10-1108_JPBM-02-2013-0262.pdf

The influence of perceived product quality,
relative price and risk on customer value and
willingness to buy: a study of private label
merchandise
Justin Beneke, Ryan Flynn, Tamsin Greig and Melissa Mukaiwa
School of Management Studies, University of Cape Town, Cape Town, South Africa
Abstract
Purpose – This study endeavours to examine the influence of perceived product quality, relative price and risk, respectively, on perceived product value
and, ultimately, consumers’ willingness to buy private label household cleaning products.
Design/methodology/approach – Respondents (157) were recruited through an in-store survey and the data analysed using partial least squares
path modelling.
Findings – The results are similar to those proposed by Sweeney, Soutar and Johnson. Strong relationships between perceived relative price and
perceived product value, as well as between perceived product value and willingness-to-buy, were found to exist. A negative relationship was observed
between perceived product quality and perceived risk. The results indicate that establishing a value perception is critical in the buying process. Tangible
cues exhibiting high quality (e.g. packaging, shelf space, media placement) need profound attention. Furthermore, it is suggested that risk (which plays
an important part in the consumer decision process) is minimised through optimal retail service quality and customer reassurances.
Research limitations/implications – This study is limited in that respondents are consumers of a specific geographic region and demographic
grouping. Findings may therefore not be generalisable, particularly with respect to other countries.
Originality/value – This is one of the first studies investigating consumers’ perceptions of value, using the attributes of quality, risk and price, in an
emerging market setting.
Keywords Private label, Store brand, Value, Quality, Risk, Price, Retailing, Republic of South Africa, Individual perception
Paper type Research paper
An executive summary for managers and executive
readers can be found at the end of this article.
INTRODUCTION
Private label brands, also commonly referred to as “own
brands” or “store brands”, consist of merchandise produced
and sold by a specific retailer or chain of retail stores (Kumar
and Steenkamp, 2007). These brands are often thought of as
being of inferior quality to mainstream (i.e. national) brands.
However, research by Verhoef et al. (2002) suggests that
opinions are changing and that private labels are becoming
more acceptable to many consumers. The growth of private
labels has also been accentuated by the rise in power of
retailers, who are increasingly pushing this agenda (Nirmalya,
2007). In due course, retailers are being empowered to extract
higher profit margins, develop customer loyalty and to
increase bargaining power over manufacturers (Batra and
Sinha, 2000).
Nonetheless, adoption of private label brands in South
Africa remains weak. This is due to a multitude of factors
including risk aversion and the modest development of these
brands (Beneke, 2010). Richardson et al. (1996) found that
customer inclination towards purchasing a private label
depends on, inter alia, notions of perceived quality,
perceived risk and perceived value. This article investigates
the influence of such factors on willingness to buy private
label brands.
Research statement
Based on the conceptualization of Sweeney et al. (1999), the
objective of this study was to determine the influence of
perceived product quality, perceived relative price and
perceived risk, respectively, on customer perceived product
value and ultimately their willingness-to-buy private label
brands. As considerable research has already been directed
towards middle to upper income consumers in developed
countries, this study assumed the position of investigating
mass-market consumers in South Africa who purchased entry
level private label household cleaning products.
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/1061-0421.htm
Journal of Product & Brand Management
22/3 (2013) 218–228
q Emerald Group Publishing Limited [ISSN 1061-0421]
[DOI 10.1108/JPBM-02-2013-0262]
The authors would like to acknowledge Michael Cook for his assistance in
editing the final manuscript.
218

Literature review
Perceived product value
A customer’s perceived value represents an overall mental
evaluation of a particular good or service (Peterson and Yang,
2004). This construct is often defined in terms of the equity
theory which describes perceived value as that which is
deemed fair, right, or deserved in relation to the perceived
cost of the offering, while taking into consideration suitable
competitor alternatives (Khalifa, 2004; Zeithaml, 1988).
Research by Monroe (2002) reveals one of the prime
definitions for this construct to be the ratio or trade-off
between quality and price, hence representing a value-for-
money conceptualization.
Customer perceived value is arguably one of the most
critical determinants of purchase intent and, consequently,
one’s willingness-to-buy (Chang and Wang, 2011; Ulaga and
Chacour, 2001). Although research has shown that this
construct is difficult to both conceptualize and measure, it
seems universally accepted that if a customer perceives the
value of a good or service to be relatively high, the probability
(s)he will actually make a purchase is likely to increase
(Monroe, 2002; Zeithaml, 1988). Therefore, this study
hypothesizes that:
H1. Perceived value influences a customer’s willingness to
buy private label household cleaning products.
Evidence has been produced to reveal that customer
perceived product value is a multidimensional and highly
subjective evaluation of factors, thus gaining an
understanding of the various dimensions of customer
perceived value becomes crucial for developing effective
positioning strategies (Peterson and Yang, 2004; Ruiz et al.,
2008; Snoj et al., 2004; Ulaga and Chacour, 2001; Zeithaml,
1988). This is because customer perceived product value not
only dictates how the organisation is seen in the mind of its
customers, but also provides insight into the types of
communication channels that a company might use in order
to maximise the probability that messages are interpreted as
intended (Sweeney and Soutar, 2001).
Although retailing texts often group perceived value
influencers into either “quality-related” or “price-related”
aspects, a consideration of “perceived risk” is argued to be
equally applicable (Boksberger and Melsen, 2011; Peterson
and Yang, 2004; Sweeney et al., 1999). These issues are
discussed further below.
The role of customer perceived product value as a mediator
in the processes linking the above constructs should also be
taken into account. As per research by Agarwal and Teas
(2001), Sweeney et al. (1999) and Zeithaml (1988), we
advocate that customer perceived product value be
investigated for its effect on the indirect relationships
involving perceived relative price, perceived product quality,
perceived risk and willingness to buy. The following
hypotheses are therefore set out for empirical testing:
H2a. Perceived value mediates the influence of perceived
quality on a customer’s willingness to buy private label
household cleaning products.
H2b. Perceived value mediates the influence of perceived
relative price on a customer’s willingness to buy private
label household cleaning products.
H2c. Perceived value mediates the influence of perceived
risk on a customer’s willingness to buy private label
Perceived relative price
The literature provides varying perspectives on the role that
price plays in influencing the perceived customer value of a
product. Jacoby et al. (1971) describe perceived relative price
as being the price encoded by the customer by referencing the
price of the product relative to the price of other substitutable
products. By applying the principles contained in the works of
Sweeney et al. (1999) and Kwon et al. (2008), the perceived
relative price of a private label brand may be deemed to be the
perception of the product’s price compared to that of other
non-private label brands in the same merchandise category.
Wangenheim and Bayon (2007) and Ralston (2003) assert
that the perception of price is significant as it represents an
extrinsic cue and offers one of the most important forms of
information available to customers when making a purchasing
decision. Zeithaml (1988) highlights that sacrifice in terms of
price is most relevant to respondents’ perceptions of value.
Accordingly, it has been found that a significant negative
relationship exists between perceived price and perceived
value (Boksberger and Melsen, 2011; DeSarbo et al., 2001;
Kashyap and Bojanic, 2000) in that a high price erodes
purchasing power.
Authors such as Huber et al. (2007), Petrick (2002) and
Lapierre (1997) emphasize that price is but one variable in the
value equation. Other such aspects may include the time or
effort in making the purchase as well as service quality, thus
not all consumers are fixated on the price-value relationship.
Dickson and Sawyer (1986) add that customers do not always
recall the exact prices of all products. For such reasons, the
pricing of merchandise is seldom the deciding factor.
Rosa-Dı́az (2004), Monroe and Lee (1999), Gabor and
Granger (1993), Conover (1986), as well as Jacoby et al.
(1971), support the notion that there is a distinction between
actual (absolute) price and perceived relative price. To this
end, information may be recalled on the basis of other
product knowledge or it could be directly recollected from a
stored representation. Thus, pricing is seen holistically as
being relative within the particular merchandise context. As a
result of Sweeney et al.’s (1999) conceptualization, the price
construct of this study is measured comparatively as perceived
relative price. Thus, we hypothesize that:
H3. Perceived relative price influences the perceived value
of private label household cleaning products.
Perceived product quality
Perceived product quality may be defined as the way in which
a customer views a product’s brand equity and overall
superiority compared to the available alternatives (Aaker,
1991; de Chernatony, 2009; Richardson, 1997). It relates to a
customer’s attitude towards the overall brand experience as
opposed to just a product’s particular characteristics
(Zeithaml, 1988). Quality perceptions are thus created when
active relationships between suppliers and customers exist
(Eriksson et al., 1999). According to Agarwal and Teas
(2004), customers will use product performance, as well as
the degree to which the product conforms to manufacturing
standards and product-specific attributes, in order to judge
product quality.
The influence of perceived product quality, relative price and risk
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Multiple studies have found a correlation between
perceived product quality and perceived value (Dodds et al.,
1991; Khalifa, 2004; Rangaswamy et al., 1993;). The
inclusion of perceived product quality in the modeling of
perceived product value, and ultimately willingness-to-buy,
can be justified by sources who claim that product quality is a
significant determinant of private label brand purchases and
their success (Garretson et al., 2002; Grewal et al., 1998).
Literature suggests that there is a positive relationship
between the perceived quality and perceived value of a
product, thus when comparing private label brands to
manufacturer brands, a higher perceived product quality
may increase the perceived value and, consequently, a
customer’s willingness-to-buy (Cronin et al., 2000; Snoj
et al., 2004). Therefore, this study hypothesizes that:
H4. Perceived quality influences the perceived value of
private label household cleaning products.
Numerous studies by authors such as Varki and Colgate
(2001), Etgar and Malhotra (1981) and Gerstner (1985)
share the view that perceived relative price is also a
determinant of perceived product quality, whereby a positive
correlation exists between the variables. Hence, this study
hypothesises that:
H5. Perceived relative price influences the perceived quality
Pioneering research by Monroe and Krishnan (1985) profiled
the positive relationship that price has with perceived product
value, through its influence on perceived quality. This
highlights the possible mediating nature of perceived
product quality with regards to perceived relative price
among customers purchasing private label products. In order
to allow compliance with this, and test the effect, we
hypothesise the following:
H6. Perceived quality mediates the influence of perceived
relative price on the perceived value of private label
Perceived risk
Dowling (1986) defines perceived risk as the uncertainty of a
desired performance that all customers experience when
making purchasing decisions. Mitchell (1998) contends that
perceived risk is actually a “multidimensional phenomena”
which can be segmented into various different risk
components. The more common components of perceived
risk include functional/performance, physical, financial, social
and psychological risk (Jacoby and Kaplan, 1972; Laforet,
2007; Murphy and Enis, 1986; Peter and Tarpey, 1975;
Schiffman and Kanuk, 2009; Shimp and Bearden, 1982).
Customers are certainly conscious of the losses that may
arise due to product failure (Sweeney et al., 1999), hence a
product with a relatively high perceived likelihood of
malfunction will have a lower perceived value (Livesey and
Lennon, 1993; Narasimhan and Wilcox, 1998; Tam, 2012).
Richardson et al. (1996) advocate that the level of perceived
risk in a specific product category is a vital factor in private
label brand purchases. Thus, certain categories of
merchandise are more suitable for private labels than others.
We therefore hypothesize that:
H7. Perceived risk influences the perceived value of private
There is strong support from the literature that customers
depend on perceptions of quality to form perceptions about
risks (Batra and Sinha, 2000; Sweeney et al., 1999; Settle and
Alreck, 1989). Prior research has emphasised that the higher
the level of perceived quality, the lower the risk in a particular
product category (Batra and Sinha, 2000; Hoch and Banerji,
1993; Narasimhan and Wilcox, 1998; Sabiote et al., 2012).
Therefore, this study hypothesises that:
H8. Perceived quality influences the perceived risk of
It has also been put forward that perceived risk is a mediator
between perceived product value and perceived product
quality (Agarwal and Teas, 2001; Snoj et al., 2004; Sweeney
et al., 1999). In this light, we too suggest that:
H9. Perceived risk mediates the influence of perceived
quality on the perceived value of private label
Conceptual model
Figure 1 represents a visual summation of the relationships
hypothesized in this study.
As indicated by the conceptual model, perceived product
quality, perceived relative price and perceived risk all have a
direct influence on customer perceived product value.
Thereafter, perceived product value has a direct effect on
willingness-to-buy.
In addition to the direct relationships outlined above, the
interrelationships between perceived relative price and
perceived product quality, as well as between perceived
product quality and perceived risk, have been included in the
model. It is believed that these relationships may also
influence perceived product value and, ultimately,
willingness-to-buy.
Hence, the researchers aim to establish whether the
relationships previously tested by Sweeney et al. (1999) are
indeed applicable for the household cleaning product
category in an emerging market setting.
Methodology
The methodology of this study was based on, and adapted
from, that of the Sweeney et al. (1999). Their study focused
on perceptions regarding the purchase of electronic goods in a
physical retail environment. However, the authors cautioned
against generalizing across product categories. Thus, our
Figure 1 Conceptual model of hypothesised relationships
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research is oriented towards applying a similar approach in a
different setting.
A survey design was used to collect the data for empirical
testing. The advantages of this method include quick
responses, relatively low costs and a high degree of
respondent control (Malhotra, 2010).
A non-probability convenience sampling technique was
employed, with the target population consisting of
supermarket shoppers between 21 and 65 years of age
(excluding full-time students) who had actively purchased a
private label household cleaning product within the last six
months, or intended to do so in the near future.
A pre-test was conducted through a pilot study of 20
respondents. Here, results were analysed to ensure that any
inconsistencies or errors with the questionnaire were
recognized and eliminated before official field work
commenced. Thereafter, a mall intercept approach was used
to collect data whereby three interviewers approached
respondents in the household cleaning products aisle at two
suburban supermarket stores. Respondents were made aware
of the fact that their responses would remain anonymous and
no incentives were offered throughout the data collection
process so as to minimise the risk of manipulated responses.
The final questionnaire consisted of filter questions
ensuring that the correct target population was maintained,
five-point Likert scales measuring each construct in the
conceptual model and, finally, demographic questions to
assess the composition of the sample. On completion of the
field work, 165 questionnaires had been distributed in total,
of which 157 were deemed valid and used for the
computation of results.
The data were initially cleaned and captured into a
spreadsheet and, thereafter, exported into the SPSS
software package. Outputs for confirmatory factor analysis
and item total reliability were evaluated to test the validity and
reliability of the scales used in the questionnaire. Once
deemed acceptable, the data was transferred into SmartPLS
2.0 and path modeling was applied. The researchers elected
to use partial least squares (PLS) analysis, as this is a
predictive statistical technique that facilitates exploring the
strength and significance of embedded relationships in the
conceptual model (Henseler et al., 2010).
Sample and scale considerations
Sample biases
The sample was skewed towards females, with 76 percent of
the respondents fitting this profile. This bias is largely
reflective of the fact that women are traditionally responsible
for conducting the shopping for household cleaning products
in the area of study. Respondents were also classified
according to their age groups. Here, 38 respondents (24
percent) were found to be between ages 21 and 30, 44
respondents (28 percent) between 31 and 40, 44 respondents
(28 percent) between the ages 41 and 50, 25 respondents (16
percent) between 51 and 60, and the remaining 6 respondents
(4 percent) between 61 and 65 years of age. Hence, the
majority of respondents were under 50 years of age. The
largest cohort, in language terms, was found to be native
English speakers (40 percent of the sample), followed by
Xhosa speakers (36 percent of the sample).
Validity and reliability of scales
Confirmatory factor analysis
Confirmatory factor analysis was conducted in order to assess
the validity of the constructs in the model.
Table I shows the factor loadings of each item on a
construct in the model. According to Field (2005), all
loadings should exceed 0.7 in order to be considered valid.
The table reflects that the items of every construct loaded
successfully onto a single factor, which can be seen by the
italicized figures. Therefore, all constructs used in the
hypothesized model were considered valid.
Item total reliability
Internal consistency and reliability of the model were
measured by conducting an item total reliability analysis of
the constructs. The Cronbach Alpha of each construct is
displayed in Table II.
In each case, the Cronbach Alpha far exceeded the critical
value of 0.7 (Field, 2005), thus ensuring that all five
constructs were indeed internally consistent and reliable.
At this point in the study, it was concluded that the scales
were both valid and reliable, therefore enabling the
researchers to proceed with the analysis.
Testing the model
Structural equation modeling, using partial least squares
(PLS) analysis, was conducted in order to test the conceptual
model depicted in figure 1. In the following section, the
measurement model is assessed in terms of convergent and
discriminant validity of the various constructs. Thereafter, the
results of the hypothesized relationships are presented
through a consideration of the structural model.
Measurement model
Convergent validity
In order to test the convergent validity of the model, the
average variance extracted (AVE) figures for each construct
were analysed. As shown in Table III, the AVEs for all
constructs’ are well above the 0.5 threshold (Vasilecas et al.,
2005), indicating that convergent validity holds within the
model.
Discriminant validity
Discriminant validity within the model is maintained if the
loading of a particular construct on its allocated construct is
higher than its cross loadings on all other constructs. These
are displayed as the italic figures in Table IV.
In each case, the loading of the particular construct on its
allocated construct is higher than its cross loadings on all
other constructs. Therefore discriminant validity within the
model holds.
Based on the above, the authors were satisfied that the
model is adequate in terms of convergent and discriminant
validity.
Structural model
T-values
Figure 2 displays the relevant t-values that pertain to each
relationship in the model. Here, two tailed t-tests were
measured and assessed at the 1 percent, 5 percent and 10
percent significance level.
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It can be seen in Figure 2 above that all the relationships
between the constructs, with the exception of three, are
significant at the 1 percent significance level (t-value . 2.58).
The relationship between perceived risk and perceived
product value has a t-value of 1.964. This relationship is
therefore significant at the 5 percent level. The relationships
between perceived risk and willingness-to-buy, and perceived
relative price and willingness-to-buy, are not significant even
at the 10 percent level (t-value . 1.65)
Path coefficients
Figure 3 reveals the path coefficients related to each
hypothesized relationship in the model. These path
coefficients determine the strength and directional nature of
the respective relationships.
In Figure 3 it can be seen that the coefficient between
perceived product value and willingness-to-buy is 0.493. This
indicates a strong positive relationship between the two
constructs. A strong (0.515) positive relationship also exists
between perceived relative price and perceived product value.
However, a moderate (0.319) positive relationship occurs
between perceived product quality and perceived product
value, and a weak (20.143) negative relationship connects
perceived risk and perceived product value.
An R2
value of 0.696 (in the case of willingness-to-buy)
indicates that 69.6 percent of the variation within the
willingness-to-buy construct is explained by the antecedents
identified.
Assessment of hypotheses
H1. Perceived value influences a customer’s willingness to
buy private label household cleaning products.
The above PLS output indicates a significant relationship
between perceived product value and willingness-to-buy, with
Table I Factor loadings
Perceived product quality Perceived product value Perceived relative price Perceived risk Willingness- to-buy
q6 0.861 0.4488 0.2173 20.5051 0.5899
q7 0.8726 0.4724 0.2648 20.5253 0.5889
q8 0.8607 0.528 0.3004 20.5159 0.6355
q9 0.2024 0.4202 0.7707 20.2345 0.3477
q10 0.1705 0.5448 0.8606 20.1964 0.3596
q11 0.3494 0.6431 0.8608 20.4008 0.5121
q12 20.4493 20.4085 20.2987 0.825 20.4091
q13 20.4165 20.4081 20.2562 0.8284 20.4013
q14 20.4827 20.3967 20.2946 0.8123 20.4043
q15 20.5419 20.4792 20.3336 0.899 20.5693
q16 20.616 20.4776 20.2995 0.892 20.577
q17 0.4236 0.8849 0.6242 20.4689 0.6432
q18 0.6351 0.9004 0.5461 20.5102 0.7365
q19 0.3515 0.7785 0.529 20.3179 0.569
q20 0.574 0.6852 0.4407 20.4777 0.9087
q21 0.6462 0.68 0.4731 20.491 0.9239
q22 0.6599 0.7045 0.4612 20.4994 0.9052
q23 0.6629 0.7064 0.4506 20.5808 0.9002
Table II Cronbach Alpha values and items per construct
Construct Cronbach alpha Number of items
Perceived product quality 0.8316 3
Perceived relative price 0.7818 3
Perceived risk 0.9059 5
Perceived product value 0.8170 3
Willingness-to-buy 0.9304 4
Table III Average variance extracted (AVE)
Construct AVE
Perceived product quality 0.7479
Perceived relative price 0.6919
Perceived risk 0.7261
Perceived product value 0.7333
Willingness-to-buy 0.8273
Table IV Cross loadings of the constructs within the model
Perceived product quality Perceived product value Perceived relative price Perceived risk Willingness-to- buy
Perceived product quality 0.8648
Perceived product value 0.5602 0.8563
Perceived relative price 0.3032 0.6600 0.8318
Perceived risk 20.5962 20.5125 20.3489 0.8521
Willingness-to- buy 0.7003 0.7635 0.5020 20.5643 0.9096
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a t-value of 6.001. The path coefficient is 0.493, indicating a
positive relationship. H1 is therefore accepted at the 1 percent
significance level and it may be concluded that perceived
value positively influences a customer’s willingness to buy
H2a. Perceived value mediates the influence of perceived
quality on a customer’s willingness to buy private label
The relationships between perceived product quality and
perceived product value, between perceived product value
and willingness-to-buy, as well as between perceived product
quality and willingness-to-buy, have t-values of 4.030, 6.001
and 4.666 respectively. H2a is therefore accepted at the 5
percent level and it may be concluded that perceived value is a
partial mediator of perceived quality and a customer’s
willingness to buy private label household cleaning products.
Figure 3 Structural model: path coefficients
Figure 2 Structural Model: T-values
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H2b. Perceived value mediates the influence of perceived
relative price on a customer’s willingness to buy private
The relationships between perceived relative price and
perceived product value, between perceived product value
and willingness-to-buy, as well as between perceived relative
price and willingness-to-buy, have t-values of 7.014, 6.001
and 0.558 respectively. H2b is therefore accepted at the 5
percent level and it may be concluded that perceived value is a
full mediator of perceived relative price and a customer’s
willingness to buy private label household cleaning products.
H2c. Perceived value mediates the influence of perceived
risk on a customer’s willingness to buy private label
The relationships between perceived risk and perceived
product value, between perceived product value and
willingness-to-buy, as well as between perceived risk and
willingness-to-buy, have t-values of 1.964, 6.001 and 1.108
respectively. H2c is therefore accepted at the 5 percent level
and it may be concluded that perceived value is a full
mediator of perceived risk and a customer’s willingness to buy
H3. Perceived relative price influences the perceived value
The PLS model indicates a significant relationship
between perceived relative price and perceived product
value, with a t-value of 7.014. The path coefficient is 0.513,
indicating a positive relationship. Therefore, H3 is accepted at
the 1 percent significance level and it may be be concluded
that perceived relative price positively influences the perceived
value of private label household cleaning products.
H4. Perceived quality influences the perceived value of
The PLS model indicates a significant relationship between
perceived product quality and perceived product value with a
t-value of 4.030. The path coefficient is 0.319, indicating a
positive relationship. Therefore, H4 is accepted at the 1
percent significance level and it may be concluded that
perceived quality positively influences the perceived value of
private label household cleaning products
H5. Perceived relative price influences the perceived quality
perceived relative price and perceived product quality, based
on the t-value of 4.030. The path coefficient is 0.303,
indicating a positive relationship. Therefore H5 is accepted at
the 1 percent significance level and it may be concluded that
perceived relative price positively influences the perceived
quality of private label household cleaning products.
H6. Perceived product quality mediates the influence of
perceived relative price on the perceived value of
The relationships between perceived product quality and
perceived product value, between perceived relative price and
perceived product quality, as well as between perceived
relative price and perceived product value, have t-values of
4.030, 4.030 and 7.014, respectively. Therefore H6 is
accepted at the 5 percent level and it may be concluded
that perceived quality is a partial mediator of perceived
relative price and a customer’s perceived value of private label
H7. Perceived risk influences the perceived value of private
perceived risk and perceived product value with a t-value of
1.964. The path coefficient is -0.143, indicating a negative
relationship. Therefore, H7 is accepted at the 5 percent
significance level and it may be concluded that perceived risk
negatively influences the perceived value of private label
H8. Perceived product quality influences the perceived risk
The relationship between perceived product quality and
perceived risk is significant, based on the t-value of 10.840.
The path coefficient is -0.596, indicating a a negative
relationship. Therefore, H8 is accepted at the 1 percent
significance level and it may be concluded that perceived
quality negatively influences the perceived risk of private label
H9. Perceived risk mediates the influence of perceived
quality on the perceived value of private label
The relationships between perceived risk and perceived
product value, between perceived product quality and
perceived risk, as well as between perceived product quality
and perceived product value, have t-values of 1.964, 10.840
and 4.030 respectively. Therefore H9 is accepted at the 5
percent level and it may be concluded that perceived risk is a
partial mediator of perceived quality and a customer’s
perceived value of private label household cleaning products.
Discussion and managerial implications
This study found that perceived product value has a
significantly positive influence on a customer’s willingness to
buy private label household cleaning products. Perceived
product quality and perceived relative price have significant
positive relationships with perceived product value, while
perceived risk has a significant (albeit weak) negative
relationship with perceived product value.
The study also identified further relationships between the
constructs which influence perceived product value. Perceived
relative price is positively related to the perceived product
quality, while perceived product quality is negatively related to
the perceived risk of private label household cleaning
products. In addition, it was found that perceived product
quality, perceived relative price and perceived risk all
influence a customer’s willingness to buy through the
mediation effect of perceived product value, and that
perceived relative price influences a customer’s perceived
product value through the mediation effect of perceived
product quality. Lastly, perceived product quality was found
to influence a customer’s perceived product value through
perceived risk of the product.
Hence, it was determined that our results correspond to
those documented by Sweeney et al. (1999).
This study highlights that customer perceived product value
is paramount in the decision process. Pricing, as a key
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variable, therefore requires considerable attention. Although
low pricing erodes an image of quality, it creates the
perception that the merchandise is of superior value.
Relative pricing between national and private label brands
needs to be significant in order for the savings to justify the
risk in opting for a “lesser” brand (Peterson and Yang, 2004).
However, marketers should remain aware of “stuck in the
middle” pricing whereby the price is not low enough to
generate a sale, yet sends a signal of inferior quality, relative to
the category leaders (Zielke and Dobbelstein, 2007). Further
research is required in the case of individual product
categories.
Lower socio-economic groups appear to be particularly
susceptible to perceived risk. For example, it has been found
in South Africa that lower income consumers, particularly
those dwelling in the townships, are not always in a position to
assume the risk of brand failure. Hence, they invariably opt
for safer, tried-and-trusted, national brands which are
invariably more expensive than their private label
counterparts (Beneke, 2010). This conundrum is evident in
the relationship between perceived risk and perceived product
value.
In order to alleviate these negative signals being sent to
consumers, emphasis needs to be placed on providing
noticeable affordability (i.e. allowing for a significant
differential in pricing) while at the same time minimizing
consumer risk. The latter may be achieved through superior
returns policies, in-store demonstrations, and product
samples. This should operate in tandem with efforts to
increase product quality (e.g. insisting on high manufacturing
standards) while reaching compromises with suppliers, so as
not to unnecessarily drive up costs.
Quality cues are absolutely crucial. This may include shelf
space development (e.g. attractive signage at the point of sale
and appropriate lighting to showcase the products) and
promoting the products in a media context which casts them
in a positive aura. Marketers may therefore opt to steer away
from high-volume, low print quality publications such as
mass-market newspapers and may choose to promote such
products in niche publications, such as glossy magazines and
internet portals, instead. This may infuse a sense a quality
into the perception of the merchandise.
Consumer education to the merits of private label brands
may also entrench a sense of merchandise quality. Education
campaigns punting a “as good as the leading brands” message
is likely to build credibility and highlight the advantages of
buying such brands. It is suggested that social media
channels, particularly those that encourage electronic word-
of-mouth, represent a low cost, high impact platform for
disseminating the message and growing brand affinity (Brown
et al., 2007).
Operational factors and supply chain management maintain
their crucial importance in this setting. Ensuring that retail
service quality (e.g. minimising stock outages, ensuring
friendly staff, appealing atmospherics and cleanliness, as
well as optimised store layout and design, etc) is upheld is
likely to create a positive halo effect for the private label brand
(Vahie and Paswan, 2006). Sadly, it would appear that such
issues are neglected in lower-end mass market supermarket
stores, which may serve to tarnish the image of their private
label ranges.
Recommendations for further research
Opportunity exists for the expansion of research into different
product categories. To date, most studies seem to have
focused on relatively low cost fast moving consumer goods. It
would be interesting to ascertain whether the theory holds in
the context of premium items. Furthermore, the authors are
unaware of any studies where this model has been applied
across private label and national brand domains
simultaneously. The relative difference in relationships, if
any, may provide insightful results.
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About the authors
Justin Beneke is a Senior Lecturer in the School of
Management Studies at the University of Cape Town. His
research interests include retailing management, branding,
and electronic marketing. He is currently completing his
doctorate in the field of private label brand management.
Justin Beneke is the corresponding author and can be
contacted at: Justin.Beneke@uct.ac.za
Ryan Flynn was a postgraduate student in the School of
Management Studies at the time of the study.
Tamsin Greig was a postgraduate student in the School of
Management Studies at the time of the study.
Melissa Mukaiwa was a postgraduate student in the School
of Management Studies at the time of the study.
Executive summary and implications for
managers and executives
This summary has been provided to allow managers and executives
a rapid appreciation of the content of this article. Those with a
particular interest in the topic covered may then read the article in
toto to take advantage of the more comprehensive description of the
research undertaken and its results to get the full benefits of the
material present.
Recent studies indicate that consumers are becoming more
favorable towards private label or store brands. This has
marked a significant shift in sentiment as such offerings were
previously condemned as being cheap, poor quality
alternatives to brands offered by established manufacturers.
Standards have risen to an extent that the perceived quality
gap between mainstream brands and private label brands has
narrowed considerably. Retailers that produce their own label
goods are exploiting the changing situation to increase profits
and create customer loyalty. Being able to negotiate terms
with manufacturers from a position of strength is another
notable consequence.
It has been noted by several researchers that different
factors potentially impact on whether or not consumers will
support private label brands. Customer perceived value of a
product is seen as particularly important and has been
described as an “overall mental evaluation” performed by the
consumer. Value is often measured in relation to cost of the
product or service and to suitable alternatives. Other
researchers consider the value construct as the balance
between quality and price. Perception of value is renowned for
strongly influencing consumer purchase intention.
The subjective and multidimensional nature of customer
perceived product value makes measuring the construct a
challenging task. Nevertheless, a firm must gain insight into
the different facets of perceived value in order to use
appropriate channels to communicate with consumers and
position its offerings effectively. Value dimensions are typically
regarded as relating to either quality or price, although the
relevance of perceived risk is also becoming acknowledged
more.
Opinions vary as to the role that price plays in shaping how
consumers value a product. Certain academics attach greater
substance to the perception of a product’s price in comparison
with the cost of suitable alternatives rather than to its actual
price. In this context, the perceived relative price of a private
Volume 22 · Number 3 · 2013 · 218–228
227

label brand will be referenced against manufacturer brands
within the same product category.
Price is regarded as an important extrinsic cue that
consumers use to aid their purchase decision making. The
relationship between perceived price and perceived value has
been found to be negative in the sense that consumer buying
power decreases as the price climbs. However, price is only
one aspect of the value equation and consumers may
sometimes be more influenced by such as service quality or
the amount of effort needed to make the purchase.
The perceived quality of a product strongly influences value
perceptions, as numerous studies have found. Consumers
typically measure value on a product’s attributes and how it
performs and meets the required manufacturing standards
relative to alternative offerings. Perception of quality is not
limited to the specific attributes of the product as it is a
reflection of the consumer’s attitude towards the “overall
brand experience”. Evidence shows that product quality
strongly impacts on the purchase of private label brands and
the likelihood of their success. There is also some indication
that perceived quality increases perceived value, suggesting
that consumers may choose retail brands over national brands
when perceived product quality of the former is high. The
view held by various authors is that positive correlation exists
between perceived product quality and perceived relative
price.
It is commonly accepted that consumers perceive that a
degree of uncertainty surrounds their purchase decision
making. Perceived risk is regarded as a multidimensional
construct which incorporates such as functional, physical,
social, financial and psychological categories. One assumption
is that perceived value will be lower for products consumers
believe are likelier to fail in some respect. It is also felt that
risk is greater in certain product categories. Since risk
perceptions are influenced by quality perceptions, scholars
argue that some categories of product are less appropriate
than others for private label brands.
Earlier research examined these factors in relation to the
purchase of electronic goods. In order to test whether findings
from that work might be applicable to other product
categories, Beneke et al. adopt a similar method involving
household cleaning products. The study context was South
Africa, where weak adoption of store brands prevails. Limited
development of such brands and high levels of risk aversion
are among the reasons cited for this sluggish uptake.
Subjects who were recruited at two supermarkets had
recently bought household cleaning products or were
planning to in the near future. Females were responsible for
76 percent of the 157 usable responses obtained. Since
women are largely responsible for purchasing cleaning
products for their household, this bias was deemed
acceptable. Age of participants ranged from 21 to 65 years-
old, with the majority aged below 50.
Various hypotheses were developed to investigate the effect
of different factors on customer willingness to purchase
private label household cleaning products. Subsequent testing
revealed that:
.
Willingness to purchase is positively influenced by
perceived product value.
. Perceive value mediates the impact of perceived relative
price on willingness to buy.
. The influence of perceived risk on willingness to purchase
is mediated by perceived value.
.
Perceived relative price impacts the perceived value.
.
Perceived value is influenced by perceived quality.
.
Perceived relative price influences perceived quality.
.
Perceived risk impacts on perceived value.
.
Perceived product quality negatively influences perceived
risk.
Partial mediation was additionally found for perceived value
on the impact of perceived quality, perceived risk on the
influence of perceived value, and perceived product quality on
the effect of perceived value.
These findings closely relate to those found in the earlier
study concerning electronic goods. The strong influence of
perceived product value on purchase decisions highlights the
need for marketers to place considerable emphasis on price.
Ideally, national and store brands should be priced relatively
so that the increased risk of choosing a brand perceived as
inferior is compensated by savings. But retailers are warned
against mid-range pricing as this could signal inferior quality
relative to leading brands while not been low enough to
prompt purchase.
Perceived risk would seem to be a particular issue for lower
socio-economic groups in South Africa. Efforts to minimize
risk and offer greater affordability could lower the reluctance
of these consumers to adopt private label products. Beneke
et al. propose making improvements to the quality of these
goods, while addressing risk concerns through such as
offering product samples, in-store demonstrations and
appealing returns policies.
The importance of signaling quality is likewise noted.
Attractive in-store displays of merchandise and promotion
using appropriate media channels are suggested. With regard
to the latter, the authors recommend using glossy magazines
and other “niche publications” rather than mass-produced
newspapers. Educating consumers about store brands is also
considered imperative. Marketers should emit positive
messages about their private label brands and use social
media channels as a cost-effective way of reaching consumers.
Firms are additionally advised to improve operations and
manage the supply chain more efficiently. Focusing on such as
service quality and store layout can help provide a positive
experience for customers at retail outlets and improve their
perception of the store’s own brands.
Researchers might in future consider other product
categories, especially premium goods. Simultaneous study of
national and private label brand domains is another
possibility.
(A précis of the article “The influence of perceived product quality,
relative price and risk on customer value and willingness to buy: a
study of private label merchandise”. Supplied by Marketing
Consultants for Emerald.)
Volume 22 · Number 3 · 2013 · 218–228
228
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