Consumers' Reasons for Buying Private Label
     Brands – Some Empirical Findings




     Gianfranco Walsh
     Professor...
I.          Background
           II.         Two Studies
           III. Conclusion




2009 ECR Baltic Forum, Riga, Octo...
Background: The PLB Market




2009 ECR Baltic Forum, Riga, October 29, 2009   Prof. G Walsh   3
Background: The PLB Market

          Private Label Brands                        Percentage of all
          (PLB) Food P...
Background: The PLB Market

            In 2008, Food Sales                         Percentage of US
            in US:   ...
Background: The PLB Market
     - In 2009, Wal-Mart relaunched its own "Great
       Value" brand.
     - Great Value incl...
Background: The PLB Market
                                                                   - Category competition (-)
 ...
Background: Previous Research
    - Private label brands (PLB) continue to attract attention
      within retailing and ma...
Background: Previous Research




        IBPLB = Intention to Buy Private Label Brands (PLB)


2009 ECR Baltic Forum, Rig...
Background: Previous Research
    - AC Nielsen (2005) survey in 38 European countries: PLB
      are good alternative to o...
Study 1 (Similarity hypothesis)
    - First, 30 exploratory interviews.
    - Second, survey was carried out in two waves ...
Study 1

    Germany‟s 3rd largest
    chemist's chain with
    1,300 stores and 18,000
    employees. Revenues in
    Ger...
Study 1




                   Private label brand shown                         Manufacturer brand
                     d...
Study 1
    - Interviewees received a tin of Isana Crème and asked if
      they believed that Isana Creme and Nivea Creme...
Study 1
                                                Private label brand shown   Manufacturer brand
                   ...
Sample 2                  (PLB-offer-numerous-benefits hypothesis)

    - Primary data were collected in Germany.
    - Th...
Sample 2 – The Model
                                 Attitude Toward
                                  Private Label
    ...
Sample 2 – The Model
                                 Attitude Toward
                                  Private Label
    ...
Study 2 –                Results
                                 Attitude Toward
                                  Privat...
Conclusion
     - Study 1: Fine line between legitimate retail brand and
       trademark infringement.
     - Study 2 spe...
Thank You. Danke. Grazie. Thank You. Danke.
        Grazie. Thank You. Danke. Grazie. Thank You.
        Danke. Grazie. Th...
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Gianfranco walsh university_of_koblenz-landau

  1. 1. Consumers' Reasons for Buying Private Label Brands – Some Empirical Findings Gianfranco Walsh Professor of Marketing & Electronic Retailing, University of Koblenz-Landau, Germany Visiting Professor of Marketing, University of Strathclyde Business School, Glasgow 2009 ECR Baltic Forum, Riga, October 29, 2009 Prof. G Walsh 1
  2. 2. I. Background II. Two Studies III. Conclusion 2009 ECR Baltic Forum, Riga, October 29, 2009 Prof. G Walsh 2
  3. 3. Background: The PLB Market 2009 ECR Baltic Forum, Riga, October 29, 2009 Prof. G Walsh 3
  4. 4. Background: The PLB Market Private Label Brands Percentage of all (PLB) Food Product Shopping Trips Introductions in the US Including PLB (in % of all food product launches) 2009 82% 73% 2005 55% 13% 25% Source: Mintel, USA (2009) Source: AC Nielsen (2006) 2009 ECR Baltic Forum, Riga, October 29, 2009 Prof. G Walsh 4
  5. 5. Background: The PLB Market In 2008, Food Sales Percentage of US in US: households that consume PLB regularly PLB Manu- 97% +9.3% facturer Brands +4.5% Source: Levy, P. (2009) Source: Mintel, USA (2009) marketingnews, 30.05.09. p. 13 2009 ECR Baltic Forum, Riga, October 29, 2009 Prof. G Walsh 5
  6. 6. Background: The PLB Market - In 2009, Wal-Mart relaunched its own "Great Value" brand. - Great Value includes 5,000 items. - Several European multiples increase share of private label brands. - …. Source: Brat, Illan, Ellen Byron and Ann Zimmerman (2009): US retailers cut back on variety, once the spice of marketing, Wall Street Journal, June 29 , p. 16 2009 ECR Baltic Forum, Riga, October 29, 2009 Prof. G Walsh 6
  7. 7. Background: The PLB Market - Category competition (-) - Utilize expertise and excess plant capacity (+) - … - Profit margins (+) - Customer store loyalty Private-Label (+) Brands - … Consumers - Choice (+) - Lower prices (+) - … 2009 ECR Baltic Forum, Riga, October 29, 2009 Prof. G Walsh 7
  8. 8. Background: Previous Research - Private label brands (PLB) continue to attract attention within retailing and marketing (e.g., Choi and Coughlan 2006; Jin and Suh 2005; Lamey et al. 2007). - UK retailer Tesco: in 1993 introduced its „Value‟ range. In 1997, Tesco launched „Finest‟ product range - premium PLB, priced the same as their branded counterparts. - Previous research that shows that national brands command higher prices (e.g., Kosenko and Krishnan 1990) needs revising. - Price differential in some categories such as frozen and refrigerated food is now as low as 20% or 16%, respectively (AC Nielsen 2005). 2009 ECR Baltic Forum, Riga, October 29, 2009 Prof. G Walsh 8
  9. 9. Background: Previous Research IBPLB = Intention to Buy Private Label Brands (PLB) 2009 ECR Baltic Forum, Riga, October 29, 2009 Prof. G Walsh 9
  10. 10. Background: Previous Research - AC Nielsen (2005) survey in 38 European countries: PLB are good alternative to other brands and rated most highly in the Netherlands (91%), Portugal (89%), and Germany (88%). - Why do people buy PLB?  “Similarity hypothesis” (PLB and MB are made by the same manufacturers; Study 1).  “PLB-offer-numerous-benefits hypothesis” (Study 2). 2009 ECR Baltic Forum, Riga, October 29, 2009 Prof. G Walsh 10
  11. 11. Study 1 (Similarity hypothesis) - First, 30 exploratory interviews. - Second, survey was carried out in two waves in the German city of Hanover using a qualified convenience sample of N = 355 male and female and different aged consumers. - On-street interviews from Monday to Saturday. - Average interview length was just below 30 minutes. 2009 ECR Baltic Forum, Riga, October 29, 2009 Prof. G Walsh 11
  12. 12. Study 1 Germany‟s 3rd largest chemist's chain with 1,300 stores and 18,000 employees. Revenues in Germany of approx. €2.5 bn. Source: Walsh, G. (2002). 2009 ECR Baltic Forum, Riga, October 29, 2009 Prof. G Walsh 12
  13. 13. Study 1 Private label brand shown Manufacturer brand during the interviews (original) (copy) Source: Walsh, G.; Mitchell, V.-W. (2005): Consumers Vulnerable to Perceived Product Similarity Problems: Scale Development and Identification, Journal of Macromarketing, 25 (2), 140-152. 2009 ECR Baltic Forum, Riga, October 29, 2009 Prof. G Walsh 13
  14. 14. Study 1 - Interviewees received a tin of Isana Crème and asked if they believed that Isana Creme and Nivea Creme were made by the same manufacturer. Private label brand shown Manufacturer brand during the interviews (original) (copy)  43% said „no‟ / 31% „don‟t know‟ / 26% „yes‟ 2009 ECR Baltic Forum, Riga, October 29, 2009 Prof. G Walsh 14
  15. 15. Study 1 Private label brand shown Manufacturer brand during the interviews (original) Finding: (copy) PLB can cause perceived product similarity, which can benefit retailers but hurt customers.  Legal responses? 2009 ECR Baltic Forum, Riga, October 29, 2009 Prof. G Walsh 15
  16. 16. Sample 2 (PLB-offer-numerous-benefits hypothesis) - Primary data were collected in Germany. - The questionnaire was pre-tested with N = 38 consumers. - Two surveys were carried out in two major western German cities. - Two samples – total of N = 642 face-to-face interviews. - Four product categories (cookies, chocolate bar, granola bar, canned sweet corn). - Regression Analysis. Source: Walsh, G.; Mitchell, V.-W. (2008): Determinants of the Intention to buy Private Label Brands – A Revised Perspective, in: Robinson, L. (Ed.), Proceedings Developments in Marketing Science, AMS 2008 Annual Conference, Vancouver (Kanada). 2009 ECR Baltic Forum, Riga, October 29, 2009 Prof. G Walsh 16
  17. 17. Sample 2 – The Model Attitude Toward Private Label Brands Brand Consciousness CPV Factor 1: Quality CPV Factor 2: Intention to Buy Emotional Private-Label Consumer Perceived Brands Value CPV Factor 3: Price CPV Factor 4: Social 2009 ECR Baltic Forum, Riga, October 29, 2009 Prof. G Walsh 17
  18. 18. Sample 2 – The Model Attitude Toward Private Label Brands Brand Consciousness CPV Factor 1: Quality CPV Factor 2: Intention to Buy Emotional Private-Label Brands CPV Factor 3: Price CPV Factor 4: Social CPV = Consumer Perceived Value 2009 ECR Baltic Forum, Riga, October 29, 2009 Prof. G Walsh 18
  19. 19. Study 2 – Results Attitude Toward Private Label Brands Brand Consciousness CPV Factor 1: Quality CPV Factor 2: Intention to Buy Emotional Private-Label Consumer Perceived Brands Value CPV Factor 3: Price CPV Factor 4: Social bold arrows = significant effect 2009 ECR Baltic Forum, Riga, October 29, 2009 Prof. G Walsh 19
  20. 20. Conclusion - Study 1: Fine line between legitimate retail brand and trademark infringement. - Study 2 specifies new drivers of intention to buy PLB and shows their differential impact. - Quality-related value, emotional value and price- related value are drivers of intention to buy PLB. - Implication: enhance the social value of PLB, either through communications or through more premium ranges of PLB which are consumed in social situations. - Future research: test our model to see if the findings hold in other countries - … 2009 ECR Baltic Forum, Riga, October 29, 2009 Prof. G Walsh 20
  21. 21. Thank You. Danke. Grazie. Thank You. Danke. Grazie. Thank You. Danke. Grazie. Thank You. Danke. Grazie. Thank You. Danke. Grazie. Thank You. Danke. Grazie. Thank You. Danke. Grazie. Thank You. Danke. Grazie. Thank You. Danke. Grazie. Thank You. Thank you. Grazie. Thank You. Danke. Grazie. Thank You. Danke. Grazie. Thank You. Danke. Grazie. Thank You. Danke. Grazie. Thank You. Danke. Grazie. Thank You. Danke. Grazie. Thank You. Danke. Grazie. Thank You. Danke. Grazie. Thank You. Danke. Grazie. Thank you. walsh@uni-koblenz.de 2009 ECR Baltic Forum, Riga, October 29, 2009 Prof. G Walsh 21
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