Determinants of Private label purchase

Insights from research studies

Outline

Introduction

About Store brands

Determinants of the purchase.

Research Gaps to be explored

Conclusion

Introduction
Organised
Projected

retailing in India worth 396 Billion USD by 2011.

growth rate is 20 -25% per annum.

Private

label penetration in India is 10 -12 %.

Major

Private label players Trent (90%), Reliance (80%),

Pantaloons (75%).

About Store brands \Private labels

Brands

owned, controlled and sold exclusively by retailer

by Baltas (1997).
Nirmalya

kumar and Steen kamps (2007) -Private labels are

any brand to be produced and owned by the retailer which is

sold exclusively in retailers outlet only.
Private

label manufacturer association (PLMA) has termed

Private label products encompass all merchandize sold under

a retailers brand
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Out Look- Food and Grocery segment-India

60 % spending on Food and grocery segment

Clothing

& Fashion items 20 % of House hold consumption

Food and Grocery segment it accounts nearly 1% and

clothing and fashion has a share of 33% in organized
retailing .

Private

labels presence in food and personal care products is

limited to 19- 25 %.

Determinants of Purchase based on Literature

Price

Quality

perceptions

Category
Store

image

Extrinsic

and Intrinsic cues

Positioning,
Others
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Price
Consumer

price consciousness and its consequent effect of

consumers perceptions.
Price

consciousness - Perceived category risk and perceived

price unfairness.
Consumer

Less price conscious where category risk is high

(Batra and Sinha, 1999).

S.

Chan Choi and Anne T. Coughlan (2004) private label price

should not be link to the National brands

Price

and the pricing need to be based on its quality and variable

cost.
Vertical

and horizontal differentiation

 Price

considerations have limited influence on consumers

when private labels are of higher quality (Singh, Hansen and

Chintagunta (2006) )
Wanga,

Kalwanib and Akcura (2007) private label purchase

increases with the price discount.

Private

label is to follow an everyday low pricing strategy

(Liu and Wang 2008).

Private

label price image perceptions are one of the major

factors influencing the purchase of private labels (Chandon,

Mbayefall and Jean, 2011)

Quality perceptions
Uncertainty

about the private label quality - (Batra and

Sinha, 2000).
Perceived

quality of private label is one of the major factors

that influence the consumer decision(Sethuraman, 2000).

Consumer

perception study by (Beneke, 2010) -perceived

quality .
Benito

(2010) stated the importance of quality oriented store

brands to differentiate the store and to increase private label

purchase.
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 Quality

variation in the private label or store brand can create

a negative perception on consumers(Bao, Yeqing and Sheng,

2011). Value consciousness ,Product signatureness also
influence the purchase.
Category
Keller

and Ailawadis qualitative study (2004) -category

determines the private label purchase.

Private

label purchase is category specific, purchase

determined by quality - Wanga, Tolga and Kalwanib (2007).

Retailers

should enter a category which is strongly associated

in the consumers mind (Bao, Yeqing and Sheng, 2011)

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Store and Brand Image

Strong

brand image for private labels can improve the quality

perceptions about private labels (Dick, Jain, Richardson, 1994).

Extrinsic cues are important.
Consumers

perceive store brands as the extension of store image

(Dodd and Lindley, 2003).

Keller

and Ailawadi (2004) retailers create brand image - product

assortment, merchandising, services and pricing strategies.

Store

image influences the perception and attitude of consumers

towards private labels(Liu and Wang, 2008).

Private

label should be brand extension with retailer acting as the

parent brand (Lee and Hyman, 2008).

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 Bao, Yeqing

and Sheng (2011) store image on improving the

perception about private labels.

Extrinsic cues and Intrinsic Cues
Consumers

rely more on extrinsic cues for assessing the

product quality (Dick, Jain, Richardson, 1994).

Extrinsic

cues like packaging, brand name and price are

important for the success of private labels.

Intrinsic

cues : Minimal difference in ingredients for PLs

and NBs (Dick, Jain and Richardson, 1994).

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Positioning
Base

demands for two national brands are equal - store brand

to be positioned in between the two brands.

In

categories where first national brand one is stronger than

other national brand target the First NB. (Hoch, Raju,

Sayman (2002) .
Manufacturer

brands are horizontally undifferentiated then

retailer has to differentiate private labels.( Choi and Coughlan

(2004)).
Private

label should be imitate the stronger brand or the

weaker ones (Choi and Coughlan, 2006).

Feature

differentiation.

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 Benito

(2010) stressed the importance of positioning strategy

based on the price than quality which can be favourable for the
private label.
Other Variables
Liu,

Wang and Cheng (2008) considered income as one of the

major factor influencing the attitudes towards private labels.

Income
Store

determine the private label purchase (Beneke, 2009).

visit frequency is positively associated with store brand

purchase (Wanga, Kalwanib and Akcura, 2007).

Familiarity

with private labels was also one of the major

factors for private label purchase (Dick, Jain, Richardson,

1996).

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Research Gaps
Private

label purchase is determined by the no of variants

private labels are offering.

In

store promotions can be vital for making the purchase

decision of store brands.

Shelf

space allocation and display is also important for

categories like apparel, personal care products.

Cost

of Living as a factor.

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Conclusion
Private

labels or store brands increased consumer choice in

terms of price, variety and quality.

Quality

parameters, value for money and variants available

important for purchase.

Consumer

perceptions and attitudes governed by this factors

which are detrimental

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THANK YOU

Jayakrishnan.S
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