Purchasing Behavior of Islamic Brands: An Experimental Research. Author: OZGE OZGEN - University: DOKUZ EYLÜL UNIVERSITY

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Purchasing Behavior of Islamic Brands: An Experimental Research Author: OZGE OZGEN - Email: ozge.ozgen@deu.edu.

1 Purchasing Behavior of Islamic Brands: An Experimental Research Author: OZGE OZGEN - ozge.ozgen@deu.edu.tr University: DOKUZ EYLÜL UNIVERSITY Track: Product and Brand Management Co-author(s): Sumeyra Duman Kurt (Dokuz Eylul University) Access to this paper is restricted to registered delegates of the EMAC 2013 Conference.

2 Abstract Purchasing Behavior of Islamic Brands: An Experimental Research Islamic branding has become a popular topic among academicians due to increasing demand for Islamic products and intensified competition among companies to capture this customer segment. This study is the first to apply an experimental research in this field to predict and observe purchase behavior for Islamic brands through theory of reasoned action (TRA). Specifically, the applicability of TRA for Islamic branding alternatives (true Islamic brand, inbound Islamic brand, domestic brand with halal certificate) is assessed via a between-subjects experimental design. The results show that consumers have more unfavorable attitude and subjective norm for buying true Islamic brand whereas the actual purchase behavior did not differ across conditions. Keywords: Islamic branding, halal certificate, theory of reasoned action, experimental research Track: Product and Brand Management

3 1. Introduction Multinational companies (MNC) (both with and without Islamic nuance) started to concentrate on Islamic branding as demand for Islamic brands increased which also created considerable attention among academicians. Different versions of Islamic branding practices can be seen not only in the markets with majority of Muslim consumers but also in markets with non-muslim-majority consumers. For example, products with halal certificates receive significant attention from Muslim consumers in European countries. Turkey has a majority of Muslim population but at the same time is a secular and democratic country. Islamic branding practices increased in Turkey as consumers with religious tendency started to have higher income and became more brand-conscious in terms of Islamic marketing. Although all products produced in Turkey are assumed as halal in default by consumers, due to the widening of the customer segment with Islamic sensitivities (Sandikci & Ger, 2002; Sandikci & Ekici, 2009) many Turkish brands started to obtain halal certificates. This tendency created new marketing opportunities in Turkey whereas whether this strategy will turn itself into a positive attitude or purchase behavior still remains unquestioned by the researchers. In this respect, the aim of this study is to analyze the applicability of TRA and mediating effect of intention to purchase three distinct types of Islamic brands; (1) true Islamic brand, (2) inbound Islamic brand, (3) Turkish brand with halal certificate. This study fills the gap in the Islamic branding literature by addressing the consumer attitudes and purchase behavior for Islamic brands and is the first study conducting an experimental research in this field, which constitute its originality. 2. Islamic branding Halal is an Arabic word which means permissible or lawful in Islam and 70 per cent of Muslims follow halal standards (Alserhan, 2010a). There are 1.57 billion Muslims living in the world today and are expected to account for 30 per cent of the world s population by 2025 (Roberts, 2010). Additionally, the halal market accounts for $2.1 trillion and is increasing $500 billion a year (Ogilvy Noor, 2012). The halal market has grown to other sectors besides meat such as halal chocolate, halal soap and halal perfume in a way that this growth in halal industry can be assessed as a paradigm (Wilson & Liu, 2010 and 2011). Besides Muslim originated companies, non-muslim MNCs (e.g. Nestle, Unilever, L Oreal) also have growing interest for addressing Islamic dietary, lifestyle and consumption requirements (Alserhan, 2010a). The first reason underlying this trend is that Islamic market derives attention not only from Muslims but also from non-muslims who are motivated by simplicity, purity and humanity that Islamic brands are assumed to possess (Alserhan 2010a, 2010b). Additionally growing interest in Islamic consumption, greater empowerment of Islamic consumers, attempts of Islamic countries to create Islamic brands, increasing quality standards of Islamic products and increasing availability of Islamic products in non-muslim-majority markets (Alserhan 2010a, 2010b; Temporal, 2011) contribute to increasing popularity of Islamic brands. Brands are described as Islamic when; (1) these brands are Shariah-compliant; (2) they originate from an Islamic country; (3) their target is Muslim consumers (Alserhan, 2010a). Alserhan (2010b) proposes a four type-categorization for Islamic brands which is also used in this study; (1) true Islamic brands (halal, produced in Islamic country, target Muslims), (2) traditional Islamic brands (assumed to be halal, originate from Islamic countries, target

4 Muslims), (3) inbound Islamic brands (halal, originate from non-islamic countries, target Muslims), (4) outbound Islamic brands (halal, originate from Islamic countries, not necessarily target Muslims). This categorization may result in different attitudes, subjective norms, intention and purchase behavior because Muslims pay attention to their actions in the context of Islamic rules which pertains Muslims to be careful about what, when, where, how, from who and how much to consume (Alserhan, 2010b). Therefore, the researchers propose the following hypotheses: H 1 : Attitude towards the chocolate brand differs among the three types of Islamic brands H 2 : Subjective norms related to the chocolate brand differs among the three types of Islamic brands H 3 : The intention to choose the chocolate brand differs among the three types of Islamic brands H 4 : Purchasing behavior of the chocolate brand differs among the three types of Islamic brands 3. Theory of reasoned action The model of the present study is derived from TRA developed by Fishbein and Ajzen (1975). According to TRA, a person s actual behavior can be predicted through behavioral intention, which refers to the expectance and probability of buying (Tuu & Olsen, 2012) and individual s conscious plan to make an effort to purchase a brand (Spears & Singh, 2004). TRA defines a person s intention as a function of two basic determinants. First determinant includes individual s favorable and unfavorable evaluation about object/performing behavior and called as attitude toward the object/behavior (Fishbein & Ajzen, 1975; Ajzen, 2001). Second determinant is subjective norm defined as the person's beliefs about what important referents think (s)he should do (Wiener, 1982). TRA model has received significant attention within the field of consumer behavior and Sheppard, Hartwick and Warshaw (1988) concluded, as a result of a meta-analysis of past research on TRA, that the predictive utility of the model was strong across conditions. Evidently, the theory has also been applied to Islamic marketing contexts. For example, Hanudin (2012) analyzed Islamic credit card usage intention among Islamic banks customers through TRA. Additionally, Lada, Tanakinjal and Amin (2009) used TRA to predict intention to purchase halal product. Alam and Sayuti (2011) used Theory of Planned Behavior, which is an extension of TRA, to examine halal food purchasing behavior in Malaysia. In the same context, Mukhtar and Muhammad (2012) investigated the role of Muslim attitude towards Halal products, their subjective norms and religiosity in predicting intention. According to TRA, the more favorable attitude and the greater social pressure lead to a stronger intention that turns into an actual behavior (Ajzen & Fishbein, 1980). Hence, three additional hypotheses can be portrayed as: H 5 : The relation between attitude and behavior is mediated by intention for Keyif (Turkish brand with halal certificate) H 6 : The relation between attitude and behavior is mediated by intention for Friedel (inbound Islamic brand) H 7 : The relation between attitude and behavior is mediated by intention for Noor (true Islamic brand)

5 4. Method One hundred-twenty undergraduate students at a major Western university in Turkey participated the experiment. The experiment was announced through flyers posted around the faculty building. The between-subjects experimental design consisted of three conditions (adapted from Alserhan, 2010b): true Islamic brand (n=40), inbound Islamic brand (n=40) and Turkish brand with halal certificate (n=40). The item used in the experiment was chosen as chocolate because food plays an important role in Islam, and Muslims expenditure on groceries is high due to their large families and the literature is in its infancy in terms of halal branding in FMCG (Alserhan, 2010a; Wilson & Liu, 2010). Subjects were paid 2.5 TL (approx. 1.00) prior to the presentation of the choice and were randomly assigned to one of the three conditions. Different scenarios were designed for the conditions, which provide information about the brand. In each scenario brand name was depicted as a fictitious brand name in order to minimize prior attitudes, which may result in subject bias. The brand names manipulated in the scenarios were selected through a pretest in which 21 participants rated alternatives for the brand names on seven-point scales (1= Islamic brand name, and 7= non-islamic brand name, 1=not a domestic brand name, and 7= domestic brand name). As a result, Noor (M Islamic =5.10, M domestic =2.81) was selected for true Islamic brand condition, Friedel (M Islamic =2.19, M domestic =2.19) for inbound Islamic brand condition, and Keyif (M Islamic =2.71, M domestic =5.29) for Turkish brand with halal certificate condition. Background information, which covers three different conditions about the company and brand, is presented. For Islamic brand condition the following scenario was used: Noor Chocolates plans to launch a new product in the Turkish market. They are produced in a Muslim country and target Muslim consumers. For inbound Islamic brand condition: Friedel Chocolates as a MNC plans to launch a new product in the Turkish market. They have halal certificate issued by Turkish Standards Institution (TSI) was used. In Turkish brand with halal certificate condition: Keyif Chocolates as a Turkish company plans to launch a new product in the Turkish market. They have halal certificate issued by TSI was used. After reading these scenarios, subjects filled the questionnaire about attitude, subjective norm and behavioral intention for purchasing the brands. Attitude was assessed with a five-item semantic differential scale based on Shimp and Kavas (1984) and Chang (1998). On a sevenpoint scale, subjects were asked whether they think buying the brand was good-bad, usefuluseless, foolish-wise, valuable-worthless, harmful-beneficial. The subjective norm was measured by two-items on a seven-point scale based on Shimp and Kavas (1984): My family thinks I definitely (should not/should) buy this brand, My close friends think I definitely (should not/should) buy this brand. The subject s intention to buy the brand in the relevant condition was measured using two seven-point items based on Chang (1998): I intend to buy this brand in the future, I will make an effort to buy this brand in the future. Since the study was conducted in Turkey, back translation was used to assure the accuracy of the translation of the questions. After completing the questionnaire, the chocolate brand mentioned in the relevant scenario was presented to the subject. Chocolates were packaged compatibly (brand name, logo and halal certificate, depending on the condition, were designed resembling a real chocolate) to the three conditions. The experimenter asked the subjects whether they wanted to buy the chocolate or not for 1.00 TL (approx. 0.40). Since the constructs were formed through a theoretical framework, which was derived from a widely accepted theory, construct validity of the instrument is justified. Convergent and discriminant validities were also tested. Convergent validity is indicated by evidence that

6 different indicators of theoretically similar constructs are strongly interrelated (Brown, 2006). Therefore, a preliminary confirmatory factor analysis was undertaken to test the adequacy of the measurement model for TRA model, which consisted of three latent constructs and nine observed variables, was performed. Three nested models were compared and the hypothesized model treated the three variables as distinct. This most differentiated model was compared to a two-factor model, which combined attitude and subjective norm as one single construct, and to a one-factor model, which combined all three variables. The results revealed that the hypothesized three-factor model fit the data better than the two alternative models as indicated by significant χ 2 differences (χ 2 (df) for three-factor model: 80.9(24), two-factor model:173.8(26) one-factor model: 223.9(27)). Thus, the results provide evidence for discriminant validity (Anderson & Gerbing, 1988). Next, an exploratory factor analysis was used to confirm the dimensionality of the constructs per cent of variance is explained by three constructs (Attitude=32.2%, Subjective Norm= 22.3%, Intention= =20.9%). All factor loadings range from 0.54 to These results provide evidence for convergent validity (Bagozzi, Yi & Phillips, 1991). Internal reliability was computed independently within each of the constructs and yielded favorable results (Cronbach s α for Attitude =.890, Subjective Norm =.846, Behavioral Intention =.843). 5. Results Univariate analysis of variance, log linear analysis and regression analysis were conducted in order to test the hypotheses and mean scores for each construct were used. First of all, the univariate analysis of variance was used to test the hypotheses 1-3 which shows that attitude (F(2,117) = 5.111, p <.01, Adj. R 2 =.065), subjective norm (F(2,117) = 6.875, p <.01, Adj. R 2 =.090) and behavioral intention (F(2,117) = 5.730, p <.01, Adj. R 2 =.074) significantly differed across conditions. Group comparisons of the conditions for H 1 - H 3 through difference contrasts indicated that attitude (p >.05, for 95% CI, LB = , UB =.044), subjective norm (p >.05, CI = 95% for LB = -.620, UB =.686), and intention (p >.05, for 95% CI, LB = -.949, UB =.349) for purchasing Keyif and Friedel did not differ, whereas each dependent variable significant differences for purchasing Noor compared to other brands (Attitude: p <.05, for 95% CI, LB = , UB = -.160; Subjective Norm: p <.05, for 95% CI, LB = , UB = -.493; Intention: p <.05, for 95% CI, LB = , UB = -.363). Results indicate that the mean score of attitude toward purchasing Noor was 4.02 (SD = 1.310), which shows less favorable attitude compared to other brands. Additionally, subjects stated that their family and close friends think that they should not purchase Noor (M = 2.71, SD = 1.38) and also their buying intention for Noor was relatively lower than other brands (M = 3.49, SD = 1.55). In order to test H 4, log-linear analysis was employed and results revealed that conditions explained only 0.42% variance of behavior and buying behavior of three brands did not differ (p >.05), therefore H 4 is rejected. Log-linear analysis also reveals that more than 50% of respondents selected buying option. A series of regression models were employed according to Baron and Kenny (1986) s methodology to test H 5 -H 7. No mediating effect was observed for the conditions Keyif and Friedel both for attitude and subjective norm. Therefore H 5 and H 6 are rejected. On the other hand TRA model worked as intended for purchasing Noor and H 7 is accepted. To test the mediating effect of intention on the relation between attitude and behavior, first, a significant effect of attitude on intention was found (β =.816, p =.000, t = 5.866). Second, attitude significantly affected behavior (β =.883, p =.019). Finally, including intention in behavior as a mediator variable resulted as a loss in significance in the relation between attitude and behavior

7 (β =.481, p =.266), while the effect of intention remained significant (β =.721, p =.048). A Sobel test for the mediation model was also significant (z = 2.0, p <.05). To test the mediating effect of intention on the relation between subjective norm and behavior, first, a significant effect of subjective norm on intention was found (β =.639, p =.000, t = 4.246). Then, subjective norm significantly affected behavior (β =.556, p =.041). Finally, including intention in behavior as a mediator variable resulted as a loss in significance in the relation between subjective norm and behavior (β =.122, p =.751), while the effect of intention remained significant (β =.823, p =.026). A Sobel test for the mediation model was also significant (z = 2.25, p <.05). 6. Conclusion This paper provides preliminary assessment about Islamic branding concept in the framework of TRA. It is shown that in general, attitude, subjective norm, and intention did not differ for buying inbound Islamic brand or Turkish brand with halal certificate. On the other hand, buying true Islamic brand has been perceived differently compared to other brands. Consumers had more unfavorable attitude and subjective norm for purchasing true Islamic brand. In this respect, companies targeting Turkish consumers can be recommended to prefer using foreign or Turkish brand, which has halal certificate rather than a brand name which has Islamic means and points out an Islamic origin. Consumers may have shown a politically motivated brand rejection behavior (Sandikci & Ekici, 2009) but this inference needs further investigation. It is also important to note that actual buying behavior did not differ across brands and most of the consumers chose the option to buy. These brands were introduced as new brands entering the Turkish market and the products were low involvement products. Therefore consumers may have been triggered to try the products. On the other hand, even though the purchase behavior did not show difference at the initial launch in the market, consumer purchase behavior may change unfavorably in time depending on the attitude, subjective norm and intention formation since TRA was significantly meaningful for true Islamic brand. Nevertheless, Islamic brands can benefit from the first trial of the products on condition that they follow accurate marketing strategies that focus on converting attitudes from negative to positive. In this study, rather than decision making process, the outcome was examined which ignores the underlying thoughts that subjects spontaneously generate in the three conditions. This limitation also points out promising areas for further research. References Ajzen, I. (2001). Nature and operation of attitudes. Annual Review of Psychology, 52, Ajzen, I. & Fishbein, M. (1980). Understanding attitudes and predicting social behavior. Englewood Cliffs, NJ: Prentice-Hall. Alam, S. S. & Sayuti, N. M. (2011). Applying the theory of planned behavior (TPB) in halal food purchasing. International Journal of Commerce and Management, 21(1), 8 20 Alserhan, B. A. (2010a). Islamic branding: A conceptualization of related terms. Journal of Brand Management, 18, Alserhan, B. A. (2010b). On Islamic branding: brands as good deeds. Journal of Islamic Marketing, 1(2),

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