CONSUMERS’ DIFFERENTIAL BEHAVIOR TOWARDS PLATFORM-SHARING AND INDEPENDENT BRANDS: THE ROLE OF GENERAL INTELLIGENCE

Abstract

The marketing practice in several industries, including fashion and luxury goods, increasingly relies on the utilization of shared product platforms across different brands (Halman, Hofer, & Van Vuuren, 2003; Krishnan & Gupta, 2003; Luo, 2011; Sawnhey, 1998). For instance, manufacturers of products ranging from automobiles (di Benedetto 2012) to wines (Beverland, 2004) offer consumers several products under different brand names, but partly based on the same product components or architecture. However, while such platform branding practices have been increasingly adopted by companies and studied by marketing research, less is known about the consumer behavior implications of such branding. In particular, the few extant studies on the consumer behavior implications (e.g., Sullivan, 1998; Strach and Everett, 2006; Olson, 2008) do not take into account consumer heterogeneity, i.e., the potentially different behavior towards platform brands by different consumers. This issue is, in essence, the focus of the present study.Specifically, as the focal consumer trait, we concentrate on the role that consumers’ general cognitive ability, i.e. intelligence, may play in their choices of platform vs. independent brands. While intelligence has been shown to affect consumers’ financial decisions in the stock market (Grinblatt, Keloharju, & Linnainmaa, 2011, 2012), we are unaware of studies that would have directly examined the link between intelligence and brand choices in the product market. Our contribution is to report such an investigation with over 200,000 consumers’ purchase choices of cars in Finland.As the car brands studied differ in price points, higher-income individuals can, on the baseline, better afford the higher-premium platform brands (and, possibly, independent brands). Intelligence, in turn, correlates with income, possibly giving rise to a spurious, overall correlation between intelligence and higher-premium platform brands through income. Therefore, to study the ceteris paribus association between intelligence and brand choice, independent of income, we estimated an ANCOVA of the mean intelligence of individuals possessing cars of different brands, controlling for income and the other control variables. As to results, the least squares mean intelligence of individuals possessing higher-premium platform brands was lower (M = 5.55, s.e. = 0.01) than individuals possessing lower-premium platform brands (M = 5.64, s.e. = 0.01; pairwise comparison significant at p < .0001 level). Furthermore, the mean intelligence of independent, non-platform brand owners resulted even higher (M = 5.76, s.e. = 0.02) than that of the low-premium platform brand owners (M = 5.64, s.e. = 0.01; comparison significant at p < .0001 level). Ordered probit regression analysis of purchased brands, provided consistent results. In summary, the results support our hypotheses that controlling for income, greater intelligence is associated with the preference for lower-premium platform brands over higher-premium platform brands and, further, with the preference for independent platform brands over platform brands.Managerially, the results demonstrate that smarter consumers may have suspicions towards higher-priced platform brands. Correspondingly, such consumers may be more predisposed either to seek lower-priced brands of equal quality, or to pursue brands of independent posture. To attract these consumers to higher-premium platform brands, marketers may need to provide convincing information on which tangible quality aspects are distinctive in the products of the higher-premium platform brand, as opposed to the lower-premium brand that is based on the same platform. At the same time, the independent brands may face a harder marketing task among less smart consumers, who seem to have more trust in the larger platform constellations of brands.