Journal of Business Research 67 (2014) 667672

Contents lists available at ScienceDirect

Journal of Business Research

Relationship marketing management: Its importance in private

label extension
Maria Jos Miquel-Romero a,, Eva Mara Caplliure-Giner a,, Consolacin Adame-Snchez b
a
b

Department of Marketing, Juan Jos Renau Piqueras, University of Valencia, Av. Tarongers s/n, 46022 Valencia, Spain
Department of Business Management, Juan Jos Renau Piqueras, University of Valencia, Av. Tarongers s/n, 46022 Valencia, Spain

a r t i c l e

i n f o

Article history:
Received 1 April 2013
Received in revised form 1 October 2013
Accepted 1 November 2013
Available online 26 December 2013
Keywords:
Relationship marketing
Private label
Trust
Commitment
Experience
Loyalty

a b s t r a c t
Relationship marketing aims to generate long-term protable relationships between partners. In the context of
the convenience goods market, the present study considers private labels in traditional categories as a tool to
develop effective relationships. The main contribution of the study is the use of the relationship approach to
explain private label loyalty and the success of store brand extension strategies. Drawing upon a sample of 434
individual and using EQS software, this study shows that customer experience, satisfaction, trust, and commitment to private labels play an important role in customer loyalty toward private labels in convenience goods,
increasing consumers' propensity to buy private labels in new categories such as durable goods. Generating
trust and commitment, which ultimately result in loyalty, is therefore a strategic goal and a source of longterm protability for retailers.
2013 Elsevier Inc. All rights reserved.

1. Introduction
Retailers are aware that a strong brand is a source of competitive
advantage for any company. In recent years, private labels (PLs) are
becoming very important for retailers as a means of differentiating
themselves from competitors, to grow through PL extension, and to
strengthen their relationships with consumers (e.g., Dhar & Hoch,
1997; Narasimhan & Wilcox, 1998; Pepe, Abratt, & Dion, 2011).
The Private Label Manufacturers Association (PLMA, 2013) denes
PL products as all merchandise sold under a retailer's brand, which
may be the chain's own name or a brand name that the retailer uses
exclusively for their stores. Across Europe, private labels are becoming
very popular among shoppers, with 46% of consumers frequently
purchasing PLs (PLMA, 2013). Manufacturer and retailer brands compete for consumer loyalty within the same product categories (BustosReyes & Gonzlez-Benito, 2008; Grewal, Levy, & Lehmann, 2004). PLs
exist in almost every category of grocery, drugstore, and perfumery
products, and retailers are extending their PLs to new categories such
as shopping products (textiles, household appliances, and electronic
devices), and even services (nancial, insurance, and mobile services).
To counter the advance of PLs, Grossman (1998) advises manufacturers to exploit relationship marketing (RM), as a mechanism to
The authors gratefully acknowledge comments by James W. Taylor (California State
University, USA) and Oscar Gonzlez (University of Salamanca, Spain). The authors
alone are responsible for any limitations and errors in the study and the paper.
Corresponding authors.
E-mail addresses: maria.j.miquel@uv.es (M.J. Miquel-Romero), eva.caplliure@uv.es
(E.M. Caplliure-Giner), consolacion.adame@uv.es (C. Adame-Snchez).
0148-2963/$ see front matter 2013 Elsevier Inc. All rights reserved.
http://dx.doi.org/10.1016/j.jbusres.2013.11.025

provide value added to the customer. Nowadays, retailers implement relationship strategies to retain customers. Customer RM focuses on
developing mutually valuable long-term relationships with customers
(Ravald & Grnross, 1996) on the basis of the core variables of satisfaction,
trust, and commitment (Payne, Christopher, Clark, & Peck, 1995). For the
company, appropriate RM leads to effective customer retention and loyalty, resulting in a gradual increase in the customer base, a rise in customer
lifespan, a greater acceptance of brand extension, and improvements in
business performance (Sirohi, Mclaughlin, & Witink, 1998).
Despite the abundant academic research into RM, PL, and brand
extension, only partial or indirect linkages appear among these concepts
in the context of retailers. In their review of 142 PL research papers,
Gooner and Nadler (2012) conclude that the consolidation of customer
goods leads to a greater PL market share.
Experience and satisfaction with the PL in regular products instill
trust in customers, making purchasing PLs in new product categories
easier (Steenkamp & Dekimpe, 1997) because of a fall in perceived
risk (Sheth & Parvatlyar, 1995). Retailers are adopting brand equity as
their strategy (Pappu & Quester, 2006) by creating a unique selling
proposition (Gutwilling, 2000; Steiner, 2004). New offers must be
consistent with earlier ones to demonstrate commitment to the consumer. To keep the consumer's interest in maintaining the relationship,
the retailer has to match its offers with customers' desires better than
competitors do (Reinartz & Kumar, 2000), bolstering customer loyalty
to the brand and establishment. The concepts in the above discussion
come under the umbrella of RM.
In view of the growing presence of PLs in new categories (PLMA,
2013), this study attempts to analyze to what extent the fundamentals

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M.J. Miquel-Romero et al. / Journal of Business Research 67 (2014) 667672

of RM apply to PL in convenience goods, enhancing PL extension acceptance in durable goods. The goal is to analyze whether satisfaction stemming from experience, trust, and commitment to the PL in convenience
goods (CG) favors PL loyalty, and, consequently, acceptance of brand extension into new product categories. The new product category is complex durable goods (DG), whose characteristics make the purchase
decision more complex. Customers are likely to perceive higher risk in
purchasing DG products from PLs, increasing the perception that a negative outcome may occur (Burnham, Frels, & Mahajan, 2003).
Following this introduction, Section 2 reviews the literature on RM
and PL, presenting the conceptual model and research hypotheses.
Section 3 covers the study methodology, and Section 4 presents the
results and ndings. Section 5 discusses the conclusions and limitations,
and proposes suggestions for future research.
2. Literature review: relationship marketing model for private label
extension to durable goods
RM entails the development of strategies to build relationships with
customers, to develop these relationships further and maintain them
over the long term, and, through this process, add value. The aim of RM
is to create customer loyalty on the basis of customer satisfaction (Berry
& Parasuraman, 1991; Kotler, 1994). Mutual benets for both company
and customer are possible. RM increases levels of customer satisfaction
and loyalty (Evans & Laskin, 1994), and simplies purchasing procedures.
RM reduces the need to collect information and subsequently process this
data, and diminishes purchasing risk by bolstering psychological wellbeing and satisfaction (Sheth & Parvatlyar, 1995).
Given the intrinsic characteristics of DG and the time that elapses between one purchase and the next, the initial choice of PL in durable
goods categories is crucial and depends on previous experience of
other PL product categories (Zielke & Dobbelstein, 2007). Retailers are
so condent in their ability to satisfy customers' needs and in the quality
of the products they supply that they expect re-purchases of PL, thereby
increasing customer familiarity (Alba & Hutchinson, 1987; Coupey,
Irwin, & Payne, 1998), and resulting in a positive attitude towards PL
(Richardson, Jain, & Dick, 1996).
Anderson, Fornell, and Lehman (1994) dene satisfaction as an
overall assessment of customer experience over time, or of a set of
similar-type experiences. More recent contributions take a much
broader approach, suggesting that satisfaction is an overall assessment
of the experience as owner or customer of a product or service
(Fullerton, 2005; Yu & Dean, 2001). When customers view the experience in a positive light, scholars refer to this concept as satisfaction
(Batra & Sinha, 2000; Roselius, 1971; Sethuraman & Cole, 1999).
H1. Experience with PL CG has a direct, positive impact on customer
satisfaction with PL CG.
Chaudhuri and Holbrook (2001) dene brand trust as the willingness of the average customer to rely on the brand's ability to perform
its function. Satisfaction is an attitude deriving from experience with
another individual or entity. Undeniably, a certain amount of positive
experience with a person or organization will at least support the development of trust towards such a person or organization. In customer
supplier relationships, the literature supports a strong relationship
between customer satisfaction and trust (Anderson & Narus, 1990;
Garbarino & Johnson, 1999). Therefore, the higher the degree of
consumer satisfaction with PL products and services with which
customers have some kind of bond, the greater the trust in the brand
(Ganesan, 1994; Selnes, 1998).
H2. Satisfaction with PL CG has a direct, positive impact on trust in PL CG.
The RM literature widely acknowledges commitment as an integral
part of any long-term business relationship (Gundlach, Achrol, &

Mentzer, 1995; Morgan & Hunt, 1994). In most cases, scholars describe
RM as a kind of lasting intention to build and maintain a long-term
relationship (e.g. Dwyer, Schurr, & Oh, 1987; Moorman, Zaltman, &
Deshpand, 1992). Trust diminishes perceived risk and vulnerability
in a relationship, which leads to greater commitment to the relationship
(Ganesan, 1994). Following Chumpitaz and Paparoidamis (2007), and
Garbarino and Johnson (1999), the present study examines trust as a
precursor of commitment.
H3. Trust in PL CG has a direct, positive impact on customer commitment to PL CG.
Satisfaction, trust, and commitment are outcomes of implementing
RM. These three factors are the precursors of loyalty (Chumpitaz &
Paparoidamis, 2007; Mittal & Kamakura, 2001; Moorman, Deshpand,
& Zaltman, 1993; Morgan & Hunt, 1994; Oliver, 1997), and develop
into the strategic goals of companies (Aurier & Gilles, 2012a).
Oliver (1999, p. 34) denes loyalty as, a deeply held commitment
to rebuy or repatronise a preferred product/service consistently in the
future, thereby causing repetitive same-brand or same brand-set
purchasing. This denition highlights the two different aspects of
brand loyalty appearing in earlier works on attitude and behavioral
concepts (Aaker, 1991; Jacoby & Kyner, 1973; Oliver, 1999). True loyalty
is an attitudinal commitment to the brand and repurchase intention
(Chumpitaz & Paparoidamis, 2007).
The relationship between customer brand satisfaction and brand
loyalty appears extensively in the literature (Bitner & Hubbert, 1994;
Oliver, 1999), with brand satisfaction being the most important antecedent of loyalty (Fornell, 1992). One of the more relevant premises
for a PL to establish loyalty is the brand's ability to fulll promises to
its customer base. The continuing fulllment of promises usually leads
to a long-term protable relationship between a retailer and its
customers (Pepe et al., 2011). In such cases, the customer trusts the
retailer's ability and motivation to behave in the expected way
(Jarvenpaa, Tractinsky, & Vitale, 2000).
H4. PL satisfaction in CG has a direct, positive impact on PL customer
loyalty in CG.
H5. PL trust in CG has a direct, positive impact on PL customer loyalty in
CG.
H6. Commitment to PL CG has a direct, positive impact on PL customer
loyalty in CG.
Brand extension, or brand stretching, is one of the growth strategies
that distributors use when they are attempting to exploit PL equity by
increasing the number of PL product categories, despite many of these
new categories being non-traditional, as is the case of DG in this
research paper. The brand extension strategy can also optimize relationships with customers (Scott & Halligan, 2002).
Brand equity includes multiple dimensions such as brand awareness, brand image and associations, and brand loyalty (Aaker, 1991;
Keller, 2008). Abundant research on brand extension establishes a link
between the rst two categories of brand equity (Broniarczyk & Alba,
1994; Dacin & Smith, 1994; Keller & Aaker, 1992). Nonetheless, few
studies analyze the effect of brand loyalty on customer assessment of
retail brand extension. Exceptions to the rule are the studies by He
and Li (2010), and Hem and Iversen (2003), which report that brand
loyalty has a positive effect on the assessment of brand extension.
When retailers extend their PL to a new product category, customer
loyalty to the parent brand indicates a good chance that the same
retailers will try the extended brand, as long as loyalty remains within
some reasonable limits (Reast, 2005). Brand loyalty refers to general
preference towards the parent brand, whereas brand extension assessment is a product-specic brand attitude, specically referring to
purchase intention.

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669

Fig. 1. Model.

H7. Loyalty to PL CG has a direct, positive impact on PL DG purchase

intention.
Fig. 1 shows the model and hypotheses.
3. Methodology
The sampling frame for data collection is all individuals between 18
and 70 years old. The survey covers 434 respondents that random
interception selects in two high trafc commercial areas in three
major Spanish cities, using age-stratied sampling. Fieldwork took
place in May 2011, yielding 434 valid questionnaires. All variables in
the questionnaire work with 7-point Likert scales (1 = Low to
7 = High), from earlier studies (see Table 1). Scales refer to PL in general (with no PL brand specication). To facilitate generalization of the
results, the survey examines purchase intention for two different DGs
(a television and a washing machine), considering the mean for each
scale item.
Assessment of the reliability and validity of the measurement
instruments begins with conrmatory factor analysis using maximumlikelihood estimation of the six factors above. Items with factorial
loadings of below 0.6 or those that the Lagrange multiplier test
highlights do not feature in the model. Factorial loadings are statistically
signicant and above 0.6, thus conrming convergent validity (Table 2).
Assessment of reliability involves calculating, for each factor, Cronbach's
alpha, the composite reliability index, and the average extracted
variance. The results show acceptable levels of reliability and

convergent validity. Discriminant validity also receives conrmation

because the condence interval for the estimation of the correlation
between each pair of factors does not include the value 1, and the
mean extracted variance for each factor is greater than the square of
the correlation between each pair of factors. During this process,
commitment to PL results in one single-item scale.

4. Results
The next step is to estimate the structural model in Fig. 1 through
maximum likelihood using EQS 6.1. The results, as well as the model
t, appear in Table 3.
All hypotheses except one (H5) receive support from the results. The
only relationship that the data fail to corroborate is that which directly
links customer trust in PL CG with loyalty towards PL. Although the
RM literature often nds strong positive links between trust and loyalty,
the ndings in this study suggest that this relationship is non-existent,
in line with the conclusions in Taylor and Hunter (2003) in their
analysis of B2B relationships.
According to the results, adequate PL management in traditional
product categories favors acceptance of PL in less traditional ones. PL
purchase intention in DG depends on loyalty towards PL in convenience
goods and, to a certain extent, relies on customer satisfaction with PL in
convenience goods. To a lesser extent, PL purchase intention also
depends on customer commitment to PL in traditional product categories. In these relationships, experience of PL in CG and the resulting

Table 1
Scales.
Variable

Items

Based on

F1. PL experience in convenience goods

EX1. I have plenty of experience using private label products

EX2. I know the available private label products well
EX3. I am quite familiar with private labels
EX4. I have often bought private labels
SA1. I am satised with my decision to purchase private label products
SA2. Overall, I have had more positive experiences than negative ones
with private labels
SA3. I am pleased that I purchased PL
SA4. I think that I did the right thing when I bought private label products
SA5. My choice to buy private label products was a wise one.
TR1. Based on my experience, the retailer's brand is trustworthy
TR2. I trust the retailer's brand when I buy grocery, drugstore, and perfumery
products
CO1. I think the retailer's brand takes my interests into account
CO2. I trust that the retailer's brand will keep its promises and
commitments to me
LO1. I'm very close to private labels
LO2. I'm a loyal customer of private labels

Bailey (1999), Dick, Jain, and Richardson (1995),

Sethuraman and Cole (1997)

F2. PL satisfaction in convenience goods

F3. PL trust in convenience goods

F4. PL commitment in convenience goods

F5. Loyalty to private label in convenience

goods

F6. PL Purchase intention of durable goods

(TV/washing machine)

PU1. If I were going to buy an X, the likelihood of me buying a private

label one is
PU2. The likelihood that I would purchase this X with private label is

Zbojay and Voorhees (2006)

Delgado-Ballester and Munuera-Alemn (2001)

Delgado-Ballester and Munuera-Alemn (2001),

Fullerton (2003)
Aurier and Sr de Lanauze, (2012b), Ailawadi, Neslin,
and Gendenk (2001), Garretson, Fisher, and Burton
(2002),
Oliver (1999)
Grewal, Monroe, and Krishnan (1998)

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M.J. Miquel-Romero et al. / Journal of Business Research 67 (2014) 667672

Table 2
Psychometric properties.
Reliability and convergent validity
Dimension
F1. PL Experience in convenience goods

F2. Satisfaction with PL in convenience goods

F3. PL trust in convenience goods

F5. Loyalty to private label in convenience goods
F6. PL Purchase intention of durable goods (TV/washing machine)

Indicator

Load

Robust t

Average loads

Cronbach's

Composite reliability

AVE

EX1
EX2
EX3
EX4
SA1
SA2
SA3
TR1
TR2
LO1
LO2
PU1
PU2

.88
.90
.91
.93
.89
.90
.87
.89
.85
.86
.83
.97
.95

26.96
25.42
24.52
25.84
20.84
19.88
19.88
20.50
18.65
23.07
21.45
31.55
29.17

.90

.95

.95

.82

.88

.91

.91

.78

.87

.86

.86

.76

.85

.83

.83

.71

.96

.96

.96

.92

Discriminant validity

F1
F2
F3
F4
F5
F6

F1

F2

F3

F4

F5

F6

.82
[.82;.89]
[.81;.87]
[.64;.75]
[.66;.78]
[.23;.41]

.73
.78
[.91;.96]
[.73;.82]
[.77;.87]
[.29;.47]

.72
.75
.76
[.74;.83]
[.71;.83]
[.26;.45]

.48
.59
.61

[.65;.77]
[.24;.41]

.52
.68
.59
.50
.71
[.29;.48]

.10
.15
.13
.10
.15
.92

2 = 143.97; d.f. = 63; p b 0.01; BBNFI = 0.97; BBNNFI = 0.97; CFI = 0.98; IFI = 0.98; and RMSEA = 0.05.
The diagonal represents the average variance extracted AVE. Above the diagonal is the variance that each pair of factors shares (squared correlation). Below the diagonal, the 95%
condence interval for the inter-factor correlation appears.
AVE = average variance extracted;p = b.01.

trust are also of particular signicance, as experience strongly inuences

satisfaction and trust strongly inuences commitment.
5. Conclusions
Nowadays, most of the development in the PL sector is taking place
in the grocery and drugstore sectors, and various studies show that PL
product purchase intention depends on the type of product (Batra &
Sinha, 2000; Semeijn, Van Riel, & Ambrosini, 2004). As the results of
the present study show, however, adequate management of PL in the
most familiar product categories to the customer can be an RM tool. If
the experience with these categories generates satisfaction, which is
the consequence of adequate RM management, consumers will develop
trust and commitment, as well as loyalty, toward the PL in these categories, with greater acceptance of PL in completely different product lines
such as DG. As perceived risk is a pivotal aspect of customer behavior
(Taylor, 1974), any actions serving to mitigate risk in the choice would
increase customer PL purchase intention (Bao, Bao, & Sheng, 2011).
Efforts to ensure quality and consistent functional characteristics of
PL convenience goods, together with the development of premium PLs
that target a more discerning public, are leading to a generally favorable
attitude towards PLs, with improvements in brand image and higher
Table 3
Structural model assessment.
Hypotheses

Standardized
loading

T value

Test result

H1: Experience (+) Satisfaction

H2: Satisfaction (+) Trust
H3: Trust (+) Commitment
H4: Satisfaction (+) Loyalty
H5: Trust (+) Loyalty
H6: Commitment (+) Loyalty
H7: Loyalty (+) Purchase intention in
new categories

0.87
0.96
0.80
0.89
0.23
0.22
0.41

17.35
21.03
18.29
3.46

Accepted
Accepted
Accepted
Accepted
Rejected
Accepted
Accepted

0.80ns
2.79
8.21

2 (70 d.f.) = 150.18 (p b 0.01); BBNFI = .96; BBNNFI = .93; CFI = .97; IFI = .98;
RMSEA = .05; and nsnot sig.
p b .01.

levels of customer trust in such brands and their promoters. As the literature shows, PL market share expands and contracts asymmetrically,
with greater growth during periods of recession and only partial decline
during intervening periods of economic growth (Gooner & Nadler,
2012; Hampson & McGoldrick, 2013). This nding suggests that periods
of recession boost customers' willingness to try PLs, and that, during
subsequent periods of economic growth, if the retailer manages to
satisfy customer needs, customers will remain loyal. Adequate PL management in traditional categories is the cornerstone of RM. This good
management increases the number of dealings between company and
customer (loyalty), due to a higher degree of customer trust and
satisfaction.
The retailer must encourage the purchase of own brands in CG, by,
for example, including them in promotional catalogues, as some
retailers are already doing. Results show that experience with PL in CG
positively inuences the degree of satisfaction with PL in these goods,
with satisfaction being a decisive variable in PL loyalty and intention
to buy new PL categories. Given that, in most cases, a retailer uses a
different name for the PL of CG from that of DG, the retailer has to stress
that both PL names belong to the same entity. The brand extension
literature suggests that the parent brand's image has a stronger impact
on attitudes towards the extension when promotion of the brand
receives support from advertisements about either the parent brand
or the brand extension (Martnez, Montaner, & Pina, 2009).
Also crucial for retailers is achieving customer commitment to PL in
traditional product categories through trust. Trust emerges when
retailers meet customer expectations of CG functionality. Therefore,
retailers must manage PL from an RM approach. In their research,
Dawes and Nenycz-Thiel (2013) point out that many PLs fail to create
exceptional store loyalty because their customers will buy a PL regardless of the store to which the PL belongs. Therefore, in the context of
this research, in such cases, no real loyalty toward a specic retailer of
PL convenience goods exists. Only through PL satisfaction, trust, and
commitment can retailers achieve real PL loyalty toward traditional
categories. The benets of good RM management are, however, even
greater, as the retailer can differentiate the store from other retailers
through PL extension to DG. According to Dawes and Nenycz-Thiel

M.J. Miquel-Romero et al. / Journal of Business Research 67 (2014) 667672

(2013), PL in categories with lower purchase frequency, with a higher

price ratio relative to national brands, and with lower levels of national
brand promotions have greater potential to differentiate a store from its
competitors. Grewal and Levy (2007) raise the question of how retailers
can make and keep customers loyal. The ndings from this study
suggest that adequate PL RM management may be the answer.
The study limitations are, mainly, the size of the sample, the consideration of only two DGs, and a general approach to studying PL in CG
that overlooks the different PL strategies some manufacturers use on
the basis of the quality and price of the product. These limitations
mark potential research directions for future studies.
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