Store brands: appropriate positioning vis-à vis national brands

Abstract

Over the last decade, Private Label Brands or Store Brands have become a popular and profitable marketing strategy in the United States as well as in Europe. According to a Gallup study sponsored by the Private Label Marketing Association and conducted in September 2000, 71% of U.S. supermarket shoppers consider store brands the same as or better than the quality of national brands. Even in the emerging markets store brands have picked up in the recent years given the spread of organized retail and the value conscious nature of the consumers. Consumer is hence being more and more subjected to a choice situation between store brands and national brands. Hence it is imperative that we understand the consumer attitude towards store brands and what are the factors that contribute to its formation. Our project started with the understanding of store brands in comparison with the national brands and how people make a buying decision in favor of one over the other. Our literature review and exploratory research enabled us to understand the factors that drive the consumer s decision process. These factors could be broadly categorized into three categories namely Attitude, Beliefs and Values. Our analysis (focus group and depth interviews) also indicated the affect of Values on the formation of consumer attitudes and hence their buying decisions. But we did not find any research or analysis indicating the affect of values on the choice between national brands and store brands. Hence this became the motivation of our further work and our research objective. Next we conducted primary market research with the consumers at an organized retail outlet. We chose two product categories namely Apparel and Grocery because we intuitively felt that the buying decision and considerations for these categories were vastly different and secondly in these categories strong store brands existed in the Indian market. The data collected was subjected to various analyses like cluster and discriminant analysis to identify if the value system of the national brand buyer differed significantly from the store brand buyer. We found that a national brand buyer was more inclined towards Self respect across product categories while different values were found to be dominant for store brand buyers of different product categories like apparel shopper rated Excitement higher while grocery shopper rated Sense of belonging higher. Further our analysis also indicated that some values contribute significantly in differentiating the national brand buyer from the store brand buyer. Some of the values whose contribution was significant were Excitement , Being well respected , Self respect and Sense of accomplishment . These findings have various managerial implications for the retailers in deciding the manner in which they wish to position and promote the store brands e.g. the themes and offers on store brands for different product categories could be in sync with the respective value system of the buyer. Also appropriate positioning of the store brands can be done soas to make it more attractive to the national brand buyers. Finally we feel that this work is just the tip of the iceberg and a lot more work needs to be done in this area. It would be highly interesting to see much more research happening in this much neglected area and especially useful would be a comparison of the findings from different countries.