CONSUMERS’ PERCEPTION OF PRIVATE BRANDS:

AN EMPIRICAL EXAMINATION

ABSTRACT:

Private labels have come a long way over the last three decades. They
started with retailers wanting to offer cheaper substitutes. This was for
two reasons. One, having a private label meant that retailers could
negotiate a better margin from the manufacturer. And the other, when
they had private labels, they had a differentiator. The biggest change in
the last decade or so has been the entry of premium private labels. They
are no longer saying “buy us because we are cheap”, instead today; they
are saying “buy us because we are the best”. By offering high quality
products, many private labels have started charging more than regular
manufacturers.

Retailers are looking at private labels or store labels as one of the option
to drive the customers to their stores. The emergence of organized
retailing in India has made Private Labels a reality. It is now well within
the reckoning of the consumer, retailers and brand owners. A Private
Label is not merely a product with the store/ retailer’s name on it. It
takes more to qualify as a Private Label. The consumer must see the
Private Label product as distinct from being just a ‘product in a pack’.
There must be a clear perception that ‘it is produced by this store’

INTRODUCTION:
The consumer must see the Private Label product as distinct from being
just a ‘product in a pack’. There must be a clear perception that ‘it is
produced by this store’. The current Indian economy is witnessing the
emergence of organized retail. It is growing at a faster pace and is
expected to reach 10 % from the current 4 % of the total retail business.
Retailers are expanding through variety of formats like supermarkets,
convenience stores, hypermarkets, discount stores, specialty stores, and
department stores. Many domestic business houses have entered this
sector with ambitious plans.

With the new FDI regime, foreign players are incisive of Indian partners
to grab the potential of retail market in India. As competition is
becoming stiff, retailers are working on new strategies to sustain in the
market. One such strategy being private branding adopted by most of the
retailers. Private brands are the most successful corporate brands in the
world. Private branding is one of the strategic decisions of most retail
organizations in recent years. They are either manufactured by the
retailer or bought directly from the manufacturer, avoiding the
intermediaries. Hence retailers have control over the marketing mix
elements.

Objectives of the study:

● To understand the perception of consumers for the new

private labels introduced by retailers.
● To identify the consumer perception of store image on
private labels.
● To study the association between private labels ‘quality and
store loyalty.
● To find out the various factors that builds the store loyalty.

SCOPE AND LIMITATIONS OF THE STUDY:

● Private labels in modern retailing are a set of values and promises

made by the retail organization to their customers.
● The sample size was relatively small.
● The respondents compromised more of home makers.
● The study was undertaken in Bangalore which is prosperous than
other areas.
REVIEW OF LITERATURE:

Many researches has been undertaken in the areas of private brand in

different perspective. It was observed that consumers preferred both
national and store brands.

Frank and Boyd (1965) and Myers (1967) added mentioning that
perception of consumers plays a major role rather than the individual or
economic variables. As per Raju et al., (1990); Parasuraman et al.,
(1996), quality of the product plays a major role in the consumers’
preference of the product, their satisfaction and repurchase intention.
Burger and Schott, (1972); Richardson et al., (1996); Dick et al., (1996)
in their study found that favorable attitude of consumers towards store
brands initiates them to buy regularly.

As per Dhar et al., (2001), retailers are maintaining adequate quality

standards in their private brands. Further, Hoch and Banerji, (1993);
Hoch, (1996) added that maintaining consistent quality can enhance the
market share of private labels. Richardson, (1997), The taste test study
revealed that consumers rate private labels is higher than manufacturer
brands.

RESEARCH METHODOLOGY:

AREA OF STUDY:

● Shopping malls
● Retail outlets

TYPE OF SAMPLING:
● Random sampling
SAMPLE SIZE:
● The sample size is 400.
TOOLS USED:
● Chi-square Analysis.
● Anova (Analysis of Variance).

DATA ANALYSIS:
● Familiarity with store brands:
Out of 400 respondents, 320 respondents were aware of the private
brands offered by stores. It means 80% of the respondents were
aware of the private labels, another 20% respondents considered
the brands to be a new entrant by the existing national brand
manufacturers.

● Perception of quality:
Hypothesis 1: Store brands are perceived to offer quality on par
with the national brands. More than 50% of the respondents
perceive private brands to offer better quality.

● Perception of value for Money:

Hypothesis 2: Private brands offer great value for money. More
than 50% of the respondents are of the opinion that private brands
offer value for money, especially in case of grocery items.

● Packaging:
Hypothesis 3: Private brands have appealing packaging. National
brands are more attractive in packaging in comparison to private
brands.

● Taste:
Hypothesis 4: Private brands have good taste/scent. From the
analysis, there is close association between taste and brand choice.

● Price:
 Hypothesis 5: Private labels are affordable by consumers. From
the analysis it can be affirmed that private brands are priced low as
compared to national brands in most of the product categories.

● Store perception:
Hypothesis 6: Consumers perception of store image is same for all
the retailers. From the analysis, the perception of consumers varies
across stores. They build the perception based on the promotional
and positioning strategies adopted by the store.

● Store image:
Hypothesis 7: Store image has a direct impact on private label
perception. Positive image of the store in the market implies
acceptance by consumers. Consumers perceive private brands
offered by the store to be good.

Findings and Suggestions:

● Store loyalty and quality of a private label are dependent of each
other.
● Price differential between national brand and private and store
loyalty are dependent of each other.
● Private label’s promotion and store loyalty are related.
● Private innovativeness and store loyalty are related.

Conclusion:
Store brands approximately sell for 30% less than national brands.
Hence private brands are getting accepted in food and grocery segment.
Improvements in quality, offering more variety, with better service will
enable the retailers to go a long way. Private labels are able to position
themselves significantly in the minds of the customer. The future of
private labels is dependent on the retailers’ ability to overcome key
challenges such as adaptive supply chain practices, quality
infrastructure, co-option, hybrid marketing channels, talented
professional, blurring dividing lines between private label and national
brand and more manufacturing know-how.

APPENDIX:

SAMPLE QUESTIONNAIRE:

Dear Respondent,

I Karthigha.S am doing a research on “CONSUMERS’ PERCEPTION OF

PRIVATE BRANDS AN EMPIRICAL EXAMINATION” for the
completion of my degree. I request you to fill in the following
questionnaire, which will be of great use for my research. I assure you
that the information provided by you will be kept confidential and will
be used only for academic purposes.

1. Name :

2. Age : □Below 15 □15-30 □30-45 □above 45

3. Gender : □ Male □ Female

4. Occupation : □ Business □ Housewife □Employee

□ Student □ Professional

5. Monthly Income : □ Below 5000 □ 5000-10000 □10000- 15000

□ Above 15000
6. Do you prefer new private labels introduced by retailers?
□ Yes □ No

7. What is the perception about price of private labels brands?

□ Positive □ negative □ neutral

8.What are the factors influencing to purchase a private label brands?

□ perceived quality □ trust in brand □ availability of alternatives
□ sales promotion

9.Who are the influencers to purchase the private label brands?

□ friend’s □ family □ sales personnel □ advertising

10.Which medium is effective for private labels?

□ direct mail □ word of mouth □ television □ pamphlets

11.Perception of quality in private brands?

□ Good □ Average □ Poor

12. Which brand offers greater value of money?

□ National Brand □Store Brand

13.How the private brands packing appeals?

□ Attractive □ Average □ Poor

14.Whether private Brands have good taste/scent?

□ Yes □ No

15.Perception of taste/scent in private brands?

□ Attractive □ Average□ Poor

16.How do you consider the price in private brands?

□ High □ Average □ Low
17.Store image of your retailers?
□ Good □ Average □ Poor

18.Whether the private brands are becoming popular?

□ Yes □ No

19.Suggestions towards private brands

_____________________