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1. Research Paper (Abstract) for ICBM 2008 International Conference on
Brand Management November 21-22 2008, IMT Ghaziabad
AN ANALYSIS OF CONSUMERS’ BRAND PREFERENCE ON NATIONAL VS.
STORE BRANDS
Authors:
*Sonal Gupta
Lecturer: School of Management,
Swami Vivekanand College of Engineering
Indore (M.P.)
Affiliated to Devi Ahilya Vishwavidhyalaya, Indore
9302589082, 0731-2320032, sonalagrawal519@yahoo.com
**Dr. I.C. Gupta
Director, Prestige Institute of Management and Research, Indore (M.P.)
9993575899, director@pimrindore.com
***Dr. R. K. Jain
Professor, Marketing: Prestige institute of Management and Research, Indore (M.P.)
94259-10111, greetrk@gmail.com
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2. ABSTRACT
According to a Euromonitor study the global store brand market was estimated to be worth
$1,411 billion in 2005 and is growing at 6% per annum. In a separate AcNielsen store brand
study, two-thirds of the global consumers said they considered “super market own” or “private
label” brands to be a good alternative to other brands, and supermarket own brands are usually
extremely good value for money. Organized retail currently forms only about 3.59% of total
retail in India but its share will leap to 28% by 2017, according to a study by Technopark says
that overall store brands already form 19% of the total market share in India.
As the organized retailing is growing in India store brands are capturing the market share from
national brands. It is estimated that they are going to give a tough fight to store brands. Almost
every organized retail player is carrying its store brand and trying to increase the number and the
categories of store brands. Store brands provide value for money to customers and higher margin
to retailers. It is a way to provide differentiation from one retailer to other by having store
brands.
Store brands have changed the dynamics between manufacturer and retailer. In this scenario it
has become very essential to understand the category specific factors which affect the consumer
preference for store brands versus National brands.
This paper aims to investigate the consumers’ brand preference for National versus store brands
in Food & Grocery category. Food and Grocery is taken for the analysis of consumer preference
of store brands versus national brands in this study, as various store and National brands are
present in this category.
Key words: Store brands, National brands, Organized retailing
INTRODUCTION
Global retail consultant KSA Technopark have estimated Indian retailing to be a US $ 200
billion industry of which organized retailing makes up 3% or US $ 6.4 billion. By 2010
organized retail is projected to reach US $ 23 billion that is about 9% of total retail sales. In
developed markets of west store brands had accounted for nearly 13% of the supermarket sales
in the US & nearly 20% of the supermarket sales in Canada during 1990-91.
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3. In India too store brands started gaining share from the national brands. During the year 03, Big
Bazaar of Pantaloon group had 25% of its sales coming from store brands and it earned 5%
higher gross margin on them than other popular brands.
The growth and development of retail brands has experienced considerable change over the last
few years, Retailers offer quality product, design and packaging and use all the 4 P’s very
effectively like the manufacturers brand. Consumer perception about the store brands has also
changed from low quality products to premium brands
There has been significant increase in private labels recent years worldwide. Store brands are
growing faster than the manufacturer’s brands. It can no longer depend on the price advantage to
fight branded products. It has improved on quality & offers a value proposition to the customers.
Some store brands have been able to positioned themselves as premium brands
Store brands offer the consumer greater value, while increasing the profitability of the category
as a whole and giving greater bargaining power to retailers.
Almost all large global retailers like Tesco, Sainsbury & Wal- Mart have their own store brands.
They give better margin to retailers than selling brands from other manufacturers the retailers
make the brand and price it below competitors. Since the stores are retailer owned, they can give
the store brands ample display, saving on marketing & other intermediary costs.
About 35-40% of the total merchandise at Reliance hypermarts is likely to be its own brands.
Piramyd retail substantially increasing the share of store brands to enhance the margin of store
brands contribute a larger share of the profit margin for the retailer with saving on transportation,
marketing and advertising. Store brands are giving greater competitive threat to nation al brands.
The aim of paper is to bring in light the growing importance of private labels. Very less amount
of work has been done to understand this area. Though they are about to become a major threat
for the manufacturers, they are comprising various advantages for the consumers. This paper will
help in analyzing the factors which influence the consumer brand preference for national vs store
brands.
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4. OBJECTIVES
1. To investigate consumer brand preference for national versus store brands in Food &
Grocery category
2. To study the influence of Quality, taste, price sensitivity, packaging on brand preference
for national versus store brands in food & grocery category
3. To study the relationship of income, age, and gender between brand preference for
national brands versus store brands
HYPOTHESIS
H0: Quality, taste, price sensitivity and packaging factors have no influence on brand preference
for national brands versus store brands in food & Grocery category
H1: Quality, taste, price sensitivity and packaging factors influence brand preference for national
brands versus store brands in food & Grocery category
H0.1 There is no relationship between income level and brand preference for national versus
store brands in food and grocery category.
H1.1There is a relationship between income level and brand preference for national versus store
brands in food and grocery category.
H0.2 There is no relationship between age and brand preference for national versus store brands
in food and grocery category.
H1.2There is a relationship between age and brand preference for national versus store brands in
food and grocery category
H0.3 There is no relationship between gender and brand preference for national versus store
brands in food and grocery category.
H1.3There is a relationship between gender and brand preference for national versus store brands
in food and grocery category.
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5. LITERATURE REVIEW
Ac Nielsen the Power of Private Label (2005) An insight into consumer attitudes, two thirds of
global consumers consider supermarket own or private label brands to be a good alternative to
other brands. The study was done in developed markets of Europe, the Pacific and North
America. With a global average of 69% agreeing they were extremely good value for money,
and 62% considering their quality to be at least as good as the big brands. Study reveals that the
image and education the biggest challenges for retailers in developing markets.
Ergin Akagan Elif (2007) Analysis of Consumers’ brand loyalty on National versus store
brands
Compare the influence of quality, price sensitivity and brand knowledge factors on brand loyalty
for national versus store brands. The results reveal that the consumer s’ brand loyalty for national
brands are quiet strong compared to store brands
R.C. Natrajan, TAPMI analyzed the challenges and opportunities from own store brands, As
per the analysis, private labeling occurs mainly in destination categories such as cereals & pulses
in FMCG sector, it will not be long before the mega store move towards labeling other packaged
products as well. Brand loyalty will face assault not only from other brands but also from store
loyalty, aiding the growth of private labels.
Such a growth of private labels offers challenges to the national brands in terms of the element of
marketing strategy. It also provides the manufacturers of national brands the opportunity to
1. Move away from mass marketing to segment in specific market area
2. Utilize their production capacity better by tying up with the retail stores to pack their
brands under the store labels.
Store brand entry
1. Increases consumer choice in store
2. It makes the national brands to switch to just price and to avoid near monopoly pricing
K. Suhir, and Debabrata Talukdar, (2004), developed two sets of measures of store patronage;
to study does store brand patronage improve store patronage. Based on store revenues and store
profits from a household and the other on share of store revenue and store profits due to a
household. They found that revenue falls when store brand share increased, but profit rise under
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6. sets of measures. They found that greater breadth of store brand purchases leads to greater
revenue and profits. This conclude that store brand contribute to greater store differentiation
rather than increased price sensitivity in the market.
METHODOLOGY
The study is based on descriptive research design. Products like pulses, rice, ready to eat
packaged food in the category of food & grocery were taken. Mall intercept interview were
conducted to collect the data for the study by using questionnaire as the research instrument
The sample of 100 respondents was taken from Indore. Customers from various retail chains
like Reliance Fresh, Food Bazaar, Big Bazaar, Pakiza, Vishal Mega Mart & India Bulls Mart
participated in the survey. Customers within the age group of 18-65 were involved in the study.
Frequency Distribution of the variables was conducted to identify the profiles of the respondents
DATA COLLECTION AND ANALYSIS
Data was analyzed by Multi linear Regression to test whether the quality, taste, price sensitivity
and packaging factors have any influence on brand preference for national brands versus store
brands in food & Grocery category. T-test was performed to test whether there is a relationship
between age, gender, income level on brand preference for national versus store brands.
RESULTS AND IMPLICATIONS
Analysis of data shows that customers have strong brand preference for national brands.
Customers feel that quality, taste & packaging of national brands is better than the store brands
while store brands are priced lower than the national brands.
Table1.1: Consumer’s Demographic Profile (Income)
Income (Rs.) Frequency Percent
Below 20,000 46 46
20,000 and above 54 54
Table1.2: Consumer’s Demographic Profile (Age)
Age Frequency Percent
Below 30 yrs 56 56
30 and above 44 44
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7. Table1.3: Consumer’s Demographic Profile (Gender)
Gender Frequency Percent
Male 50 50
Female 50 50
Table2: Multi Linear Regression Analysis for brand Preference for
National versus Store Brands
Coefficientsa
Unstandardized Standardized
Coefficients Coefficients
Model B Std. Error Beta t Sig.
1 (Constant) 15.041 1.597 9.416 .000
QUALITY 1.192 .303 .290 3.929 .000
PRICE .913 .288 .218 3.167 .002
TASTE 2.188 .321 .508 6.816 .000
PACKAGIN .873 .298 .203 2.930 .004
a. Dependent Variable: BRANDPRE
Hypothesis H1 was tested to find out whether Quality, taste, price sensitivity and packaging
factors have any influence on brand preference for national brands versus store brands in food &
Grocery category. The testing of this hypothesis shows that factors like quality price taste and
packaging influence the brand preference for national versus store brands. These four
independent variables are able to explain 55.4% variation of the overall variation in brands
preference for national versus store brands(R2=0.554, F= 29.423, p<0.01), this indicate that in
addition to these variables there may also be other factors which influence the brand
preference.
t-test was performed to test whether there is a relationship between Income, age, gender and
brand preference for national versus store brands.
(n1σ 12 + n2σ 2 2 ) x1 − x2
S= & t=
n1 + n2 1 1
S ( + )
n1 n2
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8. H0.1 hypothesis was accepted as │tcal│=1.22< ttab=1.96, shows there is no relationship between
income and brand preference for national versus store brands.
H0.2 is also accepted as │tcal│=1.662<ttab=1.96, there is no relationship between Age and brand
preference for national versus store brands.
H0.3 is rejected as │tcal│=2.075>ttab=1.96., shows there is a relationship between gender and
brand preference for national versus store brands.
Table 3: t-test Analysis for relationship between income, age and gender for
brand Preference for National versus Store Brands
x1 x2 σ1 σ2 S tcal
Income 28.73 29.96 4.914 5.043 4.984 − 1.223
Age 28.66 30.34 5.210 4.590 4.95 − 1.662
Gender 28.38 30.42 4.927 4.903 4.915 − 2.078
Besides the factors discussed above other factors as reliability, hygienic, freshness and effect of
advertisement also influence the brands preference for national versus store brands. As national
brands spend heavily on advertisement they might influence the customer perception about the
quality and the benefits of the product while store brands can not spend on advertisement as it
would lead to increase average cost, so only those customers who visit the store can be
influenced.
Similarly reliability on National brands is higher than the store brands as the store brands has
always been considered as low quality products though the perception has changed significantly
but it will take some time in changing the overall perception.
LIMITATIONS AND SCOPE OF RESEARCH
Private labels are setting their foot not only in Food & Grocery but in other categories as well.
This research has limitation that it is carried out for the category of Food & Grocery only with
small sample sizes. Similar kind of research with extended version can be conducted on larger
sample sized with other categories. Brand preference for national versus store brands varies not
only with the category but also products within the category. Various product specific researches
could also be performed to have an in depth insight about the store brands. Factors for the study
can also be further added for clearer picture.
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9. BIBLIOGRAPHY
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