COMPARATIVEANALYSISOFCUSTOMERS Ptreferences

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COMPARATIVE ANALYSIS OF CUSTOMERS' PREFERENCE FOR NATIONAL


BRANDS VS. PRIVATE LABELS IN MEN'S APPAREL CATEGORY IN DELHI-NCR

Article · April 2016

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Journal of Knowledge Management and Information Technology

COMPARATIVE ANALYSIS OF CUSTOMERS'


PREFERENCE FOR NATIONAL BRANDS VS.
PRIVATE LABELS IN MEN'S APPAREL CATEGORY
IN DELHI-NCR
MD. Chand Rashid
Assistant Professor – Marketing Galgotias University, Greater Noida, UP

Dr. Harsh Purohit


Dean, Faculty of Management Studies-WISDOM,
Banasthali University, Tonk, Rajasthan

Dr. Balgopal Singh


Asst. Professor (Marketing) Faculty of Management Studies,
Banasthali University, Tonk, Rajasthan.

Abstract

Indian economy is no more a controlled economy. The retail sector is emerging as


one of the largest sectors of Indian economy. Apparel is the biggest segment in
modern retailing. Private labels are gradually flooding the Indian markets. They are
no more a 'cheap alternative' to national brands. They are becoming 'preferred
choice' with their own distinct identity. Private labels are widely becoming popular
in the organized retail segment. A large number of consumers are being attracted
towards private labels. Private labels play a big role in product differentiation for
retailers. They allow a retailer to wield more control and flexibility over
merchandise. National brands are actively making strategies to handle this
formidable scenario. It is interesting to know the factors driving customers towards
private labels and national brands.

Key Words: National Brands, Private Labels, Organized Retailing, Men's Apparel,
Consumer Behaviour, Consumer Preference

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Comparative Analysis of Customers' Preference For National Brands .........

Background popularized in Europe. Over a period


of time private labels established their
Indian economy is no more a credibility. They were not just a 'cheap
controlled economy. The retail sector alternative' to national brands. They
is emerging as one of the largest sectors became 'preferred choice' with their
of Indian economy. It accounts for 22 own distinct identity.
per cent of the country's gross The history of private labels grew with
domestic product (GDP), (IBEF). The the development of the retail industry.
modern retail market is close to 8% of
The low price was the chief motivating
the total retail market, it means there is
factor for the consumers to buy private
huge scope for growth. (IRIS
Research). Economic growth, higher labels. Gradually the focus of retailers
disposable income along with shifted from simple low price products
favorable demographic changes, to both inexpensive and quality
growth in the number of working products. Private labels are widely
women, increasing nuclear families, becoming popular in the organized
existence of largest young population, retail segment. A large number of
growing urban and sub-urban
consumers are being attracted towards
population, changing attitude towards
private labels. According to Mudra
saving, international exposure,
lifestyle changes and easy access to Institute of Communication,
credit are some of the key growth Ahmadabad, the private labels market
drivers for modern retail in India (KSA in India is presently estimated at INR
Technopark, 2012). 13 billion which accounts for 10-12 %
Apparel is the biggest segment in of organized retail in India.
modern retailing. Apparel retailing is Retailers like Pantaloons (75%),
rapidly penetrating in the class II and Shoppers' Stop (women wear 90%,
class III cities. Consumers are
men' wear 70 %); Lifestyles (30%,
becoming more discerning and
Max 75%), Westside (90%), Reliance
discriminating in their choices. Private
(80%), Spencer's (60%), Nilgiri
Labels are growing rapidly throughout
(38%), India Bulls/ Parimal (30%) and
the world. They are gradually flooding
the Indian markets as well. Initially the Globus, AV Aditya Birla Retail, Infiniti
private labels were developed and Retail, and Hyper city have increased

Page No. 26 / Vol.4 / Issue-1


Journal of Knowledge Management and Information Technology

their focus on private labels (MICA, extraordinary growth of private labels


Business World, KPMG, India Retail in apparel and groceries categories.
Report 2013). Almost all leading retailers are
Private labels sales consist of only 10- launching and promoting private
labels regularly. Now, private labels
12% of organized retail sales (India
are available in abundance in mega
Retail Report, 2013). Therefore,
stores like Shoppers' Stop, Westside,
private label sales are less than 1% of
Lifestyles, Max, Pantaloon, Spencer's,
the total Indian retail business. This Reliance trends and Globus etc. Today,
indicates that India is untapped market private labels are posing huge
for private labels (KPMG). Shoppers' challenges to the well-known national
Stop' ignited new hope for organized and international brands. Many retail
retailing in 1991 with the launch of its companies are known to stock only
outlets. Five years later food retailing their own labels. Almost all entities in
was introduced. Food-World was the consumption chain are being
established in Chennai in May 1996. benefited with the popularity of private
Subhiksha, which is closed now, came labels.
up in Chennai in 1997 and Nilgiris was Private labels play a big role in product
started in Bangalore in the mid-1990s. differentiation for retailers. They allow
Pantaloons a leading apparel retailer a retailer to wield more control and
began its operations in 1997-98. flexibility over merchandise.
During 1998 many new retailers Customized modifications can be
opened up their operation with their made effortlessly to suit the changing
own private labels. The TATA group customer profile and requirements and
launched `Westside', Dubai-based tastes. Retailers have freedom to
Landmark group opened Lifestyle provide superior service. They can
design customer friendly environment
stores. Globus' came up in 1999.
to create positive store image and
These players have been the
positioning in the minds of prospective
trendsetters in fashion retailing.
The emergence of organized retailing customers. Retailers are able to source
in India has made private labels raw materials for private labels at
recognizable among large numbers of lower cost. They avoid unnecessary
Indians. India is witnessing an spending marketing activities and

Page No. 27 / Vol.4 / Issue-1


Comparative Analysis of Customers' Preference For National Brands .........

intermediaries' margins. They can considerable bargaining power vis-à-


develop strategic profitable vis manufactures of national-level
relationships with selective vendors of brands. It is also noteworthy that the
their choice. The differentiation opportunities to introduce a wide range
enables retailers to gain price
of products are enormous. The main
premium/market share, positive brand
USP of private labels is that they can be
perception and favorable customer
customized as per the needs of
behavior (customer loyalty).
customers (Kumar and
Customers are the gainer. They get a
wider variety to select from. Their Steenkamp,2007). They are effectively
needs are satisfied without pinching promoted in various interesting ways
their pocket much. like innovative packaging,
Private labels strategy is emerging as promotional schemes and visual
an innovative business model. Private merchandising within the retail store.
labels are bridging the gap in most of The consumer perceptions towards
the retailers' product mix. They are private labels are changing. Private
being aimed to fulfill the specific needs labels are emerging as a key weapon in
of the consumers. Pricing strategy and the hands of retailers to counter
better control in deliveries are main established brands. They are also
factors which are driving the sales driving customer loyalty. Private
volumes of private labels. As it is labels get more shelf space in the
widely known that Indian consumers leading stores. It boosts the retailers'
are highly price conscious, therefore, bargaining power with the
retailers are wisely pricing their manufacturers. The channel power is
product to attract consumer towards shifting in favor of the retailers. These
their product. Other factors which have private brands are affecting national
persuaded the retailers' to shift towards brands in terms of price, preference,
private labels include direct hassle free availability, margin, packaging and
supply, greater margins and enhanced loyalty etc.Retailers are eliminating
inventory control. Apart from this, the middlemen. Private labels are
private labels also give them reducing all the cost right from

Page No. 28 / Vol.4 / Issue-1


Journal of Knowledge Management and Information Technology

sourcing, manufacturing and selling to of trendy fashions, design, style,


final consumers. They are a hot features, quality and fabrics to
property today and retailers are differentiate from private labels. They
building their market share through put wholesome efforts to provide value
private labels. Private labels now for consumers. They carry out regular
compete with national brands in research to try to understand customers
almost all product categories. Private taste and preference. They have large-
labels offer diversity in product lines of scale expertise and money to spend on
retailers. Now, private labels are promotional activities. They are
regarded as ideal substitutes for capable to tackle the private label
national brands. challenges head on. They know how to
National brands are still the market change customers mind set, partner
leaders. Their consumer base is very effectively, innovate brilliantly, fight
strong. National brands are pioneer in selectively, price competitively,
introducing new product features. improve product quality and market
They invest heavily in research and creatively.
development. They continuously try to National brands assess competition
reduce the manufacturing cost. They and customer mindset regularly. Their
have expertise to promote their brands merchandise provides value to meet
and aggressively pull and persuade customers' satisfactions. They go all
customers. They have competence to out to win the customers trust to get
develop new product and stay ahead of their patronage by providing quick
competitors as trend setters. They can customer service. National brands are
fill the product lines gap proactively. familiar across the country. It helps to
They have access to latest know how. leverage market expansion and profit
They have strong financial capability maximization continuously. As far as
to sourcing and manage economy of segments within the Indian Apparel
scale efficiently. National brands Industry are concerned, men's wear is
proactively maintain innovative gaps the largest segment. (Data Monitor).

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Comparative Analysis of Customers' Preference For National Brands .........

Source: Data Monitor

Need for the Study manufacturers (Batra and Sinha 2000).


In order to stock either private labels or Private labels' penetrations vary
national brands or their right between the countries, categories and
proportion, it is very important for the retailers. This has given rise to
retailer to understand the consumer investigate private label literature to
buying behaviour towards either of understand the consumer, products
these. The retailers have to know about attributes, retailers' image and market
the retail buying process of a consumer factors for their success. These include
to have long term and short term motivations and benefits of private
success. Since men's apparel category labels for retailers, consumer
is the largest chunk of the apparel pie, segmentation studies, studies of
this study focuses on this category consumer perceptions, attitudes and
only. behaviour, retailers' positioning of
private labels and the strategic
Literature Review reactions of national brand
manufacturers.
The phenomenal growth of private Earlier, national brands manufacturers
labels in the developed world is enjoyed great bargaining power over
drawing the attention of Indian retailers because they were dependent
retailers and national brands
on the manufacturers' products. The

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Journal of Knowledge Management and Information Technology

situations changed with the Researchers believe that attitudes and


introduction of private label products. preferences are the most important
Initially private labels were generic components for predicting the brands
low quality products, offered at low choices (Ajzen & Fishbein, 1980).
prices. Nowadays, the image of private Consumers' reactions to national
label products has drastically changed brands and private labels are
and a strong competition exists influenced by a number of factors such
as consumers' value consciousness,
between private labels and
price-quality association, trust and
manufacturer brands (Semeijn et al.,
smart shoppers' self-perception
2004; Kumar & Steenkamp, 2007).
(Garretson et. al., 2002). Various
Consumers purchase a particular brand
studies have indicated that consumers
by weighing various factors like price,
who are price conscious are less loyal
quality, store image, risk etc. National
toward specific brands (Krishnamurthi
brands as well as private label brands
and Raj, 1988).
are fighting to attract the consumers on
Del Vecchio (2001) believed that
these factors. In the beginning, lower consumers look upon private label
priced private label brands were products as competitive with
regarded as lower quality products manufacturer's national brands with
(Steiner 2004). Now, leading retailers regard to functional quality. Private
have improved the quality of their labels have poor quality image
private labels to the level of national (Vaidyanathan & Aggrawal, 2000).
brands or, in some cases, even Sestokaite (2010) concluded that
exceeded the quality of the national national brands buyers are sure about
brands (Quelch and Harding, 1996). product's high quality. Thus they are
ready to pay higher price. Sestokaite
There are empirical proofs that quality
also believed that private label brand
private label brands differentiate a
buyers hardly see any big difference in
retail store from others. It also helps to quality between the two types of
create store loyalty (Corstjens and Lal, brands and that is why do not want to
2000; Shudir & Talukdar, 2004). A pay a premium price.
retailer's profit margins go up with the Richardson, Jain and Dick (1996)
increase of private labels sales, Shudir found out that a person is less willing to
& Talukdar (2004). buy private labels if there is higher

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Comparative Analysis of Customers' Preference For National Brands .........

perceived risk associated with them. retail chains (Steiner 2004). The retail
Consumers are likely to rely on brand chains are expected to gain enhanced
reputation to minimize risk. Hoch and control over the brands they sell. They
Banjeri (1993) as well as Semeijn and want to leverage the acceptance of a
Ambrosini (2004) concluded that the private label brand across all product
c a t e g o r i e s ( S t e i n e r, 2 0 0 4 ) .
success of private label products is
(Narasimhan and Wilcox, 1998) found
greater when there are insignificant
that retailers are using successful
quality differences between private
private label brands as bargaining
labels and national brands. A number power for price negotiation with major
of studies conducted by (Raju 1995; national brands manufacturers.
Burton et. al., 1998; Ailawadi, Neslin Anselmsson & Johansson (2007)
and Gedenk 2001) also indicated that believe that when consumers purchase
private labels perform better in more private labels they become more
categories which are high price loyal to the store.
sensitive. Consumers seem to take the Ailawadi et. al., (2001) believed that
risk of buying private labels more often understanding demographic factors
when they have low financial risks. could be useful in formulating
Private labels are contributing appropriate marketing plan,
significantly to bottom lines, store segmentation, targeting and
differentiation and trustworthiness positioning (STP) strategies.
(Corstjens and Lal, 2000). Sales According to (Richard et. al., 1996)
volumes, market shares as well as the
older consumers with their vast
appeal of private labels to consumers
expertise might opt for private label in
have increasingly improved (e.g.
Dunne and Narasimhan, 1999). place of national brands. According to
“Keeping private labels provides (Ailawadi, 2001) the studies
numerous advantages like high gross undertaken later on pointed out that
margin, which can be 25% to 50% female were more likely to buy private
higher compared to national brands” labels than male consumers.
(Keller, 1993). Private labels are Educated consumers are more quality
becoming reputed brands on their own conscious (Ailawadi et. al., 2001).
merit, identities and quality images According to Hoch (1996) they have
(Keller, 2007). The private labels have minor price sensitivity. Thus, they are
become a strategic business tool for

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Journal of Knowledge Management and Information Technology

free to opt for national brands. Some Neslin and Gedenk (2001) found that
researchers have found that private private labels are deeply linked with
label buyers have lesser formal “outlet trustworthiness, price
education than national brand buyers consciousness, and lesser quality”
(Omar, 1994). Income always which indicates that at the cost of
influences the consumers purchasing quality consumers shift cheap price
ability. Hoch (1996) pointed out that factor to the store loyalty. The research
other things being equal, high conducted by (Dick, Jain and
household income have an obvious Richardson, 1997; Pauwels and
negative association with private Srinivasan, 2004) found that the low
labels purchase. price positioning of private labels
Richardson et. al., 1994 found that leads to high store traffic and also
image, brand name and packaging are promotes store loyalty.
more important to consumers than Regular sales promotions have been
built-in quality. Image also elucidates common tactics used by national
why consumers are ready to shell out a brands to counter the private labels in
premium for national brands over the last few decades. According to (
private labels (Sethuraman, 2003). Lal, 1990; Quelch and Harding, 1996)
Narasimhan and Dunne (1999) this is a helpful strategy to cut the
affirmed that the choice decision private label penetration into the
between private labels and national market. In the recent years leading
brands is influenced by consumers' retailers have exercised meticulous
perception of price and quality advertisements and promotional
association between them. efforts to highlight the quality features
Earlier studies have already of their respective private labels
established that the price is a key (Akbay and Jones, 2005; Semeijn et.
indicator of quality. Hoch & Lodish al., 2004). According to Batra and
(1998) found that the price gap Sinha (2000), these marketing
between private labels and national activities have also established
brands increases consumers' perceived customer loyalty.
value for money (quality in relation to The studies conducted by (Curhan,
price). Study undertaken by Ailawadi, 1973; Dréje et. al., 1994; Desmet and

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Comparative Analysis of Customers' Preference For National Brands .........

Renaudin, 1998) suggest that an the store image dimensions of store


increased private labels shelf space atmosphere and store quality.
allotment would decisively have a The positioning of private labels is
positive influence on the consumers' influenced by the positioning
motivation in buying private labels. strategies of both retailers and
According to Hansen & Solgaard manufacturers. The studies on most
(2004), consumers differentiate possible positioning of private labels
between stores on various attributes and national brands relative to each
such as service, price and quality, the other give a fairly mixed picture. Many
researchers advocated that national
image and positioning of a store.
brands should widen their distance
Researchers have identified a variety
from private labels (Quelch and
of store image dimensions such as
Harding, 1996; Verhoef, Nijssen, 2002
location, atmosphere, price,
) and differentiate through quality and
promotion, quality, variety and service
continuous innovation to provide
(Ailawadi and Keller 2004). Vahie and
enhanced value for consumers (Hoch,
Paswan (2006), in their prominent 1996; Pauwels & Srinivasan, 2004).
study, implied that the store Choi & Coughlan (2006) reported that
atmosphere has a significant impact on manufacturers of national brand are
th e p er ceiv ed q u ality o f th e determined to differentiate on the basis
commodities and added that the price / of quality and product features from
store image ratio has just a private labels over time. (Choi &
considerable affect over the customer Coughlan, 2006) observed that
satisfaction levels based on national brands manufacturers are
merchandise. trying continuously to distance their
Aaker (1999) emphasized that brands from private labels. They
developing product categories, which suggested retailers to position quality
are not in consonance with the private labels close to top national
popularly known store image, might brands.
have adverse outcomes. Vahie &
Paswan (2006) found that consumer Qbjectives Of The Study
perceptions of private labels quality in Ø To determine the variables
the apparel category are influenced by which create preference for private

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Journal of Knowledge Management and Information Technology

labels in men's apparel category the preference creating variables for


Ø To determine the variables private labels and national brands in
which create preference for national
men's apparels?
brands in men's apparel category
Descriptive research design has been
Ø To develop a prediction model
deployed in the study. Extensive
for the preference of the above
research on both primary and
mentioned two types of brands in
secondary level was conducted.
men's apparel category
Information gathered in literature
Methogology review and in discussion with industry
From the literature review, the experts, led to the development of a
variables which create preference for structured questionnaire for
any type of brand in apparels were facilitating quantitative research. All
identified. The private labels are a new the dependent variables were
development in the apparel retail researched using a 5-point Likert scale
scenario in India. Hence primary study where as most of the independent
had to be done to capture the variables like demographic data and
customers; perceptions about these store choice were on nominal scale.
variables. Looking at the objectives of For the present study four major and
the study, there were the following well-known apparel retail chains,
research questions which needed to be Pantaloon, Shoppers' Stops, Westside
answered: and Lifestyles have been selected.
Ø RQ1: What are the variables Cross-sectional design was used to
which influence preference of private survey the respondents. Sample was
labels in men's apparels? selected from Delhi, Noida,
Ø RQ2: What are the variables Ghaziabad, Faridabad and Gurgaon
which influence preference of national because this part of India is where the
brands in men's apparels? maximum retail boom can be observed
Ø RQ4: Is there any difference in due to continued growth and
the knowledge and preference levels of development of malls culture and
private lables and national brands in acceptance by majority of shoppers. In
men's apparels? NCR majority of organized retails like
Ø RQ3: Is there any difference in Reliance Trends, Big Bazaar,
Pantaloon, Shoppers Stops, Westside,

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Comparative Analysis of Customers' Preference For National Brands .........

Max, Globus, lifestyles, Vishal are living area, employment status) and
easily accessible by the shoppers. private label vs. national brand
Before doing the survey, validity of products' buying characteristics. The
questionnaire was checked after the area of NCR was divided into 9
detailed literature review and geographic zones – North Delhi, East
discussions with senior managers of Delhi, Central Delhi, South Delhi,
leading retail chain and industry West Delhi, Noida, Ghaziabad,
experts of NCR Region of Delhi. Once Gurgaon and Faridabad. The sample
the questionnaire was finalized, the size was decided after consultations
data were collected using the mall-
from the supervisors and various
intercept and convenience sample
experts in this area. 600 respondents
survey method. In addition to this a
classified on basis of age, gender,
detailed discussions with the industry
marital status, education income level
experts, retailers and different
and type of profession were surveyed
consumer segments were conducted.
for this study. 504 useable responses
The researcher did the Pilot study and
were obtained which indicates a
all the scale questions were tested for
reliability using Cronbach's alpha healthy 83.3% conversion ratio.
(which was above 0.7 in all cases i.e. Malhotra (2009) has advised that for
very acceptable). any empirical study like the one in
The sample was selected with respect question, the sample size should be
to both demographics (gender, age, 300-500.
Sample Characteristics
The table given below shows the profile of the sample for this study.
Table 2: Sample Profile
Gender Male Female
88.70% 11.30%

Age Group 20-34 35-49 50-65


73.00% 20.50% 6.50%

Marital Status Married Single


56.60% 44.40%

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Journal of Knowledge Management and Information Technology

Education Up to 12th Bachelor Master and above Others


Level
3.00% 46.40% 47.00% 3.60%

Occupation Service Business Homemaker Students Others


72.40% 18.70% 4.40% 3.80% 0.80%

Monthly Up to 20000 21000 – 30000 31000- 41000


Household 41000 and
Income above
13.30% 22.20% 45.00% 19.40%

Since it was a purposive judgemental Rs.40000. Hence, the majority of the


study, the sample consisted of respondents belonged to middle /
predominantly male customers. upper middle class income segment
88.70% of the respondents were male. and with majority of them in service or
Because the purpose of the study was business, the majority of the sample
to understand the buying behaviour of belonged to SEC A2 and B1 category.
the male customers, intentionally more This sample is the optimal sample for
male customers were targeted. Some this study.
female shoppers were also interviewed
to get clear ideas about their shopping Data Analysis And Results
behaviour of men's apparel as it is Secondary Data Analysis
known that they also buy various According to India Retail Report 2013,
products for their male family total value for the Clothing market in
members. The largest number (45%) of India is Rs. 2, 20,000 crore. Out of this
the people surveyed was having the share of Modern Retail apparel
income between Rs.31000 and category is Rs. 74000 crore. The share

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Comparative Analysis of Customers' Preference For National Brands .........

of apparel in modern retailing is 33% who replied in the affirmative were


(IRIS Research). Currently, menswear carried forward in the survey to the
is the biggest segment of the domestic next series of questions.
apparel market with 42% share of the Awareness of private labels
total pie while women's wear The respondents were checked for
constitutes 39% and kids wear 19%. their awareness of private labels. A
According to the latest trends, there significantly high number of
has been an increasing focus on private respondents (85.9%) know what
labels (IRIS Research Services). private labels are. This can be seen in
Private labels constitute around 21% the table given below. It seems to
of total sales in the Indian apparel indicate a very wide usage of private
sector. labels by retailers and the market
(http://tejas.iimb.ac.in/articles/98.php becoming mature enough to
). differentiate between private labels
Primary Data Analysis and national brands. This may be
The questionnaire opened with a attributed to the fact that Delhi-NCR
qualifying question to check whether has been witnessing rapid growth of
the respondent has any awareness of modern retail in the last 13 years.
private labels. Only those respondents
Table 3: Knowledge of private labels
Knowledge of private labels
Frequency Percent Valid Percent Cumulative
Percent
yes 433 85.9 85.9 85.9
Valid no 71 14.1 14.1 100.0
Total 504 100.0 100.0

Preference of private labels vs. respondents to choose their most


national brands preferred category of men's apparels.
The next questions asked the The resultant graph is shown below.

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Journal of Knowledge Management and Information Technology

Figure 1: Preference of Men's Apparel

Null Hypothesis: There is no higher level of preference (leading to


significant difference in the preference loyalty) of national brands over private
level of private labals and national labels, the data was subjected to chi-
brands in men's apparels. square test. The results are given
To test the hypothesis that there is below:

Table 4: Chi-square test: Preference of men's apparel


Preference of men's apparel
Observed N Expected N Residual
Private labels 172 252.0 -80.0
National brands 332 252.0 80.0
Total 504

Table 5: Test Statistics


T e st S ta tistics
K n ow led ge of priv ate lab els P refe ren ce of m e n's app a rel
C h i-S qu are 2 60 .0 08 a 5 0.79 4 a
df 1 1
A sym p. S ig. .0 00 .0 00
a . 0 ce lls (.0 % ) ha ve ex p ecte d fre qu en cie s les s th an 5. T he m in im um
ex p ecte d cell fr equ en c y is 25 2 .0 .

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Comparative Analysis of Customers' Preference For National Brands .........

The chi-square is coming out to be apparel category.


significant at 99% confidence level To test the hypothesis that the
which means there is a significantly respondents who are aware about the
larger preference for national brands private labels will show a greater
than private labels in men's apparel preference towards them, the data was
category. subjected to cross-tabulation with chi-
Null Hypothesis: There is no square test. The results can be seen
association between awareness and below:
preference of private labels in men's

Table 6: Knowledge of private labels * Preference of men's apparel Cross-tabulation


Knowledge of private labels * Preference of men's apparel Cross-tabulation
Count
Preference of men's apparel Total
Private labels National brands
Yes 161 272 433
Knowledge of private labels
No 11 60 71
Total 172 332 504

Table 7: Chi-Square Tests


Chi-Square Tests
Value df Asymp. Sig. (2- Exact Sig. (2- Exact Sig. (1-
sided) sided) sided)
Pearson Chi-Square 12.765a 1 .000
b
Continuity Correction 11.818 1 .001
Likelihood Ratio 14.293 1 .000
Fisher's Exact Test .000 .000
Linear-by-Linear
12.739 1 .000
Association
N of Valid Cases 504
a. 0 cells (.0%) have expected count less than 5. The minimum expected count is 24.23.
b. Computed only for a 2x2 table

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Symmetric Measures
Value Approx. Sig.
Phi .159 .000
Nominal by Nominal
Cramer's V .159 .000
N of Valid Cases 504
a. Not assuming the null hypothesis.
b. Using the asymptotic standard error assuming the null
hypothesis.

The Pearson chi-square indicates that labels


the null hypothesis of no association 12 attributes were identified from the
between knowledge and preference of literature, which influence the
private labels is not accepted. preference towards any kind of men's
However Phi and Cramer's V apparels. The respondents' reactions
measures show that the degree of were captured on 5 point Likert scale
association between knowledge and
where 1 was most important to 5 being
preference of private labels is very
least important.
weak. In other words, even though
It was decided to find the extent of
most of the respondents were aware
importance which each of these
about private labels, they showed a
attributes provides in preference of
significant preference for national
brands in men's apparel categories. private labels.
The private labels have moved beyond For each attribute, the hypothesis has
the Awareness stage of AIDA been constructed as shown below:
sequence but they need to do more H01: Quality is an important attribute
communication in building interest in reasons for preference to purchase
and desire towards them in the minds private labels
of customers. H02: Price is an important attribute in
Reasons for preferring private reasons for preference to purchase
private labels

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Comparative Analysis of Customers' Preference For National Brands .........

H03: Packaging is an important attribute in reasons for preference to


attribute in reasons for preference to purchase private labels
purchase private labels H010: Durability is an important
H04: Convenience is an important attribute in reasons for preference to
attribute in reasons for preference to
purchase private labels
purchase private labels
H011: Social recognition is an
H05: Variety is an important attribute
important attribute in reasons for
in reasons for preference to purchase
private labels preference to purchase private labels
H06: Store image is an important H012: Distinctiveness is an important
attribute in reasons for preference to attribute in reasons for preference to
purchase private labels purchase private labels
H07: Brand image is an important (H0: Null hypothesis)
attribute in reasons for preference to To test these hypotheses, the data was
purchase private labels
subjected to single sample t-test. The
H08: Service is an important attribute
test value of 2 (important) was taken as
in reasons for preference to purchase
private labels the hypothized mean value. The results
H09: Promotion is an important for the private labels are given below.
Table 9: One-Sample Statistics
One-Sample Statistics
N Mean t Sig. (2-
tailed)
reason for preference to purchase private labels – quality 501 1.31 26.689 .000*
reason for preference to purchase private labels – price 501 1.53 16.393 .000*
reason for preference to purchase private labels - packaging 501 2.83 23.967 .000*
reason for preference to purchase private labels - convenience 501 2.17 4.642 .000*
reason for preference to purchase private labels – variety 501 1.68 -9.510 .000*
reason for preference to purchase private labels - store image 501 2.01 .294 .769
reason for preference to purchase private labels - brand image 501 1.75 -4.279 .000*
reason for preference to purchase private labels – service 501 1.81 -5.223 .000*
reason for preference to purchase private labels - promotion 501 2.35 8.492 .000*
reason for preference to purchase private labels - durability 501 1.82 -5.193 .000*
reason for preference to purchase private labels - social recognition 501 2.20 4.885 .000*
reason for preference to purchase private labels - distinctiveness 501 2.07 1.782 .075

Note: * means significant at 95% confidence level


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Out of the 12 attributes, 2 null H02: Price is an important attribute in


hypotheses are not rejected – H06 for reasons for preference to purchase
store image and H012 for national brands
distinctiveness. This means these two H03: Packaging is an important
attributes are important from the
attribute in reasons for preference to
customers' perspective. Out of the rest,
purchase national brands
six attributes are coming out to be
significantly high in importance – H04: Convenience is an important
quality, price, variety, brand image, attribute in reasons for preference to
service and durability. The stores purchase national brands
selling private labels in men's apparel H05: Variety is an important attribute
category should strive to incorporate in reasons for preference to purchase
all of these aspects in their private national brands
labels and then invest on building the H06: Store image is an important
private label brand on these attribute in reasons for preference to
positioning attributes. Four attributes,
purchase national brands
which are significantly less important
H07: Brand image is an important
according to this study are –
attribute in reasons for preference to
packaging, convenience, promotion
and social recognition. purchase national brands
H08: Service is an important attribute
Reasons for preferring national in reasons for preference to purchase
brands
The same 12 attributes were surveyed national brands
from the respondents for preferring H09: Promotion is an important
national brands. It was decided to find attribute in reasons for preference to
the extent of importance which each of purchase national brands
these attributes provides in preference H010: Durability is an important
of national brands. attribute in reasons for preference to
As previously done, for each attribute purchase national brands
the hypothesis has been constructed as H011: Social recognition is an
shown below:
important attribute in reasons for
H01: Quality is an important attribute
preference to purchase national brands
in reasons for preference to purchase H012: Distinctiveness is an important
national brands

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attribute in reasons for preference to test value of 2 (important) was taken as


purchase national brands the hypothized mean value. The results
(H0 : Null hypothesis) for the national brands are given
To test these hypotheses, the data was below.
subjected to single sample t-test. The

Table 10: One-Sample Statistics


One-Sample Statistics
N Mean t Sig. (2-
tailed)
reason for preference to purchase national brands - quality 502 1.18 43.644 .000*
reason for preference to purchase national brands – price 502 1.67 10.480 .000*
reason for preference to purchase national brands - packaging 502 2.74 20.551 .000*
reason for preference to purchase national brands - convenience 502 2.20 5.617 .000*
reason for preference to purchase national brands - variety 502 1.63 11.217 .000*
reason for preference to purchase national brands - store image 502 2.06 1.494 .136
reason for preference to purchase national brands - brand image 502 1.52 14.661 .000*
reason for preference to purchase national brands - service 502 1.79 -5.771 .000*
reason for preference to purchase national brands - promotion 502 2.29 7.190 .000*
reason for preference to purchase national brands - durability 502 1.71 -8.819 .000*
reason for preference to purchase national brands - social recognition 502 2.07 1.738 .083
reason for preference to purchase national brands - distinctiveness 502 1.98 -.534 .593

Note: * means significant at 95% confidence level

Out of the 12 attributes, the default null image, service and durability. 3
hypothesis is accepted in 3 attributes – attributes, which are significantly less
H06 for store image, H011 for social important according to this study are –
recognition and H012 for packaging, convenience, and
distinctiveness. This means these 3 promotion.
attributes are important from the Comparison in preference of private
customers' perspective. 6 attributes are labels and national brands
coming out to be significantly high in The 2 sets of data, mentioned in the
importance for preference of national
above analysis were subjected to
brands – quality, price, variety, brand

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paired sample t-test to identify the no difference in the mean perceptions


major differences in reasons for of any attribute for its influence on
preferring either private labels or private labels or national brands. The
national brands. The default null results are as follows:
hypothesis for this test is that there is

Parameter Mean for private labels Mean for national brands Sig. (2-
tailed)
quality 1.31 1.19 .000*
price 1.53 1.67 .000*
packaging 2.83 2.73 .002*
convenience 2.17 2.20 .373
variety 1.68 1.63 .201
store image 2.02 2.05 .384
brand image 1.76 1.52 .000*
service 1.81 1.79 .586
promotion 2.35 2.29 .075
durability 1.82 1.71 .000*
social recognition 2.20 2.06 .000*
distinctiveness 2.08 1.97 .001*

Note: * means significant at 95% confidence level

The results indicate that there is labels while rest 6 attributes are
significant difference between 7 coming out to be significantly more
attributes in influencing the preference important for national brands. Variety
towards private labels and national and service are equally very high in
brands viz. quality, price, packaging, importance in both the categories,
brand image, durability, social store image is equally important while
recognition and distinctiveness. By convenience and promotion are
looking at their means, we can see that equally not important for both the
out of these 7, only 1 attribute - price is categories. The implications are
coming out to be significantly more private labels have not been able to
important for preference of private match upto the benchmarks set by

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national brands in various aspects and brands as the independent variables.


except prices they seem to lag behind
Hence the 24 variables in the above
in all quality perceptions.
analysis were first subjected to Factor
Creating a prediction model for Analysis for dimension reduction.
preference of private labels and
national brands Factor Analysis
As a major contribution from the study, Factor Analysis is an important
the attempt was made to create a technique to reduce the data. This
mathematical model which can predict technique looks at interdependence
the preference towards either private among the variables. The variables,
label or national brand for any which show higher degree of
c u s t o m e r. F o r t h i s p u r p o s e , correlation, based on the responses
Discriminant Analysis was identified from the customers are clubbed under
as the most appropriate technique in 1 factor (linear combination of
which the categorical question of variables). These factors can then be
choice of private label or national used as new, exclusive variables in any
brand will be the dependent variable further multivariate analysis. The
and the factors defining the attributes results are of Factor Analysis are given
which govern the preference of the below:

Table 12: KMO and Bartlett's Test


KMO and Bartlett's Test
Kaiser-Meyer-Olkin Measure of Sampling Adequacy. .671
Approx. Chi-Square 3758.553
Bartlett's Test of Sphericity Df 276
Sig. .000

The KMO measure is much larger than Sphericity also came out to be
0.5 indicating that the sample was significant indicating enough level of
adequate for conducting factor correlation between the individual
analysis. The Bartlett's Test of variables. The following table shows

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that 9 factors were extracted using factors are explaining 68.236%


Principal Component Analysis from variance in the data which is an
the original set of 24 variables. These 9 adequate result.

Total Variance Explained


Com Initial Eigenvalues Extraction Sums of Squared Rotation Sums of Squared
pone Loadings Loadings
nt Total % of Cumulative Total % of Cumulative Total % of Cumulative
Variance % Variance % Variance %
1 4.694 19.557 19.557 4.694 19.557 19.557 2.362 9.842 9.842
2 2.125 8.853 28.410 2.125 8.853 28.410 1.995 8.312 18.154
3 1.880 7.833 36.244 1.880 7.833 36.244 1.788 7.451 25.605
4 1.654 6.893 43.136 1.654 6.893 43.136 1.780 7.415 33.020
5 1.350 5.627 48.763 1.350 5.627 48.763 1.774 7.391 40.412
6 1.249 5.204 53.967 1.249 5.204 53.967 1.739 7.244 47.655
7 1.235 5.145 59.112 1.235 5.145 59.112 1.709 7.122 54.777
8 1.151 4.798 63.910 1.151 4.798 63.910 1.677 6.986 61.763
9 1.038 4.326 68.236 1.038 4.326 68.236 1.553 6.473 68.236
10 .957 3.989 72.224
11 .904 3.766 75.990
12 .834 3.473 79.463
13 .723 3.011 82.474
14 .692 2.883 85.357
15 .557 2.320 87.677
16 .505 2.102 89.779
17 .449 1.872 91.651
18 .409 1.705 93.355
19 .323 1.346 94.701
20 .304 1.266 95.967
21 .295 1.228 97.196
22 .251 1.045 98.241
23 .232 .967 99.208
24 .190 .792 100.000
Extraction Method: Principal Component Analysis.

The factors which have been extracted can be seen in the rotated component
matrix given below'

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Table 14: Rotated Component Matrixa

Rotated Component Matrixa


Component
1 2 3 4 5 6 7 8 9
reason for preference to purchase private labels – distinctiveness .830
reason for preference to purchase national brands – distinctiveness .808
reason for preference to purchase private labels - social recognition .656
reason for preference to purchase national brands - social recognition .512
reason for preference to purchase national brands - store image .770
reason for preference to purchase national brands - brand image .689
reason for preference to purchase private labels - store image .510
reason for preference to purchase private labels - brand image .508

reason for preference to purchase private labels - packaging .834


reason for preference to purchase national brands – packaging .782
reason for preference to purchase national brands – durability .872
reason for preference to purchase private labels - durability .831
reason for preference to purchase national brands – price .756
reason for preference to purchase private labels – price .670
reason for preference to purchase national brands - quality .598

reason for preference to purchase national brands - service .582


reason for preference to purchase private labels – service .556
reason for preference to purchase private labels – quality .541
reason for preference to purchase national brands – convenience .829
reason for preference to purchase private labels – convenience .818
reason for preference to purchase national brands – promotion .867
reason for preference to purchase private labels - promotion .735
reason for preference to purchase private labels – variety .819
reason for preference to purchase national brands - variety .771
Extraction Method: Principal Component Analysis.
Rotation Method: Varimax with Kaiser Normalization.
a. Rotation converged in 8 iterations.

The factors have been named as – F1: Exclusivity, F2: Image, F3: Packaging, F4:
Durability, F5: Price, F6: Experience, F7: Convenience, F8: Promotion and F9: Variety

Discriminant Analysis technique. Based on existing


Discriminant Analysis is a classification independent variables (scale data) and

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dependent variables (categorical data), a The factors identified earlier were saved
classification equation can be created. as new variables for further multivariate
This equation can also be used as a analysis. As explained earlier,
prediction model to predict the considering these factors to be
probability of the new respondent falling independent variables and preference of
into which category. Here Discriminant men's apparel (private labels vs. national
Analysis is being used to predict the brands) as dependent variable,
preference of customers for private Discrminant Analysis was conducted.
labels or national brands. The results are reproduced below:

Summary of Canonical Discriminant Functions


Table 15: Eigenvalues

Eigenvalues
Function Eigenvalue % of Variance Cumulative % Canonical Correlation
a
1 10.031 100.0 100.0 .843
a. First 1 canonical discriminant functions were used in the analysis.

Table 16: Wilks' Lambda

Wilks' Lambda
Test of Function(s) Wilks' Lambda Chi-square df Sig.
1 .270 14.984 9 .031

The values of Eigenvalues, canonical situation. The Discriminant Function


correlation, Wilks' Lambda and p- equation can be seen from the table
value indicate that Discriminant given below.
Analysis is appropriate in this
Table 17: Canonical Discriminant Function Coefficients
Canonical Discriminant Function Coefficients
Function
1
F1 -.020
F2 -.489
F3 .393
F4 .149

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F5 .484
F6 -.062
F7 .092
F8 .565
F9 .218
(Constant) .000
Unstandardized coefficients

Discriminant Function Z = -0.020F1 - Packaging, F4: Durability, F5: Price,


.489F2 +.393F3 +.149F4 +.484F5 - F6: Experience, F7: Convenience, F8:
.062F6 +.092F7 +.565F8 +.281F9 Promotion and F9: Variety)
(Where F1: Exclusivity, F2: Image, F3: For the prediction rule:

Table 18: Functions at Group Centroids

Functions at Group Centroids


Preference of men's apparel Function
1
Private labels -.244
National brands .126
Unstandardized canonical discriminant functions
evaluated at group means

The mean of this function lies at - national brands. This is the prediction
0.059. Any customer's perceptions can model for preference in men's apparel
be measured on the 9 independent category which has been developed in
variables on a 1 to 5 scale and input in this study.
the Discriminant Function equation. If To check the robustness of this model,
the Z score comes less than -0.059, the the 'leave one out' option was used in
customer is likely to prefer private SPSS to get the classification results,
labels while for Z score higher than - which are reproduced below.
0.059, the customer is likely to prefer

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Table 19: Classification Resultsa,c


Classification Resultsa,c
Preference of Predicted Group Membership Total
men's apparel Private labels National brands
Private labels 160 10 170
Count
National brands 38 291 329
Original
Private labels 94.1 5.9 100.0
%
National brands 11.5 88.5 100.0
Private labels 147 23 170
Count
Cross- National brands 54 275 329
validatedb Private labels 86.5 13.5 100.0
%
National brands 16.4 83.6 100.0
a. 90.4% of original grouped cases correctly classified.
b. Cross validation is done only for those cases in the analysis. In cross validation, each case is classified by the
functions derived from all cases other than that case.
c. 84.6% of cross-validated grouped cases correctly classified.

The results show a high level of correct classification in cross-validated cases and
hence, the discriminant model is very robust and appropriate.

Conclusions And Recommendations typical AIDA sequence for private


Ÿ Close to 85% of respondents labels.
were aware what private labels are. This Ÿ It is interesting to note that
is a significant finding which shows the there is negative correlation between
level of exposure to modern retail, which knowledge and preference of private
people in Delhi and NCR are having. labels. In other words, even though
most of the respondents were aware
Ÿ There was a significantly larger
about private labels, they showed a
preference for national brands compared
significant preference for national
to private labels. After looking at the
brands in men's apparel categories.
awareness levels and the preference
The recommendation can be given that
levels for private labels, it can be the private labels have moved beyond
concluded that there is a significant the Awareness stage of AIDA but the
drop from awareness to interest in the stores need to do more communication

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in building interest and desire towards distinctiveness. Three attributes, which


their private labels in the minds of were significantly less important,
customers. according to this study are – packaging,
Ÿ The study succeeded in convenience, and promotion.
identifying six attributes, which came Ÿ As far as the comparative
out to be very high in importance for analysis is concerned, the study
inducing preference for private labels – concluded that there is significant
quality, price, variety, brand image, difference in seven attributes in
service and durability. Two other
influencing the preference towards
attributes also had a secondary
private labels and national brands viz.
importance viz. Store image and
quality, price, packaging, brand image,
distinctiveness. Four attributes, which
durability, social recognition and
were significantly less important,
distinctiveness. Out of these seven, only
according to this study are – packaging,
convenience, promotion and social one attribute - price is coming out to be
recognition. Quite clearly the attributes, significantly more important for
which directly impact the value- preference of private labels while rest six
proposition of the private labels, are high attributes are coming out to be
on impact. The stores selling private significantly more important for
labels in men's apparel category should national brands. Variety and service are
strive to incorporate all of these aspects equally 'very important' in both the
in their private labels and then invest on categories, store image is equally
building the private label brand on these 'important' while convenience and
positioning attributes.
promotion are equally 'not important' for
Ÿ The study identified six
both the categories. The implications are
attributes, which came out to be very
private labels have not been able to
high in importance for inducing
match up to the benchmarks set by
preference for national brands – quality,
price, variety, brand image, service and national brands in various aspects and
durability. Three other attributes also except prices they seem to lag behind in
had a secondary importance viz. Store all quality perceptions. Until the stores
image, social recognition and selling private brands are able to rectify

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this perception, customers are unlikely loyal to national brands and inclined to
to switch from national brands in a major switching or buying private labels.
way. Retailers may gain sales for their private
Ÿ With the use of Factor Analysis label brands by continuously seeking to
and Discriminant Analysis techniques, a improve customer perceptions of
predictive model was established as quality. We see the negative perceptions
follows: of private label quality to be a major
(Discriminant Function) Z = -0.020F1 - roadblock to increased volume. Efforts
.489F2 +.393F3 +.149F4 +.484F5 - to improve quality perceptions of private
.062F6 +.092F7 +.565F8 +.281F9 labels might be accomplished by
(Where F1: Exclusivity, F2: Image, F3: upgrading the tangible quality of the
Packaging, F4: Durability, F5: Price, F6: product, improving the packaging,
Experience, F7: Convenience, F8: innovation, and educating consumers
Promotion and F9: Variety) about the how quality is built into the
Any customer's perceptions can be product.
measured on the 9 independent variables For critical success, retail marketers
on a 1 to 5 scale and input in the have to learn more about customer needs
Discriminant Function equation. If the Z and desires and study their perceptions
score comes less than -0.059, the of quality. This research shows that even
customer is likely to prefer private labels in an emerging market like India, where
while for Z score higher than -0.059, the perceptions towards PLs have taken
customer is likely to prefer national more time to be established, NBs are
brands. definitely considered to be superior vis-
à-vis PLs. The success of PLs is
Managerial Implications important to retailers and could be a
The findings of the study can be useful to critical part of their strategy in terms of
in developing stronger store/PLs and in competition, sourcing, supply chain
increasing their presence and acceptance management, positioning, profitability
amongst customers. A key finding is that and expansion. Development of
value-conscious consumers are less acceptable- and sought after- PLs will

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take time, effort and strategic vision on Gedenk, K. (2001). Pursuing the Value
the part of retailers. Conscious Consumer: Store Brands
Versus National Brand Promotions.
Limitations And Directions For Journal of Marketing. Vol. 65 (1).
Further Research 4. Ajzen, I. & Fishbein, M.
Ÿ First our analysis is restricted (1980). Understanding attitudes and
to one category - men's apparels. p r e d i c t i n g s o c i a l b e h a v i o u r.
Future research should investigate the Englewood Cliffs. New Jersey:
relationships across different Prentice-Hall.
categories to assess the 5. Akbay, C., Jones E. 2005. Food
generalizability of our results. consumption behavior of
Ÿ The scope of this study is socioeconomic groups for private
limited to DELHI and NCR. Inclusion labels and national brands. Food
of more stores and private labels, in Quality and Preference 16 (7), 621-
varying geographic locations, would 631.
enable the study of the relationship 6. Anselmsson, J. & Johansson,
between store image and private label U. 2007. 'Corporate social
attitude to take account of a wider responsibility and the positioning of
range of retailer brand architectures. grocery brands.' International Journal
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