A study of the relationship between UK consumers purchase intention and store brand food products -- Take Nottingham city consumers for example

By Kao-Chun Chen 2008 A dissertation presented in part consideration for the degree of M.A Marketing

Acknowledgement

First, I would like thank my best supervisor, Dr. Vicky Story, in supporting me to complete the dissertation. She is the kindest and most responsible teacher. She provided me many valuable comments when I had meeting with her. Because of her, I can manage the some challenge parts which I was confused during the writing of the dissertation. Id appreciate her help.

Next, I also would like to thank my friends, who are in Taiwan, U.S.A, and UK, for their encouragement during this year. Because of them, I have confidence to face more challenges in this year. Moreover, I also want to say thanks for the participants who filled the questionnaire out. You have donated your precious time to finish the questionnaire and helped me to acquire the data soon. Your cooperation made the success of this dissertation.

Last but not least, I am grateful to my family members, especially my grandmother and my parents who gave me endless and selflessness support this year. Your encouragement is my motivation of progress. This dissertation is dedicated to my family members and I will do my best to face any challenge in the future.

I

Abstract

Recently, store brands play an important role in retail grocery strategy. More and more retailers put their effort to develop and market new store brands because consumers have been accepting store brands. Therefore, store brands have gradually influenced consumers purchase behaviours in order to provide an in-depth investigation of consumers purchase intention in store brands, the study choose food products among many product categories because when consumers hear the store brand, they must connect to food products. The purpose of study is to understand whether the relationship between consumers purchase intention, products perception and socio-economic status have direct connections. Besides, the study use questionnaires to test consumers buying perception and choose participants by random, participants are from Nottingham city area. Total amount of the questionnaire is 110 copies, and 104 copies are validity. The ANOVA was used in analysing data. Furthermore, the study found age variable and education variable have no influence in consumers purchase intention. However, income and family size do influence consumers purchase intention. In terms of product perception, consumers think less risk and cheaper price can increase their purchase motivation, but value and quality variables are not decisive factors for them to buy the store brand food products in superstores. Finally, retailers have an opportunity to set better marketing strategies and understand more consumers intention in store brand food products.

II

ContentsPageChapter 1 -- Introduction ----------------------------------------------------------------------- 1 1.1 Summary of research design ------------------------------------------------------------ 7 Chapter 2 -- Literature review ----------------------------------------------------------------- 8 2.1 Definition of brand ----------------------------------------------------------------------- 8 2.2 Definition of store brand --------------------------------------------------------------- 10 2.3 The requirements of store brands ----------------------------------------------------- 13 2.3.1 Differences between store brands and national brands ----------------------- 13 2.4 The store brand consumers purchasing factors and influences ------------------ 15 2.5 Purchase intention of Consumers ----------------------------------------------------- 18 2.6 The relationship between socio-economic variable and purchase intentions --- 20 2.6.1 Age ----------------------------------------------------------------------------------- 20 2.6.2 Income ------------------------------------------------------------------------------- 21 2.6.3 Education ---------------------------------------------------------------------------- 22 2.6.4 Family size -------------------------------------------------------------------------- 23 2.7 Consumers perception ----------------------------------------------------------------- 23 2.7.1 Definition of perception----------------------------------------------------------- 23 2.7.2 The quality perception ------------------------------------------------------------ 24 2.7.3 The relation of quality conscious and consumers purchase intention ----- 26 2.7.4 The relation between price/value perceptions --------------------------------- 28 2.7.5 The relation of price/ value conscious and consumers purchase intention 29 III

2.7.6 The risk perception ---------------------------------------------------------------- 31 2.7.7 The relation of risk conscious and consumers purchase intention --------- 32 2.8 Summary --------------------------------------------------------------------------------- 33 Chapter 3 -- Research structure and hypothesis -------------------------------------------- 37 3.1 Hypotheses ------------------------------------------------------------------------------- 38 3.2 Research design ------------------------------------------------------------------------- 38 3.2.1 Introduction ------------------------------------------------------------------------- 38 3.2.2 Theoretical backgrounds ---------------------------------------------------------- 39 3.2.3 Different research traditions ------------------------------------------------------ 39 3.2.4 Qualitative and qualitative methods --------------------------------------------- 40 3.2.5 Reliability of data ------------------------------------------------------------------ 42 3.2.6 Research instrument --------------------------------------------------------------- 42 3.2.7 Populations and setting with context -------------------------------------------- 44 3.3 Questionnaire design and data collection instrument ------------------------------ 45 3.3.1 Perceived quality ------------------------------------------------------------------- 45 3.3.2 Perceived value --------------------------------------------------------------------- 48 3.3.3 Perceived price --------------------------------------------------------------------- 50 3.3.4 Perceived risks --------------------------------------------------------------------- 52 3.3.5 Consumers purchase intention -------------------------------------------------- 55 3.3.6 Socio-economics ------------------------------------------------------------------- 56 3.4 Pretesting/ administration/ response rate -------------------------------------------- 57 3.5 Conclusion ------------------------------------------------------------------------------- 58

IV

Chapter 4 -- Data analysis and discussion --------------------------------------------------- 60 4.1 Reliability analysis ---------------------------------------------------------------------- 60 4.2 The analysis of relationship between consumers socio-economic status and consumers purchase intention of store brand food products -------------------------- 62 4.2.1 The data analysis of consumers socio-economic background -------------- 62 4.2.2 The data analysis of consumers socio-economic status and intention ----- 64 4.3 The analysis of relationship between consumers purchase intention and the perception of store brand food products -------------------------------------------------- 69 4.3.1 The analysis of relationship between consumers perceived quality and consumers purchase intention of store brand food products ----------------------- 69 4.3.2 The analysis of relationship between consumers perceived value and consumers purchase intention of store brand food products ----------------------- 70 4.3.3 The analysis of relationship between consumers perceived price and consumers purchase intention of store brand food products ----------------------- 71 4.3.4 The analysis of relationship between consumers perceived risk and consumers purchase intention of store brand food products ----------------------- 73 4.4 The summary of research result ------------------------------------------------------- 77 4.4.1 The relationship in socio-economic background and consumers intention in store brand food products------------------------------------------------------------- 77 4.4.2 The relationship in perceived quality and consumers intention in store brand food products ---------------------------------------------------------------------- 77 4.4.3 The relationship in perceived value and consumers intention in store brand food products ------------------------------------------------------------------------------ 78 V

4.4.4 The relationship in perceived price and consumers intention in store brand food products ------------------------------------------------------------------------------ 78 4.4.5 The relationship in perceived risk and consumers intention in store brand food products ------------------------------------------------------------------------------ 78 Chapter 5 -- Discussion ------------------------------------------------------------------------ 80 5.1 Socio-economic background ---------------------------------------------------------- 80 5.1.1 Age ----------------------------------------------------------------------------------- 80 5.1.2 Income ------------------------------------------------------------------------------- 81 5.1.3 Education level --------------------------------------------------------------------- 81 5.1.4 Family size -------------------------------------------------------------------------- 82 5.2 Perceived quality ------------------------------------------------------------------------ 83 5.3 Perceived value -------------------------------------------------------------------------- 83 5.4 Perceived price -------------------------------------------------------------------------- 84 5.5 Perceived risk ---------------------------------------------------------------------------- 84 5.5.1 Product credence cues ------------------------------------------------------------- 84 5.5.2 Familiarly --------------------------------------------------------------------------- 85 5.5.3 Certainty----------------------------------------------------------------------------- 85 5.5.4 Risk taking -------------------------------------------------------------------------- 86 5.5.5 Package ------------------------------------------------------------------------------ 86 Chapter 6 -- Conclusion ------------------------------------------------------------------------ 87 6.1 Introduction ------------------------------------------------------------------------------ 87 6.2 Conclusion ------------------------------------------------------------------------------- 87 6.3 Managerial suggestions----------------------------------------------------------------- 88 VI

6.4 Limitations ------------------------------------------------------------------------------- 89 6.5 Further research suggestions----------------------------------------------------------- 90 References --------------------------------------------------------------------------------------- 92 Appendix--Questionnaire -------------------------------------------------------------------- 105

VII

List of tablesPageFigure 1: Summary of research design---------------------------------------------------7 Figure 2: Conceptual framework for research-------------------------------------------37 Table 3.1: Perceived quality questions----------------------------------------------------48 Table 3.2: Value variables questions------------------------------------------------------50 Table 3.3: Price variables questions-------------------------------------------------------52 Table 3.4: Risk variables questions--------------------------------------------------------54 Table 3.5: Purchase intention variables questions---------------------------------------56 Table 3.6: Consumers personal information variables---------------------------------57 Table 4.1: Reliability and average score--------------------------------------------------61 Table 4.2: Reliability and average score--------------------------------------------------61 Table 4.3: Reliability and average score--------------------------------------------------61 Table 4.4: Socio-economic statuses-------------------------------------------------------63 Table 4.5: H1a-ANOVA--------------------------------------------------------------------65 Table 4.6: H1b-Test of homogeneity of variances---------------------------------------66 Table 4.7: H1b-ANOVA--------------------------------------------------------------------66 Table 4.8: H1b-Post hoc tests--------------------------------------------------------------67 Table 4.9: H1c-ANOVA--------------------------------------------------------------------67

VIII

Table 4.10: H1d-Test of homogeneity of variances-------------------------------------68 Table 4.11: H1d-ANOVA-------------------------------------------------------------------68 Table 4.12: H1d-Post hoc tests-------------------------------------------------------------69 Table 4.13: Perceived quality-ANOVA---------------------------------------------------70 Table 4.14: Value through appearance-ANOVA-----------------------------------------71 Table 4.15: Value for money-ANOVA----------------------------------------------------71 Table 4.16: Perceived price-Test of homogeneity of variances-----------------------72 Table 4.17: Perceived price-ANOVA-----------------------------------------------------72 Table 4.18: Perceived price-Post hoc tests-----------------------------------------------72 Table 4.19: Familiarly-ANOVA-----------------------------------------------------------73 Table 4.20: Certainty-ANOVA-------------------------------------------------------------73 Table 4.21: Risk taking-ANOVA----------------------------------------------------------74 Table 4.22: Product credence cues-Test of homogeneity of variances --------------74 Table 4.23: Product credence cues-ANOVA---------------------------------------------75 Table 4.24: Product credence cues-Post hoc tests---------------------------------------75 Table 4.25: Package-Test of homogeneity of variances--------------------------------76 Table 4.26: Package-ANOVA--------------------------------------------------------------76 Table 4.27: Package-Post hoc tests--------------------------------------------------------76 Table 4.28: The summary of socio-economic variable of result and hypotheses---77 IX

Table 4.29: The summary of result and hypotheses-------------------------------------79

X

Chapter 1 -- IntroductionProduct selection and purchase is a complicated phenomenon which is affected by many factors classified as marketing-related, psychological and sensorial. Moreover, a sensory property of products has been viewed as the important factor of consumers choice (Guerrero et al, 2000). There are other aspects, such as the product information, included in its price and quality that play a crucial role in the purchase process as well. Furthermore, the influence of product information and consumer purchase intention has the interactive relation. Regarding the type of information, it is obvious that the brand name is most common part of product information (Guerrero, 1995).

Hence, the brand has important influences in making purchase decision for consumers. Guerrero et al (2000, p387) provide that the brand has for consumers: identification of the products and their main characteristics; reference function for the consumer helping him/her to structure the offer; guarantee function, since it gives a quality image reducing the feeling of risk. When consumers choose a product brand, the acceptability of a product and consumers expectation are two important factors which are influenced by the product itself and consumers culture background (Cardello et al, 1996). Take the BSE crisis, fatal disease affecting the nervous system in cattle, for example. After the crisis, the only way to buy reliable beef in the supermarkets is brand name (Guerrero et al, 2000). Another cultural aspect is about buying olive oil in British and Spain. Bower and Saadat (1998) observed that British consumers buy the unfamiliar olive oil in supermarkets; the brand is the last considering option. Oppositely, Guerrero (1995) proposes the brand name is the first considering factor when Spanish would like to purchase olive oil.

1

Furthermore, with more and more brands and products coming out among supermarkets, competitive intensity imposes retailers and manufacturers to make new strategies. Consumers have increasing number of shopping channels, such as internet and television, so consumers decide where to buy and which brand to buy are becoming the harder decisions than before (Carpenter and Fairhurst, 2005). Retailers ability to earn more long-term market profits and differentiate their products from other manufacturers is becoming an important mission.

The important mission is that retailers develop their owned brand products. Burt (2000) argues that the evolution of store brands (also known as own brand, house brands or private label brands) has recently changed from only offering consumers lower quality and price products to true quality brand alternatives. It also reflects that their purposes of marketing approach in the contemporary environment. The major selling point of retailers is price, they usually would like to lower price for maintaining consumers loyalty, and to hope manufacturers can provide discount and promotions, but manufactures would not like to reduce their profits. Therefore, retailers create their store brands to control the product price and have a chance to sell more products at full price, thereby preventing from markdown cycles that corrode their benefit as well as saving more cost (Guerrero et al, 2000).

Successful marketing of store brands can build tightly consumer loyalty and make the chain avoid of price pressure or fierce attack by competition (Dick et al, 1995). Take Tesco for example, it has Value products and Finest products. Furthermore, the success of the Tesco brand shows that their owned brand is practical and they can be the most important competitive weapon in the retail industry (Wulf et al, 2005). So, 2

more retailers regard themselves as active marketers of their own brands, rather than passive wholesaler of national brands (Richardson, 1996). Developing store brands can enhance the lower price image of retailers and bargaining power over manufactures and other well-known brands, and control product shelf space (Narasimhan and Wilcox, 1998). Furthermore, a successful store brand can bring relatively high gross margin by more efficient marketing effort, such as decrease of middlemen, obtaining economics scale in distribution. That is why store brand retailers can offer a joining of good quality and value goods to consumers as well as strengthen their brand names on the shelves and in consumers image (Richardson, 1996).

The sign shows that when consumers start to look for lower priced choices at the lower end of markets, it means consumers prefer the guarantee that a familiar store name brings instead of the risks came with purchasing from a not very well-known manufacturer brands (Baltas, 1997). Therefore, there are getting more store brand products coming out, and consumers acceptability is also dramatically increasing for store brands.

Actually, from the consumers viewpoint, store brands are quite special because they are the only brand that exists throughout the store. Indeed, even the most famous national brands and manufacturers are not willing to come close to the store brand regarding storewide coverage (Hansen et al, 2006). However, store brands have such a wide penetration which is coming with a question that arises whether consumers attitudes are the same for national brands. Meanwhile, earlier research found the difference of store-brand penetration across categories, which gives an explanation 3

that category-specific causes could be controlling (Hoch and Banerji, 1993).

Also, Burt (2000, p882) suggests the transfer of most of the operational decisions relating to product assortments, merchandising, store layout, pricing and promotion, from the store or region to corporate centre allowed retailers to develop a clear, consistent image and market position to consumers. The uniformity in store brand and management system offer and build a consistent set of core value through store brand products provide as well as make sure that value aree conveyed. Therefore, these values will continue strengthen in consumers minds through in-store advertisings which stress quality and value instead of only price message (Burt, 2000).

Meanwhile, consumers prefer store brand products which have various reasons. For example, economic factor, income constraints, might drive lower income consumers to buy store brands. Consumers are willing to buy lower-priced store brands that do not mean that there exist consumers with strong purchase intention because of the cheapest product. That is, they still have various factors for buying products, such as quality, risk, and value factors (Binninger, 2008).

Store brands are getting popular recent years. According to Wulf et al (2005), in the 1980s and 1990s, the average market share of store brands was gradually increasing from 15.3 percent to 20 percent within twenty years. There are more store brand products on the market than before (Quelch and Harding, 1996). Moreover, store brands in Europe can compete with other well-known brands with currently market share from 13-45 percent, and the market share of U.S has already up to 13 percent of 4

store brand food products in early 1990s (Binninger, 2008 and Hansen et al, 2006).

Store brands now estimate that every day one of every five items is sold in America supermarkets, food merchandisers. Store brand market provides more than fifty billion dollars of current business at retail that succeed new levels of growth every year (Collins-Dodd and Lindley, 2002). Therefore, the importance of store brands has greatly enlarged over past twenty years as well as caused many consumers change in shopping behaviour and habits.

In Britain, store brands have reached almost half of grocery sales in 1990s (Steenkamp and Dekimpe, 1997). Britain also has been a strong and stable increasing in store brands or private label brands (Dunne and Narasimhan, 1999), such as Sainsbury, Tesco, Costco, Safeway, and Marks and Spencer and so on. For example, ASDA's owned brand products share achieved 46 percent, with Safeway at 39.4 percent and Sainsbury at 45 percent (Burt, 2000). In addition, the acceptance of store brands by consumers occurs because they perceive store brand products as more reliable, different from conventional image and good value for money (Grewal et al, 2004). Colleen-Dodd and Lindley (2003) indicate some product categories in store brands lead the market share and build store loyalty by their owned distribution.

With more retailers start to develop their store brands, the market is becoming more competitive, especially in product distributors and manufacturers. Store brands begin to promote their own brands by way of publicity and attempt to enhance the quality image of their brands (Hansen et al, 2006). Besides, consumers become to more understand and accept store brands rather than to exist the negative stereotypes in 5

store brands (Guerrero, 2000). Among many store brand products, food products are more significant part because the percentage is 31 percent among store brand products (Hansen et al, 2006). Furthermore, the impact of store brands will be getting popular and the system will be getting robust. Consumers intention also becomes an important field that worth to discuss what consumers perceptions for store brand product are.

The aim of study expected to investigate the intention of consumers purchase intention in different socio-economic status from consumers viewpoints as well as examine whether the four factors, quality, risk, price, and value, are influential factors in buying perception of consumers. Tybout and Artz (1994) point out any research about consumers consciousness and judgement which are need to consider different consumers characteristics. Hence, the study also uses socio-economic status, such as age, income, educated level, and family size, to understand consumers intention. Through the study makes retailers can understand consumers purchase behaviours and attitudes towards store brands as well as improve their marketing strategies and product design towards consumers favourite. The main objectives were (1) to examine that socio-economic factors have an impact on consumers likelihood of purchasing store brands, (2) to test that whether the quality consciousness, value consciousness, price consciousness and risk consciousness have impact on consumers purchase intention in store brand food products.

6

Figure 1

Research topic and purpose

Second research

Literature review

Primary research

Research methodology

Questionnaire

Analyse results

Conclusion and suggestion 7

n

g

i

s

e

d

h

c

r

a

e

s

e

r

f

o

y

r

a

m

m

u

S

1

.

1

American Marketing Association (AMA) gives the definition of brand that brand is a name, term, sign, symbol and design to recognize and distinguish the sellers product and sellers from other competitors (Aaker, 1996). Aaker (1996) also mentions that brand provide customers a source of market information through names, terms, signs, and designs. Through these consumers and sellers can build relationship with each other. Blackston (2003) purposes brand provides a product concept for consumers. However, there are some differences in understanding products that result from consumers.

There are three types of brands in retailing (Ghosh, 1990): 1. Manufacture brands: It is also called national brand that everyone knows the brand. Consumers can buy the products in most stores and chains. The brand usually uses large, lasting and national advertising to build their image and to earn market share. Sometimes, most consumers think these products have better quality.

2. Store/ private brand: Retailers can produce merchandises under their own label, or store brands are typically those produced or provided by the company for offering under another firms brand. Generally, national brands are more famous than private brands.

w

e

i

v

e

r

e

r

u d

t n

a a

r r

e

t b

i f

L o

n

o i

2 t i

r n i

e

t f e

p D

a 1

h .

C 2

8

3. Generics brand It is also called no-name brand. Consumers cannot find an associated label, name, and trademark from products. Besides, generics brands usually research and develop through retailers.

Hoeffler and Keller (2003) points out that brand provide companies with some benefits. First, customers might depend on the influence connected with a familiar brand to help in making decisions. Second, the brand can bring consumers confidence because consumers get more familiar with products. So, consumers can easily identify the products. Besides, confidence can lead consumers to facilitate their decision making process. Third, brands can help customers to explain, handle and store related information. Fourth, increasing consumers satisfaction, the brand offers group identification for consumers.

In short, the brand is the best way to recognize products that they like or do not like. Meanwhile, brands provide buyers more information and facilitate the purchasing process. Moreover, the brand is a tool of products, a substitution of experience, the quality of source, and the consistent guarantee for consumers (Blackston, 2003). The brand is a necessary part of marketing strategies. It not only helps consumers recognize products, but also can enhance the particular image and characteristic for the company.

Above of all, the brand, a name, a sign or a term, is a concept of products which provides information and a channel to communicate with consumers. Consumers can build the long term and trust relationship with sellers through the brand. Hence, the 9

seller can be distinguished from other competitors among many brands (Corstjens and Lai, 2000).

Generally, store brands (also known as own brand, house brands or private label brands) are owned and branded by retailers, which can control and sell by themselves (Raju and Sethuraman, 1995). Sometimes, store brand owners will not sell their own label products to other competitive retailers; however, they will cooperate with noncompeting wholesalers for selling their products in markets (Dick et al, 1995).

Moreover, Hoch (1996) provides the definition of store brand which includes: (1) the only trademark, which can be almost sold within every product in the retail store, is the private label brand product. Even though the famous and big companies have many products, they do not come close in storewide coverage and penetration. (2) Private label products are the only products that the retailers can decide marketing and investments of inventory by themselves. Also, private label retailers can control product quality level and decide investment levels on marketing activities, such as advertising, packaging, and wholesale price. (3) It must put private brand products in the most obvious shelf and guarantee full distribution in the store, and these products do not need to pay for shelf placement. Because of reducing the cost, retailers can offer customers more discount. (4) The trademark right belongs to retailers themselves, and there is retailers name or trademark on the products. So, consumers hardly find the private label product in other stores.

d

n

a

r

b

e

r

o

t

s

f

o

n

o

i

t

i

n

i

f

e

D

2

.

2

10

Above mentioned, the consuming products focus on the profits of distribution and the name of retailers or labels, these products are just store brand products which are sold by retailers selling channels. For retailers, they can raise their sales volume by store brands as well as earn the loyalty of customers. Because the store brand makes retailers and other competitors have differences, store brands can strengthen retailers image and steady the relationship with consumers. Furthermore, consumers can buy any national brand in every hypermarket. However, if consumers would like to buy specific retailers store brand products, they should go to their own stores.

According to Steenkamp and Dekimpe (1997) and Quelch and Harding (1996) points of view, there are some good reason why retailers want to build up store brands. First, Customers loyalty is a fundamental reason for having own labels. If you have a nucleus of products which customers see as having a quality image, there is an inevitable dynamic created (Steenkamp and Dekimpe, 1997, p 919). Store brands can cement consumers loyalty and differentiate the brand from others, thereby reinforcing retailers positions regarding national brand manufacturers and increasing profit. In addition, private label brands can help retailers increase store traffic and consumer loyalty by offering individual lines under labels which cannot found in other hypermarkets (Richardson et al, 1996).

Second, if retailers build strong store brands, their bargaining power can compete with other manufacturers. In other words, retailers will have more power to negotiate price and other discounts, and then increase the channel of distribution.

Third, retailers do not need to pay extra money to promote these products in their 11

own stores, and they can control shelf space. Also, store brand production can enhance cumulative production experience and reduce unit manufacturing and distribution costs.

Furthermore, store brands are not substitutions or subordinations of famous national brands. The most purposes of store brand are to differentiate products with other brands and to compete with other national brands in quality. Although most store brands become the cheap substitutions of famous brands because they cannot compete with national brands in the product quality, they sometimes will force the national brands to lower their price. (Wulf et al, 2005).

Once consumers choose store brand products, the behaviour is regarded as another choice or opportunity by store brand retailers. Comparing with national brands, consumers can save more money, when they purchase some private label products. However, these store brand products are necessary commodities because they are cheaper than national brand products. One more important reason is that consumers do not need to use coupons or wait for discount promotion to buy the products because the products are low price everyday.

Furthermore, both of store and national brands use almost the same ingredient and put their brand name and produce label on the package for easily recognizing the component by consumers. Therefore, consumers can make sure the safety of store brand products. According to PLMAs (2002) data shows people who like to buy store brand products can save more money than national brand buyers. The main cause is consumers do not need to pay money for retailers in advertising and sales promotion. 12

Actually, it is hard to control all products quality that retailers ask manufacturers to produce. Because once manufacturers create bad quality goods, it will damage the image of store and other store brands products. Therefore, not all products are suitable for becoming private label products. If retailers do not evaluate the category carefully, some products will become a burden. Chen (1997) mentions retailers run private label products for market segment strategy. They would like to create their particular channel and earn more market share through store brands. Thus, Yu (2007) proposes some requirements for products that are likely to be store brand products. 1. Lower brand loyalty. 2. No difference among products. 3. Not superior quality or image products. 4. High purchasing frequency goods (necessities). 5. Easy to control the quality, or damage the image of store. 6. Consumers can easily differentiate the quality of goods. 7. Not high-price and price sensitive goods. 8. Higher profit products.

Generally national brand enterprises usually are large scale company and use large equipment to produce their products. Meanwhile, they market and promote their goods all over the country by mass media. However, store brand retailers seldom use large scale promotion to consumers. Therefore, store brands can bring greater profit to retailers and cheaper price to consumers through lower advertising and distribution costs. 13

s

d

n

a

r

b

l

a

n

o

i

t

a

n

d

n

a

s

s d

d n

n a

a r

r b

b e

e r

r o

o t

t s

s n

f e

o e

s

t w t

n e

e b

m s

e e

r c

i n

u e

q r

e e

r f f i

e D

h

T 1 . 3

3

.

. 2

2

Burt (2004) points out many retailers have their own brand products which can compete with national brands. Most product category is mid-high quality and low price, and these products do not have large difference with national brand products (Louis, 1981). The past few years, a lot of retailers have offered more innovative and qualitative products that are similar those of manufacturers brand (Binninger, 2008).

Jagmohan et al (1995) found retailers develop their own brand products to enhance their profit. Furthermore, comparing with the national brands price, a store brands price is quite low. Also, their cheaper price force manufacturers to decrease the price unwillingly, so they can not earn more profit. In this case, the market share of store brands will be better. Thus Steiner (2004) purposes that private label brand is a particular and special weapon in the retailing market.

According to Sethuraman and Coles (1999) study shows consumers would judge the difference of price between private label brand and national brand by quality, added value and ingredients. When they find the value and price of national brands, they are likely to buy store brand products because of lower price and good quality.

Hoch (1996) mentions that the food market share of private brands has already achieved 13% in U.S market. Moreover, Wulf et al (2005) also offers the evidence that quality perception between store brands and national brands are equally. There are more and more consumers preferring to choose store brand products over a higher-price national brand (Quelch and Harding, 1996). Hence, most people are gradually changing their image that private brand products are no longer bad quality and cheaper substitutions. 14

Purchasing behaviour means people use money or money substitutions to exchange for goods or personal service which results in the process of decision-making (Baumgartner and Steenkamp, 1996). Wu (1999) also points out purchasing behaviour is a consequently decision-making process that includes how to perceive the information, motivation, what to buy, how to buy, and when to buy before purchasing. Furthermore, consumers will evaluate the satisfaction after purchasing.

Studies regarding store brands had been influential interest in practice. Early Frank and Boyd (1965) investigated store brand buyers to be better educated, have a lower income, and are older. In addition, Sudhir and Talukdar (2004) mention store brand consumers characteristics that value price as a key standard for purchase and do not think brand image as essential and may consider product quality as determining factor.

According to Richardson et als (1996) study, they found majority store brand consumers are under 45 years of age. The family middle income, which is between $15001-$49999, is likely to buy store brand products. Moreover, the family size also has a strong influence on consumers proneness. If the family has more than 5 people, it is likely to become private brand label consumers because they are more price sensitive Also, Sethuraman and Cole (1999) found middle-income ($25K-$50K) households, younger consumers, and female prefer to buy private label products.

Although retailers improve their private label products a lot, consumers still worry about the quality. In spite of the price advantage, high quality seems more important 15

s

e

c

n

e

u

l

f

n

i

d

n

a

s

r

o

t

c

a

f

g

n

i

s

a

h

c

r

u

p

s

r

e

m

u

s

n

o

c

d

n

a

r

b

e

r

o

t

s

e

h

T

4

.

2

for some consumers (Hoch and Banerji, 1993; Sethuraman, 1992). Thus, perceived risk is a major concern for consumers. In Quelch and Hardings (1996) report, they proposed retailers start to improve their quality of own brand products. Dick et al (1995) and Guerrero et al (2000) found the perceived risk may be minimized by in-store promotion, such as taste test and money back guarantees, to overcome the inferior image in store brand products. However, the gap between private label products and national brand has narrowed down recently. Whether in Europe or U.S researches, there is one common issue which is the role of perceived risk in connection with quality and value, emerging from the literature (Burt, 2000).

Many studies mention that most store brands still give consumers an inferior image (Burt, 2000 and Grewal et al, 1998). Most people still have scepticism toward store brand products. Therefore, Bettman (1974) figured out that differences in store brand and national brand consumers are the basis of perceived quality of the individual brands, perceived risk connect to private label product purchase, and familiarity with private label brands. However, Gordon (1994) found that consumers are willing to buy private label brand in terms of some factors:

1. Product detectable: Some ingredients are used directly, such as salt, rice, and flours. These kinds of products do not have any difference in ingredient and quality, except for manufacturers and the brand. Therefore, store brand consumers have higher acceptable and less risk for these goods.

16

2. Involvement level: The difference of involvement level will affect consumers purchasing willing. When consumers understand the product more, they are willing to buy the product. Moreover, low involvement consumers would not be store brand buyers.

3. Experts: Some advertising invites experts to recommend their products as a means of earning consumers trust. In other words, experts opinions can influence consumers attitudes, especially most consumers do not know very well about the quality of store brand products. Once one expert recommends the store brand product, consumers are willing to buy it (Gordon, 1994).

In addition, Richardson et al (1994) tested the impact of extrinsic cues, such as price and package, on evaluation of store brands products. The result of the study suggests that most consumers evaluate store brand products, which are depended on the extrinsic cues of the product. Obviously, extrinsic cues play a much more important role in enticing consumers purchasing desire than do actual inner ingredients.

Moreover, Richardson et al (1996) examined eight factors for store brand proneness. The result of the examination of eight factors affecting store brand proneness shows that familiarity is the most important factors for consumers. If consumers feel the store brand product is familiar, they are prone to view them as good quality, low risk products, good value. Oppositely, consumers do not know the store brand product; they will view them as doubt and not reliable choice. Last, the result suggests that 17

store brand retailers should improve extrinsic cues that will entice consumers purchasing desire, if consumers are not familiar with goods.

Besides, Dick et al (1995) found consumers prefer to buy national brand products because they are not familiar with store brand products. If the retailers want to win more market share by store brand products, the study suggests they need to strengthen the attractiveness of packaging, labelling, and brand image in order to look as if they are high quality products. Furthermore, the private brand products can catch consumers eyes and increase familiarity. Chen (1997) pointed out external or internal features of the product, such as package, price, quality, ingredients, store image, and store environment are the main factors that will influence consumers purchasing desire. However, when the retailers gradually improve product attractiveness and whole image to entice more consumers, it may not easy to keep the price and cost low at the same time.

Above noted that, these studies provide the price of products, quality, and involvement of consumers are factors of influencing consumers attitudes for store brand products. Moreover, objective self-perception of consumers is also an influence factor (Senthuraman and Cole, 1999).

Purchase intentions mean the consumer has purchase behaviours after he/she considered and evaluated the product. The behaviour can be viewed as a key point for predicting consumers purchasing behaviours as well as their subjective intentions (Keller, 2001). Ghosh (1990) tried to combine some studies about purchasing 18

s

r

e

m

u

s

n

o

C

f

o

n

o

i

t

n

e

t

n

i

e

s

a

h

c

r

u

P

5

.

2

behaviours with consumers decision-making processes. The result was that when consumers choose one good, the final decision depended on their intention. Therefore, most marketers think consumers purchasing intention is an effectively method of predicting purchasing. In addition, both Sudhir and Talukdar (2004) and Sethuraman (2003) offer that quality perception and purchase intention have a positive relationship. Zeithaml (1988) thinks consumers purchase intention will be influenced by objective price, quality perception, and value perception.

With different purchasing ways, consumers have diverse intentions (Yu, 2007). 1. Prior planned purchasing: Consumers, who highly engage in search processes, usually will make a plan and list before they go to stores because they think such behaviour will increase the effectiveness of their endeavour. Additionally, the motivation could make them attach value to previous plans that allow them to acquire more benefits efficiently during their shopping, such as preparing lists and coupons (Putrevu and Lord, 2001).

2. Partial planned purchasing Any purchase condition can be an important factor of searching information, especially highly interesting in purchase decisions. However, if they would like to buy a more familiar product, their decisions would just depend on the product promotion, which leads to a lower involved decision.

3.

Unplanned purchasing Beatty and Ferrell (1998) define unplanned purchasing as goods for which the

buying decisions were made in the shop and not before entering the shop. Moreover, 19

Keller (2001) also provides unplanned purchasing is a rapid and urgent purchase with nopre-purchasing intentions either to buy a particular good or to perform a particular purchasing task.

The age of private label consumers of household is probably a factor that influences private label brand proneness. Generally, older consumers have more shopping experience than the younger consumers. Whereas younger consumers may select brand by simple heuristics, older consumers may have their own sophisticated choice processes (Richardson et al, 1996). It seems that older consumers are more familiar with private label brands. Namely, when consumers are familiar with the brand, they are likely to buy the brand. Cole and Balsubramanian (1993) suggest people age will influence their brand loyalty. Szymanski and Busch (1987) found that younger consumers would not like to spend more money on purchasing national brands because their brand loyalty is weaker than older consumers. On the other side, younger shoppers might more images oriented and not familiar with private label brands. In the end, younger shoppers may be inclining to spend their money on national brand products (Sethuraman and Cole, 1999). Recently, Lii and Hung (2003) provide age variable does not have any influence in store brands intention. Hence the effect of age is ambiguous in store brands.

20

d

n

a

e

l

b

a

i

r

a

v

c

i

m

o

n

o

c

e

-

o

i

c

o

s

n

e

e

w

t

e

b

p

i

h s

s n

n o

o i

i t

t n

a

l e

e t

r n i e

e e s g

h a

T A h c 1 . r

6 6 u

.

. 2

2 p

Time is money. McGoldrick (1984) pointed out time is very important for people who are high income shoppers, so these people do not like to spend their time on searching brand information before they go shopping. Furthermore, they only choose familiar or well-known brands because these famous brands always use extensive advertising and superior extrinsic cue effects to attract consumers that easily lead consumers to strong brand images (Wulf et al, 2005). Anselmsson et al (2008) asserted that store brand set up lower price, store brand products just are additionally low choice goods, in the competitive markets between retailers and manufacturers. Therefore, low income consumers are likely to buy private label brands because they have pressure on limited budget (Richardson et al, 1996).

However, Sethuraman and Cole (1999) found that not only do higher income consumers like to purchase national brands, but also are lower income shoppers likely to buy national brands. It means lower income consumers are not always willing to buy store products because they may think national brand products can enhance their social status and self-concept. Moreover, Coe (1971) reported that the higher income female are notably more store brand prone than lower income female. Correspondingly, Murphys (1978) study purposed high income consumers have stronger willing to choose store brands than middle and low income consumers. Although higher income consumers have higher budget in shopping, they may prefer to buy lower price and large quantity products, store brand products.

In opposition, these higher income consumers have higher price perception than lower income consumers. Therefore, they are likely to purchase private brands for 21

e

m

o

c

n

I

2

.

6

.

2

saving money (Ailawadi et al, 2001). Above the studies, they seem it is not clear to figure out store brands for the impact of consumers income level.

The study of the direction of the relationship with store brand proneness is fewer in consumers education level. One reason is that education may consider as a substitution to measure for income. Another reason is that other things being equal, higher educated consumers may prefer to choose high price national products and enjoy more liberty in decision-making processes (Sethuraman and Cole, 1999). Furthermore, higher educated people have greater opportunity costs for time and hence they might not want to waste time on searching good deals (Hoch, 1996). So, the supposition would be a negative between store brand tendency and education level.

However, consumers, who have certain amount of cognitions about store brands, would like to choose store brands. Higher educated consumers may be able to make a distinction in product category of national and private brands and to process some product indications (Richardson et al, 1996). Chen (1997) examined some chain stores in Taiwan and found the result that higher educated consumers are gradually accepting the private brands, but Lii and Hung (2003) provide education variable does not have any influence in store brands intention. Thus the education factor still is ambiguous.

n

o

i

t

a

c

u

d

E

3

.

6

.

2

22

In general, regardless of other factors, the bigger the family size, the fewer the resources they have. The greater family should be more sensitive in product price because of the fixed budget that needs to share with large number members. Therefore, larger families may not spend a lot of money on more expensive national brands. Sudhir and Talukdar (2004) propose the size of family has a strong influence on purchasing private label brands because the family, which has children, is likely to buy store brands. Besides, the married families with children have more spending than no children families, the choice of store brands results from economic factors, such as income constraints (Hansen, 2006).

Perception is the direct response, when people are stimulated by some physical actions. Moreover, as people explain their feeling, this is a perception. Different perceptual steps may take various time lengths (Zhong, 1990). Richardson et al (1996) point out that the broader definition of perception is people have important inner response from their environment. Therefore, an individual consumer has different perceptions. Consumers have different stimulus, acceptable levels, and information from the same product. Furthermore, the perception acts just like a process that directs consumers on how to process, organize, and explain the outer stimulus, as well as giving a meaning and complete process (Wu, 1999). The study would like to discuss the influence between consumers perception and consumer behaviour.

n

o

n

i

t

o

i

p

t

e

p

c

e

r

c

e

r

p

e

f

p

o

e s

zn

i r o

s e i t

yi

l m

i n u i f

m

s

e

a n

D

Fo C 1

4

. .

7

7

6

. . .

2 2 2

23

Steenkamp (1990, p315) mentions A mental predisposition to respond in a consistent way to quality-related aspects which is organized through learning and influences behaviour. Moreover, he also provides that perceived quality is considered as one-dimensional, a higher-level, abstractly evaluative judgment which is based on the consciousness of goods about the quality attributes.

Bellizzi (1981) and Ghosh (1990) propose that quality perception of consumers is the result of subjective judgement for a product, and consumers can evaluate a product by judging the superiority of products. Steenkamp (1990) provides one more point of view that perceived quality may be wholly objective or totally subjective. It includes a subject-object interaction because consumers would form a subjectively brand image by product or service diversity. Furthermore, he also offers that quality consciousness of a product can be valued in contrast to other goods, and the sense is objective because it depends on the subjects and the context.

Aaker (1996) defines that perceived quality is that the recognized level for the quality of whole product, as well as the subjective satisfaction in comparing with other brands quality for certain sakes. Therefore, perceived quality can make consumers have a subjective judgement and form brand differences of product or service. Finally, consumers perceived quality becomes an influence factor, when they want to buy a product. However, Aaker (1996) thinks there are some differences between perceived quality and actual quality.

n

o

i

t

p

e

c

r

e

p

y

t

i

l

a

u

q

e

h

T

2

.

7

.

2

24

1. Different quality cognitions exist in consumers and manufacturers. Manufacturers must focus on some product attributes, when they promote their products. However, consumers might do not consider the attribute is important for them.

2. Prior image or knowledge. Consumers with more prior knowledge are inclined to have more interrelated schemata of product-related cognitions, which would affect their processing of quality-related information (Steenkamp, 1990). Moreover, consumers may be affected by former bad quality, and then they do not want to believe that new products have already improved their quality.

3. Incomplete product information Generally, consumers are seldom to acquire necessary information to evaluate the product objectively. Even though they have abundant information, they may not have enough time to judge the product. Finally, what they only can do is that they just choose the most important information to evaluate a product alternatively. Additionally, consumers may choose wrong cues or do not know what the correct product information is.

Recently, both Binniger (2008) and Sethuranman (2003) found that the quality of products plays a very important role in consumers satisfaction and purchase decision. Sudhir and Talukdar (2004) also provide a positive relationship between quality awareness and consistency of private brand products and store brand buying intention. Past studies find that most consumers still think national brand products have better 25

taste, quality, flavour, and are more reliable than store brand products. Therefore, consumers are not willing to buy store brand products because of a perception regarding the relative poor quality of these products (Cunningham et al, 1982 and Richardson et al, 1996).

Meanwhile, Quelch and Harding (1996) propose that store brand and national brand products have an obvious gap in the level of quality. Now, the gap has lessened. The quality levels of store brand are better than before. Sinha and Batra (1999, p242) indicate that 20% of retailers in the UK report providing own-labels of better quality than national brands, and 62% claim having private label brands of equal quality. Wulf et al (2005), Steiner (2004) provides that the quality of store brand products have gradually caught up with national brands. This result is also in line with current trends suggesting that many consumers think store brand products do as well as or taste as good as national brand products (Binniger, 2008).

This study wants to discuss the food products with consumers intention in private label stores; thus, food quality can be divided into many parts, such as performance, durability, edibility, and economy. Moreover, it can be evaluated by types, weight, smell, flavour, and ingredients (Steenkamp, 1990). Wulf (2005) gave a definition that the appropriate food quality means the quality of food products is composed of products outlook, aroma, colour, flavour, texture, nutritional value, and fresh, as well as consumers are satisfied with what they purchased products.

26

e

s

a

h

c

r

u

p

s

r

e

m

u

s

n

o

c

d

n

a

s

u

o

i

c

s

n

o

c

y

t

i

l

a

u

q

f

o

n

o

i

t

a

l

e

r

e n

ho

Ti t n

3

. e t

7

. n

2 i

When consumers purchase products, quality cognition is an important factor. Aaker (1996) thinks product quality can help consumers to recognize the brand and make the brand prominent in order to be chosen by consumers. Sethuraman and Cole (1999) suggest if the store brand managers want to increase their sales volume, they have to increase products quality for catching consumers eyes. Both Zeithaml (1988) and Ghosh (1990) give a result that the higher quality consciousness customers have, the higher purchase intention customers would have. They also find consumers do have doubt about low-price store brand products, especially in terms of quality problems. Therefore, quality consciousness and purchase intention are relative and positive. Also, according to Lichtenstein et al (1993) and Sudhir and Talukdar (2004) studies, both of them provide that consumers indeed have some doubts about the quality of low-price store brand products, and then reduce their purchase intention.

According to Wheatley (1981) and Binninger (2008), the quality of products has a significant influence on a brands performance. When private label brands create higher quality products, consumers have greater quality consciousness. Namely, private label brands can earn more market share by improving their quality images because most consumers are price-sensitive. Say in other words, consumers hope to spend less money on products, but they can acquire at least the same quality as other high-priced products. However, private label brand retailers need to face gradually higher cost problems when they want to enhance quality image.

Furthermore, Marcel (2000) find consumers first will have quality consciousness from products or service when they buy the private label brand products or service. After having quality consciousness, they will emerge purchase need. Also, retailers 27

want to attract more consumers, they can enhance product quality to earn more profit as well as to maintain consumers loyalty and satisfaction (Corstjens and Lai, 2000). Grewal et al (2004) also argues that willing is the first factor considered when consumers evaluate one product. So, good and bad quality will directly affect consumers purchasing behaviours.

Batra and Sinha (2000, p 177) give a definition of price conscious as the degree to which the consumer focuses exclusively on paying as low price. Namely, consumers will base their acquirement and produce price to evaluate the whole effect of products. Additionally, value for money implies consideration of quality not in absolute terms but in relation to the price of a particular brand (i.e. utility per dollar) (Richardson et al, 1996, p163). Moreover, the lower priced product sometimes has attractive features, such as organic ingredients, double cream, which may be considered as providing better value for money than others brands which set the equal price but comprised of less attractive attributes (Richardson et al, 1996). Therefore, when consumers perceive obtainment of more benefit, their value perception will be higher. Equally, consumers who spending less money when they buy the product; they have higher price/ value consciousness (Zeithaml, 1988).

Zeithaml (1988) provides value is low price. Consumers can have discount and use coupons to buy products that mean high value for them. If consumers pay the price to acquire quality products, they can also perceive value. Moreover, Bellizzi (1981) arguing perceived value is after consumers buy the product, they obtain the percentage of the product which includes in paid price and acquired quality. Higher 28

s

n

o

i

t

p

e

c

r

e

p

e

u

l

a

v

/

e

c

i

r

p

n

e

e

w

t

e

b

n

o

i

t

a

l

e

r

e

h

T

4

.

7

.

2

quality products, which decrease their price, usually are more attractive than lower ones. This is because consumers perceive more value in discountable and higher quality products.

Furthermore, the higher product value means consumers pay lower price, and then have a better product. Lichtenstein et al (1993, p235) defined price consciousness as the degree to which the consumer focuses exclusively on paying low price. Meanwhile, manufacturers offer discount and coupons of products which are viewed as the higher product value for shoppers. Beside, consumers desires and satisfaction also can be a tool to evaluate value. For example, consumers want to lose their weight by playing tennis when they decide to buy the racket and balls. That is, consumers perceive value that is losing weight as they bought rackets. Additionally, if consumers spend less money and acquire products of the higher quality brand or more quantity products, they will have higher price/ value consciousness (Zeithaml, 1988).

Store brand products are usually positioned to emphasize their value (quality fitted for price) to attract to price conscious shoppers (Sudhir and Talukdar, 2004). Dick et al (1995) also found private label shoppers are more likely to be price sensitive than other consumers. Therefore, as consumers spend less money on gaining higher quality product, their price consciousness and purchase intention normally will improve. According to Sethuraman and Cole (1999) provide when the product price increases, consumers perceived risks of the price and value also increase. Namely, consumers 29

e

s

a

h

c

r

u

p

s

r

e

m

u

s

n

o

c

d

n

a

s

u

o

i

c

s

n

o

c

e

u

l

a

v

/

e

c

i

r

p

f

o

n

o

i

t

a

l

e

r

e n

ho i

Tt n

5

. e t

7

. n

2 i

may decide to choose higher priced products, such as national brands, because they are afraid of buying bad quality products.

Steiner (2004) found that consumers have higher recognition about the value of the store brand product; therefore, they are willing to buy it. He suggests retailers can enhance consumers intentions through decreasing price. Moreover, Sethuraman and Cole (1999) conclude that most private label brand consumers are middle income and price sensitive, which encourages them to purchase private label brand products and to obtain more value as well as knowledge about quality differentials.

In other words, Zeithaml (1988) uses three factors, probable purchase, want to purchase, and considered purchase as variables to examine the relation between value and the willingness to terms of purchase. The result is positive. Consumers are willing to buy the product if they perceive worthy value. Besides, Bruno (1994) offers there is a positive relation in purchase intention and price value.

However, private brands were considered as low quality and low price in the past, so not all consumers are willing to purchase their goods. That is why retailers would like to increase and entice consumers shopping desires now. Therefore, they try to add extra product value, whilst keeping price low. According to a recent study, more retailers are gradually changing their intrinsic characteristics, such as the creation of added value for money, image building, providing better or equal quality, innovation, and unique goods (Anselmsson et al, 2008). In addition, Grewal et al (2004) offer perceived value and consumers satisfaction are a positive relationship. The purpose of change is to increase consumers purchase intention. Above of all, price and value 30

may influence consumers purchase behaviours.

Risk is the degree of inconvenience of marking a mistake (Batra and Sinha, 2000, p 178). In other words, the perception of purchase risk is subjective. It is the probability of making a wrong choice in shopping, and how much degree do consumers afford the ability of losses in purchase (Sinha and Batra, 1999). When consumers buy any merchandise, it may come with unpredictable risks that some of them are unpleasant. Therefore, these unpredictable results can be viewed as risks.

According to the theory of consumers perceived risk, consumers perceive risks because of uncertainty and mistakes of shop. The appearance of uncertainty is related to the product itself. Consumers usually feel insecurity caused by too low price, simple packages, and less well-known brands. Moreover, losses result from losing money and value after they purchase the product (Lim, 2003).

Cunningham (1967) agrees that there is the level of perceived risk among products. For most of consumers, different products bring different risks; therefore, it is not suitable to define low or high risks of products because perceived risks are individual and dynamic. Therefore, consumers may feel more risks on the product today, and maybe they may feel fewer risks tomorrow. The more risk they consciousness perceive, the less probability they will buy.

n

o

i

t

p

e

c

r

e

p

k

s

i

r

e

h

T

6

.

7

.

2

31

Perceived risk and consumers behaviour are close relationship because consumers are more often motivated to avoid mistakes than to maximise utility in purchasing (Mitchell, 1999, p. 163). As consumers want to buy the product, they may receive different risks. If product riskiness is high, it will make consumers hesitate to choose brands. Batra and Sinha (2000, p178) provide that one of the determinants of risk is the degree of inconvenience of making a mistake. He also mentions some products such as baby food should clearly be viewed as more risky than other products, such as toiletries. Therefore, consumers prefer to buy the low risk product for themselves, such as the familiar or the clear label product, because the cost of making a mistake for baby food is obviously more rigorous than toiletries. Besides, Cox (1967) provides that when consumers choose the store brand product, they may feel high risk because most of them are not familiar with these products.

Sethuraman and Cole (1999) purpose there are some common risks in consumers purchasing behaviours (i.e. performance, financial, social, time, and functional). Take the time risk for example, it could make consumer waste their time on purchasing a type of brand than different one. Dunn et al (1986) found that risks of finance and performance are most closely correlated with store brand alternative. Moreover, functional and financial risks appear to be correspondent the product which is not compliant with functional could directly cause financial damage for consumers (Semeijn et al, 2004). Sinha and Batra (1999) also found that there is a phenomenon of information asymmetry between buyers and manufacturers that may increase consumers perceived risks. That is, consumers cannot understand the product very 32

e

s

a

h

c

r

u

p

s

r

e

m

u

s

n

o

c

d

n

a

s

u

o

i

c

s

n

o

c

k

s

i

r

f

o

n

o

i

t

a

l

e

r

e

hn o

Ti t n

7

. e t

7

. n

2 i

well, so they are afraid of buying the product.

However, Dick et al (1995) found that providing in-store taste tests that can minimize consumers perceived risks and store brand inferiority. The financial risk with private label brand may use another way to reduce risks, such as offering money-back guarantees and distributing free food samples. Furthermore, Livesey and Lennon (1978) argue that social risk is also viewed as a shortage in purchasing private label brand. For example, they found British consumers offer national brand tea to their guests, but they just drink cheaper store brand tea. Additionally, Batra and Sinha (2000) argue that consumers usually purchase store brand products in products categories where they think lower risks in their product choice.

Every retailer own brand has different market share in different countries. The trend of private label brand is more popular in Europe, because European retailers develop higher quality and diverse products (Tulin, 2004). In addition, Ailawadi et al (2001) found private label brand buyers like to try various products. That is, these private label buyers can afford to higher risks. On the other hands, although purchasing national brand product is a good way to reduce risks, store brand goods are cheap and may have the same quality and value as national brands. So, consumers are willing to buy cheaper private label products and can afford to take higher risks. Therefore, consumers attitudes, such as risks, quality, value and price, play an important role.

Store brands are owned by retailers, who directly coproduce products generally with other famous manufacturers. Furthermore, these products use retailers own 33

y

r

a

m

m

u

S

8

.

2

labels or names to sell them and the products only sell in their own supermarkets. Many store brands differentiate themselves from other national brands in that they are good quality and low priced (Sethuraman and Cole, 1999). For consumers and retailers, store brand products indeed can bring them more valuable profits.

The brand can provide information for consumers to influence their decision-making and to strengthen their confidence. Also, building the store brands can increase retailers sale volume and consumers loyalty. Now, store brands are not only substitutions, but also are viewed as differentiate goods in supermarkets. Because store brand products do not need to pay for shelf space, they can save cost for retailers enabling them to be sold at a lower price for consumers (Wulf et al, 2005). Moreover, they enable consumers to buy cheaper, both similar quality food, without coupons or waiting for discount promotions.

Not all products are suitable to be store brand products. The requirements are lower brand loyalty, no difference among products, high-frequency goods, easy to differentiate the quality of products, and not high and sensitive products (Yu, 2007). Therefore, most retailers focus on store brand food products. According to some studies mentioned above, the majority of store brands are viewed as mid-high quality and low price products (Burt, 2004 and Binninger, 2008). However, if the prices are too low retailers hardly earn any profit; consumers can think that the products are not good quality, so the price is a problem for both of them.

Moreover, once consumers have product suspicions in their mind, they then consider more reasons to buy products, such as quality, value, price, and risks. The 34

quality perception is the first consideration for most consumers (Ghosh, 1990). Therefore, quality perception has a large influence on consumers purchase desire. When consumers perceive higher quality in store brand products, they are more likely to buy these own brand labels. As time has passed, the quality of store brands has improved. Therefore, this study wants to discuss whether consumers consciousness of quality has an influence on their intentions to purchase store brands.

Second, former studies provide that lower price is the weapon of store brands (Sudhir and Talukdar, 2004). Sometimes, lower priced products have more attractive features. Also, lower prices indeed have positive influence on consumers behaviours (Sinha and Batra, 1999). Sethuraman and Cole (1999) mention consumers risk consciousness enhance as goods price enhance. That is, consumer may not willing to buy private label brands in higher-priced product categories due to if the private label brand product cannot offer them satisfaction, they will lost a comparatively large quantity of money. From above, this study would like to discuss whether store brand food products offer lower or higher prices that would influence consumers intention.

Third, consumers lend to judge the quality of products based on what they see, such as the packaging, especially when they have to pick one among many brands. Therefore, the package of the product is an external tool to represent products value. A number of authors (e.g. Richardsion, Jain, and Dick) have suggested that price and value influence each other, so they think expensive products are better than cheap one (Richardsion et al, 1996). However, more retailers keep the price low and change their intrinsic characteristics to increase value and to catch consumers eyes. According to above studies (Grewal et al, 2004 and Bruno, 1994), the product value and consumers 35

intentions have a positive relationship. So, this study will investigate whether product packaging influences consumers perceptions of value, and whether this in turn will influence consumers intentions to purchase.

Fourth, consumers would rather maximize product utility than make mistakes in buying goods. Therefore, they are willing to choose more familiar products in order to avoid risk. Everyone perceives the level of risk differently, especially in edible products. Moreover, Batra and Sinha (2000) suggest that risks and consumers purchase intention have a mutual connection. This study will investigate whether risk affect consumers purchase desires.

Moreover, socio-economic variables seem to have an important influence for store brands products. The older consumers may be willing to purchase store brand products (Richardsion et al, 1996); lower income consumers probably choose store brand products for saving some money (Sethuraman and Cole, 1999); higher income consumers may buy a store brand product because they do not have time on understanding product information or they have stronger price perception because they want to save more money (Ailawadi et al, 2001); higher educated consumers are more prone to purchase the private label products in terms of searching more product information; families, particularly large families, are purchase store brand products; higher perceived value consumers are more likely to choose store brands, sometimes retailers will use lower price to increase consumers value perception because value consciousness and purchase intention are positive relation (Bruno, 1994 and Steiner, 2004). Therefore, the study will also examine that the influence of these socio-economic variables in buying store brand products. 36

This study is to understand participants purchasing intention in store brands. According to the literature review, the study would like to discuss that quality perception, value perception, price perception, risk perception, and consumers socio-economic status may affect their purchasing intention in store brand products. Both Monroe and Krishnan (1985) and Zeithaml (1988) provide the model and concept of quality consciousness, price consciousness, and value consciousness, the study adds risk consciousness to test consumers purchasing intention.

Furthermore, the chapter also gives details of the sample and the questionnaire design. The goal of the questionnaire was to examine investigate UK consumers purchase intention and how four factors, the price, the quality, the value, and the risk, influence their buying process.

Figure 2: Conceptual framework for research

Quality

Socio-economic status

Value Consumers purchasing intention Price

Risk

37

s

i

s

e

h

t

o

p

y

h

d

n

a

e

r

u

t

c

u

r

t

s

h

c

r

a

e

s

e

R

-

-

3

r

e

t

p

a

h

C

H1: Socio-economic factors have an impact on consumers likelihood of purchasing store brands. H1a: Young consumers less likely to have positive intention on store brands. H1b: Lower income consumers have positive intention on store brands. H1c: High educated consumers have positive intention on store brands. H1d: Large family consumers have positive intention on store brands.

H2: The better the perceived quality, the more likely consumers are to purchase store brand.

H3: The better the perceived value for money presented by store brands, the more likely consumers are to purchase store brands.

H4: The lower price changed for store brands, the more likely consumers are to purchase store brands.

H5: The greater the perceived risk related to the purchase of the store brand product, the less likely consumers are to purchase store brands.

In order to discover the fundamental principles of certain phenomenon, doing research is necessary. Regarding the science of knowledge acquirement, epistemology 38

n

g

i

n

s

o

e

s i d t

e c

s h

e

u

c

d

r

h

t o a r

o e t

p s nI

e

y 1

H R.

1 2 2

.

. . 3

3 3

is connected to the science of knowing, however, methodology is recognized to be the science of discovery (Babbie, 2004). Arnould et al (2004) propose that gathering, recording, and analysing data are to understand and foresee how consumers feeling, thinking, and behaviours are.

Generally, qualitative and quantitative researches are two types of research methods. Both of them include various approaches, which are decided by the kinds of research data being collected. This chapter will introduce diverse theories and research methods, and give good reasons for choosing a fitting method for this study.

In this area, most studies discuss the research traditions, theories, and reliability and validity of data so as to offer a common view about how the research is conducted and which causes affect the justification of research method.

Gephart (2004) argues that there are two research traditions, positivism and interpretive research. Moreover, Easterby-Smith et al (2002) propose that the only reliable knowledge that is established on substantial sense experience, and they assume that a social world only comes from confirmation of theories by strictly and objectively research method. Therefore, the research tradition is characterized by a highly organized methodology to ease duplication as well as by quantifiable observations that are statistically analyzed (Saunders et al, 2003).

s

n

o

i

s t i

d d

n a

ur

o t

r

h

g c

kr

c a

a e

b s

l e

a r

c t

i

t n

e e

r r

o e f

e f i

h

D

T3

2

. .

2 2

. .

3 3

39

However, there are advantages and disadvantages when people conduct positivist research. The first advantage is that it can provide a broad coverage of the research range. Secondly, positivist research can be fast and economical. Oppositely, some disadvantages of positivist research are that it is inflexible and artificial (Easterby-Smith et al, 2002). Moreover, positivist research is not helpful and useful in research context.

Additionally, the second point of view is interpretivism. The method is to discover the subjective intention motivating participants actions in order to understand reality deeply. From the explanation of social constructionism, reality is socially constructed. However, different interpretations can affect people actions and the character of their social interactions with other people (Saunder et al, 2003).

Moreover, this method also has its advantages. For example, researchers can understand the whole transform processes, recognize peoples meanings, modify their new ideas when they create, and make the change of new theories. However, it is also argued from the other to have a number of limitations, this method is time and source consuming and low credibility, as well as difficulties in explaining the data (Easterby-Smith et al, 2002).

Researchers have been discussing what a proper methodology is for social research for many years. According to the depiction and explanation of phenomena, quantitative research method highlights on analyzing numerical data; however, qualitative research method emphasis on describing, understanding, examining, and 40

s

d

o

h

t

e

m

e

v

i

t

a

t

i

l

a

u

q

d

n

a

e

v

i

t

a

t

i

l

a

u

Q

4

.

2

.

3

explaining complicated phenomena (Babbie, 2004).

Moreover, the feature of qualitative method is that it can look into in-depth phenomenon about which little is not yet discovered, or to have fresh viewpoints of what is already discovered (Kirk and Miller, 1986). In other words, Silverman (2000) also provides qualitative method is to describe the procedure of how we outline and assess variables. However, in this study much is already known, therefore, more appropriate to utilized a quantitative approach.

Comparing qualitative method with quantitative method, there is less research using qualitative method. Furthermore, quantitative method depends on experimental, official statistics, random sampling data which can generate valid or reasonable explanations.

Quantitative methods are often used by researchers because they can analyze data established on representative samples of a large scale and have an entire set of classification for an event, behaviour or thought described (Proctor, 2000 and Silverman, 2000). Therefore, quantitative method is more popular than qualitative method in this case because it can easily explain clear data analysis to readers.

The research instrument is designed through conducting the quantitative method in the study because quantitative methods are more appropriate for large scale issues. Moreover, the study wants to understand social process, especially to investigate and explicate the way people think, feel and behaviour and motivations in their minds (Bryman and Burgess, 1999). Moreover, according to Churchill (1999), the main 41

target of the research design will be initially relevant to the problem and then will employ economic procedure. The attempt is to express the possible relationships between one or more independent variables by conducting a great number of data. In comparison of relative costs with other methods, the quantitative research method is viewed as a more proper and controllable tool to test this context.

The reliability for data analysis plays very important roles in research. This factor can determine the researchs success or failure. Reliability in the research means its consistency. Also, Nunnally and Bernstein (1994, p248) define reliability as the extent that measurements are repeatable. Namely, the same result of research can be acquired by different or some people on different occasions. For instance, if a research is designed to test the attribute, and then every time the research is administered to the issue, the outcome should be nearly the same (Blaikie, 2006). Bryman (2004) provide that in order to validate reliability, researchers can duplicate the same research to check whether the result is obtained on following occasions. Reliability relies on how much of the differences in the scores are pin to random errors and how much is measurement error (Chisnall, 2005); therefore, the study used the Cronbach alpha to test reliability of the questionnaire.

There are many research methods which can be used to this survey, but this study used self-completion questionnaire, such as mail, on-line, fax, and telephone survey (Blaikie, 2006). Furthermore, this study collected each 50 percent data from on-line 42

t

n

e

am

t

u

a r

d t

f s

o n i

y

t

h

i

l c

i r

b a

a e

i

l s e

e

R R

56

. .

2 2

. .

3 3

survey and interview survey. Using self-completion method can give participants fill out the questionnaire in their own time, and quick to complete the questions (Creswell, 2003). Also, the study could collect the data on a short timescale, and the bias would minimize by on-line questionnaire because participants cannot see ahead or any supplementary information to help them to answer the questions (Chisnall, 2001).

The questionnaire measures consumers perceptions on diverse facets explained in the above literature, including perceived risk, quality, price, and value of the products as well as consumers intention. Mittal and Lee (1989) mention a scale to test all these various facets of involvement. Moreover, their scale uses over 20 items and may cause participants fatigue because the questionnaire administers too many products. However, they suggest a shorter measurement scale includes in only 14 items that can capture all the element of consumer perceptions of brands effectively. Therefore, the questionnaire administers the whole image of the store brand food product in this study. The questionnaire does not exactly mention how many food product categories.

Furthermore, consumers can connect to their buying behaviour and intention. The intention of store brand products is measured across various facets using five-point Likert scales. Likert-Scales are frequently used to test attitudes and simple to build and have good reliability (Crouch and Housden, 1996 and Chisnall, 2005). With mainly using five-point Likert-Scale range (Strongly agree/ agree/ neutral/ disagree/ strongly disagree and never/ seldom/ sometimes/ usually and always), the participants were questioned to think about the degree of agreement with the sets of statement.

43

This survey is conducted in the context of Nottingham (UK) supermarkets, such as Tesco and Sainsbury. For 40 percent of the interviews, data were collected in face-to-face interviews of Nottingham (UK) consumers of retailer brands recruited while existing point-of-sale v