Research Paper (Abstract) for ICBM 2008 International Conference on                Brand Management November 21-22 2008, I...
ABSTRACTAccording to a Euromonitor study the global store brand market was estimated to be worth$1,411 billion in 2005 and...
In India too store brands started gaining share from the national brands. During the year 03, BigBazaar of Pantaloon group...
OBJECTIVES   1. To investigate consumer brand preference for national versus store brands in Food &       Grocery category...
LITERATURE REVIEWAc Nielsen the Power of Private Label (2005) An insight into consumer attitudes, two thirds ofglobal cons...
sets of measures. They found that greater breadth of store brand purchases leads to greaterrevenue and profits. This concl...
Table1.3: Consumer’s Demographic Profile (Gender)Gender                             Frequency                       Percen...
H0.1 hypothesis was accepted as │tcal│=1.22< ttab=1.96, shows there is no relationship betweenincome and brand preference ...
BIBLIOGRAPHY  1. AcNielsen consumer attitudes towards private label global study(may, 2005).  2. Bolta Lakshmaiah, Private...
15. Serdar Sayman and Raju Jagmohan S. (Number 2 / March, 2004) Investigating the   Cross-Category Effects of Store Brands...
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An analysis of_consumers_brand_preference_on_national_vs_store_management

  1. 1. Research Paper (Abstract) for ICBM 2008 International Conference on Brand Management November 21-22 2008, IMT Ghaziabad AN ANALYSIS OF CONSUMERS’ BRAND PREFERENCE ON NATIONAL VS. STORE BRANDSAuthors:*Sonal GuptaLecturer: School of Management,Swami Vivekanand College of EngineeringIndore (M.P.)Affiliated to Devi Ahilya Vishwavidhyalaya, Indore9302589082, 0731-2320032, sonalagrawal519@yahoo.com**Dr. I.C. GuptaDirector, Prestige Institute of Management and Research, Indore (M.P.)9993575899, director@pimrindore.com***Dr. R. K. JainProfessor, Marketing: Prestige institute of Management and Research, Indore (M.P.)94259-10111, greetrk@gmail.com 1
  2. 2. ABSTRACTAccording to a Euromonitor study the global store brand market was estimated to be worth$1,411 billion in 2005 and is growing at 6% per annum. In a separate AcNielsen store brandstudy, two-thirds of the global consumers said they considered “super market own” or “privatelabel” brands to be a good alternative to other brands, and supermarket own brands are usuallyextremely good value for money. Organized retail currently forms only about 3.59% of totalretail in India but its share will leap to 28% by 2017, according to a study by Technopark saysthat overall store brands already form 19% of the total market share in India.As the organized retailing is growing in India store brands are capturing the market share fromnational brands. It is estimated that they are going to give a tough fight to store brands. Almostevery organized retail player is carrying its store brand and trying to increase the number and thecategories of store brands. Store brands provide value for money to customers and higher marginto retailers. It is a way to provide differentiation from one retailer to other by having storebrands.Store brands have changed the dynamics between manufacturer and retailer. In this scenario ithas become very essential to understand the category specific factors which affect the consumerpreference for store brands versus National brands.This paper aims to investigate the consumers’ brand preference for National versus store brandsin Food & Grocery category. Food and Grocery is taken for the analysis of consumer preferenceof store brands versus national brands in this study, as various store and National brands arepresent in this category.Key words: Store brands, National brands, Organized retailingINTRODUCTIONGlobal retail consultant KSA Technopark have estimated Indian retailing to be a US $ 200billion industry of which organized retailing makes up 3% or US $ 6.4 billion. By 2010organized retail is projected to reach US $ 23 billion that is about 9% of total retail sales. Indeveloped markets of west store brands had accounted for nearly 13% of the supermarket salesin the US & nearly 20% of the supermarket sales in Canada during 1990-91. 2
  3. 3. In India too store brands started gaining share from the national brands. During the year 03, BigBazaar of Pantaloon group had 25% of its sales coming from store brands and it earned 5%higher gross margin on them than other popular brands.The growth and development of retail brands has experienced considerable change over the lastfew years, Retailers offer quality product, design and packaging and use all the 4 P’s veryeffectively like the manufacturers brand. Consumer perception about the store brands has alsochanged from low quality products to premium brandsThere has been significant increase in private labels recent years worldwide. Store brands aregrowing faster than the manufacturer’s brands. It can no longer depend on the price advantage tofight branded products. It has improved on quality & offers a value proposition to the customers.Some store brands have been able to positioned themselves as premium brandsStore brands offer the consumer greater value, while increasing the profitability of the categoryas a whole and giving greater bargaining power to retailers.Almost all large global retailers like Tesco, Sainsbury & Wal- Mart have their own store brands.They give better margin to retailers than selling brands from other manufacturers the retailersmake the brand and price it below competitors. Since the stores are retailer owned, they can givethe store brands ample display, saving on marketing & other intermediary costs.About 35-40% of the total merchandise at Reliance hypermarts is likely to be its own brands.Piramyd retail substantially increasing the share of store brands to enhance the margin of storebrands contribute a larger share of the profit margin for the retailer with saving on transportation,marketing and advertising. Store brands are giving greater competitive threat to nation al brands.The aim of paper is to bring in light the growing importance of private labels. Very less amountof work has been done to understand this area. Though they are about to become a major threatfor the manufacturers, they are comprising various advantages for the consumers. This paper willhelp in analyzing the factors which influence the consumer brand preference for national vs storebrands. 3
  4. 4. OBJECTIVES 1. To investigate consumer brand preference for national versus store brands in Food & Grocery category 2. To study the influence of Quality, taste, price sensitivity, packaging on brand preference for national versus store brands in food & grocery category 3. To study the relationship of income, age, and gender between brand preference for national brands versus store brandsHYPOTHESISH0: Quality, taste, price sensitivity and packaging factors have no influence on brand preferencefor national brands versus store brands in food & Grocery categoryH1: Quality, taste, price sensitivity and packaging factors influence brand preference for nationalbrands versus store brands in food & Grocery categoryH0.1 There is no relationship between income level and brand preference for national versusstore brands in food and grocery category.H1.1There is a relationship between income level and brand preference for national versus storebrands in food and grocery category.H0.2 There is no relationship between age and brand preference for national versus store brandsin food and grocery category.H1.2There is a relationship between age and brand preference for national versus store brands infood and grocery categoryH0.3 There is no relationship between gender and brand preference for national versus storebrands in food and grocery category.H1.3There is a relationship between gender and brand preference for national versus store brandsin food and grocery category. 4
  5. 5. LITERATURE REVIEWAc Nielsen the Power of Private Label (2005) An insight into consumer attitudes, two thirds ofglobal consumers consider supermarket own or private label brands to be a good alternative toother brands. The study was done in developed markets of Europe, the Pacific and NorthAmerica. With a global average of 69% agreeing they were extremely good value for money,and 62% considering their quality to be at least as good as the big brands. Study reveals that theimage and education the biggest challenges for retailers in developing markets.Ergin Akagan Elif (2007) Analysis of Consumers’ brand loyalty on National versus storebrandsCompare the influence of quality, price sensitivity and brand knowledge factors on brand loyaltyfor national versus store brands. The results reveal that the consumer s’ brand loyalty for nationalbrands are quiet strong compared to store brandsR.C. Natrajan, TAPMI analyzed the challenges and opportunities from own store brands, Asper the analysis, private labeling occurs mainly in destination categories such as cereals & pulsesin FMCG sector, it will not be long before the mega store move towards labeling other packagedproducts as well. Brand loyalty will face assault not only from other brands but also from storeloyalty, aiding the growth of private labels.Such a growth of private labels offers challenges to the national brands in terms of the element ofmarketing strategy. It also provides the manufacturers of national brands the opportunity to 1. Move away from mass marketing to segment in specific market area 2. Utilize their production capacity better by tying up with the retail stores to pack their brands under the store labels. Store brand entry 1. Increases consumer choice in store 2. It makes the national brands to switch to just price and to avoid near monopoly pricingK. Suhir, and Debabrata Talukdar, (2004), developed two sets of measures of store patronage;to study does store brand patronage improve store patronage. Based on store revenues and storeprofits from a household and the other on share of store revenue and store profits due to ahousehold. They found that revenue falls when store brand share increased, but profit rise under 5
  6. 6. sets of measures. They found that greater breadth of store brand purchases leads to greaterrevenue and profits. This conclude that store brand contribute to greater store differentiationrather than increased price sensitivity in the market.METHODOLOGYThe study is based on descriptive research design. Products like pulses, rice, ready to eatpackaged food in the category of food & grocery were taken. Mall intercept interview wereconducted to collect the data for the study by using questionnaire as the research instrumentThe sample of 100 respondents was taken from Indore. Customers from various retail chainslike Reliance Fresh, Food Bazaar, Big Bazaar, Pakiza, Vishal Mega Mart & India Bulls Martparticipated in the survey. Customers within the age group of 18-65 were involved in the study.Frequency Distribution of the variables was conducted to identify the profiles of the respondentsDATA COLLECTION AND ANALYSISData was analyzed by Multi linear Regression to test whether the quality, taste, price sensitivityand packaging factors have any influence on brand preference for national brands versus storebrands in food & Grocery category. T-test was performed to test whether there is a relationshipbetween age, gender, income level on brand preference for national versus store brands.RESULTS AND IMPLICATIONSAnalysis of data shows that customers have strong brand preference for national brands.Customers feel that quality, taste & packaging of national brands is better than the store brandswhile store brands are priced lower than the national brands. Table1.1: Consumer’s Demographic Profile (Income)Income (Rs.) Frequency PercentBelow 20,000 46 4620,000 and above 54 54 Table1.2: Consumer’s Demographic Profile (Age)Age Frequency PercentBelow 30 yrs 56 5630 and above 44 44 6
  7. 7. Table1.3: Consumer’s Demographic Profile (Gender)Gender Frequency PercentMale 50 50Female 50 50 Table2: Multi Linear Regression Analysis for brand Preference for National versus Store Brands Coefficientsa Unstandardized Standardized Coefficients Coefficients Model B Std. Error Beta t Sig. 1 (Constant) 15.041 1.597 9.416 .000 QUALITY 1.192 .303 .290 3.929 .000 PRICE .913 .288 .218 3.167 .002 TASTE 2.188 .321 .508 6.816 .000 PACKAGIN .873 .298 .203 2.930 .004 a. Dependent Variable: BRANDPREHypothesis H1 was tested to find out whether Quality, taste, price sensitivity and packagingfactors have any influence on brand preference for national brands versus store brands in food &Grocery category. The testing of this hypothesis shows that factors like quality price taste andpackaging influence the brand preference for national versus store brands. These fourindependent variables are able to explain 55.4% variation of the overall variation in brandspreference for national versus store brands(R2=0.554, F= 29.423, p<0.01), this indicate that inaddition to these variables there may also be other factors which influence the brandpreference.t-test was performed to test whether there is a relationship between Income, age, gender andbrand preference for national versus store brands. (n1σ 12 + n2σ 2 2 ) x1 − x2S= & t= n1 + n2 1 1 S ( + ) n1 n2 7
  8. 8. H0.1 hypothesis was accepted as │tcal│=1.22< ttab=1.96, shows there is no relationship betweenincome and brand preference for national versus store brands.H0.2 is also accepted as │tcal│=1.662<ttab=1.96, there is no relationship between Age and brandpreference for national versus store brands.H0.3 is rejected as │tcal│=2.075>ttab=1.96., shows there is a relationship between gender andbrand preference for national versus store brands. Table 3: t-test Analysis for relationship between income, age and gender for brand Preference for National versus Store Brands x1 x2 σ1 σ2 S tcalIncome 28.73 29.96 4.914 5.043 4.984 − 1.223Age 28.66 30.34 5.210 4.590 4.95 − 1.662Gender 28.38 30.42 4.927 4.903 4.915 − 2.078Besides the factors discussed above other factors as reliability, hygienic, freshness and effect ofadvertisement also influence the brands preference for national versus store brands. As nationalbrands spend heavily on advertisement they might influence the customer perception about thequality and the benefits of the product while store brands can not spend on advertisement as itwould lead to increase average cost, so only those customers who visit the store can beinfluenced.Similarly reliability on National brands is higher than the store brands as the store brands hasalways been considered as low quality products though the perception has changed significantlybut it will take some time in changing the overall perception.LIMITATIONS AND SCOPE OF RESEARCHPrivate labels are setting their foot not only in Food & Grocery but in other categories as well.This research has limitation that it is carried out for the category of Food & Grocery only withsmall sample sizes. Similar kind of research with extended version can be conducted on largersample sized with other categories. Brand preference for national versus store brands varies notonly with the category but also products within the category. Various product specific researchescould also be performed to have an in depth insight about the store brands. Factors for the studycan also be further added for clearer picture. 8
  9. 9. BIBLIOGRAPHY 1. AcNielsen consumer attitudes towards private label global study(may, 2005). 2. Bolta Lakshmaiah, Private Labels An Introduction, ICFAI university press. 3. Broadbridge Adelina & Morgan Henry Consumer buying behavior of and perceptions towards Retail Brand Baby Products ISSN 02659778 4. Dhar Sanjay K., Hoch Stephen J. & Kumar Nanda(2001) Effective category management depends on the role of the category, Journal of Retailing Volume 77, Issue 2. 5. Elif Ergin Akagan (2007) Analysis of Consumers’ brand loyalty on National versus store brands, EABR (Business) & ETLC (Teaching)Conference Proceedings. 6. Floor K O, (2006) Branding a Store: How to Build Successful Retail Brands in a Changing Marketplace Amazon.com 7. Glynn Mark, Judy Motion and Brodie Rederick, paper 06-2003 Retailer’s perceived value of Manufacturers’ Brands, Research Paper Series Faculty of Business, ISSN No. 1176-1997 8. Ibarra Octavio Consuegra Own labels in the UK, a source of competitive advantage in retail business ISSN1657-6276 9. Johan Ameslmson, Ulf Johansson, Antonio Maranon, Niklas Persson Retailer brand – Category penetration & effect on average prices. Lund International Food Studies 10. Kumar Nirmalya, Steenkamp, Jan-Benedict, (Published: 2/2007) Private Label Strategy: How to compete with Store Brands, Harvard Business School Press 11. Mark O’ Bornick (Jan. 1, 2003) the Future of private Label Food & Drink (Growth strategies for retailers& manufacturers, management Report published by Business Insight Ltd. 12. Natarajan R.C TAPMI Manipal, Challenges & Opportunities from our store brands. 13. Retail Management, ICFAI Centre for Management Research 14. Sennou Fabian Berges, Bontems Philippe and Requillart Vincent universite de Toulouse (INRA, IDEI),(June, 26-27, 2003), Economic impact of the development of private labels, Ist Biennal Conference of the Food System Research Group, University of Wiscinsin, Madison, 9
  10. 10. 15. Serdar Sayman and Raju Jagmohan S. (Number 2 / March, 2004) Investigating the Cross-Category Effects of Store Brands Review of Industrial Organization Springer Netherlands Volume 24 129-14116. Gajanan Shailendra, Suman Basaroy, Srinath Belblon (Number 3 / September, 2007) Category Management, Product Assortment & Consumer Welfare, Springer Netherlands Vol18. pp 135-14817. Suhir K., and Talukdar Debabrata (2004), Does store brand patronage improve store patronage, Springer in its journal Review of Industrial Organization Vol.24,pp143-16018. Reliance Mart bets on value, private labels to drive sales. 01 September, 2007 Business Line19. www.brandchannel.com -http://www.brandchannel.com/features_effect.asp?pf_id=9420. http://www.indiaretailbiz.com/blog/?s=private+labels Visited December15, 200721. www.plma.com/http://plma.com/showinfo/showinfo2008.html January 24th 200822. www.plmainternational.comhttp://www.plmainternational.com/en/private_label_en2.htm23. www.retailyatra.com24. www.rpggroup.com25. http://retailindustry.about.com/library/uc/02/uc_stanley2.htm-26. http://retailindustry.about.com/library/uc/02/uc_stanley4.htm27. http://www.retailindustry.about.com/http://retailindustry.about.com/b/2005/06/14/private -labels-preferred.htm28. www.shoppersstop.com 10

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