This document provides a literature review on branding and its impact on consumer purchase decision-making. It defines branding as a name, term or symbol used to identify and differentiate a seller's goods/services. Branding has become important due to increased competition reducing product differentiation. The review discusses how branding creates tangible and intangible values that allow customers to distinguish brands. It also explains how branding influences consumer learning, perceptions and attitudes during the purchase process. The review uses Apple and its iTunes store as an example of effective branding strategy that has helped it gain market share in the digital music industry.

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BRANDING
IT’S IMPACT ON THE CONSUMER PURCHASE
DECISION-MAKING PROCESS
KURT VON MOOS
DECEMBER 2005
EURPOEAN BUSINESS SCHOOL LONDON

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ACKNOWLEDGMENTS
Writing this dissertation has been an extraordinary journey that ended one chapter in my life,
only to begin another. This journey could never have been completed without the love and
support of the special people that surround my life.
First and foremost, I would like to thank my mother, Maureen von Moos. You have given me so
many opportunities in life. I have come to owe you so much, that all I can offer you is my
unconditional love and gratitude.
To my Grandparents, Nazek & Ben, not a day goes by that my soul does not miss you. I hope you
can look down today, and finally be proud of me.
I would like to also thank Burton Paul, for inspiring me to achieve more. Thank you for being the
older brother I always wish I had.
To my dear friends, Nicolas & Peter, your friendship and support have meant the world to me.
You two will always have a special place in my heart.
I would like to extend a very special thank you to David & Birgit. Your constant support and
friendship was instrumental in me preserving my sanity. Thank you both so much.
And to Natasha…you’ve changed my life. I love you.

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EXECUTIVE SUMMARY
Modern day marketing has greatly evolved. Companies now use consumer driven approaches to
further their abilities to satisfy the countless emerging needs and wants of the modern consumer.
Amongst these consumer driven approaches, branding has emerged as one of the crucial activities
required in the building of a loyal customer base and the creation of an effective brand image.
The main aim of this research paper is to ascertain what the main impacts of branding are on the
consumer based purchase decision-making process. In doing so, the author aims to determine the
extent of the correlation between the activities of branding and consumer purchasing as well as
put into perspective the main functions and values branding can offer companies in terms of
guiding valued customers through the often complex process of purchase decision-making. The
author has set out to use the example of Apple Computers, Inc.’s iTunes Music Store UK as a
real life study of how the UK’s leading legal online music provider applies these concepts.
Via the use of an online survey and various economic models used to ascertain the external and
internal factors affecting the iTunes Music Store UK, the author has determined that iTunes
Music Store has focused on the enhancement and extension of its brand image to cater to the
learning process, attitudes formation process and perception of consumers in the UK market for
digital music industry. In doing so, iTunes UK has secured a 85% market share in the United
Kingdom. Their success can be attributed to their use of branding to create a loyal and in some
instances, fanatical following of digital music lovers. As a direct result, Apple as contributed to
the fight against online music piracy, which as resulted in a 10% decrease of illegally
downloaded music.
This dissertation has found that branding has an large impact on the learning and attitudes
formation process that takes place during consumer purchasing activities. As a direct result,
consumers form meaningful links to a brand image, brand name or company, that leads to
sustainable sales as well as the sustainable satisfaction of consumers wants and needs.

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TABLE OF CONTENTS
1 Chapter 1 - Introduction
1.1 Introduction
1.2 Research Aims & Objectives
2 Chapter 2 – Literature Review
2.1 Introduction
2.2 Understanding Branding
2.2.1 Branding in Today’s Markets
2.2.2 The Development of Brand Equity
2.2.3 The Competitive Advantage of Brand Loyalty
2.3 Branding’s Influence on Consumer Purchasing Behaviour
2.3.1 Impact on the Consumer Learning Process
2.3.2 Impact on the Consumer’s Perception of Brands
2.3.3 Impact on Consumers’ Attitude Towards Brands
3 Chapter 3 - Methodology
3.1 Introduction
3.2 Defining Research Methodology
3.3 Research Aims
3.4 Research Philosophy
3.5 Research Approach
3.6 Execution of Strategy
3.6.1 Survey

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4 Chapter 4 – Analysis & Findings
4.1 Introduction
4.2 The Questionnaire
4.2.1 Respondent Profile
4.2.2 Brand Attributes
4.2.3 Brand Benefits
4.2.4 Brand Values
4.2.5 Brand Cultures
4.2.6 Brand Identity
4.2.7 Conclusions Drawn from the Survey
4.3 External Analysis of The Legal Music Downloads Industry in The United Kingdom
4.3.1 Market Overview
4.3.2 P.E.S.T.L.E. Analysis of the Digital Music Industry
4.3.2.1 Political
4.3.2.2 Economical
4.3.2.3 Social
4.3.2.4 Technological
4.3.2.5 Legal
4.3.2.6 Environmental
4.3.3 Porter’s 5 forces
4.3.3.1 Threat of New Entrants
4.3.3.2 Threats of Substitute Products
4.3.3.3 Bargaining Power of Buyers
4.3.3.4 Bargaining Power of Suppliers
4.3.4 Listing of Opportunities and Threats
4.3.4.1 Opportunities
4.3.4.2 Threats
4.4 Internal Analysis of Apple Computer’s iTunes Music Store UK
4.4.1 ITunes Music Store UK Company Overview
4.4.2 ITunes UK’s Strategic Capabilities and Competitive Advantage Model
4.4.3 Resource Audit

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4.4.3.1 Physical Resources
4.4.3.2 Financial Resources
4.4.3.3 Human Resources
4.4.3.4 Intangible Resources
4.4.4 Strengths and Weaknesses
4.4.4.1 Strengths
4.4.4.2 Weaknesses
5 Conclusions and Recommendations
5.1 Recommendations
5.2 Conclusion
6 Bibliography
7 Appendix A

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CHAPTER 1
INTRODUCTION

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CHAPTER 1: INTRODUCTION
1.1 Introduction
Modern times reflect key changes in the marketing strategies employed by companies seeking to
sustain competitive advantage. The financial health of these companies is now dependent on the
amount of information that is collected in regards to consumer purchasing habits. These
companies have resorted to the adoption of behavioural and sociological studies in order to
collect this pertinent data and to further the corporate understanding of consumer purchasing
patterns. The study of these fields are an attempt to establish a correlation between consumer
spending and the key factors involved in consumer preferences in terms of attitudes, cognition,
perception and learning.
Companies shifting their focus from a product/market driven line of attack to consumer driven
marketing activities reflect this evolution of marketing. As a direct consequence of this shift,
companies are now attributing much more importance on the reaction consumer display in
regards to the 4Ps (product, price, promotion and place) and have further implemented three
additional Ps, physical layout, process and people (Kotler, 1999).
Current market trends show that the homogeneity of product has increased, meaning that few
functional differences between key competitors currently exists in most highly competitive
markets. This decrease in product differentiation is considered to be the direct result of high
levels of competition that exists within today’s markets, as well as the technological advances of
production and distribution methods. Because these advances have diminished the ability of
technological innovations to offer sustainable competitive advantage and have made product
differentiation extremely difficult (Levitt, 1983; Kotler, 2000)
As a direct consequence, branding has emerged as a significant feature of contemporary
marketing strategies and is now considered a key organizational asset (Kotler, 2000). The
symbolic values associated with brand names have become the basis for product differentiation,

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with leading strategies attempting to emulate key factors that are conductive to key behaviours
associated with consumer purchasing patterns.
An example of the impact branding has on the consumer purchasing decision process, is how
branding is applied to the legal music downloads industry. With nearly 230 providers online, it is
a highly competitive industry that is still expanding at a furious pace. With over 180 million
music tracks purchased online in the first quarter of 2005 alone, (IFPI National Groups, 2005),
web based giants such as Apple’s iTunes Music Store, Napster, Tesco, Emusic and Kazaa are all
competing for domination in this digital marketplace. Only one however, the iTunes Music Store,
has achieved near domination with 8o% market share in the UK in 2005 (OCC, 2005).
With the advent of the iPod digital music player and the iTunes Music Store, Apple has become
one the most followed companies of the 21st
century. Steve Jobs, CEO of Apple, is seen as being
a key contributor to Apple success story, by transforming and further developing Apple’s brand
image, by making it more accessible to a wider audience and extending the Apple brand into the
legal music download industry. Spotting a gap in the market and considering that record
companies were loosing an estimated 4.6 billion dollars annually (RIAA, 2005) with illegally
pirated music files being downloaded via file-sharing servers, Apple pioneered the sale of legal
music on the Internet, via their iTunes Music Stores. This has earned Apple 240 million dollars in
revenue from music sales in the second quarter of 2005 alone and has lead to the sale of an
estimated 30 million iPods since its launch in 2001. By the beginning of 2006, it is predicted that
Apple will sell its 1 billionth song (Smith 2005)
The following dissertation aims to ascertain the theoretical impact of branding on the consumer
decision-making process as well examine its impact in real-life, via a critical evaluation of
Apple’s use of branding to influence the consumer decision-making process of consumers in the
legal music downloads industry in the United Kingdom.

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1.2 Project Aims and Objectives
As the author as established, the importance of understanding branding and its impact on modern
day markets is vital to the health and growth of most industries. The aim of this thesis is to put
into perspective the functional values of branding as well as assess its role in the consumer
purchase decision-making process. In order to further understand consumer behaviour with
regards to branding, this research paper aims to gain an in-depth understanding of the process and
attributes that lead to the customers’ evaluation of brands and the key drivers to building brand
loyalty. This will be brought into focus by a critical evaluation of how Apple has used this
process to secure an 80% market share in the legal music downloads sector in the United
Kingdom. In order to meet these outcomes, the author has set the following research question:
“ Determine the impact branding has on the consumer purchase decision-making possess
by assessing its use by Apple Computers, Inc. to influence the purchase decision-making
process of consumers in the legal music downloads industry in the United Kingdom. “
In order to fully answer this research question, the following objectives have been set:
• Set a valid and sustainable research question in order to achieve a non-bias and accurate
understanding on the topic in question;
• Present the key concepts behind branding, its values and its usage in modern day
marketing campaigns by reviewing current literature pertaining to the subject matter;
• Determine whether a correlation between consumer identities and perceived brand
identities is present;
• Determine the impact of branding on the consumer purchase decision-making process;
• Evaluate Apple’s iTunes Music Store UK’s current situation by conducting both external
and internal analysis;
• Critically assess the impact of branding via an evaluation of Apple’s usage of branding to
secure its market presence in the legal music downloads industry in the United Kingdom.

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CHAPTER 2
LITERATURE REVIEW

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2 CHAPTER 2: LITTERATURE REVIEW
2.1 Introduction
In this chapter, the author seeks to establish an academic foundation from which both further
research will be built upon. Its purpose will be to enhance the readers understanding of the
various concepts that branding involves, as well as its theoretical impact on the consumer
purchase decision-making process. The chapter is written under Murphy’s (1992) findings that
stipulates that as distinguishing characteristics of products becomes less noticeable, the likelihood
of consumers using branding related cues rises. offerings,
2.2 Understanding Branding
To gain a clear insight into the definition of “branding”, one must first clarify what this literary
review refers to as “products”. Referring to Baker (2000), one can consider a product as being
anything that can satisfy the economic, psychological or functional needs of a potential customer.
Baker (2000) furthers this definition by stating that the extent of which a “product” meets the
above-mentioned needs, is determines the product’s “value”.
The often-complex process of branding is a need that has been inspired from the highly
competitive nature of most modern day industries. This competition has lead to product offerings
that have become increasingly difficult to differentiate for reasons stated in Chapter 1. In order to
address this problem, branding has become a widespread tool used by companies to highlight
their products in increasingly saturated markets. In doing so, companies enable themselves to
showcase their core competences that they feel are needed by consumers (Hamel and Prahalad,
1994).
In modern day marketing, it has now become the brand itself that differentiates a company’s
products available for purchase (Levitt, 1983). If one looks at Apple Computers as an example,
many claim that a shift towards brand orientated marketing techniques have allowed them to
break into the digital music market and further their presence in the IT market. However others

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believe that this is by no means a new “shift” but rather the efficient furthering of an already
effective brand image. Considering that Apple has always been at the forefront of creative
advertising and brand associative techniques, with publicity stunts such as the “1984”1
commercial, the “Think Different. Think Apple”2
, advertising campaign or the more recent
“iPod+iTunes” commercials involving celebrity endorsements.
So what exactly is branding? Kotler (1999), defines branding as a “name, term, sign, symbol or
design, or a combination of these, intended to identify the goods or services of one seller or
group of sellers and to differentiate them form those of competitors.” Feldwick (1995) furthers
the concept of differentiation that Kotler (1999) touches on, by comparing a brand to “a
recognizable and trustworthy badge of origin and a promise of performance.”. His research
emphasizes the relationship between the product and the consumer as being instrumental to the
branding process and the positioning of offerings within the social environment. He considers
that a brand reflects a company’s intangible guarantee that the product will meet consumers’
expectations.
So far, the above-mentioned literature restricts the effects of branding to a consumer’s
interpretation of how a specific brand relates to his or her personality based traits. Macrae (1996)
however, elaborates by introducing the additional element of “Brand Essence”, which he defines
as being the soul or very reasons for being of a company. Macrae (1996) furthers this definition,
by stating that a company must consider its own employees with the same importance as its
targeted consumers, because both are of equal importance. He justifies this by shedding light on
the fact that it is the employees that promote the products or services in direct sales situations, not
the company. This concept of branding establishes a clear link between a company’s internal
working with the outside world of consumers, via their brand.
1
Aired during the 1984 Super Bowl in the USA, the “1984” Apple commercial was a big budget advertisement
themed after the George Orwell novel, 1984. This commercial was groundbreaking in that it was the first to establish
personal computers as commodities, rather than simple office tools.
2
Groundbreaking marketing campaign that established and contrasted Apple computers from competitors and
illustrated consumer usage of computers for the first time. This campaign was replaced in 2003 by the “Switch”
campaign, that incites users to “switch” from Windows based computers to Mac OSX based computers.

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If one examines Apple Computers, one can easily see Macrae’s (1996) definition in practise. The
famously relaxed and welcoming atmosphere of the “Apple Stores”3
is produced by the trained
staff, who must all be proficient in the employee-training manual which reinforces the
importance of employees sharing the same level of brand commitment as consumers. This allows
consumers and staff to interact seamlessly and has turned Apple Stores into both a place of
business and a cultural hotspot for the 16 – 35 year old market segment (Bajarin, 2005).
In modern day branding, the creation of tangible values as well as intangible values is
quintessential in allowing customer the means to distinguish one brand from another (Hankinson
and Cowing, 1993). The reader will appreciate that it is this ability in particular, that separates a
“brand” from a mere “product”. King (1991) captures this by defining a product as a factory-
made tangible that can readily be copied by competitors. King (1991) continues with his
distinction by clarifying that a brand is an intangible asset that is unique and timeless. This
simple yet powerful definition insinuates that a brand is the core identity of a product. Kotler
(1999) expands on the concept of identity by stating that a brand is capable of conveying up to
six different levels of meaning to a targeted audience. This is known as the “Six Dimensions of
The Brand”
Attributes A brand will communicate specific attributes, such as prestige
Benefits A brand strengthens a product’s attributes by communicating a
set of benefits that makes it more attractive
Values A brand represents a company’s core values and belief system
Culture A brand is representative or target a target audiences socio-
cultural characteristics
Personality A Brand can project behavioural personality patterns of
targeted consumers
User The brand, in some cases, can emulate the end user
3
There are currently over 125 Apple retail stores spanning the USA, Canada, Japan and the UK. They continue to be
a driving force behind the company’s most recent success, with sales revenue of over 663 million dollars in the last
quarter

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Kotler’s (1999) extensive work on the understanding of branding can be seen as the middle
ground between Macrae (1996) and Feldwick’s (1995) schools of thought. Despite Kotler’s
initial definition seeming overtly simplistic, his expanded definitions and views on the various
dimensions of brands, provide a deeper understanding of how branding can be so much more
than simply symbols, designs and catchy slogans. Kotler establishes branding as the creation of a
deep bond between the company and the consumer.
From the consumers’ perspective, brand names are as fundamental as the product itself in the
sense that they simplify the purchasing process, guarantee quality and at times form as a basis of
self-expression. Hence, should a company market a brand name as nothing more than “just a
name”, it would be missing the entire purpose of product branding. The challenge lies in
developing a deep set of meanings for the brand. Once a target market segment can visualise all
six dimensions of the brand, it will have established a strong rapport within the consumers’
purchase decision-making process.
2.2.1 Branding in Today’s Markets
A central function of branding is the facilitation of the consumer choice process. Due to the
complexity of having to select a product amongst thousands of similar offerings, consumers will
instinctively attempt to simplify their choice process by selecting brands that have satisfied them
in the past. Assael (1993) supports this concept by stating that consumers, especially in situations
of low-involvement, heavily rely on previous consuming experiences when attempting to select a
product to satisfy their present needs. Thus, one can conclude that pleasant past experiences is
highly conducive to consumers associating benefits to a brand. One can conclude that a central
function of branding, is its ability to negate the need for a consumer to seek out information when
a need or a want has been recognized, but rather, lead him to a brand that has been satisfying in
the past.
One must acknowledge however, that frequent purchasing of a brand can not always be linked to
previous experiences, but can alternatively be formed by embedded perceptions. A consumer
might strongly favour a brand with no prior purchasing experience. This type of consumer

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behaviour is based on stimulus provided by direct exposure to advertising campaigns, a
company’s PR efforts or even a high concentration of local distribution in an area that is in close
proximity to a consumer (Assael, 1998).
In terms of companies’ views on branding, it can induce the natural differentiation of their
offerings, which ultimately, will produce a state of competitive advantage. According to Adcock
(1998) differentiation is the process of creating a set of unique differences so as to separate one
company's products from another. The value of this uniqueness will determine the level of its said
“differentiation”. This in turn will allow companies to seek out higher asking prices. It must be
noted however, that differentiation comes at a cost. Therefore, differentiation can only allow for
competitive advantage if the cost of differentiating is significantly lower than the revenue earned
by the sales.
Differential advantage allows companies to showcase their offer in respects to other competitors
in the same marketplace. A competitor could easily copy a digital music player. However,
competition will not be able to copy the personality that is associated with the brand name of, for
example, Apple’s iPod4
. Porter (1980) clearly established the importance of differentiation by
stating that one of the main requirements needed for acquiring said “competitive advantage” in an
industry, is by differentiating one’s product line. Should a market’s segment players hold no
differential advantage, consumers would likely revolve their decisions around pricing. (Foxall
and Goldsmith, 1994).
Branding is not the sole source of differential advantage, as it can be obtained by the efficient
implementation the 4Ps of the marketing mix (Diaz de Rada, 1998). However studies have shown
that the most efficient and long lasting strategy that is easily accessible to any company is to
focus on brand differentiation, rather than the development of pricing policies as a sole way of
reaching profitability (East, 1997).
4
Apple’s iPod is the current best selling digital music playing devices. Designed for seamless integration with the
iTunes music store, the iPod is a light weight portable hard drive capable of holding up to 15000 songs, 25000
photos and 150 hours of music.

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2.2.2 The Development of Brand Equity
The amount of clout controlled by different brands will vary. Some are deeply embedded in
global culture and are thus, highly recognizable, whilst other are virtually unknown to consumers.
When attempting to place a value on a brand, one refers to “brand equity”. Chay (1991), defines
brand equity as a “set of associations and behaviours on the part of a brand’s customers, channel
members, and parent corporation that permits the brand to earn greater volume or greater
margins than it could without the brand name and that gives the brand a strong, sustainable, and
differential advantage over competitors” (Chay, 1991, p.30). This explanation creates a clear link
between a product’s value, be it financial or intangible, and a brand name. Aaker (1991) furthers
delves into the subject matter, distinguishing between several perspectives from which one can
view brand equity. These include, amongst others, the financial perspective, the consumer-based
perspective and finally the brand extension perspective.
Using the financial perspective, one measures brand equity by determining how much more
consumers are willing to pay in direct relation to the brand name. This gives marketers essential
insight into the financial value of the brand. When viewing brand equity from this perspective,
one must naturally consider overhead, such as costs of advertising.
Using the consumer-based perspective entails considering how the attitude strength of a
consumers is directly influenced by the brand name. This perspective operates under the
assumption that the consumer has had extensive experience with the product in question.
Viewing brand extension from the brand extensions perspective involves evaluating whether a
brand is strong enough to launch as a launching pad for an extended product range. If one
considers Apple Computers, the success of the iPod music player was largely dependant of the
high brand equity of the brand name and more specifically, their brand image. According to
Alreck and Settle (1999), the consideration and development of brand equity is vital as its
benefits are wide reaching. One can consider brand equity as an asset, as it can increase cash flow
via the widening of a company’s market share and the allowance of higher pricing policies.

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2.2.3 The Competitive Advantage of Brand Loyalty
Meenaghan (1995) states that there is a palpable correlation between the efficient branding of a
product or service, and the display of brand loyalty in consumer purchasing patterns. In this
instance, loyalty is defined by Oliver (1999) as a “deeply held commitment to rebuy or
repatronize a preferred product/service consistently in the future, thereby causing repetitive
same-brand or same brand-set purchasing, despite situational influences and marketing efforts
having the potential to cause switching behaviour" (Oliver, 1999, p.34).
In considering Oliver (1999), one can conclude that brand loyalty is a direct consequence of the
ability to better satisfy the desires of a customer that main competitors do. Therefore, Oliver
assumes that one can estimate the extent of loyal that can be achieved by understanding the
personal characteristics of the targeted consumer market segment. Building on this concept,
Quester and Smart (1998) have questioned this, by suggesting that it is not uncommon to find
irrational attachments to products in humans, as a people. Levitt (1983), however, counters this
by putting forward his findings suggesting that consumers form attachments to specific products
as a direct result of a company’s effort to create a personable link between them and the
consumer. These links are essentially induced by the creation of attributes that stem from the
appearance of the product, the design and outer package of the product, or even the identity
emulated by the brand itself. Coupled with the fact that past experiences heavily influence
consumers, Levitt (1983) concludes that there is nothing irrational at all in consumers forming
deep seeded attachments to certain brands. He continues by stating that the very existence of
these attributes are key in providing competitive advantage, seeing as without them, competitive
pricing would become the only factor used by consumers to distinguish company offerings.
It now becomes clear that a modern day marketer’s principal objective is to build sustainable
forms of loyalty between a company and its consumers, instead of focusing solely on the
individual sale of products. According to Oliver (1999), a loyal customer is one who will prove
his commitment by spending additional time, money and effort to obtain the brand of his
preference. If one looks at Apple, with its recent success with the iPod music player, one might
immediately recognize the effects of customer loyalty. Despite offering songs only playable on

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iPods, the iTunes music store sales represent 80% of the legal music downloads market in the UK
(Smith 2005). Despite constant rumours of new entrants, and vain attempts by Napster or Virgin,
customer loyalty to the iTunes music store remains unshaken. (Smith 2005) This real life
example is reflected in Alreck and Settle’s (1999) statements which outline how the formation
relationships that are conducive to consumer loyalty, are achieved via the creation of a strong link
between the consumer and the brand. If sustainable, a loyalty that can isolate rival competition
will be created. A potent brand image or brand name will sustain what is referred to as a
“consumer franchise” that will expand, once the number of customers that become loyal to that
brand and refuse a rival products (irrespective of varying pricing policies), reaches a
predetermined number. According to Kotler and Cox (1980) and Cowley (1996), companies with
a strong consumer franchise, will experience a degree of isolation from its competitors
The financial implications of selling and promoting products to a new consumer is estimated to
be six times grater than that of maintaining a loyal and returning customer database. (Thakor and
Kohli, 1996). Thus, it is easy to understand why it would be more profitable for companies to
focus on the creation of such a loyal customer following. Other benefits include a rising value of
brand equity experienced by companies who maintain customer loyalty by implementing a series
of strategic marketing campaigns that focus on achieving dominant market share in a specific
industry (Cowley, 1996; Kapferer, 1995;Kotler, 1999)
Dun (1997) and Chevron (1998) both suggest that modern day marketing has become a quest to
gather as much information pertaining to consumer behaviour as is possible. The continue to state
that this quest will eventually lead to information that will enlighten companies on how to
accurately tailor to specific needs and wants of their consumers by considering purchasing
behaviour. Graham (2001) believes that in doing so, product offerings will be more efficiently
targeted, as this is vital to the success of branding, for branding is only efficient with a specific
segment of consumer and not the entire market. This can be illustrated by considering the legal
music downloads industry. When some people think of iTunes, the online legal music download
store, the words “quality legal music” flashes through their minds, while others could think
differently associating the online store with a high priced, limited content provider.

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2.3 Branding’s Influence on Consumer Purchasing Behaviour
The preceding section of this literature reviewed has sought to define the term branding and
explain its functions and values as an instrumental marketing tool used in attaining differential
and competitive advantage. The following section of this literature review will seek to enlighten
the reader on the impact branding has on the consumer decision-making process. The author
seeks to achieve this via the use of consumer decision making academic models. First however,
one must gain clear insight into the definition of consumer buying behaviour in order to
understand the impact branding has on it.
In defining “consumer buying behaviour”, one may refer to Assael (1987) who distinguishes four
types of consumer buying behaviours (See figure 1). He bases these four consumer types on the
varying degrees of involvement and the degree of differentiation amongst the brands in question.
Figure 1: (Assael, H, 1987, Consumer Behaviour and Marketing Action, 6th edition, p. 67

21. 21
Consumers who are described as displaying complex buying behaviour will expand their beliefs
regarding a particular product as a starting point. This stage will eventually lead them to develop
positive attitudes regarding the product. This intermediary stages lead them to the final stage of
their behavioural pattern, where they consciously make the choice of purchasing the product.
Referring to the Assael’s model, one will notice this type of consumer engages in highly involved
purchasing experiences being fully aware of the range of brands available and their levels of
differentiation.
Assael (1987) classifies consumer who exhibit Dissonance-reducing behaviour as consumer who
are highly involved in the purchasing experience, however see few differences between brands.
For this reason, the consumer will seek information on the differentiation of the product offerings
and will not be particularly price sensitive when seeking functionality. In the event that this
consumer finds him or herself in a market that displays low levels of differentiation, the
consumer might result to purchasing influenced by convenience. Like consumers who display
complex buying behaviour, consumers with dissonance-reducing behaviour will seek to establish
personal beliefs regarding the product. If fostered adequately, these beliefs with eventually
transform into attitudes regarding the product offerings. These attitudes, if favourable, will lead
to a thoughtful purchase.
Assael (1987) considered consumes displaying habitual buying behaviour as consumers who did
not experience the same sequence as the previous two behavioural types. Instead of basing their
decision-making process on seeking product information pertaining to functionality or
characteristics, this type of consumer will purchase based on information gathered passively, via
the company’s promotional efforts, by it through the medium of television, radio or print
advertising. This behavioural type, as can be seen on Assael’s (1987) model, with low-level
involvement products. Differentiating this consumer type is the fact that they being the process
with beliefs already embedded in their mind, which they have learnt passively, rather than
actively.
Variety-seekers are the last behavioural type contained in Assael’s (1987) model. Their typical
buying situation is summarised by low-level involvement in a market that displays high levels of

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product differentiation. Common to this type of consumer, is “brand switching”, in order to
satisfy their need for diversification.
In order for the reader to fully ascertain the effects that branding has on the consumer decision-
making process, the author has selected an academic model that explains not only the process of
consumer decision-making during purchasing activities, but one that facilitates the understanding
of pre and post purchasing activities as well. Thus, the author has selected the Howard-Sheth
Decision-making model by Howard and Sheth (1969).
The model’s core assumption lies in that the key to determining behaviour exhibited by
consumers is to fully understand the consumer thought process. The Howard-Sheth model
illustrates that cognitive decision-making is the process in which consumers mentally process
information that influences his or her selection of brands. For the purpose of this research, the
author shall focus on the final three variables of the model, as it is of most relevance in
determining the effects of branding on the consumer decision-making process.

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2.3.1 Impact on The Consumer Learning Process
At its most basic definition, one can define the consumer learning process as being a time period
in which a customer is heavily exposed to the branding process of a product or service. The
branding process can include any aspect of the promotional strategy, including audio/visual
forms of promotion. By learning from this information, whether it is a conscious process or not,
the consumer will develop strong feelings towards a brand. For marketers, branding has a vital
effect on the learning process, because it is self-growing. Once consumers start to purchase
product, others will vicariously learn from them. Vicarious learning is when consumers begin to
copy the behavioural patterns of their peers by making changes in their own lives to reflect what
they have “vicariously” learnt (Bandure,1977) If one considers the legal music downloads
industry, one might struggle to understand why a consumer would be willing to pay for a musical
track, on say the iTunes Music Store, when he or she could just as easily obtain the same track,
for free, via the may file-sharing softwares that exists. Apple’s use of celebrity endorsements has
caused of movement of loyal consumers who in essence, vicariously learn from both the
celebrities that endorse the services and the lifestyle it offers, as well as family and friends who
have adopted the product as well (Thurrott, 2004).
In searching for a more academic view on consumer learning, one can understand the process as
modifications to a consumer’s behavioural patterns that are the direct consequence of either past
experiences or information gathered during all aspects of the purchase decision-making process.
These modification are caused by information that has essentially been saved as a set of
meaningful associations in the consumer’s mind. (Dodds,1991). Foxall and Goldsmith (1994)
elaborate on this by implying that these above-mentioned associations provide the consumer with
a link to the brand image of offerings in respects to the promotional tools used to further this
brand image. These tools include both physical characteristics of the product as well as pricing
policies. All the elements that are retained by the consumer stem from what they have been
exposed to during their individual learning process. This is ultimately, what will shape their
views and attitudes in regards to brands.

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It has been found that the learning process discussed above acts as a catalyst in creating
emotional and evaluating responses. These responses are embedded in the consumer’s memory
span, which will be recalled when faced with a purchase decision-making process. Thus,
understanding the learning process is key to marketers who seek to efficiently use promotional
methods to influence consumers, because the imprints they create in the mind of consumer will
later on be recalled when selecting a product or brand (Conoway, 1994)
2.3.2 Impact on Consumers’ Perception of Brands
One may refer to Foxall (1980), where Engel defines perception as “the process whereby stimuli
are received and interpreted by the individual and translated into a response” (Foxall, 1980,
p.29). At this point, it is important to note that this process is unique to each individual, as
perception is highly dependant on a consumer’s individual beliefs structure.
Foxall (1980) states that perception is crucial in the decision-making process. In a market where
branding is used, products are no longer only purchased for their functional characteristics, but
primarily for the social or in some cases, psychological identity they express (Foxall, 1980).
Building on these concepts, One can elaborate on these concepts by outlining two determinants
that influence a consumer’s perception of brands. These two factors are stimulus discrimination
and stimulus generalisation (Erdem 1998)
Erdem (1998) raises a fundamental question by asking whether a consumer has the ability to
“discriminate” between the various methods used to stimulate a consumer. His findings show that
when a customer is introduced to a brand, whether this is done via advertising, packaging, word
of mouth marketing or any other form of stimuli that affected them during their decision-making
process, their levels of awareness of the brand will gradually increase via their ability to learn.
Once their levels of brand awareness has increased, Erdem (1998) continues to say that their
purchase decision-making process will be influenced by their perception of the brand in question.
An excellent example is that of Apple Computers. Many believe that it is the iPod and the iTunes
music store that saved the company from financial ruin (Haddad, 2003). During the launch of the

25. 25
iPod, heavy importance was placed on advertising and promotion. As brand awareness levels
rose, consumers quickly adopted the iPod as the defacto digital music player of this century. The
strong brand presence had far reaching effects. With the launch of the of the iTunes music store,
which was designed to work specifically with the iPod, consumers perception of Apple and their
infamous iPod had a direct influence on them when selecting a online music store.
The perception of brands is crucial to both the marketer and the customer. If one considers that
frequency of purchases varies from consumer to consumer, one can understand that the influence
of perception is vital. By providing relevant information for the consumer market, marketers
enable the creation of symbolic links between the consumer and the brand image. Thus,
consumers will have the relevant tools needed to distinguish between the brands on offer and
therefore be persuaded in their selection. In the event that a consumer is a new user with no
product experience, he or she will not be able to make relevant decisions based on the actual
product. Thus, the brand image again, become vital in directing the consumer to a specific
product.
In order to better understand the relevance of branding on the consumer purchase decision-
making process, the author refers to Cherantony (1993), who has suggested that four key factors
are responsible for directing a potential consumer towards a particular brand.
Perceived Quality In time, consumer will have faith in a brand’s integrity via
their perceived quality of the brand in question
Building Excellent Service
When a company implements excellent after service sales, this
endorses the perceived quality of the brand and facilitates
activities in the pre and post purchase moments of the
decision-making process. As discussed previously, this is key
in the creation of loyal customers.
Standing Out in the Consumer’s
mind
By striving to differentiate one’s brand from another,
companies hope to become embedded in the users culture and
mind. This is the most effective way to insure consumers

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positively perceive the brand and product. This eventually
leads to extremes forms of competitive advantage.
Investing in Differential
Markets
When one seeks to establish a brand, it is essential to select a
market in which it is possible to create differentiation.
Otherwise, the concepts of branding will not be possible.
Brands have a large impact on the perceived risks consumers associate with the consumer
purchase decision-making process. The author has found there to be six risks that are perceived
by consumers during all aspects of the decision-making process and further outlines how brands
can appease the consumer’s mind in regards to these perceived risks (Keller, 1998).
The first perceived risk a consumer might encounter is one of a functional nature. The consumer
might worry whether the product will meet his or her expectations. In the creation of a
trustworthy brand, marketers seek to raise the level of perceived quality in order to specifically
address this risk.
Consumer might also perceive a physical and/or psychological risk that might dissuade them
from continuing the purchasing decision-making process. For instance, in the download of
illegally distributed music, the consumer might face ethical problems in committing copyright
infringement or might worry about the risk of being jailed if caught. Thus, one can understand
why the iTunes music store so heavily emphasises the legality of their services, as well as the
superior quality of their products of badly copied music, distributed illegally.
A fourth possible risk that might be perceived by the consumer, is one of an economic nature.
Price sensitive consumers will question whether the product is in fact properly valued at the
quoted asking price. Again, marketers will strive to counter this by highlighting the perceived
value of a product in the branding process. If properly done, consumer can become price
insensitive by forming a strong bond to a brand and therefore isolating him or herself from
competitors.

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Socially speaking, a fifth risk a consumer might perceived to be detrimental to the buying process
is whether his or her selection of a brand will cause embarrassment in a social setting, amongst
his or her peers. Marketers address this issue in the creation of the brand image. By emulating
current market trends and fashions, marketers strive to identify and differentiate their products as
being the selected choice of revered people. Thus, one can now explain the use of celebrity
endorsements, such as the iPod commercials used by Apple to further their social standing
amongst consumers.
Yet another economic risk consumer might consider, is the opportunity cost of seeking out
alternative products, should the selected one fail to satisfy their needs and wants. Reflected in a
loyal consumer base, is a brands ability to deliver on the satisfaction guarantee. Thus, one can
understand that branding is key in addressing this issue in the consumer’s mind.
2.3.3 Impact on Consumers’ Attitudes Towards Brands
Carpernter and Nakamopto (1989) consider a consumer’s attitude towards a brand to be his or her
final evaluation of the brand in question. An attitude can be considered to be either positive or
negative, depending on the outcome of their learning and evaluating process.
The evaluation of consumer attitudes towards brands has quickly become a major part in
conducting marketing research. Briggs and Cheek (1986) explain this by having found a
correlation between consumers having positive attitudes towards a brand and that same consumer
deciding to purchase the said brand. Therefore it is fair to assume that the development of
positive attitudes towards brands can lead to not only the sustaining of competitive advantage,
but in the bettering of the financial health of a company.
According to Chay (1991) and Muehling (1987) branding has been fount to be key in formation
of positive attitudes towards products, especially those involving low-levels of consumer
involvement. However it has been noted that there are factors that might negate the effects of the
formation of positive attitudes. One being that the effects of positive attitudes can dissipate
should the consumer not purchase the product within a certain timeframe. Another factor that
might negate the effects of positive attitudes might be an overtly high pricing policy, which might

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have a contrary effect to the consumer’s positive attitudes towards the brand and result in a non-
sale.
A real life situational example of this can been seen in the promotion of the iTunes Music Store
and its pricing policy. Offering amongst the cheapest legal music downloads in the UK, iTunes
uses heavy marketing campaigns to build strong positive attitudes in the minds of consumers.
They have further strengthened these attitudes by highlighting the ease of access of their service
as well as their stringent pricing policy, keeping rates at £0.79 per song since their launch in
2001. This has inspired a level of trust in the consumer and has therefore created a loyal customer
base for Apple’s online music services as well as their other product lines.
In considering attitudes towards brands, one must ponder whether theses attitudes all remain at a
conscious level, or whether branding can instigate attitudes at a sub-conscious level. Vecchio
(1992) has raised Sigmund Freud’s theory that individuals are rarely aware of how their own
psychology shapes their visual behavioural patterns. This suggests that at an unconscious level,
consumer might have beliefs that shape their attitudes towards products. By acknowledging
Freud’s theories, one can conclude that branding can be used to target sub-conscious desires that
rest at a primal level. This can explain the use of primal sexual imagery, or the frequent use of
age discrimination to insight target segments of the consumer market to associated themselves
with particular brands.

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CHAPTER 3
METHODOLOGY

30. 30
3 CHAPTER 3: METHODOLOGY
3.1 Introduction
In order for the reader to understand the methodology used to compile this dissertation, the author
has included this chapter in order to clarify how an effective methodological philosophy can
contribute the successful production of a un-bias and critically dissertation, as well as
comprehend the process underwent by the author to reach the pertinent conclusion outlined in
chapter 5.
This chapter also serves the purpose of justifying and authenticating the research procedures
employed by the author in order meet the set objectives and answer the main research question of
this thesis.
3.2 Defining Research Methodology
Wikipedia.com defines “research” has being is “an active, diligent, and systematic process of
inquiry in order to discover, interpret and/or revise facts. This intellectual investigation should
produce a greater understanding of events, behaviors, or theories, or to make practical
applications with the help of such facts, laws, or theories. The term research is also used to
describe a collection of information about a particular subject” (www.wikipedia.com)
Methodology is considered to be the “way in which information is found or something is
done. The methodology includes the methods, procedures, and techniques used to collect
and analyze information.”(www.google.com)
3.3 Research Aims
As outlines in chapter one, the author has clearly defined the research question : “ Determine the
impact branding has on the consumer purchase decision-making possess by assessing its use by
Apple Computers, Inc. to influence the purchase decision-making process of consumers in the
legal music downloads industry in the United Kingdom” . In order to achieve pertinent
conclusions, the author set the following objective to be met in order to produce a non-bias

31. 31
dissertation that provides the world of academia with a critical assessment of the said research
question. The objectives outlined in chapter one were as follows:
• Set a valid and sustainable research question in order to achieve a non-bias and accurate
understanding on the topic in question;
• Present the key concepts behind branding, its values and its usage in modern day
marketing campaigns by reviewing current literature pertaining to the subject matter;
• Determine whether a correlation between consumer identities and perceived brand
identities is present;
• Determine the impact of branding on the consumer purchase decision-making process;
• Evaluate Apple’s iTunes Music Store UK’s current situation by conducting both external
and internal analysis;
• Critically assess the impact of branding via an evaluation of Apple’s usage of branding to
secure its market presence in the legal music downloads industry in the United Kingdom.
In order to meet the above objectives, the author outlines a systematic and methodologically
sound action plan :
! Explore literature pertinent to the key concept of branding and its impact on the consumer
decision-process. Literature to be used include books, journals, research papers, websites and
any other source of literary knowledge that can provide an un-bias and relevant view on the
relevant concepts
! Conduct a survey using two groups of respondents. Group A is to contain iTunes Music Store
UK users and group B is to contain non-iTunes users. Both groups must be composed of
respondents that are actively and currently consuming digital music over the Internet at least
two times a month. The author will then conduct a survey pertaining to their views on iTunes
UK and how its brand image has effected their purchase decision process.

32. 32
! Critically evaluate external and internal environmental factors that affect Apple Computers.
This is to be achieved via the use of academically proven business models, in order to ensure
the validity and reliability of the produced information.
! Use the information gathered from the internal and external environmental analysis an relate
this information to Apple’s use of the branding process in order to influence the consumer
purchase decision-making process.
3.4 Research Philosophy
The author has chose to incorporate two research philosophies in order to effectively meet the set
outcomes. Firstly, the author has employed a philosophy of positivism, in the sense that the
observance of social realities pertaining to the effects of branding on consumers in a real life
market will be conducted. The compiling of this methodology and the lengths to which this
methodology has been structures is all derivative of a positivistic research philosophy.
The author will also use a form of realistic philosophy in that the author will aim to understand
external realities in order to understand the causes of influential and behavioural characteristics in
the consumers of legally downloadable music over the Internet.
3.5 Research Approach
The author’s approach to research will essentially by inductive, in the sense that via an extensive
literary review, as well as in depth industry analysis, the author will see to understand the impact
of branding on the consumer purchase decision-making process, rather than test a pre-conceived
hypothesis.
The author did have the option to use a deductive approach in which he would test a pre-
conceived hypothesis. However, it is of the author’s opinion that this would limit the scope of
research, by focusing too much on the hypothesis and not enough on all other factors that might
influence the consumer decision-making process.

33. 33
3.6 Execution of Strategy
.
3.6.1 Survey
The author has compiled a survey to be used to determining the effects of branding on the
consumer purchase decision-making process.
The first step was creating a survey that could adequately gage the impact of branding
specifically on the consumer decision process. Thus, the author used Kotler (1999) model of six
dimensions of meaning for a brand in order to create a survey that could reflect the various
elements of learning, perception, and attitude formation in the consumers mind.
The second step, was finding the appropriate group of individuals for the survey. For these
purposes, the author created a chain email that was sent via the www.hi5.com network. The
author chose this particular network as it contains individuals whom are frequently on the internet
and thus have access to the iTunes Music Store and the various techniques of branding used by
Apple.
The initial email was sent out to a network of over 2000 people, in which it outlines this
dissertation, as well as stipulated the requirements sought in a survey group. The requirements
were listed as follows:
“Searching for individuals who actively seek digital music online . This music can be of a legal
or illegal origin. If you meet the following requirement, please reply to this email for you chance
to take part in a study that will determine how iTunes Music Store UK has used branding to
affect YOUR purchase decision process! Do you :
! Seek and download music at least twice a month online?
! Use the Apple iTunes Music Store UK?
! NOT use the Apple iTunes Music Store UK?
! Are the bill payer of any legal purchases of music?

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! Have 5 minutes to spare in order to contribute to a university level dissertation?
If you have answered yes to all of theses questions, please reply to this email for your chance to
take part in this study”
Once the authored had received replies from fifty people who actively used iTunes UK and fifty
people who did not use iTunes UK, the survey was forwarded to them via email for completion.

35. 35
CHAPTER 4
ANALYSIS & FINDINGS

36. 36
4 CHAPTER 4: FINDING & ANALYSIS
4.1 Introduction
In the first three chapters of this dissertation, the author aimed to provide a solid academic
foundation on the subject of branding, its value, its many functional uses in a modern day
economy and finally, its theoretical impact on the consumer purchasing decision-making process.
This was achieved by reviewing published academic research on the subject matter and putting it
in to context by using real life examples. In order to ascertain the impact of branding on a real life
consumer market segments, the author set a research question that entailed the critical evaluation
Apple Computer’s, Inc. use of branding to influence the purchase decision-making process of
consumers in the legal music downloads industry in the United Kingdom.
This chapter is essentially structured in four parts. The first section will determine the effects of
branding on both frequent users of the iTunes music store, and non-users of the iTunes music
store UK by analyzing result from a questionnaire provided to two sample groups, iTunes UK
customers and non-users of the iTunes UK service.
The second part of this chapter will determine external industry factors affecting Apple. This will
allow the author to determine how Apple has configured their approach to branding with respects to
the above-mentioned external factors
In section three of this chapter, the author will examine the internal factors affecting Apple, in
order to determine how Apple has approach the branding process with regards their internal
capabilities and resources.
In the final section of this chapter, the author will determine how Apple’s branding process has
been affected by external and internal forces and how in turn, this has affected the consumer with
regards to his or her purchase decision-making process.

37. 37
4.2 The Questionnaire
The following section presents the findings from the questionnaire distributed (Please refer to
Appendix 1). In the analysis, the author seeks to highlight how Apple’s means of branding has
affected both users and non-users of the iTunes UK service.
4.2.1 Respondent Profile
The first section of this questionnaire aims to ascertain the key demographic information that
makes up the respondent’s profile. The results have be divided into two groups, users and non
users of iTunes UK. The sample size of each group was caped at 50 respondents.
In the first group , which were users of iTunes, respondents were composed of 67% males,
indicating a more male orientated sample group with 45% being between the age of 21 to 30. The
dominant consumer behaviour type for iTunes users the complex buying group, closely followed
by the habitual buying group.
For the second group of non iTunes users, this sample group was predominantly female, at 58%
with the majority being between the ages of 21 to 30. The main buyer behaviour for this group
was the complex buying group, closely followed by the dissonance-reducing buying behaviour
type.
By looking at the respondents profiles from one group, one can initially conclude that there is a
slight penchant for males to favour iTunes. It is clear that the target age group is between the ages
of 21 to 30 and that both group, are mainly composed of complex buying behaviour types,
suggesting that both groups have indeed for a set of beliefs and attitudes towards iTunes, and
have chose accordingly whether to favour the brand or not.

38. 38
4.2.2 Brand Attributes
In terms of how the perceived brand attributes affected both groups of consumers, iTunes users
strongly believed in the importance of a recognizable brand, suggesting they favourably viewed
iTunes as a brand that could satisfy their needs. 71% of respondents confirmed this by clearly
stating that the saw great importance in being associated with a famous brand.
The non-iTunes users on the other hand did also favoured being associated with a famous brand,
with 54$% of respondents claiming that being linked to a famous brand was important for them.
However, in choosing iTunes, only less than half of the respondent group, at 43%, admitted that
the iTunes brand was important to them choosing whether to use the service or not.
It becomes clear that the majority of iTunes users heavily favoured the brand before hand,
confirming dominance in complex buyer types within the group. It also become clear that
Apple’s efforts to portray their brand image as reputably as possible, clearly was a factor in
whether or not to chose the service.
4.2.3 Brand Benefits
82% of iTunes UK users felt that added functionality was important in them choosing to use
iTunes, whereas only 46% of non iTunes users found functionally important. Quality was also
much less of an issue for non users with only 21% of non users sitting that quality was an
important factor for them. The iTunes users group however found that 63% of them considered
quality to be a determining factor in the purchase decision process.
This suggests that the iTunes user base perceived the brand to have high levels of quality,
whereas non users where not particularly focused on this dimension of the product. The relatively
his percentage of users seeking out functionality and quality also suggest that Apple has placed
particular emphasis on the dimension of benefits.

39. 39
4.2.4 Brand Values
85% of respondents felt that the iTunes brand image conveyed a sense of excellence whilst 61%
claimed to have felt more secure shopping on iTunes than on another provider. These statistics
are interesting in that they show that a strong sense of brand value has been created amongst this
sample group. If one considers the process of consumers forming beliefs, attitudes and finally
adopting the product, once can see that the brand image of iTunes has instilled a sense of security
and guarantee in quality. Both factors are conducive of brand loyalty and competitive advantage.
4.2.5 Brand Culture
86% of iTunes users found that the brand image iTunes portrayed exuded excellence compared to
a much lower 59% of non-users. What is interesting to note, is that even though the majority of
non-users think iTunes it’s a good brand, they still chose not to use it. This is perhaps partially
explained by only 19% of non users thinking that shopping on iTunes would make them safer
than anywhere else, compared to a much higher 66% positive response from iTunes users. It is
particularly clear in these two statistics that non-iTunes users have less brand culture than users.
This perhaps explains their choice of non-purchase.
4.2.6 Brand Identity
The final two questions of the survey reflected the sense of brand identity felt by iTunes UK
consumers and non-consumers. For the sample group who were iTunes users, 78%% believed
that the brand image of iTunes UK matched their own identity whilst only 39% of non-users felt
the same way. This perhaps can explain their choice of non-purchase. The questionnaire
continues to reveal that 40% of users don not care whether purchasing on iTunes is safer, leaving
only 12% on non-users stating that they would feel safer. When compared to a iTunes users, 28%
felt safer with 26% not caring.
This section of the survey was fairly indicative of the fact that the very large majority of iTunes
users felt a strong sense of personal identity in the iTunes brands, which has clearly influenced
their purchase decision. Whilst a low 39% of non-users feeling a link in terms of identity clearly
shows a correlation between perceptions of brand identify on active consumers of iTunes UK
services.

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4.2.7 Conclusions Drawn from the Surveys
The survey conducted was clearly indicative of the importance that branding has on the consumer
purchase decision-making process. A clear majority of respondents who feel a bond between
themselves and the iTunes brand have chose to become consumers. Non-users clearly have little
emotional or personal investment in the brand and seem to not have perceived or transformed any
mental associations into desires to become consumers. One must therefore conclude that the six
dimensions of meaning of a brand has a pertinent impact on how consumers view brands.
It must also be duly noted that there exists a clear discrepancy between the consumer behaviour
types contained in each group of respondents. Although the dominant consumer behaviour type
in both groups was the complex behaviour type, which indicates that this is the dominant type for
digital music consumers, there was a higher percentage much higher percentage (27% vs 17%)
of habitual buyer types in the group of iTunes users than there was in the non iTunes users. This
is suggestive of the fact that consumer behaviour types react differently to the various dimensions
of meaning that are portrayed by products.
4.3 External Analysis of The Legal Music Downloads Industry in The United Kingdom
4.3.1 Market Overview
In 2001, it was estimated that record companies lost 4.6 billion dollars in annual revenue as a
direct result of illegal music sharing over the Internet (RIAA 2005). The widespread popularity
of illegal music downloads was largely attributed to the lack of music providers online and high
compact disk prices. Youths and elders alike flocked to the Internet in order to fill their hard
drives with illegally obtained music for their enjoyment.
Having spotted a gap in the industry, Apple Computers, Inc. launched in 2001 the iTunes Music
Store in the United States of America in an attempt to curb the circulation of pirated music on the
Internet by offering a legal source of digital music downloads. Having negotiated agreements
with key players in the music industry, such as Warner Music Group, EMI, BMG, Universal

41. 41
Music Group, Sony Music and several other independent labels, Apple secured the rights to
distributed via the means of an online music store, an extensive catalogue of music, available to
purchase via download, at the flat rate of $0.99 per song. The launch of the iTunes music store
was coordinated with the launch of the iPod, a revolutionary new digital music player that offered
seamless integration with the iTunes music store. This combination enabled users to purchase
music online and seamlessly integrate it on to their iPod using the straightforward synching
capabilities of iTunes. This move by Apple created a new industry that would prove to raise
much controversy since its creation: The legal music downloads industry. By the 15th
of June,
2004, Apple expanded its Music store to cater the UK market by opening a iTunes Music Store
UK, which provided residence of the United Kingdom with a UK billing address legal digital
music solutions. ITunes UK began offering single track downloads for £0.79 per
song.(www.apple.com)
In November of 2005, the International Federation of Phonographic Industries (www.IFPI.com)
announced that over 16.9 million single tracks have been downloaded in the first 9 months of
2005. The IFPI continues to say that the figure represents a large rise in legal music downloads,
compared the 2.7 million tracks legally downloaded during the same period of 2004. (De Freitas,
2005)
Compared to 1.1 billion downloads in 2003, this figures seems insignificant. However, several
companies in the UK, including Apple Computers, saw this in a different perspective. To them, it
was 1.1 billion possible customers. In 2005, the IFPI confirmed the viability of the legal music
downloads industry by declaring a 10% fall in illegal music downloads between 2003 and 2005
(De Freitas, 2005)
In 2005, the viability of the legal music downloads industry has been recognized by several
companies around the UK. This has sparked intense competition for market share domination and
is largely seen as a battle of the brands. In order to secure more new customers and more
importantly retain a loyal consumer database of returning customers, companies such as Apple
Computers, Napster and Tesco’s have resulted in reassessing their branding strategy in order to
influence the purchase decision-making process of consumers in this industry.

42. 42
4.3.2 P.E.S.T.L.E. Analysis of the Digital Music Industry in the UK
In assessing the external environment that surrounds the iTunes Music Store UK, the author has
conducted a P.E.S.T.L.E. analysis in order to determine the key external factors that have a
significant influence on the current market for legally downloadable music in the UK
P.E.S.T.L.E. provides a framework from which to consider these external factors, by dividing the
analysis into key categories. These categories include political, economical, social, technological,
environmental and legal aspects.
4.3.2.1 Political
! The European Commission has been referred a case by the British Office of Fair Trade
regarding the discrepancy of pricing policies of digital music provider in the UK. Online
music providers have justified this by quoting varying prices of distribution due to the
conversion of currencies across international borders
! Despite being part of the European Union, the UK has retained its currency, the British
Pound. Political debates on whether the UK should join are rampant. Should the UK adopt the
Euro currency by joining the Euro zone, possible complications could ensue regarding the
pricing policy of digital music providers in the UK. One must consider current UK status in
the EU
! Current political hot topics, such as the war on terrorism and homegrown attacks have had a
detrimental effect on the economy. Because the purchase of musical tracks is considered a
luxury purchase, one must consider consumer spending trends in relation to disposable
income in the UK
! Increasing pressure from the US Government to root out internet piracy and ongoing
investigations being carried out have caused a consumer views on illegal music to drastically
shift since 2003

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4.3.2.2 Economical
! The difference in currency exchange rates makes it difficult to define a single pricing policy
that would be fair to both global and UK users. This sense of unfairness can lead consumers
to seek alternatives, such as illegal files sharing over the internet
! Heavy financial losses in CD sales have forced Record Companies to embrace to arrival of
legal online music distributors. Because there now exists a necessity to establish some form
of online distribution of music, record companies will be more willing to negotiate
distribution rights with legal online music providers
! Unchanging interest rates in the UK allow record companies to more readily offer price cuts
to online music distributors. This will enable providers to offer a wider catalogue of musical
content in order to reach a wider segment of music lovers in the UK
! The financial risk of being sued over Internet piracy is conductive to consumers choosing
legal music providers as an alternative to Internet file sharing
4.3.2.3 Social
! A noticeable change in consumer lifestyle dictates that more shopping is being performed at
home. Therefore, an increase in online music sales has become noticeable in both the UK and
international markets
! An aging population in the United Kingdom is having a wide effect on the types of music in
demand in the music industry in the United Kingdom.
! As digital equipment is becoming more embedded in the average consumer’s lifestyle, the
demand for easy access to online distributors of music is increasing

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4.3.2.4 Technological
! Technological developments in Internet connections available in the United Kingdom and the
wider availability of high speed Internet access is enabling more people to connect to online
music retailers
! Growing sales of portable digital music players are making more consumers seek out higher
quality music downloads and other forms of digital suppliers
! The increasing levels of technological knowledge amongst consumers are raising the standard
in music quality sought by the seekers of digital music. As expertise in the area of online
music progresses, consumers are becoming more demanding.
! An increase in the amount of viruses that are rampant on the internet are dissuading users
from downloading pirated music and favoring the use of legal and trustworthy suppliers of
digital music
! The increasing trend of Internet connection providers to limit the amount of information that
can be downloaded over a given period of time over users internet connections are limiting
the capabilities of consumers to download the desired amount of music
4.3.2.5 Legal
! Increasing court cases regarding the piracy of digital music are forcing consumers to seek
new methods of acquiring music online. Namely, through the channels of online music
providers. With increasing court cases appearing in France, Switzerland, Germany, the UK
and Finland, these scare tactics have essentially contributed to the reducing internet piracy by
nearly ten percent
! Antitrust laws in the United Kingdom limit the opportunity for companies to merge in order
to provide fuller and more divers catalogues of music.

45. 45
! Increasing knowledge of copyright law amongst consumers are pushing consumers to seek
more ethical way to procure copyrighted materials such as music
4.3.2.6 Environmental
! Increasing concern about the environment is pushing consumers to seeking more digital
alternatives to commonly consumed products, such as music.
! With a rise in ecological awareness, consumers are displaying increased loyalty to companies
who are implementing efficient environmental polices regarding the production and
distribution of their products.
4.3.3 Porter’s 5 Forces
Porter (1985) states that their exists five forces in any industry that drive competition. These
forces include competitive rivalry, threat of new entrants, threat of substitute products, bargaining
power of suppliers and bargaining power of buyers. In creating the five forces model, he allows
one to outline the competition. The author has used this model bellow to determine the extent and
threat of competition in the legal music downloads industry

46. 46
Source: Adapted from M.E. Porter, Johnson et al (2005), Exploring Corporate Strategy, Prentice Hall, ed 7:
Competitive Rivalry
(High)
• High levels of competition
in the UK, including
Napster, MSN Music,
HMV, and Tesco’s.
• Retailer of hard copy music,
including Amazon.com,
Tesco’s, HMV, Virgin
Mega Store
Threat of New Entrants
(Low-Medium)
• Increasing agreements
between providers of musical
content are creating more
competition
• Record Companies might
mobilize to set up their own
online music stores
Bargaining Power of
Buyers
(High)
• Music is available
free on the internet,
although illegal
• Highly Competitive
rivalry offers
choice and lower
prices
Bargaining Power of
Suppliers
(Low to Medium)
• For the moment,
Record Companies
have no choice but
to help online
music providers
due to internet
piracy
• Record Companies
could collude to
ask for higher
royalties
Threats of Substitute Products
(High)
• Free but ILEGAL Pirated Music
• High Street Music Stores

47. 47
4.3.3.1 Threat of New Entrants
Increasing pressure from record companies on online distributors of music have spawned
rumours of that record companies will soon chose to no longer provide online distributors with
content. Should this happen, records companies could merge together in order to create their own
source of distribution for online music. Antitrust laws would most likely prevent such a
monopoly from forming, however the law would not prevent trade agreements to be formed by
record companies, a system of royalties payments could be established.
Another factor that should be considered is increasing agreements between companies that are
seeking to break into the industry are being formed. With companies such as Virgin and HMV
are forming partnerships that could lead to price war which would result in the survival on the
fittest.
4.3.3.2 Threats of Substitute Products
The most competitive substitute to legal music is illegally pirated shared files that can be trade
via file sharing servers over the Internet. This substitute is currently more popular that legal
music and is costing the music industry an estimated 4.6 billion dollars a year.
Other competitors are high street music stores that sell CDs and music DVDs. Competitors such
as Virgin, HMV, WHSmith and Tesco’s provide users with an alternative to digital music: a
tangible hardcopy in the form of a CD. This threat is relatively low however, as the proliferation
of free pirated music has caused immense financial troubles in this industry.

48. 48
4.3.3.3 Bargaining Power of Buyers
Buyers bargaining power is high. This can be justified by the fact that music can be obtained free
of charge over the internet. Coupled with the fact that there now exists a multitude of online
providers, buyers have the choice and freedom to freely chose amongst the multitude of
companies that offer the same products at cheaper prices. Therefore, companies are now heavily
depending on branding and other forms of promotion to desensitize consumer from price and
attempt to create loyalty based on advanced functionality and a more extensive selection of hard
to find music tracks.
4.3.3.4 Bargaining Power of Suppliers
This threat is low to medium. Record companies are forced to embrace the arrival of legal
retailers of digital music, as it is currently the only alternative to illegal music downloads. For the
moment, record companies will seek to expand agreements with legal music providers such as
iTunes or Napster in order to increase revenue of music sales as this source of income is
becoming increasingly difficult to maintain with the existence of music piracy.
4.3.4 Listing of Opportunities and Threats
In this section, the author aims to provide a listing of external opportunities and threats relevant
in the legal music downloads industry
4.3.4.1 Opportunities
! Consumers are more willing to explore alternatives to illegal music downloading in search for
better quality musical recordings as their understanding of the varying qualities of digital
recording increase

49. 49
! Record companies are more willing to establish working relationships with online music
providers in order to further music sales as internet piracy takes its toll on the industry. At the
moment, online legal music stores provides the sole means for which record companies can
efficiently provide music to internet users
! Increasing access to the internet in the United Kingdom provides consumers with more
opportunities to download music
! Increasing technological awareness is pushing internet users to seek more functionality out of
their browsing experience. Online music retailers can provide consumers with more options
in regards to music consumption than illegal providers can. Such functionality can be seen in
users reviews of music, the creation of online playlists or the option to give music as a gift by
purchasing gift vouchers redeemable at online stores
! Increases in viral infections of computers are forcing consumers to seek safer sites on which
to download music. Current providers of illegal downloadable music cannot guarantee the
privacy nor the technological safety of the user
! Current market trends show consumers are more willing to purchase digital music as it is
easier to store than CDs and cheaper to acquire in the long run, as online providers allow the
purchase on single tracks as opposed to then entire album
! Increasing pressure from the United States of America are resulting in the conviction of users
of pirated music. This is having an effect of dissuading the average user from downloading
illegal music as the consequences now involve jail time
! The success of digital music players are creating a higher demand for digital music, as
consumers seek to fill their players with desired musical tracks. With the advent of the iPod,
digital music as now become of sought after fashionable accessory

50. 50
! An increase in consumers shopping from home suggest there now exists a wider market to
market legally downloadable music. More users are investing in high speed internet access
which is facilitating the process of seeking music
! Higher levels of digital integration now exist. For the average consumer, this means that he or
she can more easily incorporate digital music into his or her lifestyle by either containing it in
a portable music player, a computer or a telephone
! Increasing endorsements from celebrity musicians fearing that their copyrighted material will
be pirated are facilitating the branding process, making both digital providers of music and
the digital music tracks themselves more attractive to the consume
! Globalization is reducing the geographical boundaries of musical tastes, resulting in more
consumers seeking a wider variety of music to be purchased. Due to the high cost of
distributing all musical materials internationally, legal digital music downloads would
provide a cost efficient way of satisfying the evolving musical tastes of modern consumers
4.3.4.2 Threats
! Record companies are becoming increasingly frustrated with online music store policies.
These companies may seek to create their own online music store in an effort to raise revenue
and cut distributor fees
! The illegal music download industry currently represented an estimated 1.1 billion downloads
in 1993. Although it slightly decreased to 900 million downloads in 2005, it still represents
the majority of all music downloads on the Internet. Being free, illegal music is highly
attractive to the average consumer. Therefore the only means of competitive differentiation of
legal providers, rests in the effective branding of their offerings, added functionality and
security. Unfortunately, these are factors that are readily looked over by most consumers of
digital music

51. 51
! A current lack of payment options dissuades many consumers from purchasing legal music
online. Seeing as the majority of downloaders are younger customers who have limited
methods of payment
! An increasing trend of Internet services providers to limit the amount of information that can
effectively be downloaded during a set timeframe limits the ability of consumers to download
the desired amount of music. This in turn, limits the potential amount of sales that can be
experienced by legal providers of digital music
! Most digital music players have no restrictions on the type of music files that it can play.
Therefore, the average consumer can still easily play either legal or illegal music on them.
This incites consumers to use legal providers of music in a limited capacity, as the will use
illegal providers for the bulk of their needs, and legal providers in the rare instances when
they cannot find the desired music
4.4 Internal Analysis of Apple Computer’s iTunes Music Store
4.4.1 ITunes Music Store UK Company Overview
The iTunes Music Store UK is currently the industry leader in legal music downloads. Offering a
range of over 1.5 million music tracks, iTunes commands a 80% market share in the United
Kingdom. Designed to be used with the iPod, the iTunes music store offers seamless integration
for users seeking to purchase and store music on their computer or digital music player, share
recommended mixed tape style playlists online or offer the gift of music via the purchase of
online virtual girft vouchers. Launched in 2001, iTunes Music Store UK was the first in a series
of European iTunes music stores to offer a legal alternative to pirated music on the Internet and is
said to have pioneered the industry for legally downloadable music.

52. 52
4.4.2 ITunes UK’s Strategic Capabilities and Competitive Advantage Model
In order to determine iTunes UK’s key strategic capabilities and sources of competitive
advantage, the author will us the strategic Capabilities and Competitive Advantage model
(Johnson, 2005). This will enable the reader to gain a clear understanding of how iTunes UK
compares to competitors in the market place and its key components that allows it to experience
competitive advantage
Resources Competences
Threshold
capabilities ! Online catalogue of over 1.5 million
downloadable track
! Easy to use interface
! Seamless Integration with iPod and
personal computer
! Instant Download Capabilities
! Owns songs rather than lease
! Leading development team
! Perceived as a fashionable brand
! Music catalogue expands on a
daily basis
! Offers exclusive pre-release
downloads
! Offers celebrity endorsed mixed
tape style playlists
! Offers access to a library of local
artists as well as international
! Employs a stringent flat fee policy
of £ 0.79 per song
! Allows the download of individual
tracks

53. 53
Capabilities
for
Competitive
Advantage
! Comprehensive agreement with key
record companies
! CEO Steve Jobs is an integral part of
the company
! Excellent Brand image
! Loyal Customer Base
! Agreement with television studios
for future sales of TV shows and
music videos
! Guarantees high quality
downloads
! Ensures user privacy
! Formed high levels of consumer
loyalty
! Has 80% market share
! State of the art search engine
enabling consumers to find tracks
easily
Source: Adapted from Johnson et al (2005), Exploring Corporate Strategy, Prentice Hall, ed 7
4.4.3 Resource Audit
4.4.3.1 Physical Resources
! The iTunes Music Store UK specializes in the sales of intangible music tracks via and
intangible online music store. Thus, has no physical resources
4.4.3.2 Financial Resources
! Apple Computer’s financial resources are at the iTunes Music Store UK’s disposition
! Pepsi Cola “Song for a Pepsi” scheme
4.4.3.3 Human Resources
! Steve Jobs, CEO of Apple Computers
! Celebrity Endorsers

54. 54
4.4.3.4 Intangible Resources
! The iTunes Online Store
! Extensive catalogue of Music
! Loyal consumer database
! Effective Brand Image
! Support of various donation funds, such as the Hurricane Katarina fund
! Access to exclusive content
! Excellent working relationship with Record Companies
! IPod integration
! Access to music videos and TV shows
! Extensive search engine allows users to find music easily
! User rating system
4.4.4 Strengths and Weaknesses
4.4.4.1 Strengths
! Allows users to own music as opposed to leasing it. Most competitors offer a monthly
subscription with access to a limited catalogue
! The iTunes Music Sore UK’s content is updated daily
! ITunes UK has achieved contractual agreements with record companies in order to secure
content
! Offers a straightforward pricing policy of £0.79 per song
! Allows users to download single tracks as opposed to the whole album
! Offers exclusive content

55. 55
! Enables users to create custom profiles in order to facilitate finding music that is relevant to
personal tastes
! Offers state of the art search engine that allows users to easily find the requested music
! The iTunes music store has a strong brand image that communicates the strong identities
formed by Apple Computers
! Offers the possibility of purchasing gift certificates that are redeemable online
! Access to specialized visual content such as music videos and television shows
! Offers educational discounts
4.4.4.2 Weaknesses
! Tracks cost £0.79 to purchase as opposed to being free illegally
! Tracks only playable on iPods, thus offer little compatibility
! Offers little live customer support, although help is available via email. However this process
can be time consuming
! Does not provide a customer log, in the event that the customer accidentally deletes of loses
his purchased tracks
! Content is restricted by geographical location
Limited methods of payment can be restrictive towards younger customers

56. 56
CHAPTER 5
CONCLUSIONS & RECOMMENDATIONS

57. 57
5 Conclusions and Recommendations
5.1 Recommendations
Following the analysis of this dissertation, the author has determined the impact of branding on
several aspects of the consumer decision-making process. In lights of the conclusions drawn, the
author can now make the following pertinent recommendations.
! The process of branding has proven to have a large impact on the consumer decision-making
process. However, in order to be most effective, it is recommended to ensure that the
branding strategies are targeted at specific consumer behavior types, as the complex behavior
type, dissonance-reducing buying behavior types, habitual buying behavior type and variety-
seeking behavior type all react independently and differently to various modes of branding
stimuli. The author as shown that this was reflected in the primary research conducted.
! In light of the previous point, the author recommends further research into the variations
discovered between consumer behavior types. This would be essential in determining which
consumer behavior types react most productively to which branding strategies. The results
could be used by iTunes Music Store to create more meaningful promotional activities that
would positively affect the learning, perceiving and habit forming aspect of the consumer
decision-making process.
! The author further recommends to Apple Computers, Inc. to conduct regular surveys
pertaining to consumer behavior, in order to ascertain the effectiveness of the branding
strategies over established periods of time. As it has been shown, stimuli can lose its effect if
purchasing activities are not followed shortly after the stimuli has been experienced
! The iTunes music store is clearly branded to reflect brand benefits, brand values and brand
identity. However this is not reaching consumer who show little interests in such meanings
and are more concerned with price. It is the recommendation of the author that iTunes lower
online prices to reflect the popularity of individual songs rather that maintain a flat price

58. 58
policy, in order to incite users of illegally obtained music to seek alternatives to pirated
music. This would allow for an expansion of the iTunes consumer database as well as widen
the appeal of its brand image, by maintaining reassuringly moderate prices for those
consumer types interested in importance of a reputable brand image.
5.2 Conclusions
The purposes of this dissertation was to establish the impact branding has on the consumer
purchase decision making-process, as well as determine how Apple Computers, Inc, via the
techniques of branding, affect the consumer purchase decision-making process of consumers of
legally downloadable music.
It has been found that there is indeed a correlation between the effects of branding and the
consumer purchase decision-making process. It is apparent in how branding influences the
process of learning, the creation of beliefs and the formation of attitudes in various types of
consumer purchasing behaviour.
However, it must be noted that is also evidence to suggest that the four different types of
consumer purchasing behaviour, namely the complex behaviour type, dissonance-reducing
buying behaviour types, habitual buying behaviour type and variety-seeking behaviour type, all
exhibited different reaction to branding stimuli. Therefore, one can conclude that it is essential
that marketers individualise the branding process in regards to these four types of consumer
behaviour in order to achieve maximum efficiency.
In terms of how Apple’s iTunes Music Store uses branding to influence its consumers purchase
decision-making process, it has been found that Apple has chosen to focus on the meanings
exhibited by brand benefits, brand values and brand identity. They have achieved this by
extending the already existing brand image of Apple Computers and the ensuing brand image of
the iPod, to the iTunes Music Store. This has effectively lead to the domination of the UK market
for digital music. However, the author must question the sustainability of such branding, as its
link to Apple computers does not satisfy in any long term way, the needs and wants of the

59. 59
consumer of digital music exclusively. It does satisfy however, the Apple Computers and related
products friendly consumer of digital music.
This exclusion of Apple unfriendly music consumers has lead to iTunes forming an iPod
exclusive customer base. Seeing as the iPod is also the dominant digital music player in the
industry, this has extended to the dominating iTunes market share. However, with the advent of
new digital music players as well as the emergence of new online music providers, this strategy
will have long-term sustainability.
Thus, the author has concluded that it is essential to the long-term health of Apple Computers to
segregate its iTunes brand image and Apple Computers brand image in order to widen the appeal
of their brand identity to meet the needs, wants and expectations of not only the non-iTunes user
group who participated in the primary research of this dissertation, but the rest of the consumer
market segment of legally downloadable digital music.

60. 60
CHAPTER 6
BIBLIOGRAPHY

61. 61
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66. 66
Appendix A
SURVEY

67. 1. Gender
a) Male 67%
b) Female 33%
2. Age Group
a) Under 20 15%
b) 21 to 30 45%
c) 31 to 40 25%
d) 41 & above 15%
3. Select you buying behavior (Refer to Page 2)
a) Complex Buying Behavior 31%
b) Dissonance-Reducing Buying behavior 23%
c) Habitual Buying Behavior 27%
d) Variety-Seeking Buying Behavior 19%
4. When deciding wether or not to choose iTunes
UK, was it important to you that it have a reputa-
ble brand name?
a) Yes 69%
b) No 31%
5. Would you say that being associated to a famous
brand is important to you?
a) Yes 71%
b) No 29%
6. Where functional features important to you when
deciding to purchase on iTunes UK?
a) Yes 82%
b) No 18%
7. Was the audio quality of the music being better
than substitutes a deciding factor in you choos-
ing to purchase on iTunes UK?
a) Yes 63%
b) No 37%
8. Do you think the iTunes UK brand image conveys
excellence in terms of quality ?
a) Yes 86%
b) No 14%
9. Would purchasing music on iTunes UK give you
an element of comfort, as opposed to purchas-
ing music elsewhere online?
a) Yes 66%
b) No 34%
10. When choosing wether to use iTunes for the first
time, did you consider any previous information
you had heard about iTunes UK?
a) Yes 97%
b) No 3%
11. Do you perceive the iTunes UK brand image to
match your own identity?
a) Yes 78%
b) No 22%
12. Would purchasing music at the iTunes Music
Store UK make you feel more distinguished as
person than if you were to purchase or download
music elsewhere ?
a) I think I would trust iTunes more 28%
b) There are a lot of safe place to buy music online.
iTunes is not the only one 42%
c) I dont trust iTunes. 4%
d) I could not care less 26%
THANK YOU FOR YOU TIME. TO SEE THE
RESULTS OF THIS SURVEY, PLEASE VISIT
WWW.JUSTLOOKINGPICTURES.COM
page 1 of 2
Survey for iTunes Users