains new ingredients. When other brands have sales promotion. 1. 2. 2.65 0. is affordable.89 Promotion 0. Product Innovations Factor Loading 0.69 0. 3. . 4.65 0. 2. 1. Questionnaire Itemsa cares for all dental problems. 1.80 Taste 0.82 0. 1. 2. When there is a new toothpaste. offers convenient opening/closing.40 0. has pleasant minty taste I like. healthy when I use my brand. 3. I feel .81 0. 2. 1.44 0. has different flavors to choose from.49 0.80 0. is good for the whole family. is made by a leading manufacturer. 5. is recommended by dentists. confident when I use my brand.65 0..79 Confident feeling 0.. 3. Feelings associated with you decision to use your toothpaste brand.43 0.82 0. 3. 4.86 0. 2. is good for everyday use. helps encourage children to brush their teeth regularly. is approved by dentists. leaves mouth feeling clean and healthy.81 0.51 0.

5 Difference (percent) 0. The low percentages for brushing after smoking and after drinking alcohol appear to be explained by very few smokers or drinkers in the sample that is dominated by females.5 Use Toothpaste? (percent) 83.7 20. while 63.0 19. About 42 percent of the respondents seem to have a habit of buying several toothpaste brands at the same time.7 percent. In replying to a separate question.5 0. Like shampoo.3 72.1 90.0 .9 20.4 68.5 0.3 90. Brushing with toothpaste is highest before going to bed at 93.0 19.3 93. Over sixty percent of the toothpaste respondents practice brand switching behavior.4 percent claim to purchase toothpaste for family use.5 percent) use the toothpaste only if it was their chosen brand. toothpaste is also marketed in smallsized sachet packs of 5 and 10ml.9 68. 98 percent believe that it is important to use toothpaste when brushing teeth. There is practically no difference between the percentage of those who brush their teeth and the percentage of those who use toothpaste during brushing.2 0. Of this number. sharing of toothpaste is predominant in 327 people (72 percent). However. Another vital information is that about 43. Incidence of brushing with toothpaste three times a day is 53 percent.3 0. Table 5. Unlike shampoo where users tend to have their personal brands. only 40.2 Toothpaste Usage About 90 percent of the respondents brush their teeth with toothpaste at least two times a day. 282 people (62.8 93. This finding supports the view that even in urban areas of the Philippines a family still uses a particular toothpaste brand each time. The remaining packaging sizes are in tubes of 25.6 73.0 Brushing is synonymous with using toothpaste. INCIDENCE OF BRUSHING AND BRUSHING WITH TOOTHPASTE Possible Brushing Time After getting out of bed Before going to bed Before going out Before meeting people After eating After smoking After drinking alcohol Brush Teeth? (percent) 84.1 percent claim to be loyal to only one toothpaste brand. Table 5 contains incidence of brushing and brushing with toothpaste.13 4. Not surprisingly.5 percent buy toothpaste for their own use.3 percent and after eating at 90.2 . 1996). only about 15 percent of the toothpaste business is in sachets because of the proliferation of low priced brands (Personal Communication 2. 50. . 100 and 150ml.

a Wall Street Journal (1992) article says that many dentists view brushing with water and no paste. flossing and gargling with fluoride rinse accomplish the same results as using a toothpaste. which is a useful tool in classifying respondents into their brands. the main difference between the two products lies in the consumer perception of the primary benefits. In this study. The investigation employed 24 cases to every attribute which is slightly higher than the ideal ratio recommended by Stevens (1992) of 20 cases to every variable. Finally.3. 4. some primary benefits of toothpaste like cavity prevention or tartar reduction are inherently hard for customers to evaluate even after long usage. there is clarity in interpretation because the separation of the groups along one function is unrelated and independent to the separation along a different function. . Only 40 percent of toothpaste users purchase toothpaste for personal use compared to 60 percent for shampoo. However. brands that appear to be similar can be identified. Hence. three toothpaste brands on twelve variables. There is parsimony because in comparing. Moreover. Contrary to the belief held by most consumers.14 Incidence of brand loyalty among toothpaste users is higher than among shampoo users. Sample size adequacy is an important factor to consider in designing a discriminant study. say for example. It also identifies what variables are useful in the classification. Therefore. 4. et al. only two discriminant functions describe the difference between the brands. This phenomenon has led Park and Srinivasan (1994) to conclude that toothpaste consumers are far more susceptible to correct or incorrect claims made by the manufacturers. This implies that toothpaste is mainly shared within a household. discriminant analysis was utilised to describe the major differences among toothpaste brands and to classify consumers into their chosen brands on one or more quantitative variables. toothpaste is a classic example of a “credence good” (Darby and Karni 1973).1 The Linear Model Hair. it is possible that respondents who are not the toothpaste buyers may be indifferent to the brand chosen by their family representatives. through a territorial map generated in the analysis. Therefore. Huberty 1975). (1995) stated that discriminant analysis is the appropriate statistical technique when the dependent variable is categorical (nominal or nonmetric) and the independent variables are metric (interval or ratio data). Discriminant analysis achieves these objectives with parsimony of description and clarity of interpretation (Stevens 1992). The main objective of this chapter is to determine a discriminant model that best classifies the respondents into their chosen brands. Two Monte Carlo studies implied that the sample size must be large enough relative to the number of variables so that the standardized coefficients and the correlations become stable (Barcikowski and Stevens 1975.3 Toothpaste Discriminant Models This section attempts to model the relationships between toothpaste brand choice and its determinants using discriminant analysis. the main criterion for model selection is high predictive accuracy subject to the satisfaction of the underlying critical assumptions in model building. On the other hand. Shampoo primary benefits are more perceivable than toothpaste.

and confidence contribute most to the overall discriminant function. On the other hand. which may include pleasant taste during brushing and lingering mouth feel after brushing.2438 Fcn 1* 2* Eigenvalue . dentist. and the structure matrix. Table 6 outlines the variance explained by the discriminant functions. An examination of the standardized coefficients identified the attributes that contribute most to the value of the discriminant function and useful in classifying consumers to their selected brands. The structure matrix also indicates the contributions of variables. Performing univariate analyses screened out three attributes. and Hapee. function 1 classifies the brand as Hapee when its value is negative and Colgate when its value is positive.0632 *Marks the two canonical discriminant functions remaining in the analysis. Whilst taste is also highly correlated with function 1. it has a higher absolute correlation with function 2. Most attributes correlate to discriminant function 1 and the variables with at least 0.15 The analysis considered only three toothpaste brands having the best market shares namely Colgate. to generate two canonical discriminant functions. An examination of the standardized coefficients reveals that cleaning ability.72 100. Function 1 is good at classifying Hapee (3) and Colgate (2). the territorial map in Figure 2. tartar. Meanwhile. Table 6. In the case of function 2. The first discriminant function explains 65. .28 percent of variance and identifies taste and cavity protection as the largest contributors. For any value of function 2. shows that both functions are important for classification. function 2 classifies a brand as Hapee when its value is negative and Close-Up when its value is positive. Figure 3 illustrates the territorial map that shows the separation between the brands. the second discriminant function accounts for 34. The following tables and figures were produced by the SPSS Discriminant Procedure as results of the analysis. These two attributes can be summarized as sensory benefits. Finally.72 percent of variance. Close-Up.28 Cum Pct 65. tartar reduction. CANONICAL DISCRIMINANT FUNCTIONS: TOOTHPASTE Pct of Variance 65. the toothpaste brands serve as groups or classes while the twelve attributes act as independent variables.50 correlation are clean. Thus. Table 7 includes the test of the null hypothesis that there is no difference between the population group means using Wilks’ lambda. For any value of function 1.3287 . function 2 is good at classifying Close-Up (1) and Hapee (3). not significant at 90 percent. the standardised coefficients.1212 .72 34. the taste and flavor variants have the largest absolute correlations.00 Canonical Corr . On the other hand. In the study. and cavity. The classification between Close-Up and Colgate requires both functions. function 1 summarizes the functional and cosmetic benefits required in a toothpaste.

17551 -0.13955 0.50003 0.11201 -0.27306 0.0000 0.19170 1.60574* 0.38127 0.0012 STANDARDISED DISCRIMINANT FUNCTION COEFFICIENTS Attribute INNOVATION CAVITY CLEAN CONFIDENT DENTIST FLAVOR TARTAR TASTE WHITE Func 1 Func 2 -0.419 25.20974 -0.59206* 0.02703 STRUCTURE MATRIX Pooled within-groups correlations between discriminating variables and canonical discriminant functions.17680 0. .33846 0.38627* 0.05399 -0.04824 -0. Variables ordered by size of correlation within function.26863 0.88520 -0.35415 -0. Func 1 CLEAN DENTIST TARTAR CAVITY INNOVATION WHITE CONFIDENT TASTE FLAVOR 0.617 df 18 8 Sig 0.28293* 0.39720 -0.74044 0.60526* 0.64221 -0. THE LINEAR DISCRIMINANT MODEL FOR TOOTHPASTE TEST OF EQUAL GROUP MEANS USING WILK’S LAMBDA After Fcn 0 1 Wilks' Lambda 0.03441 0.16 Table 7.78853 0.36595* *denotes largest absolute correlation between each variable and any discriminant function.37415* 0.70312* 0.13740 0.72354 0.18104 Func 2 0.940555 Chi-square 73.24335 -0.05933 0.54114* 0.838918 0.10633 0.

0 Canonical Discriminant Function 1 C a n o n i c a l D i s c r i m i n a n t F u n c t i o n 2 Symbols used in territorial map 1 2 3 * Close-Up Colgate Hapee indicates a group centroid Function 1 Function 2 represents functional and cosmetic benefits represents sensory benefits .0 + 112+ | 1122 | | 122 | | 112 | | 1122 | | 122 | 2.17 Figure 2.0 -2.0 3.0 3.0 -1. TERRITORIAL MAP FOR TOOTHPASTE -3.0 -2.0 + + + + + 112 + | 1122 | |11 122 | |33111 112 | | 33311 1122 | | 3311 122 | 1.0 + + + 32 + + + | 32 | | 32 | | 32 | | 32 | | 32 | -2.0 1.0 1.0 .0 -1.0 + 32 + +---------+---------+---------+---------+---------+---------+ -3.0 +---------+---------+---------+---------+---------+---------+ 3.0 .0 2.0 + 33111 + + 112 + + | 33311 122 | | 33111 112 | | 33311 1122 | | 3311 * 122 | | 33111 112 | .0 2.0 + + +33311 1122* + + + | 331122 | | 332 | | * 32 | | 32 | | 32 | -1.0 + + + + 32 + + + | 32 | | 32 | | 32 | | 32 | | 32 | -3.

the assumption of multivariate normality is reasonable.0. Most likely. dentist. show that in all the nine independent variables.01) rejects the null hypothesis of equal population covariances. the territorial map indicates that Colgate’s group centroid has the highest and only positive value for function 1. Although the sample chosen in this study has Close-Up bias. Although the prediction rate is above 50 percent it is necessary to check for the assumptions of multivariate normality and variance homogeneity. the percent of correctly classified cases is only 60. 1996). Taste. The distribution is negatively skewed as shown by the median line at the top of the box.98249. the means are equal but there is heterogeneity of variances. the Close-Up group centroid has higher value than Colgate. df=90. Using equal group sizes as priors. These are externally valid findings as they closely mirror the realities in the Philippine toothpaste market. It appears that Hapee does not meet the consumers’ requirements in a toothpaste. Moreover. It is interesting that all the boxplots have Colgate as the median brand. p<0. it is expected that on some occasions Close-Up users may be switching to Colgate as shown by the closeness of the group centroids of the two brands. Colgate is still rated higher than Close-Up in terms of functional benefits.5 and 2. Shapiro-Wilks’ and Lilliefors normality tests. Colgate dominates the therapeutic segment and it is popular among people with families. Consider the boxplot of 247 respondents who gave a taste rating of 9. the null hypothesis of equal variances is rejected for five of the nine variables: cap. it seems that Hapee (3) is not rated highly for its taste. Thus.94 percent or an error rate of 39.0 to their brands. Multivariate normality is a necessary condition to ensure optimality in the linear discriminant function. Consumers are only choosing Hapee because of its low price. This is a violation of one assumption of the linear function. Colgate is the consumers’ benchmark for toothpaste and each brand is evaluated and compared against Colgate. Hence. and white. the consumers are rating the taste of Close-Up higher than Colgate. On the other hand. Figure 3 displays six boxplots. Colgate is the dominant brand among the 78 people who gave a taste rating of 8. At least for this sample. However. . The first quartile marked by a whisker shows that Close-Up (1) users comprise the outliers. Therefore.06 percent.18 Furthermore. Hapee’s group centroid appears on the third quadrant. tartar.0 is just between Colgate and Close-Up. At 95 significance level. However in function 2. Thus. To understand the extent and character of differences between the brands in terms of the variable. clean. Colgate is the toothpaste brand preferred by most mothers (Personal Communication 2. the variability of those who rated their brands above 7. The median brand choice is Colgate (2) and the spread is between 1. it appears that Colgate is the toothpaste that provides the highest utility to the consumers. where both functions have negative values. The test for equality of group covariance matrices (Box’s M=922. Close-Up accounts for the cosmetic segment and it is patronized by younger people mostly aged 16-30 years. Moreover. one-way ANOVA and the modified LSD (Bonferroni) tests suggest that no two groups are significantly different. including normality plots.0. Close-Up and Hapee users are just outliers. a Levene test for homogeneity of variance on every independent variable confirms this finding.

The next section presents the results for the quadratic and nonparametric models. the error count estimates and the posterior probability error rate. then the quadratic rule is applicable. or triweight kernels to estimate the density. Mahalanobis distances are based on either the individual within-group covariance matrices . Johnson and Wichern (1982) asserted that the normality assumption seems to be more critical to the quadratic rule rather than the linear rule. Two methods are available to generate a nonparametric density estimate in each group: the kernel method or the knearest neighbor method. Parametric methods assume that each group has a multivariate normal distribution. biweight. while there is multivariate normality. In the kernel method.5 N= 19 13 38 78 247 30 361 144 26 100 239 88 328 303 357 356 115 43 84 30 5. 685).00 6.00 taste In conclusion. BOXPLOTS FOR TASTE DATA: TOOTHPASTE 3. the variances are not homogeneous.00 9.0 2. the SAS DISCRIM procedure computes two error rates. The procedure also computes the posterior probability of an observation belonging to each class.00 10.5 2.5 1.00 8. Nonparametric methods build distribution-free models and they are based on nonparametric estimates of group-specific probability densities.0 . Consequently. p. The SAS DISCRIM Procedure is able to determine the discriminant models using both parametric and nonparametric methods.5 3.2 The Quadratic and Nonparametric Models The quadratic discriminant function has a more complicated classification rule than the linear function. the fitted linear model may not be optimal. When normality appears to hold and the assumption of equal covariance matrices is seriously violated. Furthermore. One must note. 4. The kernel method may use any one of uniform. that when parametric method is used on a non-normal population the resulting posterior probability rate estimates may not be appropriate (SAS/STAT User’s Guide 1990.19 Figure 3. Epanechnikov. The error rate is simply the probability of misclassification. normal. However. however.3.00 7.0 313 111 331 213 120 345 3 7 74 355 180 204 90 113 425 248 3 5 6 20 417 48 42 161 126 348 brand choice 1. Huberty (1984) affirmed that the results of the quadratic classification rule are more unstable compared to those given by the linear rule when the samples are small and the normality assumption is not satisfied. Hence.

To reduce the bias. However.10 or the k-nearest neighbor rule at k=1. Huberty (1994) and Hair et al. Table 8 contains the classification or hit rates of both the parametric and nonparametric discriminant methods. For an extensive discussion of the two methods see Crask and Perreault (1977).12 percent from either the kernel method with equal bandwidth at r=0. Higher hit rates are produced by nonparametric methods than either the linear or quadratic function.08 percent in the holdout sample. These findings are consistent with the conclusions drawn from the territorial map. On the other hand. However. nonparametric models are appropriate for non-normal population distributions.10. The first method considers n-1 observations to determine the discriminant functions and then applies them to classify the one observation left out (Lachenbruch and Mickey 1968). pp.01 percent and a classification rate of 39. The r value specifies the radius for kernel density estimation while the k value is used with the k-nearest neighbor rule.06 percent (see Table 7).20 or pooled covariance matrix. Thus. Although there are various methods for choosing the smoothing parameters no simple solution is available to solve this problem. both methods have found limited use because only the BMDP (1992) statistical computer package provides them as a program option. Using the quadratic function has improved the classification rate from 60. p. 683). the crossvalidation rates may be calculated using two methods in the SAS DISCRIM Procedure. when the crossvalidation rates were examined. statisticians refer to the hit rate estimated under such conditions as apparent classification rate. Close-Up is similar to Colgate and both brands are significantly different to Hapee. However.94 to 67. the best discriminant model for prediction is the kernel method with unequal bandwidth at r=0. But what has to be noticed is that this classification rate has an optimistic bias because the same data set is used to define and to evaluate the classification criterion. Values of r and k determine the shape and irregularity of the density function. It has a L-O-O crossvalidation rate of 56. Some researchers err in accepting the classification rate as the sole criterion in choosing the best model. . 60-68. the k-nearest neighbor rule uses the pooled covariance matrix to obtain the Mahalanobis distances (SAS/STAT User’s Guide 1990. On the other hand. As such they are called smoothing parameters. An examination of the pairwise squared distances between the brands would demonstrate which brands are similar in terms of the nine significant toothpaste attributes (Table 9).5 This method is very useful whenever the sample size is small (Crask and Perreault 1977). The best classification rate is 89. Thus. 5 The two approaches using the leave-one-out principle are the U-method and jackknife method. (1995) also referred to this procedure as the leave-one-out (L-O-O) method. the difference between Colgate and Hapee is greater than that between Close-Up and Hapee.

40 r = 0.31 75.75 43.30 r = 0.73 * Uses the pooled covariance matrix in calculating the generalized squared distances.12 89.41 84. . PERCENTAGE CLASSIFICATION AND CROSSVALIDATION OF DISCRIMINANT METHODS CLASSIFICATION DISCRIMINANT MODELLING METHOD Parametric Methods Linear function Quadratic function Nonparametric Methods Using the Kernel Method Kernel density with equal bandwidth* r = 0.06 89.08 89.43 79.94 88.07 74.12 89.10 57.12 89.59 77.03 38.11 88.15 37.64 38.75 85.87 70.76 86.94 67.54 40.81 38.66 38.20 r = 0.80 82.21 Table 8.04 78.42 87.80 37.64 39.71 CROSSVALIDATION Using Holdout Sample Posterior Hit Rates Probability Hit Rate 43.67 38.66 52.12 89.65 41.93 82. The use of equal bandwidths (smoothing parameters) does not constrain the density estimates to be of equal variance.69 76.32 90.01 Hit Rates 60.06 88.04 CROSSVALIDATION Leave-One-Out Method Posterior Hit Rates Probability Hit Rate 49.55 36.10 r = 0.50 Posterior Probability Hit Rate 53.

49 39.30 r = 0.78 86.33 54.55 87.78 86.50 Epanechnikov kernel kernel density with equal bandwidth kernel density with unequal bandwidth Using the k-Nearest Neighbor Rule k=1 k=2 Posterior Probability Hit Rate 96.60 86.15 56.89 34.85 92.86 74.59 38.99 26.33 41.80 39.63 85.20 93.12 77.47 82.56 93.76 89.78 85.40 r = 0.10 r = 0.08 37.48 89.45 36.01 56.98 95.12 80.03 76.78 96.20 r = 0.00 95.62 78.82 CROSSVALIDATION Using Holdout Sample Posterior Probability Hit Rates Hit Rate 39.17 82.23 91.31 Hit Rates CROSSVALIDATION Leave-One-Out Method Posterior Probability Hit Rates Hit Rate 56.35 **Uses the individual within-group covariance matrices in calculating the distances.75 91.69 40.22 Table 8.39 88.06 39. CLASSIFICATION DISCRIMINANT MODELLING METHOD Kernel density with unequal bandwidth** r = 0.13 82.81 29.72 36.74 55.74 39.43 87. – Continued.25 27.17 89.93 41.56 90.10 91.50 55.12 81. .87 95.

this study provides a more useful picture because it utilizes direct consumer responses. Fourth.13319 Colgate Hapee 0 1.0 Conclusion The above results have a number of important implications to marketing management. NDF=9. It is true that the salient attributes can be indirectly found by an analysis of the brand market shares and the segmentation among the brands. it identifies the salient product attributes perceived by the consumers.36751 0 F Statistics. product managers may have the opportunity to know the strengths and weaknesses of their brands by examining the boxplots of the important variables. PAIRWISE SQUARED DISTANCES BETWEEN TOOTHPASTE BRANDS USING NORMAL KERNEL METHOD AT r = 0.44116 1. may serve as product positioning maps that summarize the consumer evaluations of the product brands in terms of the perceptual attributes. For toothpaste. First. Since the three toothpaste brands are targeting different customers.61227a 3.41982a Colgate Hapee 0 4. However. The analyses could be brought down to a micro level by determining the attitudes and demographics of people who are predisposed to certain product attributes. Colgate owns the therapeutic segment while Close-Up whose taste was rated higher captures the cosmetic segment. communicating therapeutic benefits . Hapee dominates the low price segment. manufacturers of each brand can be confident that competition from the other brands would not seriously affect their business. 5. Toothpaste segmentation as shown by the territorial map is crystal clear.99805a 0 The Prob > Mahalanobis Distance for Squared Distance to BRAND is significant at  = 0.01. Second.23 Table 9. Third. DDF=414 for Squared Distance to BRAND From BRAND Close-Up Colgate Hapee a Close-Up 0 3.10 Squared Distance to BRAND From BRAND Close-Up Colgate Hapee Close-Up 0 0. some knowledge of the attributes that consumers perceive to be important may prove useful in the concept development of marketing communications such as television and radio advertisements. the territorial maps and the pairwise squared distances between brands. generated by multiple discriminant analyses.

rather than Colgate. However. there are several reasons that make logit modeling more advantageous. Finally. a more compelling reason is that the use of a much wider range of predictors such as categorical variables is not possible with discriminant analysis. another paper would discuss the results of logit modeling studies. the mathematical choice models may guide management in explaining and predicting brand choice of competing brands and support them in developing competitive strategies. . Cosmetic benefits and lifestyles may be more appropriate for Close-Up. the multinomial logit model relates two brands to each other. management must not consider these models to be the truly representing the brand choice because of the assumptions inherent in the use of the mathematical modeling techniques. In view of this.24 and providing assurance on product quality is critical. Finally. discriminant analysis is a useful classification tool but the assumption of normality appears to be crucial. Although nonparametric methods have overcome this problem. and further refinements may need to be made. research and development teams may benefit by knowing the important consumer attributes as they develop new product formulations and packaging. Moreover. Besides having no assumption of normality. In conclusion. The models’ diagnostics must be validated by other methods.

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