1 Department of Management, Aarhus BSS, Aarhus University2 Department of Management - MAPP - Centre for Research on Value Creation in the Food Sector, Department of Management, Aarhus BSS, Aarhus University3 Department of Management, Aarhus BSS, Aarhus University
Purpose – The purpose of this paper is to examine the importance of tobacco differentiation attributes (i.e. nicotine and tar content, length, flavor and thickness) in market performance and loyalty levels of brands. Design/methodology/approach – The study adopts a stochastic approach to measure brand loyalty at the attribute level using the Dirichlet model as a benchmark tool. Data based on the Juster Probability Scale were collected from a sample of n ¼ 155 young smokers in Iceland. Findings – Product differentiation strategies operate differently. Light nicotine and tar content encourages smokers to switch across brands and within family brands, resulting on improved market performance and loyalty levels. Length and thickness-related differentiation are slightly better than nondifferentiation in inducing loyalty, but worse in improving performance. Practical implications – Two types of categorization prevail in the category: first, a family brand-based, mainly relevant for large brands; and second, an attribute-driven, apparent for small family brands. Two types of switching behaviors can also be considered: first within family brands, switching among product attributes for the larger brands; and second within product attributes, switching among family brands for smaller brands. Social implications – These findings have profound implications for the development of anti-smoking policy in terms of the exact functioning of product differentiation as part of the tobacco industry’s strategy. Public health policy makers can benefit in their fight against nicotine consumption by taking public policy counter-measures (e.g. completely banning or regulating production of “light” nicotine and tar content brands) that can limit the anticipated success of differentiation strategies of the tobacco industry. Originality/value – Not much research has been done on loyalty within the tobacco category, possibly due to the ethical considerations accompanying managerial suggestions about smoking. The contribution of the present work lies in the provisions of evidence-based insights to help brand managers and other stakeholders (e.g. public health policy makers) to take informed decisions.
Journal of Product and Brand Management, 2013, Vol 22, Issue 2