An empirical investigation of category-level effects of consumer factors on private label purchase

Chen, Shaoshan
Johnston, Charles
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Master of Business
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Auckland University of Technology

Private label brands have been examined in the literature for more than forty years (Narasimhan and Wilcox, 1998). Due to the rapid growth of private-label market share, researchers have looked into different influential factors in attempting to find out the reasons behind the success of these store products. As consumers reflect the demand side of fast-moving goods, their perceptions critically affect decisions on brand selection, and therefore the performance of the brands.Although the topic of private labels has long been studied, the volume of private-label research is less than that of national-brand studies. Findings from the extant studies of private labels have provided valuable consumer insights for marketing scholars and practitioners to better develop branding theory and strategies. However, issues still exist in the literature, in particular, concerning category-level influences of consumer factors such as perceived risk and attitude. Risk perception and attitude are important explanatory constructs for consumer proneness towards buying private labels. Moreover, category-level differences are stated as the most critical source that can explain the variations in the performance of private labels (Batra and Sinha, 2000; Dhar and Hoch, 1997).This research replicates Batra and Sinha's (2000) study which examined the categorylevel effects of different determinants of perceived risk on consumer preferences for buying private labels. The purpose of this research is to re-examine their hypotheses and to investigate other attitude determinants which Batra and Sinha did not study. In addition, this study also investigates the impact of demographics on the purchase of private labels.A mall-intercept survey was conducted to test the hypotheses. The results indicate that perceived risk and attitude determinants such as quality variability, price consciousness, price-quality association and brand loyalty influence significantly consumers' propensities to buy private labels. Furthermore, these private-label propensities vary across product categories due to category-level variations in perceptions and attitudes. Consumers are more likely to buy private labels in categories where they perceive lower quality variability across brands, where they have higher price consciousness, where they believe weaker price-quality association, and where they have less brand loyalty. Moreover, education and income are also identified as significant indicators of private label buyers.Findings from this study suggest that category-level analysis of consumer factors could more effectively answer the question why private label success varies across different categories. A better way for national-brand manufacturers and retailers to compete against each other is the product quality improvement. Manufacturers should try to keep the quality level of national brands as far above that of private labels as possible, whereas retailers should attempt to reduce the quality gap for their private label brands.

House brands , Brand name products , Consumer behavior , Consumers , New Zealand , Attitudes , Business
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