Luận văn a study on purchase intention, satisfaction and loyalty of customers towards private label brands

A STUDY ON PURCHASE INTENTION, SATISFACTION AND LOYALTY OF CUSTOMERS TOWARDS PRIVATE LABEL BRANDS A THESIS Submitted By GIJO GEORGE REG.NO 7832... 4.5 Factors influencing purchase of

A STUDY ON PURCHASE INTENTION,

SATISFACTION AND LOYALTY OF CUSTOMERS

TOWARDS PRIVATE LABEL BRANDS

A THESIS

Submitted By

GIJO GEORGE REG.NO 7832

MANONMANIAM SUNDARANAR UNIVERSITY

TIRUNELVELI - 627 012

CERTIFICATE

The research work embodied in the present Thesis entitled “A STUDY ON

CUSTOMERS TOWARDS PRIVATE LABEL BRANDS” The work reported herein is original and does not form part of any other thesis or dissertation on the basis of which a degree or award was conferred on an earlier occasion or to any other scholar

I understand the University’s policy on plagiarism and declare that the thesis and publications are my own work, except where specifically acknowledged and has not been copied from other sources or been previously submitted for award

ACKNOWLEDGEMENT

I wish to record my deep sense of gratitude and profound thanks to my

research supervisor Dr Herald M Dhas, Associate Professor, Dept of Business

Administration Scott Christian College, Nagercoil for his keen interest, inspiring guidance, constant encouragement with my work during all stages, to bring this thesis into fruition

I am extremely indebted to Dr S.A Senthil Kumar, Reader, Dept of

Management Studies Pondicherry University for his valuable suggestions and support during the course of my research work

I also thank the faculty and non-teaching staff members of the Department

of Management Studies, Manonmaniam Sundaranar University, Tirunelveli, and Faculty members of Department of Management Studies, Scott Christian College, Nagercoil for their valuable support throughout the course of my research work

GIJO GEORGE

REFERENCES

APPENDICES

i QUESTIONNAIRE

ii LIST OF PUBLICATIONS

iii REPRINT OF JOURNAL PUBLICATION

iv BIO-DATA

4.5 Factors influencing purchase of private label brands 104

4.7 Factor Analysis on perception towards private label brands 109 4.8 Factor analysis of Attitude toward private label products 112

4.9 Mean and Standard Deviation For Perception Towards Private

4.10 Mean And Standard Deviation For Attitude Towards Private

4.11 Mean And Standard Deviation For Purchase Intention 118

4.12 Mean And Standard Deviation For Private Label Brand

4.13 Mean And Standard Deviation For Private Label Brand Loyalty 120 4.14 Perception towards private label brands based on gender 121 4.15 Perception towards private label brand based on marital status 122 4.16 Perception towards private label brands based on family type 124 4.17 Attitude towards private label products based on gender 125 4.18 Attitude towards private labels based on marital status 126 4.19 Attitude towards private label brands based on family type 127

4.20 Purchase intention towards private label brand apparels based on

4.21 Satisfaction towards private label brand apparels based on

4.22 Loyalty towards private label brand apparels based on gender,

4.23 Analysis of variance on Perceptions towards private label brands

4.24 Analysis of variance on Perceptions towards private label brands

4.25 Analysis of variance on Perceptions towards private label brand

4.26 Analysis of variance on Attitude towards private label brands

4.27 Analysis of variance on Attitude towards private label brands

4.28 Analysis of variance on Attitude towards private label brands

4.29 Analysis of variance on Purchase intention towards private label

brands based on the age, Occupation and Monthly Income 141

4.30 Analysis of variance on satisfaction towards private label brands

based on the age, occupation and monthly income 143 4.31 Analysis of variance on Loyalty towards private label brands

based on the age, occupation and monthly income 144 4.32 Shopping pattern and gender age, marital status, family type,

4.33 Correlation between the Variables of Perception Attitude,

purchase intention, purchase behaviour and satisfaction 151 4.34 Multiple regression analysis of the criterion variable purchase

intention towards private label brand products and predictor

variables perception towards private label brand products

153

4.35 Multiple regression analysis of the criterion variable satisfaction

towards private label brands and predictor variables perception

towards private label products

155

4.36 Multiple regression analysis of the criterion variable Loyalty

towards private label brand products and predictor variables

perception towards private label brand products

157

4.37 Multiple regression analysis of the criterion variable Purchase

Intention towards private label brand products and predictor

variables Attitude towards private label brand products

159

4.38 Multiple regression analysis of the criterion variable satisfaction

towards private label brand products and predictor variables

Attitude towards private label brand products

161

4.39 Multiple regression analysis of the criterion variable Loyalty

towards private label brand products and predictor variables

Attitude towards private label brand products

163

4.40 Multiple regression analysis of the criterion variable satisfaction

towards private label brand products and predictor variables

purchase intention towards private label brand products

165

4.41 Multiple regression analysis of the criterion variable Loyalty

towards private label brand products and predictor variables

purchase intention towards private label brand products among

shoppers based on gender

166

LIST OF ABBREVIATIONS

X2 - Chi-Square for the specified Confidence Level

i X - Mid – point of the ith class interval

i f - Frequency of the ith class interval

Xi - The ith observation

f i - The frequency of the ith observation

MSx - Mean square due to X

MSerror - Mean square due to error

O i - The number of observations of type i

Ei - The expected (theoretical) frequency of type i

SEM - Structural Equation Modeling

CHAPTER - I INTRODUCTION

RETAIL INDUSTRY

Retail industry in India is one of the fastest growing industries in the world Retail industry in India is expected to grow to US$ 1,100 trillion by 2020 from US$ 672 billion in 2017 In India, it is the largest among all industries accounting for 10 per cent of the country’s GDP and employs around 8 per cent of the workforce India’s retail sector is witnessing accelerated growth, with retail development taking place not just in major cities and metros, but also in Tier-II and Tier-III cities India’s retail sector now stands at the cusp of fast-paced growth, one that could see it emerge as one of the fastest growing retail markets across the world India has been ranked number one in A.T Kearney’s 2017 Global Retail Development Index, which ranks the top 30 developing countries for retail investment worldwide

India is the fifth largest favorite retail destination globally The country is among the highest in the world in terms of per capita retail store availability India’s retail sector is experiencing exponential growth, with retail development Healthy economic growth, changing demographic profile, increasing disposable incomes, urbanisation, changing consumer tastes and preferences are the other factors driving growth in the organised retail market in India

Retail is the first stage of any economic activity and occupies a consequential place in the economy The business activities involved in retailing

are selling goods and services to consumers (Pradhan, 2010) The Indian retail

market is highly broken-up with 94 percent business coming from unorganized retailing and 6 percent share from organized retailing Growth of the industry is fortified by vigorous macroeconomic conditions, including 6 to 7 percent lift up in GDP, rapid urbanization and higher disposable incomes

India is still largely an unorganized retail market where maximum retailers operate in less than 500 sq ft of space indicating a gigantic potential market opportunity for the organized retailers Organized retail share would reach 25% by

2018 as per a study done by Technopak and according to IBEF, by 2020 retail market in India is projected to reach USD 1.3 trillion from USD 672 billion in

2016 India’s retail market is estimated to rise based on the factors like rising incomes and lifestyle changes by middle class and increased digital connectivity While the overall retail market is expected to grow at 12 per cent per annum, modern trade would expand twice as fast at 20 per cent per annum and traditional trade at 10 per cent Indian retail market is divided into “Organised Retail Market” which is valued at $60 billion which is only 9 per cent of the total sector and

“Unorganised Retail Market” which constitutes the rest 91 per cent of the sector

Current trends and future possibilities show that the Government of India has taken diverse plans to improve the retail industry in India Some of them are listed below:

• Changed the Foreign Direct Investment (FDI) rules in food processing, in a bid to permit e-commerce companies and foreign retailers to sell Made in India consumer products

• Allowed 100 per cent Foreign Direct Investment (FDI) in online retail of goods and services through the automatic route, thereby providing clarity

on the existing businesses of e-commerce companies operating in India

Increasing participation from foreign and private players has given a boost

to Indian retail industry India’s price competitiveness attracts large retail players

to use it as a sourcing base Global retailers such as Walmart, GAP, Tesco and JC Penney are increasing their sourcing from India and are moving from third-party buying offices to establishing their own wholly-owned sourcing and buying offices The Indian Consumer Market is possibly going to grow four times by 2025

as per McKinsey report ‘The rise of Indian Consumer Market’

The retail environment is highly competitive and retailers are competing for customers, suppliers, locations, services, and merchandise with other traditional store-based retailers, as well as internet and catalog retailers To face these

competitive challenges, retailers are trying to gain differential advantage (Burt and Mavrommatis 2006) To accomplish this objective, retailers have recognized that brands constitute essential resources for creating and supporting competitive

advantage and this lead to a major challenge of building a strong retail brand (Kent 2003; Grewal, Levy et al 2004)

National brand manufacturers are facing the severe competition of store brands, and retailers use private labels as defensive mechanisms from powerful

global and national brands, to raise mark ups and consumer store loyalty (Ailawadi

et al., 2008) AC Nielsen, 2005 report confirms that the market share of private labels ascend around the world reaching significant levels across Europe and North

America Store Brands

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Figure 1.1 Evolution of Indian retai

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RETAIL FORMATS

FOOD AND GROCE

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Figure 1.2 Retail Formats in India

ERY RETAILING IN INDIA

cery account for the largest share in revenue inlargest producer of food Food and grocery ion representing 16 percent of India’s GDP Byestimated to constitute 66 percent of the total and forecast to grow at a CAGR of 12.0%

50,226 billion by 2021 Rapid urbanizat, and rising concerns about food safety are

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than 15 million mom-and-pop stores On the other hand, the organized sector includes gourmet stores, department stores, discount stores, supermarkets and hypermarkets, e-tailers and cash-and-carry formats

Emerging trends in the Indian food market are the expansion of imported food categories and products; and the incremental popularity of gourmet food market amongst Indian consumers

Key Challenges in Food Retailing

The Indian consumer, unlike his Western counterpart, has a penchant for freshly cooked food over packaged food This is a result of dietary patterns, poor electricity supply, low penetration of refrigerators and a family structure where one

of the primary roles of the housewife is feeding the family The Indian consumer is extremely value conscious A TSMG study indicates that packaged food players need to drive down prices by almost 35-40% to be comparable on cost with home-made food

• Diversity of tastes and preferences

Multiple cultures, languages and religions have a huge bearing on the tastes and preferences of the Indian consumer This will pose a challenge for players aspiring to develop a pan Indian presence

• Willingness to travel

Given the current density of retail outlets in India, retailers will have to motivate the consumers to trade convenience with price, range and ambience

• Sourcing base and efficiency

The fragmented agri supply base coupled with an inadequate legal framework make it difficult for retailers and food processors to procure quality produce at competitive costs directly from farmers The small size of the food processing industry further limits the supply options

• Real estate availability and cost

Rentals account for 7-7.5% of the total costs for organized retail in India against global benchmarks of less than 3% Real estate availability and costs will continue to remain a challenge in the retail industry with factors like adequate parking, ambience and proximity being the key drivers of footfalls

As organized retail expands, there is expected to be a dearth of skilled manpower The lack of institutions and courses for different aspects of retail management will have an impact on the overall supply of quality manpower

EMERGING TRENDS IN FOOD RETAILING

Globally, retailers have realized that size drives profitability, not just through economies of scale in operations but also through higher bargaining power leading to better margins While many players are entering the retail space in India

currently, the growth stage will be characterized by rapid expansion and consolidation among these players

• Rise of organic foods and health and wellness segment

Consumer attitudes and preferences are undergoing a shift owing to factors like increased disposable incomes, changes in lifestyle patterns, shift in age structure, increased number of working women and multi-cultural exposure These would lead to increasing health consciousness in the future Organic foods and wellness products would be emerging opportunities in the years to come

• Increasing focus on private labels

As competition in the organized retail market increases, discounts and promotions are expected to play a critical part in generating footfalls To counter the impact on profitability, organized players will find it more attractive to promote private labels or store brands given their higher margins The consumer too would benefit from lower prices

MAJOR PRIVATE LABEL BRAND FOOD AND GROCERY IN INDIA

• Aditya Birla Group (More)

Aditya Birla Retail Limited, a $41 billion corporation, is the retail division

of Aditya Birla Group In 2007, with the acquisition of Trinethra Super Retail, it entered into food and grocery retail sectors and from that point forward, it extended its retail locations everywhere throughout the nation in two formats ― Supermarkets and Hypermarkets under the brand ‘More’

There are 495 supermarkets throughout the nation More Quality First supermarkets are strategically placed in neighborhoods to address the issues of buyers It offers an extensive variety of fresh vegetables and fruits, groceries, personal care products, home care, general merchandise and a basic range of apparels

Private Label Brands of ABRL are VOW, Kitchen’s Promise and Feasters are the in-house brands which convey world-class quality to consumers In-house brands are available across various categories like Prarthana, More Choice, More Daily, More Life, etc

ABRL is the first Indian food and grocery retailer to receive the certificate of Food Safety Management System (FSMS) The award is given for the high quality standards in manufacturing, storage, distribution and sales of food

• Future Retail (Food Bazaar)

The blend of businesses of Future Retail Limited and Future Enterprises is driving in seven retail formats - Big Bazaar, Easy Day, and Home Town, eZone, Food Bazaar, fbb and Food hall There are 738 retail locations in 221 urban areas, spread over more than 13 million square feet of retail space

Food Bazaar is a large retail store in the format of supermarket In Food Bazaar, there is a blend of Western and Indian values for the fulfillment and solace

of customers Western values like comfort, neatness and cleanliness are given by pre-pressed wares and Indian values like ‘see-touch-feel’ are given by exhibiting staples in open Food Bazaar gives undetectable blend of a great Indian bazaar and

International market atmosphere Future Consumer Enterprise Limited (FCEL) is the FMCG division of Future Group FCEL’s contributions incorporate classes like staples, dairy and bakery, home and personal care and value added products

Its private label brands include Golden Harvest, Nilgiris, Desi Atta, Karmiq, Sangi’s Kitchen, Clean Mate, Care Mate and so on The organization has

a far reaching horticultural deliver sourcing base and assembling offices in Food Park Tumkur, Karnataka, alongside access to around 2000 present day retail locations like Big Bazaar, Easy Day, Foodhall, Aadhaar, Nilgiris, Annapurna Bhandaar, Star Bazaar and so forth

The organization has the capacity and aptitude to take off framework for around 3 million square feet of new retail space in different store sizes and configurations everywhere throughout the nation The organization will bring about capital use for setting up the new stores and for recharging of existing stores

• Reliance Retail (Reliance Fresh)

In 2006, Reliance Retail started its venture with its first Reliance Fresh store Now there are more than 500 Reliance Fresh stores across the country wherein excess

of 200 metric tonnes of foods grown from the ground and 300 metric tonnes of vegetables are sold every day Its product offering incorporates fresh fruits and vegetables to dairy, grains to spices, prepared food and refreshments to home and individual care products Reliance Fresh is the India's leading neighborhood retail store with the highlights of freshness and savings It is a one-stop-shop with the three key guarantees- Fresh Hamesha, Available Hamesha and Savings Hamesha

The private label brands of Reliance Fresh are Reliance Select, Reliance Value, Reliance Tea, Reliance Honey and 'Dairy Pure' Over the time, consistently Reliance Fresh has appeared in the list of ‘Most Trusted’ Service brands in India

by Brand Equity and is positioned as second In Reliance Fresh, there is a direct connection with a large number of farmers and small sellers in a farm-to-fork model The linkage brings changes in the quality of life of the farmers and also enhancing the quality of produce, reducing wastage by curbing the time to move fresh produce and dropping intermediaries in the value chain Now, the strategy of Reliance Fresh is to re-launch its stores as Reliance SMART which offers plenty in choice and straight big value and savings

PRIVATE LABEL

Private-label products or services, also known as “phantom brands", are those manufactured or given by one company for offer under a store's brand name Private-label products (that are bought and sold) and services are available in a wide range of businesses from food to cosmetics to web hosting They are often positioned as lower-cost other choices to national or international brands Some private label brands have been positioned as premium brands "higher price/higher cost" to fight against existing "name" brands Private labels referred to as home brands, own brands, own labels, store brands, retailer brands and probably more Kumar and Steenkamp define a private label to be any brand that is owned by the store, retailer or the distributor and is sold only in its own outlets

The Private Label Manufacturers Association (PLMA), founded in 1979 in

US, states that “Private labels products include all merchandise sold under a retailer’s brand and brand can be the store’s own name or a name created exclusively by that store Sometimes, a store may belong to a wholesale group that owns the brands that are available to only the members of the group.”

Private labeling is when a retailer purchases products from various manufacturers and then markets those products under its own brand Private label products (that are bought and sold) are often referred to as "store brands," instead

of the "name brands" that are sold under the brand name of the manufacturer Private label products tend to be less expensive than competing name brands, mostly because of reduced advertising expenses

Private labeling gained importance during recession, the time period when people and businesses made less money in the late 1980s, when many people chose

to give up expensive name brand products in an effort to save money, and many stores began to market store brands in an attempt to increase sales Later in 1990s consumers’ confidence rebounded but consumers’ loyalty to name brands did not Today, private labeling is a business practice among supermarkets, drugstore chains, and mass merchandisers These retailers or stores sell hundreds of different items under their own brand names, from basic household items and food to specialty items and even clothing A survey by the Private Label Manufacturers Association pointed that sales of private label merchandise topped $43 billion in

1998

In the early days, private label products were almost completely cheap imitations of the leading brands, even copying the colors and designs of the major competitors' packaging Even though court rulings have supported right of private labelers to pretend to be the packaging of leading brands, private label stores have now moved away from fake copy or pretending to be someone and toward attractive packaging of their own design Some stores believe that they need eye-catching packaging because they do not do much advertising, and instead depend

on consumers paying attention of their offerings as they walk through store aisles Over time, many consumers began to think about store brands on the same level as national brands as far as quality, performance, and happiness were concerned Another important thing concerns the type of products that are sold as store brands Earlier most private label products used to be the most fundamental household products However, the areas of growth over the last few years have been in higher price/higher cost and super-high-quality products The growth in high-quality brands shows that today's consumers are value-conscious and they're still very particular about product quality

The perpetuated growth of private labels has emboldened stores to give much more attention to developing store brands to make blissful the value-conscious consumers and make higher margins

TYPES OF PRIVATE LABEL BRANDS

Retailers incline to concentrate on any or all of four key groupings of private label lines These are generics, copycats, premium store brands and value innovators

Generics

Private labels first came onto the scene several decades ago as cheap, inferior products They were presented as ‘generics’, often not having the name of the store, but simply the name of the product, such as ‘milk’ or ‘butter’, in plain script on a white plain background Mostly basic food products, food in cans and paper products- they were offered at low prices, competitive with the lowest priced product in that category The product range appealed to the budget-sensitive

consumer They were seen as low quality but cheap Retailers rarely run price promotions because the product is cheap already and there is usually only one product to choose from

Copycats

Copycat store brands carry the name of the store and tend to have packaging and price points very close to the products that they fight against The stores tend to target labeled products that are already successful, then produce a copycat that has almost the same ingredients, packaging and pricing Copycat stores can in that way cash in on the success of the labeled product without having the costs connected with developing the product and researching the market Marketing costs are also kept down since the product is instantly recognisable as being connected with the product it is copying With copycat brands, there is no cost of failure to soak up since only successful products are targeted The store tends to produce almost the same product and offer it at a lower price than the branded product and the message to the customer is that it is as good but cheaper The advantages of having copycat brands is not only to make profit on the sale of

the product itself, but it creates competition for the existing manufacturer branded products as well as increasing the store's bargaining power with the manufacturers, since the store has the option to increase its own brand in competition with the original brands

Premium store brands

As retailer success plans have developed, the approaches have evolved to incorporate premium store brands Retailers have seen the opportunity to differentiate their products and thereby target a whole new section of the market The latest trend is to establish high quality products with distinctive packaging, presented as a whole incipient product line by the retailer, targeted at competing with the top brands in the range There are two types of premium brands: the premium private label which is exclusive, higher in price, and superior in quality to competing brands; and the premium store brand which is promoted as being equal or better in quality to the competing brands, while being more money saver

Value innovators

Value innovators own labels are the fourth main category of private labels The retailers following this approach have focused on cutting down costs and processes to simplify the production and marketing of product ranges, so that a good quality product can be offered at very low prices The value innovator approach differs greatly to the generic, copycat and premium label approaches There are some key principles that must be adhered to for this approach to be

successful They are (i) Limited number of products (ii) Low costs of production and marketing (iii) Good quality products at low prices

THE GROWTH OF PRIVATE LABELS IN INDIA

Private Labels are a win-win solution for retailers and customers in the current retail market structure While retailers expect better bargaining power with their vendors, in turn better margins and control over their merchandise mix, customers get a wider range, better quality and good prices for the products The growth of private labels is directly linked to the growth of modern retailing Retailers need to gain customer confidence in its offerings so as to successfully introduce private labels Private label’s share in the modern retail in India is about 7%, but it is as high as 40% in the European countries, and as low as less than 1%

in China

Indian retail industry has visually perceived some ups and downs over the past However, with unstoppable effort by the organized sector, the retail industry has now become well entrenched The private labels or store brands are now common phenomenon in the retail market Not to be left behind, even the Apollo Pharmacy and Guardian Pharmacy introduced their private labels in 2010

in beauty and personal care products

Though the growth of private labels is seen across categories, growth in grocery is boldly and clearly visually perceived in supermarkets at 15% and hypermarkets accounting for 30% of total value sales In a report published in 2012

by the Technopak’s Advisors Private Ltd, food and grocery segment is a key driver for private labels accounting for 20-25 percent, and sometimes even 40 percent, of

all categories in private labels and margins in private labels in staples like sugar, groceries can range between 15-25%.

In 2014, the private label market in India was estimated at Rs 13 billion, which accounts for 10-12% of the organised retail in India Stores such as Pantaloon, Trent, Customers Stop and Spencer’s have better focus on private label retailing Private labels constitute 90% of Trent’s, 80% of Reliance’s and 75% of Pantaloon’s overall sales Aditya Birla Retail plans to increase the share of own brands in sales from the present 3% to 10% in the next 2-3 years

According to industry estimates, private label margins for electronics goods are up to 20% higher compared with average national brands This lifts up to 30-50% when it comes to clothing Department stores tend to price their products at par with standard-priced products of some leading brands in India, while electronics and appliance specialist stores, as well as health and beauty specialist retailers, generally price their products lower than the leading brands in order to create volume sales (Euromontior, 2012)

Customers have begun to enjoy private labels due to better quality, high food safety standards, international look and feel of products, customized packaging created after customer feedback and the believability of the store, said William Savage, chief merchandising officer, Bharti Walmart, which has Private labels owned by retailers such as Bharti Retail, Future Group and Aditya Birla Retail outsell several national brands in certain home care and food categories at their retail stores even as big brands push more sales through modern retail In

India, some of the most important retailers who have come up with their own brands are:

Reliance Fresh is a subsidiary of Reliance Retail Ltd, which in turn, is a subsidiary of Reliance Industries Limited Reliance Retail Ltd was established in

2006 The first Reliance Fresh store was unveiled in October 2006 in Hyderabad Reliance Fresh is the pioneer for the multi-format retail initiative of Reliance and involves an investment of Rs 25,000 crore Reliance Fresh stores stock in-house brands like Reliance value grains, pulses, rice and spices, Reliance Select tea, noodles, jam, honey grains, dry fruits, dals as well as healthy life fortified grains, flours and pulses

Customers Stop is an Indian department stores promoted by the K Raheja Corp Group (Chandru L Raheja Group), started in the year 1991 with its first store

in Andheri, Mumbai Customers Stop is one of the leading retail stores in India Customers Stop began by operating a chain of department stores under the name

"Customers Stop" in India Customers Stop has 35 stores across the country and three stores under the name Home Stop Customers Stop retails a range of branded apparel and private label under the following categories of apparel- footwear, fashion jewelry, leather products, accessories and home products These are complemented by cafe, food, entertainment, personal care and various beauty related services

Aditya Birla Retail Limited is the retail arm of Aditya Birla Group, a $41 billion corporation The Company ventured into food and grocery retail sector in

2007 with the acquisition of a south based supermarket chain Subsequently,

Aditya Birla Retail Ltd expanded its presence across the country under the brand

"More" with 2 formats- Supermarket & Hypermarket They are currently pursuing strategy to increase its private label sales from the current 3% to 10-15% of total sales and these products shared the shelf space with other branded products

Easyday India is the retail chain operated jointly by Walmart and Bharti Retail, a subsidiary of Bharti Enterprises It opened its first retail outlet in the city

of Ludhiana in 2008 Bharti Retail has introduced eight Walmart private labels, including two of its largest- 'Great Value' and 'George'- in its supermarket chain Easyday It has introduced Great Value line of food (flour, dry fruits, spices, cereal and tea) Equate, a brand for pharmacy and health and beauty items, has been introduced only in the hand wash category as of now in Easyday stores Other Walmart private labels introduced in India include Home Trends (home furnishing), Mainstays (plastic containers, kitchen accessories), Kid Connection (toys, clothing), Faded Glory (footwear) and Athletic Works (athletic shoes, equipment)

Spencer's Retail is one of India's fastest growing retail stores Spencer’s is based on the 'Food First' Format (it mainly offers fresh and packaged food) Many outlets though sport multiple formats for retailing food, apparel, fashion, electronics, lifestyle products, music and books It is owned by the RPG Group, a major business house Spencer's boasts of a wide range of private brand products that encompasses both foods as well as non-foods FMCG category 'Spencer's smart choice' is the leading in store brand which has a plethora of products ranging from juices, noodles, cookies, honey, Air freshener etc Spencer's also has the

'clean home' range of home improvement products and 'Tasty wonders' range of snacks and impulse food range Its general merchandize products under the brand name of MAROON which includes Non Stick, Hard Anodized, Home Plastic and Foils

Future Brands Limited (FBL) is involved in the business of creating, developing, managing, acquiring and dealing in consumer-related brands and IPRs (Intellectual Property Rights) It offers fashion brands like John Miller, RIG, Bare, DJ&C, UMM, Srishti, Knighthood, Lombard; Electronic brands like Koryo, Dreamline, Sensei, IQIP, Unpaid and FMCG brands like Fresh & Pure, Caremate, Tasty treat, Cleanmate, Sach, etc

Nilgiris is South India's leading chain of retail stores providing consumers a shopping experience that hinges around freshness of produce, superior quality and better value From humble beginnings in the hills around Ooty and Coonoor at the turn of the twentieth century, Nilgiris has grown from being a Dairy Farm specializing in butter to a supermarket chain of over 90 stores spread across India's southern states Nilgiris offers exotic range of hand-made Jams/Marmalades/Chutneys with more than 50% real fruit Classic Kids Favorite: Strawberry, Mango, Peach, Apricot, Guava Jelly Your Kind of Flavors: Cinnamon Apple, Black Cherry, Bitter Orange, Strawberry Mint Mango Chutney, Tomato Chutney, Ginger Orange Jam

The retailers choose to offer private labels for generating additional margins by by-passing branded suppliers as the power shifts from national brands

to retailers; filling gaps in their product range which may not be currently

addressed by branded suppliers; including a product variant or a size option in that category and using private labels to differentiate their store’s product range from competitors; and create a distinctive advantage This helps in improving profitability and loyalty to the retailer

THE INCREASING ACCEPTANCE OF PRIVATE LABELS IN INDIA

Indian retailing has seen a lot of ups and downs over the last few years With the increasing growth of the organised retail sector, private labels or store brands are also increasingly accepted by the Indian organised retail market The recession has significantly given a thrust to private labels, thus favourably affecting the private label sales of almost all major retailers like Reliance Retail, Adithya Birla, Future group, Bharti Walmart Retail, Hypercity, Trent, Customers Shop, Infiniti Retail etc., offering private label in their merchandise mix

Though the growth of private labels was seen across categories, growth in grocery was prominently seen in supermarkets at 15% and hypermarkets accounting for 30% of total value sales Introduction of private labels in categories such as apparels and footwear, toys, electronics and appliances enable retailers to expand their offerings Even Apollo Pharmacy and Guardian Pharmacy entered into their private labels in 2010 in health, beauty and personal care products

FUTURE IMPACT OF PRIVATE LABELS

Many retailers have incremented their profits by offering private label products since there are very huge margins to be accomplished from private label products, which are 30-40% higher margins than branded products Retailers are

not any more offering low quality products for a lesser price, but they are creating new level of differentiation, better pricing for a good quality product and new merchandising and promotion plans

One major advantage to the retailers in India, and which works in favour of private labels, comes from the fact that Indian consumers are less brand conscious and more quality and freshness conscious Most major retailers have introduced private labels not only in food and grocery products, but also in apparels and accessories, consumer durables, toys, healthcare, and home furnishings

CONSUMER ATTITUDE

Attitudes can be described as an individual’s favorable or unfavorable desire towards an attribute of an object which will lead to a tendency to act or behave in an expected way in relation to it This is because attitudes not only partly clarify consumer behavior, but they are also changeable by marketing activity

Burton et al (1998) found that private label brand attitude is positively related to

the actual percentage of private label brand purchase on a shopping trip, and private label brand attitude is the strongest predictor of the percentage of private label brand purchase in relation to other price perceptions, deal perceptions, and other marketing related constructs The attitudes of consumers towards own-labels are found to be important in affecting the intention of buying such products More specific, Chaniotakis et al (2009) highlighted the very important role of attitudes and suggested that retail chains should try to influence consumers so that they form positive attitudes toward private labels

Consumers’ attitude is the most important factor in influencing consumers’

purchase intention towards private label product (Chaniotakis et al 2010)

Consumers’ attitude includes ‘trust in private label product’, ‘familiarity’ and

‘perceived economic situation’ Consumers would try to save more money by purchasing private label products during economic downturn and once the

condition turn to be better, they will shift back to their familiar brands (Conroy, 2010) This is because when the product is familiar to a person, he or she will define the product in a good way As a result, in order to build up trust on private label product, retailers should let consumers feel confident with their product

(Broadbridge and Morgan, 2001)

Trust in private label product is influenced by perceived benefit, which signals that perceived price-quality affects customers’ attitude Once purchase is over, internal memory arise from purchase experiment along with external memory which arise by the information received that would play their role in the buying-

related process (Bettman, 1979) Customers with negative experience toward a

product will give a negative impact for future purchase while when the quality matched the price, a positive impact is shown In addition, such experience is quickly shared with others and so influences their decision-making

PERCEPTION

Perception is the process of acquiring, interpreting, selecting and organizing sensory information Perception is a process that begins with consumer exposure and attention to marketing stimuli and ends with consumer interpretation Consumers’ perception of store image is based on the functional qualities that the

store may possess including merchandise, service, clientele, physical facilities, convenience, promotion, store atmosphere, institutional attributes, and post-transaction satisfaction Service quality and merchandise quality were the key

determinants of store image (Baker et al, 1994)

A strong image of a shopping location will influence customers The closer consumers are in a store, the greater their chance to purchase from that store A location itself may be a source of pleasant-feeling experience purchase intention, longer shopping time and higher sales turnover, in effect, the more positive

shopping behaviour of its visitors (Bloch et al., 1994) The choice of location

linked to social and demographic changes, and the rising number of workers with

too little time to shop for their families (Brassington and Pettitt 2003) The

location of a store and the distance that the consumer must travel to shop there are basic criteria in their store choice decisions Travel time longer than 15 minutes appear as a barrier to any shopping center patron However, the location of the shopping center is not close as important as other variables, such as price, value, variety of product and store, store quality and cleanliness and friendly sales personnel

Consumer’s perception on private label brands could be an important issue

as a result of its direct influence on the brand sales Porter and Claycomb (1997) argue that consumer purchase intention and behaviour towards a brand is mainly driven by the perception customers have towards the brand Rai (2008) defines perception as consumer’s belief concerning a product or a service received or experienced Perception is also defined as a process in which people select, sort

and interpret outside stimuli into a coherent picture of the world around them

(Schiffmann and Kanuk, 2000) Perception is highly subjective and therefore easily distorted It is therefore vital for marketers to understand consumer’s perceptions because it often determines the success or failure of brands in the marketplace With this understanding, marketers are more careful on the ads they air, product packaging, size, colour, packaging design and point of sale materials because of the first impression to consumer’s eyes and ears For customers who are not brand loyal, a change in packaging colour of another brand can win the

customers attention and as a result their thought for the other brand (New Ideas MSI, 2003)

PURCHASE INTENTION

Consumers’ buying decision is very complex Usually buying intention is related with consumers’ behavior, perception and their attitude Purchase behavior

is the most important key point for customers while considering and evaluating of

certain product (Keller, 2001) Ghosh (1990) stated that purchase intention is an

effective tool used in predicting buying process Once the consumers decide to buy the product in certain store, they will be driven by their intention However, purchase plan might be altered by the influence of price, quality perception and

value perception (Zeithaml, 1988 and Grewal et al 1998) In addition, consumers

will be interrupted by internal impulse and external environment during related process Customers’ behavior will be driven by the physiological motivation that stimulates their respond which bring them to the retail store to

buying-fulfill their needs (Kim and Jin, 2001)

Purchase intention represents “the possibility that consumers will plan or be

likely to buy a certain product or service in the future” (Wu et al 2011) and it is

considered as the exactly precedent step from pampering the actual buying

behavior (De Magistris and Gracia, 2008) Physiological, socio-psychological

and customer attitudes drives to purchase private label brands However, one needs

to acknowledge first, that buying decisions can be influenced by various needs

CUSTOMER SATISFACTION

Customer satisfaction is the key factor in knowing the success of any retail business; therefore, it is very important to measure it and to find the factors that affect the customer satisfaction Customers are most likely to appreciate the products and services that they buy if they are made to feel special This happens when they think that the products and services that they buy have specially produced for them or for people like them

The aim of customer satisfaction is to identify the gap between customer perception of service and actual service Not surprisingly, the nature and extent of personal contact with customers in service encounters are of critical importance in determining customer satisfaction Although, extended, personalised customer contact is expensive, it is very effective at increasing satisfaction and repeat

purchase intentions

LOYALTY

Loyalty customers are precious, they spend a high percentage of their budget and are less likely to switch store because they are less sensitive to market

offers Loyalty has been explained from a behavioural perspective, based on repeat purchases Repeated store visits would be a measure often used by analysts as an

expression for store loyalty (Knox and Denison, 2000).

OPERATING DEFINITION

• Retail

The word ‘retail’ implies a first-hand transaction with the customer Retail

is the sale of goods and services from businesses to the end-user A retailer purchases products in large quantities from manufacturers and then sells in smaller quantities to the consumers for a profit

• Retailing

Retailing is defined as the commercial transaction in which a buyer plan to

consume the good or service through personal, family, or household use

• Private label brand

A private label brand is a product manufactured by a third-party manufacturer and sold under a retailer’s brand name

• Perception

Perception is the way in which something is regarded, understood, or interpreted

• Perceived price

Perceived price is the worth that a product has in the mind of the consumer

Price is the monetary value attached to a product or service

• Perceived quality

Perceived quality is the consumer’s perception of overall components of

product characteristics Quality is defined as the totality of feature and characteristics of a product that bears its ability to satisfy stated or implied needs

• Perceived risk

Perceived risk is the consumer’s level of uncertainty regarding the outcome

of a purchase decision Perceived risk is viewed as the “expected negative utility”

or the “expected penalty” associated with the purchase of a particular brand

• Perceived value

Perceived value is the worth that a product or service has in the mind of the consumer

• Perceived Store image

Perceived Store image means the image of a store in the mind of customers

• Attitude

Attitude is the tendency to evaluate things in a certain way

• Perceived economic situation

Consumers wants are broad and they behave rationally and efficiently to satisfy their needs

Loyalty exists when a customer buys the product regularly

NEED FOR THE STUDY

The retail space in Ernakulum is growing dramatically, and retailers have to attract more consumers to their shops Shops that differentiate their offerings can

build strong patronage, which will ultimately survive in this intense competition A better understanding of a demographic segment, marketers and retailers will be more capable of meeting their wants and needs This study provides significant insights into the factors that influence consumers to select private label brands A proper understanding of the behaviour of consumers can be financially beneficial

to businesses Knowledge about the attitude, perception, purchase intention, satisfaction and loyalty of consumers help marketers to design more effective and efficient strategies Handful academic materials are available on the consumer behaviour towards private label brands The review shows that a few studies were conducted on consumer behaviour towards private label brands in India This research has attempted to study the attitude, perception, purchase intention, purchase behavior, and satisfaction of consumers towards private label brands

STATEMENT OF PROBLEM

Understanding of consumer behaviour is the essence for the survival of any business organisation In changing cultural, demographic, political and economic environment, the consumers taste and preferences are changing drastically In the last three to four years, traditional retailers in India have experienced great problems related to improving their top line and bottom line, which has threatened the profile and identity of the retail market in India It is felt that there is a need of understanding the behaviour of consumer towards private label brands and go to the extent of fulfilling the needs and wants in a more effective and efficient way This study contributes to the existing research in private label brands and

establishing the customer-centric strategies for private label brands based on the following factors:

The researcher attempted to answer the following questions

1 What are the characteristics of consumer, shopping pattern, trial of private label brand, frequency of switching brands?

2 What are the basic factors which influence the purchase of private label brand and store choice?

3 Is there any difference between attitude, perception, purchase intention satisfaction and loyalty towards private label brand based on age, gender, occupation and income?

OBJECTIVES OF THE STUDY

1 To study the demographic profile of consumers

2 To determine the existing shopping pattern, trial of private label brands and frequency of switching brands