Private Label free essay sample

PRIVATE LABEL BRANDS AND THEIR PERCEPTION AMONG INDIAN YOUTH Dr. Ankit Mehrotra Faculty Jaipuria Institute of Management, Lucknow Dr. Reeti Agarwal Faculty (Marketing), Jaipuria Institute of Management, Lucknow Article No: 180 Year:November 2009 ISSN 0974 – 9497 Volume 3, Issue 4/4 Abstract: Retail and real estate are the two booming sectors of India in the present times. Retail, one of India’s upcoming industries, has presently emerged as the most dynamic and fast paced industries of recent times with several players entering the market. One of the routes taken up by Indian retailers to succeed in the retail business is to focus on private label brands. Retailers use private label brands to compete with the national brands by setting competitive price points. Determining customer perception towards private label brands is an essential part of a retailer’s marketing strategy formulation process. To gain this understanding in respect of Indian customers specially the youth of India, the study was conducted using the personal survey method on respondents taken from the northern part of India. We will write a custom essay sample on Private Label or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page The major findings of the study depict that though respondents on the whole prefer national label brands over private label brands, the preference pattern is significantly affected by the age and profession of respondents. Age and profession were also found to affect the preference pattern and satisfaction level of respondents in respect of private label brands in different categories of products. Key words: profession Private label brands, apparels, grocery, electronics, Indian youth perception, age, INTRODUCTION The Indian retail market, which is the fifth largest retail destination globally, has been ranked the second most attractive emerging market for investment after Vietnam in the retail sector by AT Kearneys seventh annual Global Retail Development Index (GRDI), in 2008. The share of retail trade in the countrys gross domestic product (GDP) was between 8–10 per cent in 2007. It is currently around 12 per cent, and is likely to reach 22 per cent by 2010. A McKinsey report The rise of Indian Consumer Market, estimates that the Indian consumer market is likely to grow four times by 025. Commercial real estate services company, CB Richard Ellis findings state that Indias retail market is currently valued at US$ 511 billion (Bang, 2009). Banks, capital goods, engineering, fast moving consumer goods (FMCG), software services, oil marketing, power, two-wheelers and telecom companies are leading the sales and profit growth of India Inc in the fourth quarter of 200809. India continues to be among the most attractive countries for global retailers. At US$ 511 billion in 2008, its retail market is larger than ever and drawing both global and local retailers. Foreign direct investment (FDI) inflows as on January 2009, in single-brand retail trading, stood at approximately US$ 1 25. 18 million, according to the Department of Industrial Policy and Promotion (DIPP) (www. dipp. nic. in). According to the Investment commission of India, the overall retail market is expected to grow from US$ 262 billion to about US$ 1065 billion by 2016, with organised retail amounting to US$ 165 billion (approximately 15. per cent of total retail sales). India is expected to be among the top 5 retail markets in the world in 10 years. Indias overall retail sector is expected to rise to US$ 833 billion by 2013 and to US$ 1. 3 trillion by 2018, at a compound annual growth rate (CAGR) of 10 per cent. As an emerging market with high growth rates, consumer spending has risen sharply as the youth population (more than 33 percent of the country is below the age of 15) has seen a significant increase in its disposable income. Consumer spending rose an impressive 75 per cent in the past four years alone. Also, organised retail, which accounts for almost 5 per cent of the market, is expected to grow at a CAGR of 40 per cent from US$ 20 billion in 2007 to US$ 107 billion by 2013. India has emerged the third most attractive market destination for apparel retailers, according to a new study by global management consulting firm AT Kearney. It further says that in India, apparel is the second largest retail category, representing 10 per cent of the US$ 37 billion retail market. It is expected to grow 12-15 per cent per year. Apparel, along with food and grocery, will lead organised retailing in India. India has one of the largest numbers of retail outlets in the world. A report by Images Retail estimates the number of operational malls to grow more than twofold, to cross 412, with 205 million square feet by 2010, and a further 715 malls to be added by 2015, with major retail developments even in tier-II and tier-III cities in India. Also, according to new market research report by RNCOS titled, Booming Retail Sector in India, organised retail market in India is expected to reach US$ 50 billion by 2011 (http://www. rncos. com/Report/IM112. ht m) . The report specifies that the number of shopping malls is expected to increase at a CAGR of more than 18. 9 per cent from 2007 to 2015. It further specifies that rural market is projected to dominate the retail industry landscape in India by 2012 with total market share of above 50 per cent. Thus, according to industry experts, the next phase of growth is expected to come from rural markets, with rural India accounting for almost half of the domestic retail market, valued over US$ 300 billion. Rural India is set to witness an economic boom, with per capita income having grown by 50 per cent over the last 10 years, mainly on account of rising commodity prices and improved productivity. As already mentioned, the Indian retail industry is valued at $270 billion, with organized retail cornering 4. 5%. The organized pie is expected to see a growth at a CAGR of 37 % (India Retail Report 2007) 2 Source: http://www. chillibreeze. com/articles_v arious/top-10-retailers. asp In order to be truly successful, retailers must advance from the generic or store brand mindset of the past to a new private label paradigm. Many retailers have begun to describe their private label brands as â€Å"own† brands because there is recognition that these proprietary, exclusive offerings are tools that represent momentous power and potential for the retail store. Sales of private label brands (PLBs), also called store brands, have been growing rapidly in recent years (Batra and Sinha, 2000). The term â€Å"own† brands acknowledges that today’s visionary retail marketers have powerful proprietary portfolios that they control and manage and there is potential to reap bigger and better rewards by taking a closer look at the way they orchestrate the role and expression of these brand offerings in the eyes of consumers in each product category. Those retailers who appreciate the magnitude of this brand opportunity have created a new industry standard in their realm of influence and activity. Retailers like PLBs because of their potential to increase store loyalty, chain profitability, control over shelf space, bargaining power over manufacturers, and so forth (Richardson, Jain, and Dick, 1996). Among consumers, one obvious reason for their popularity and growth is their price advantage (averaging 21%) over national brands (Batra and Sinha, 2000). Nevertheless, high quality seems to be more important in determining PLB success than lower price (Hoch and Banerji, 1993; Sethuraman, 1992). â€Å"Own† brands are articulated and developed in a way that they not only fit with the brand promise of the retail store, but if effective, they also give consumer a key point of departure to enhance and celebrate the overall retail brand proposition to keep consumers coming back for more. One of the interesting phenomena concerning PLBs is the fact that their growth has been highly uneven across product categories (Hoch and Banerji, 1993). The present study has been undertaken to gain an insight into Indian customers’ specially youth’s perception of private label brands and to explain variations in purchasing preferences for private label brands versus national label brands across three product categories. THEORETICAL FRAMEWORK 3 Meaning of Private Label Brands A private-label product is a manufactured good that a retailer purchases from a supplier, with the intention of renaming, repackaging and selling it under the distributor’s own brand name. Depending on the agreement between a manufacturer and a retailer, the manufacturer sometimes handles the packaging and labeling for the retailer for an additional charge. Otherwise, the retailer is responsible for the process of dressing up the product as its own. Thus, it can be said that Brands owned not by a manufacturer or producer but by a retailer or supplier who gets its goods made by a contract manufacturer under its own label are called private label brands. Manufacturers use either their own name, that of a middleman, or a combination of both when they are marketing their products. Private labeling occurs when middlemen, usually large retailers or wholesalers, develop their own brand. Building a following from scratch through private-label products, especially in rough economic times, is challenging because smaller retailers do not have the marketing budget compared to their larger-sized competition. Evolution of private label brands The definition of private label branding has evolved significantly over time. Some would argue the term â€Å"private label† is a misnomer of great proportions. There is no question that the words â€Å"private label† acknowledges the birth, history and existence of generic and store brands. Yet, the term does not adequately capture the extent to which private label has progressed. Todays retail marketers are managing their proprietary brands with the same combination of care and innovation as manufacturers of national brands. In recent years, retailers have been liberating themselves from the traditional definition of private label marketing as being the poor relative of national brand consumer goods, and, in doing so, opening up huge opportunities for private label branding. These opportunities require the adoption of a different set of marketing and branding practices to support and propel the retailer’s business and marketing ideals for its private label brands. The key to successful marketing management for today’s retailers is to understand the contribution and role of their proprietary or â€Å"own† brands in the long-term business strategy and marketing mix of the retail store and consider both the supply side and the demand side of the equation. Effective category management can enable retailers to solidify and optimize supplychain relationships. Strategic brand management goes hand in hand with these endeavors to establish sustainable points of difference in each aisle and segment within the store. It also spurs decisions about how to appropriately define the retailer’s â€Å"own† brand portfolio in order to galvanize consumers to connect and reconnect with its franchise in a compelling manner. Benefits of Private Label Brands Since manufacturers (producers) brands have large advertising expenditures built into their cost, a private labeler is able to buy the same goods at a lower cost and thus sell them at a lower price and/or at a better profit margin. In addition, private labelers have more control over pricing and are able to advantageously display their own brands for maximum impact. For example, a grocery store can quickly reduce the price of its own private-label brand in order to meet or beat a competitors price. Or the grocery store can create a special point-of-purchase advertising display and/or give its brand predominant shelf space in order to boost sales. Private-label brands are usually priced lower than comparable 4 manufacturers brands and therefore appeal to bargain-conscious consumers. An example of a private-label brand would be a supermarket product bearing a store label with a products name. As already mentioned, retailers like PLBs because of their potential to increase store loyalty, chain profitability, control over shelf space, bargaining power over manufacturers, and so forth (Richardson, Jain, and Dick, 1996). Among consumers, one obvious reason for their popularity and growth is their price advantage (averaging 21%) over national brands (Batra and Sinha, 2000). Previous studies related to Private Label Brands A review of previous studies related to private label brands brings forth researches carried out related to certain issues. For example researchers have found that one of the interesting phenomena concerning PLBs is the fact that their growth has been highly uneven across product categories (Hoch and Banerji, 1993). Dhar and Hoch (1997) found that by far the largest source of variation in PLB share across markets, retailers, and categories (40%) is due to the differences among product categories. Because the reasons for these intercategory differences in PLB share might shed light on the reasons for PLB growth overall, these differences are clearly worth researching in detail. Retailers will benefit by knowing better how to expand sales of their higher-margin PLBsand national brand manufacturers will benefit by knowing better how to fight PLB growth. Previous research investigating these across-category differences has looked at them mostly from the manufacturer and retailer perspectives. In studying the retailer economics of PLB programs, researchers have mostly examined factors such as the technology investments necessary, size of category, category margins, national brand advertising and promotional activity levels and so forth (Hoch and Banerji, 1993; Sethuraman, 1992). Thus, Hoch and Banerji (1993) find that PLBs have higher shares in large categories offering high margins, and where they compete against fewer national manufacturers who spend less on national advertising. The gap between national brands and PLBs in the level of quality also depends on the technology requirements in manufacturing that varies across categories (Hoch and Banerji, 1993). Research has been more limited on the consumer-level factors that make PLBs differentially successful across product categories. Some researchers studying consumer-level factors for PLB pronenesssuch as Richardson, Jain and Dick (1996)have not studied acrosscategory variations at all. They have chosen instead to aggregate data across categories. Those few studies that have looked at cross-category differences from a consumer-factor perspective have sometimes omitted important variables: Sethuraman and Cole (1997), for instance, did not measure and model the crucial effect of the level of perceived risk in the product category (Richardson, Jain, and Dick, 1996; Narasimhan and Wilcox, 1998). In this research, we focus upon these consumer-level perceptions of intercategory differences. By doing so, we hope to shed light on what has made PLBs successful overall, drawing implications both for retailers marketing PLBs as well as the national brands that compete with them. Any examination of the consumer-level factors that moderate PLB success across product categories should start with a framework to explain consumer 5 susceptibility to buying PLBs. Richardson, Jain, and Dick (1996) present what is probably the most extensive such framework offered to date. They argue that consumers propensity to purchase PLBs depends on (a) certain demographic factors, such as income, family size, age and education, (b) certain individual difference variables, such as the degree of reliance by the consumer on extrinsic cues (those more reliant on such cues preferring national brands) and the consumers tolerance of ambiguity (intolerants preferring safer national buys), and (c) certain consumer perceptions of the particular category (degree of perceived quality variation, level of perceived risk, and perceived value for money), as well as the degree of consumer knowledge about the category (greater knowledge increasing PLB choice). Note that though several of these perceptual factors ought to vary across categories (such as the degree of perceived quality variation, level of perceived risk, perceived value for money, and degree of consumer knowledge), Richardson, Jain and Dick did not study category-level variations in these factors. In their more recen t study, Sethuraman and Cole (1997) did model categorylevel variations in many of these factors. They also examined the effect on willingness to pay a price premium for a national brand of (a) several categorylevel variables, including the quality perception of PLBs, average price, purchase frequency, and the degree to which the category gives consumption pleasure, (b) individual demographics such as income, age, family size, gender and education, and (c) individual difference perceptual variables such as the belief of a price-quality relationship, perceived deal frequency, and familiarity with PLBs. However, as noted above, their list of category-level variables did not include crucial perceptions of the degree of category perceived risk. In this study, the consumer-level variables include category-specific perceptions of private label brands versus national label brands, the degree of variation in quality across brands, the factors customers consider important while purchasing private label brands in a particular product category, and consumer price-consciousness in that category. Price Consciousness, defined as the degree to which the consumer focuses exclusively on paying low prices (Lichtenstein, Ridgway, and Netemeyer, 1993, p. 235), has been found to be a predictor of PLB purchase (Burger and Schott, 1972; Rothe and Lamont, 1973). We include it here because it can logically be expected to mediate (and thus capture) the effect of several demographic and attitudinal variables for which have data, such as income, profession and so forth. Previous research has shown that a consumers level of price-consciousness rises with lower incomes (Gabor and Granger, 1979; Lumpkin, Hawes, and Darden, 1986), and is higher among deal-prone consumers (Babakus, Tat, and Cunningham, 1988) who believe less in price-quality associations (Lichtenstein, Bloch, and Black, 1988). Research has for long talked of the level of perceived risk in the category as being a crucial factor in PLB purchases (Bettman, 1974; Richardson, Jain, and Dick, 1996), though this variable has either not been studied at the individual category level (e. g. , by Richardson, Jain, and Dick, 1996), or has been omitted in some recent category-level studies (e. g. , Sethuraman and Cole 1997). Such perceived risk can be gauged using performance, financial, or social criteria (Dunn, Murphy, and Skelly, 1986). Drawing on the literature on perceived risk (e. g. , Bauer, 1967; Cox, 1967), Narasimhan and Wilcox (1998) argue 6 hat consumers will prefer national brands to PLB s if the level of perceived risk in buying the PLB in that category is seen as high. One of the determinants of such risk, according to Narasimhan and Wilcox (1998), Dunn, Murphy, and Skelly (1986), and others, is the degree of inconvenience of making a mistake. Similar conceptualizations have been offered in the extensive literature on product category involvement (e. g. , Laurent and Kapferer, 1985). Thus, purchases of certain product categories such as baby foods should clearly be seen as more risky than the purchases of others, such as most toiletries and groceries. The consequences of making a mistake for the former are obviously more severe. In addition, purchases that expose the consumer to social (reference- or peergroup) ridicule can also be high risk, even if they are of low dollar value (e. g. , certain types of clothing, or publicly consumed beverages). Livesey and Lennon (1978) argue that social risk inhibits the selection of PLBs. They find that English consumers serve national brand tea to guests, but consume less expensive store brand tea themselves. The other half of the consequences of making a mistake notion deals not with the consequences of making such a mistake, but with the likelihood of doing so. The expected value of any decision is obviously the product of its consequences times its likelihood (Dunn, Murphy, and Skelly, 1986). This suggests the important role of the perceived degree of quality variability in a categorydifferent from the perceived PLB quality levelfor it is the variability that should create greater uncertainty and doubt and create more perceived risk. Researchers such as Narasimhan and Wilcox (1998) have argued that the degree of perceived risk increases with the degree of perceived quality variation across brands in that category. Supporting this notion, Hoch and Banerji (1993) found that PLB share was lower in categories where the quality variability of store brands was high. Richardson, Jain and Dick (1996) found, in their analysis of aggregate across-category data, that perceived quality variation led to reduced perceived value-for-money of PLBs both directly and via perceived risk. This eventually led to a reduced, private-brand proneness. A third determinant of category-specific perceived risk, (Erdem and Swait, 1998), is search versus experience nature of the attributes or benefits involved. Several researchers have found, or suspected, that the nature of the product features makes a difference in PLB proneness. Thus, Bellizi et al. (1981) found that (in 1980) consumers rated national brands higher than PLBs and generics on prestige, reliability, quality, attractive packaging, taste, aroma, color, texture, appealing, tempting, purity, freshness, uniformity, familiarity, confidence in use, among others (italics added). Sethuraman and Cole (1997) found that national brands are more likely to command a price premium if they were higher on consumption pleasure (hedonic), instead of functional, though they do not offer a theoretical rationale for this result. To use the terminology of Nelson (1974), we suggest that hedonic attributes or benefits such as taste, aroma, color, texture, and so forth, share the characteristic of being experience qualities of a product instead of search qualities. Search attributes are those that can be verified before purchase through direct inspection or through readily accessible sources such as color or ingredient content. Experience attributes can be verified only by using the product (e. g. , taste). That is, consumers can easily compare the functional attributes of a 7 roduct such as ingredients used, quality standards or specifications met, and so forth, based on written or often numerically quantifiable descriptions in product packaging or other communications. Howe ver, such hedonic or experiential qualities as taste and aroma cannot be so easily quantified or described. They should thus create the potential for greater felt uncertainty and risk, nudging the consumer to prefer a known national brand to a lesser-known PLB. Prior research has established that consumers are less skeptical of search attribute claims than they are of claims involving experience attributes (Ford, Smith, and Swasy, 1990). Erdem and Swait (1998) argue that in product categories where the attributes are of this experience type (e. g. , in jeans), instead of being of the search variety (e. g. in the caloric content of a juice), a wellrespected brand will have a higher purchase probability because awareness will serve to reduce perceived risk. This idea that PLB proneness rises in categories where it is easier for consumers to compare attribute quality levels on search-type attributes has been hinted at, though not clearly articulated, in some previous research. Hoch an d Ha (1986) have argued and shown that consumers tend to utilize extrinsic cues, such as a brand name, when confronted with ambiguous attributes that lower their perceived ability to make objective, quality-comparisons across brands. Search attributes are, by definition, more unambiguous than experience attributes. McKinsey and Co. in analyzing intercategory differences in PLB marketshare in Europe (Glemet and Mira, 1993), found that categories with high PLB share were those that provided, among other characteristics, an easy comparison. PLB shares tended to be higher where consumers could, in their judgment, make quality comparisons more easily. Richardson, Jain, and Dick (1996,p. 180) also suggested that consumers may be more prone to select store brands for think type rather than feel type products, though they do not offer support for this suggestion. Thus, a review of previous studies undertaken in the area of PLBs indicates that, research has been more limited on the consume r-level factors that make PLBs differentially successful across product categories. Some researchers studying consumer-level factors for PLB proneness-such as Richardson et al. (1996) have not studied across-category variations at all. Also the effect of demographic variables on customer perception and preference for private label brands across different product categories has hardly been researched. Given the lack of studies undertaken in the area of understanding Indian customers’ attitude and perception of private label brands across product categories and the effect of demographic variables on this perception, the present study has been undertaken to gain an insight into how customers in India, specially youth, perceive and evaluate private label brands in comparison to national label brands. The findings of the study will be helpful for retailers to understand the importance of various factors in being successful with customers in the private label brands category. For manufacturers of national label brands, the insights will prove to be useful in leveraging their brands while for private label brands wanting to make their presence felt in the market, the findings will act as important guidelines in competing successfully with national label brands. OBJECTIVES OF THE PRESENT STUDY 8 The present study has been undertaken to understand the perception of Indian youth towards private label brands in Indian Retail and the importance they attach to such brands while making purchases. In particular, the research focuses on: 1. Finding out customer understanding/perception of private label brands. 2. Finding out their overall preference of private versus national brands while purchasing. 3. Finding out customers’ frequency of purchase of private versus national brands for different categories of products. 4. Customer satisfaction with private label brands. 5. Identifying important factors affecting customer’s decision to purchase private label brands in different categories of products. RESEARCH DESIGN The research was conducted in the northern part of India. The tool employed for generating responses was questionnaire based survey of customers with respect to their perception and opinion towards private versus national label brands across various factors. These factors were identified from various studies undertaken in this area in the past (Sethuraman and Cole (1997); Lichtenstein, Ridgway, and Netemeyer, (1993); Burger and Schott, (1972); Rothe and Lamont, (1973); Gabor and Granger, (1979); Lumpkin, Hawes, and Darden, (1986)) and on the basis of the information collected through focus group discussions. Focused Group Discussions (FGD) were conducted which provided information and understanding of the major factors and aspects associated with customers’ preference for private or national label brands. Pilot testing of the questionnaire was done on a group of fifty respondents. Unwanted and ambiguous questions were removed and some new alternatives were introduced in the questionnaire after conducting reliability analysis. This whole exercise helped in framing the questions for the final questionnaire and also helped in streamlining the information needed to conduct this research. Given the importance of age as one of the factors identified by Grundey (2006) in understanding the attachment and loyalty with a brand, age has been taken as the criterion variable in selecting the sample for the study with major concentration in the age group of 20 to 40 years. Thus, the sampling procedure adopted was quota sampling in which the relevant control characteristic was age on the basis of which quotas were formed. The respondents were selected conveniently and the information was collected through a questionnaire using the personal interview method of data collection. Only primary data was used in the research, which was obtained from the questionnaire. Likert scale was used to gain an understanding of evaluation of consumers regarding factors denoting different attributes associated with private or national label brands. RELIABILITY AND VALIDITY The first draft of the questionnaire was reviewed by two professional scholars in related fields. The contents of the draft were reviewed and revisions were suggested. The questionnaire used in the study thus qualified for expert validity. The results of the pilot test were incorporated and expert validity ensured. The pilot test for the questionnaire was conducted on a sample of 50 customers. Reliability analysis was conducted on all the 50 responses. The present study had adopted internal consistency analysis to conduct reliability testing. Cronbach’s ? came out to be 0. 699. The value indicated that reliability of the scale of measurement was significantly high. For 9 the complete study, 400 responses were generated using the pilot tested questionnaire, but only 344 completely filled questionnaires were retrieved. The reliability of the completely filled questionnaires was tested using the internal consistency method wherein the value of Cronbach’s alpha came out to be 0. 706. The profile of the respondents for the present study has been tabulated below in table 1. Refer Table 1) For convenience of display and analysis purposes, various items/values of the demographic variable Profession have been abbreviated as shown in table 2. (Refer Table 2) RESEARCH FINDINGS AND ANALYSIS Customer understanding/perception of private label brands Before formulating its business strategy it is important for a company to gain an insight into customers’ understanding and perception about a particular thing. Thus, in order to formulate strategies related to private label brands retail companies need to have clear idea about what customers’ understand by the term private label brands. Analysis of findings related to this aspect has been tabulated below in table 3. As can be seen from the table, 66. % of the respondents perceive private label brands to be goods that are outsourced from other companies (mainly local) and sold under the retailer’s name while 33. 1% of the respondents perceive private label brands to be goods which are manufactured by retailers selling them. (Refer Table 3) Customers’ preference for private label brands In order to find out the preference of overall customers towards private label brands, the respondents were asked to specify their preference for private label brands vis-a-vis national level br ands in retail outlets. As can be seen from table 4, 43. 3% of the respondents prefer private label brand while 56. 7% of the respondents prefer national level brands. Thus, it can be seen that there is not a major difference in the preference of customers for private label brands vis-avis national level brands. A review of previous studies brought forth the importance of age and profession in influencing customers’ attitude, perception and preferences. Thus, in order to find out if age or profession influence the preference pattern of customers, Kruskal-Wallis Test of Equality of Mean was administered with age and profession as the grouping variables and the preference responses of the respondents as the test variables. Significance was seen at 5% or 10% level of significance. (Refer Table 4) a) Effect of age on preference The significance of Kruskal-Wallis Test with age as the grouping variable came out to be 0. 12 which shows that age is highly significant in affecting the preferences of customers towards private/national level brands and that the preference differs in different age groups. The preference of customers for private/national level brands according to different age groups, has been given in table 5. If we consider the age groups to corresponds to two major groups that is 40 and call it younger generation and older generation respectively, it is clearly evident from the table that the younger generation has a clear cut preference for national level brands vis-avis private level brands while the preference pattern is opposite in the case of older generation. Refer Table 5 ) b) Effect of profession on preference The significance of Kruskal-Wallis Test with profession as the grouping variable 10 came out to be 0. 013 which shows that profession is highly significant in affecting the preferences of customers towards private/national level brands and that the preference differs in different profession. The preference of customers for private/national level brands according to different profession has been given in table 6 which shows people employed in government sector and also those who are retired prefers private labels more than the national level brands on a general basis. The least preference is being sown by people employed in privte sector or are professionals. Refer Table 6 ) Customers’ frequency of purchase of private label brands with respect to different product categories In order to find out customer preference for private label brands vis-a-vis national label brands in different product categories, Kendall’s W test was administered on the responses. The findings as shown in table 7, clearly depicted that based on the frequency of purchase of private label brands, grocery products topped the list followed by apparels/footwear and electronic goods. (Refer Table 7 ) The frequency of purchase of private label brands in different categories of products by customers is given in table 8. (Refer Table 8) As can be seen from table 8, approx. 39% of the respondents purchase private label brands in the grocery section fairly often to always while this percentage is the lowest i. e. approx. 31% in the case of electronic goods. ) Effect of age on frequency of purchase of private label brands visa-vis national label brands In order to find out if age has any effect on customers’ frequency of purchasing private label brands as opposed to national label brands, Kruskal Wallis Test of Equality of Mean was administered with age as the grouping variable and the responses of the respondents as the test variable. The results of the test indicated that age is significant (Asymp. Sig. = 0. 024) in affecting customers’ frequency of purchase of private label brands vis-a-vis national label brands only in respect of electronic goods. In respect of frequency of purchase of private label brands in groceries and apparels/footwear, age was not found to be having a significant effect (since the value of Asymp. Sig. came out to be 0. 622 and 0. 229 respectively). Since age was found to be having a significant effect on the frequency of purchase of private label brands only in respect of electronic goods, only findings corresponding to the effect of age on purchase pattern for electronic goods have been tabulated in table 9. (ReferTable 9) As can be seen from table 9, customers in the age group 51-60 show the maximum propensity to purchase private label brands in electronic goods fairly often while customers in the age group 41-50 show the least propensity. In the younger age group, 24%, 8. 93% and 8. 33% of customers in the age group 60. The least level of satisfaction with private label brands in electronic goods is found among customers in the age group 20-30. Thus, overall it can be said that there is a higher 12 level of satisfaction with private label brands in electronic goods category among the older generation in comparison to the younger generation. ) Effect of profession on customer satisfaction level with private label brands in di fferent categories of products Kruskal Wallis Test of Equality of Mean was administered with profession as the grouping variable and the responses of the respondents as the test variable in order to find out if profession has an effect on customers’ satisfaction level with private label brands in respect of different categories of products. Analysis of findings clearly indicates that profession significantly affects the satisfaction level of customers with private label brands in respect of all the three product categories since the value of Asymp. Sig. came out to be 0. 049, 0. 011 and 0. 001 for groceries, apparels/footwear and electronic goods respectively. Satisfaction level of customers belonging to different categories of profession in respect of private label brands in different categories of products has been given in table 14. Refer Table 14 here) As can be seen from table 14, in respect of groceries the highest percentage of customers who are more satisfied with pri vate label brands are retired followed by housewives, while the least percentage of customers satisfied with private label brands in this category are professionals. In the category of apparels / footwear, the highest percentage of customers who are satisfied with private label brands are professionals while the least percentage of customers satisfied with private label brands in this category are retired and self – employed customers. For electronic goods, the highest percentage of customers satisfied with private label brands in this category are retired customers followed by housewives. The least percentage of customers who are satisfied with private label brands in the category of electronic goods belong to the profession – employed in private sector. Importance of various parameters on customers’ choice of private label brands vis-a-vis national label brands In order to find out the relative importance that customers attach to different attributes while purchasing private label brands over national label brands in the three different product categories – groceries, apparels/food and electronic goods, Kendall’s W test was administered separately on customers’ responses in respect of ten attributes for each of the three product categories. The results of the test are tabulated in table 15. (Insert Table 15 here) As can be seen from table 15, the value of Kendall’s W came out to be . 081, . 088 and . 82 for groceries, apparels/footwear and electronic goods respectively, which indicates that there is agreement across customers in the ordering of different attributes. The values are significant at 95% significance level with the asymptotic significance value coming out to be . 000 for each product ca tegory. Table 15 also gives the mean rank of various attributes as considered to be important by customers in purchasing private label brands in different product categories. Findings indicate that customers attach maximum importance to freshness and price while choosing private label brands in grocery items while least importance is attached to sales team/salesperson who is attending to the customers. On further studying table 15, it can be seen that the customers attach maximum importance to price and schemes/discount in case of private label brands in the category of apparels and footwear. The customers attach least importance to sales team present on the floor and color of the apparels. 13 While analyzing the results for electronic items (table 15) offered under private label brands, price and after sales service stand out from the rest of the attributes studied followed by warranty/guaranty and schemes/discount associated with the product. It can be seen again that the attributes with the lowest importance are sales team present on the floor along with added/extra features offered. This is quite understandable since the customers who are buying private label products in the electronic section evaluate these goods with the branded products available in the same category based on price. To some extent, customers are accepting the fact that the quality of private label electronic goods does not exhibit the same level of quality as can be expected out of a branded product and accordingly quality has been ranked as last but third item in the ranking. CONCLUSION AND IMPLICATIONS In this study, we examined how Indian customers’ specially youth perceive private label brands in three product categories in comparison to national label brands. Although intercategory differences have been cited as the most important source of variation in PLB share across markets, retailers and categories (Dhar and Hoch, 1996), little prior consumer-level research has thus far been done to explain these crucial variations. The present study offers an insight into customer’s perception and satisfaction with private label brands across three product categories. In attempting to explain intercategory variations in customer perception of private label brands, the effect of age and profession has been taken into consideration. The findings of the study can be useful to retailers in formulating strategies to make products other than the national branded ones acceptable in the market. An analysis of perception and satisfaction with private label brands can furthermore help retailers in developing stronger store/private label brands and in increasing their presence and acceptance in the market. The Indian retail industry is growing with every passing day. Though highly lucrative, there is stiff competition in the market among organized and unorganized retailing with both branded and unbranded products manufacturers vying for a share in the pie. The findings of the present study provide important insights to all private label manufactures in India to increase their foothold and successfully compete in the Indian retail market. Understanding customers in terms of what they expect/associate with a private label brands vis-a-vis national brands is quite important from the view point of making these brands acceptable in the market. Customer loyalty has become a very fickle term in today’s highly competitive and volatile market. Customers may prefer one brand over another or might be loyal towards none of the brands as long as they feel that their expectations are being satisfied and they are getting good value for money irrespective of the brand they are purchasing. The findings of the study clearly bring forth the importance of pricing (table 15) as an attribute in influencing customers’ acceptance of private label brands. This is so because today’s customers are smart enough to understand that since they are not buying branded products so they need not pay premium. Thus, a difference in pricing is desired and companies needs to fine tune and concentrate more on their supply chain and logistics to bring down costs associated with various products which they can pass on to customers in the form of reduced prices in turn leading to increase in customer satisfaction and acceptance of private labels. This is quite acceptable and understandable in an emerging economy like India where masses are not very brand/fashion savvy/centric but pay more attention to 14 better bargains and value for money in every purchase that they make. Thus, schemes/discounts are also considered to be important by customers in purchasing private label brands in groceries as can be seen from table 15. This brings forth clear insights for private labelers and sensitizes them to the fact that though price is one of the most important factor but customers also connect themselves and eagerly purchase those products as well which are offered in bundling or are given at a discount. This leads to another insight that it is not always beneficial to project differential pricing for your private label brands rather for the same amount of price if you provide bundling with complementary products, they will be able to attract more customers. Infact, the private labelers can take a step further and start bundling non-consumable/nonperishable products along with grocery items so that the level of customer satisfaction which is lower for grocery items can be increased. Indian customers are value-conscious and increased awareness and exposure with more choices has made them conscious of their power of bargaining and capability of extracting maximum worth from everything they pay for. Retailers also need to understand that range and quality of products offered does play a role among value for money segment of customer as high quality is generally perceived to be synonymous with durability by customers. Indian customers are value-conscious and though increased awareness and exposure has made them keen on keeping pace with changing trends in society and fashion but they are still more interested in products which fit them better along with giving them unique recognition with comfort and quality at affordable prices. This is easily discernable from the findings of the present study (table 7 and 9), which indicate that age is not a significant factor in affecting preference in apparels/footwear category. A major opportunity exists for private label brands in this category. Customers, specifically young ones (students) are more interested in changing their attire with the changing fashion and to afford such luxury they need a range of clothes which are both cheap and trendy along with some quality. Marketers should not forget that India is a young country and these young Indians believe in building their own fashion statement based on their comfort and fitting rather than adopting what is displayed on the shelves and in advertisements. This is one of the reasons unbranded/local shops in Fashion Street in Bombay, Sarojni Nagar market in Delhi and the likes are still flourishing even though big names have had their presence in India for quite some years now. While analyzing the preference of customers with regard to electronic goods under private label brands, it is quite important for the retailers to take note of the fact that quality has been ranked as the 8th factor (table 15) meaning thereby that customers have accepted that the quality of the product of a private label brand would not match with that of the national level brand and that is another reason why price has been ranked as the top most factor which accordingly they expect to be low for private label brands. Customers have ranked electronic goods as the lowest in terms of satisfaction (table 11) which clearly indicates that though they are buying the private label brands in electronic goods category because of the price differential but their satisfaction in terms of services extracted out of the product is quite low. This can be viewed as an opportunity by private label brand retailers as by improving the quality even a little bit, specifically for the basic service for which the product has been made and by not paying unnecessary attention on extra features, can go a long way in increasing the satisfaction of the customers and in turn establishing 15 themselves in the electronics market as well. While analyzing the preference of private versus national level brands with respect to the profession of the customers, retailers need to target the students and house wife segments (table 6) where opportunity exists as difference in preferences are not quite high. Moreover, both these segments are price conscious and fast product changers, so a little bit of effort in these two segments with respect to increase in trendiness and quality of the product can help boost preference for private label brands. Findings related to factors considered to be important by customers across different product categories in purchasing private label brands can help retailers in taking steps to improve their private label products along these parameters. These steps would enable private label products to become more acceptable and preferable in the eyes of customers. Thus, in conclusion it can be said that if private label manufacturers can consistently provide value to customers on factors rated high by customers and even if it is low on status symbol, there is a high possibility for them to establish these brands as acceptable in the minds of customers and to improve customers’’ perception regarding the same. Though this perception may not be as high as a branded product enjoys but it could still become high enough for retailers to increase the sales of these brands and thereby raise their profit margin considerably. 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Education 3. 8% 1-40 17. 4% Female 50. 6% 41-50 5. 8% 51-60 3. 8% Post graduate 28. 8% Marital status Intermediate Graduate 6. 1% Employed Employed in Student in private government Profession sector sector 57. 8% 13. 1% 9. 0% Household avg. monthly income Family size 1 1. 5% 2 4. 7% Single 68. 2% 15K 15. 4% 3 16. 0% Newly married 9. 3% Life cycle stage 37. 2% Professional Self (Doctor, Employed Lawyer etc. ) 5. 2 % 7. 8% 3000115001-30K 45K 34. 6% 26. 5% 4 5 37. 2% 26. 2% Married Married (children (youngest between 6 child 6 18 years) years) 6. 4% 6. 1% 60 0. 6% Single Married 62. 8% 37. 2% Professional course 24. 1% Housewife 6. 4% 45001-60K 14. % 6 9. 9% Married (employed children) 8. 1% Retired 0. 6% above 60K 8. 7% 7 4. 1% Married (no children) 1. 2% Table 2: Abbreviation table Abbreviations and their meaning for the demographic variable â€Å"Profession† Student Abbreviated as S Employed in private sector Abbreviated as EInPS Employed in government sector Abbreviated as EInGS Professional (doctor, lawyer) Abbreviated as P Self employed Abbreviated as SE House wife Abbreviated as HW Retired Abbreviated as R 19 Table 3: Customers’ understanding of private label brands Valid Frequency Percent Percent Frequencies for perception Outsourced locally 230 66. 9 66. 9 manufactured by 114 33. 1 33. retailer Total 344 100. 0 100. 0 Cumulative Percent 66. 9 100. 0 Table 4: Customer preference of private label brands vis-a-vis national label brands Cumulative Frequencies for Frequency Percent Valid Percent Percent Preference Valid private label 149 43. 3 43. 3 43. 3 national label 195 56. 7 56. 7 100. 0 Total 344 100. 0 100. 0 Table 5: Customer preference for private label brands on the basis of age Crosstab Prefer * Age Age 60 Total % private within 32. 0% 42. 0% 48. 3% 70. 0% 15. 4% 100. 0% 43. 3% label age Prefer % national within 68. 0% 58. 0% 51. 7% 30. 0% 84. 6% . 0% 56. 7% label age Total 100. 0% 100. 0% 100. 0% 100. 0% 100. 0% 100. 0% 100. % Table 6: Customer preference for private label brands on the basis of profession Crosstab Prefer * Profession prefer Profession S EInPS EInGS P SE HW R Tot Total private % within 42. 7% 31. 1% 71. 0% 33. 3% 37. 0% 45. 5% 100. 0% 43. 3 label profession national % within 57. 3% 68. 9% 29. 0% 66. 7% 63. 0% 54. 5% . 0% 56. 7 label profession % within 100. 0% 100. 0% 100. 0% 100. 0% 100. 0% 100. 0% 100. 0% 100. professio n 20 Table 7: Ranking of various categories of products in terms of customer frequency of purchase of private label brands Ranks Grocery Apparel/footwear Electronic goods Mean Rank 2. 13 2. 02 1. 85 Test Statistics N Kendalls W(a) Chi-Square Df Asymp. Sig. 344 . 024 16. 306 2 . 000 a Kendalls Coefficient of Concordance Table 8: Frequency of purchase of rivate label brands in different product categories by customers Frequencies Grocery Apparel/footwear Electronic goods never 19. 5% 11. 0% 17. 7% Percentage fairly seldom occasionally often 15. 4% 26. 2% 18. 6% 28. 8% 27. 3% 21. 8% 27. 0% 24. 1% 22. 1% always 20. 3% 11. 0% 9. 0% Total 100. 0% 100. 0% 100. 0% Table 9: Frequency of purchase of private label brands in electronic goods by customers on the basis of age Crosstab Age 60 Tota % within age never 16. 00% 17. 41% 18. 33% 25. 00% 15. 38% 0. 00% 17 seldom 20. 00% 25. 89% 21. 67% 60. 00% 23. 08% 100. 00% 27 electronic goods occasionally 24. 00% 25. 45% 30. 00% 10. 00% 0. 00% 0. 00% 24 fairly often 16. 00% 22. 32% 21. 67% 5. 00% 61. 54% 0. 00% 22 always 24. 00% 8. 93% 8. 33% 0. 00% 0. 00% 0. 0% 9 Total 100. 00% 100. 00% 100. 00% 100. 00% 100. 00% 100. 00% 100 Table 10: Frequency of purchase of private label brands in different product categories by customers on the basis of profession Crosstab S EInPS EInGS % within Profession never 27. 1% 13. 3% 12. 9% seldom 15. 1% 13. 3% 6. 5% grocery occasionally 27. 1% 13. 3% 9. 7% fairly often 13. 6% 11. 1% 41. 9% always 17. 1% 48. 9% 29. 0% Total 100. 0% 100. 0% 100. 0% apparel/ footwear never seldom 14. 6% 28. 1% 17. 8% 26. 7% . 0% 25. 8% Profession P SE HW R 11. 1% . 0% 4. 5% . 0% . 0% 25. 9% 36. 4% . 0% 66. 7% 14. 8% 40. 9% 100. 0% 22. 2% 40. 7% 18. 2% . 0% . 0% 18. 5% . 0% . 0% 100. 0% 100. % 100. 0% 100. 0% . 0% . 0% . 0% 40. 7% 4. 5% 54. 5% 21 .0% . 0% occasionally fairly often always Total 24. 6% 26. 7% 45. 2% 33. 3% 23. 1% 22. 2% 3. 2% 44. 4% 9. 5% 6. 7% 25. 8% 22. 2% 100. 0% 100. 0% 100. 0% 100. 0% 14. 8% 33. 3 % 11. 1% 100. 0% 37. 0% 18. 5% 33. 3% 3. 7% 7. 4% 100. 0% 31. 8% 100. 0% 4. 5% . 0% 4. 5% . 0% 100. 0% 100. 0% 22. 7% . 0% 31. 8% 100. 0% 18. 2% . 0% 22. 7% . 0% 4. 5% . 0% 100. 0% 100. 0% never 19. 1% 13. 3% 6. 5% . 0% seldom 21. 1% 46. 7% 32. 3% 33. 3% electronic goods occasionally 26. 6% 22. 2% 16. 1% 11. 1% fairly often 21. 6% 15. 6% 35. 5% 50. 0% always 11. 6% 2. 2% 9. 7% 5. 6% Total 100. 0% 100. 0% 100. 0% 100. 0% Table 11: Ranking of various categories of products in terms of customer satisfaction level with purchase of private label brands Mean Rank Ranks Test Statistics grocery 2. 09 N 344 Apparels/footwear 1. 98 Kendalls W(a) . 012 electronic goods 1. 92 Chi-Square 8. 424 Df 2 Asymp. Sig. .015 a Kendalls Coefficient of Concordance Table 12: Customers’ satisfaction level with private label brands in different product categories highly dissatisfied dissatisfied satisfied highly satisfied Total Frequencies grocery 7. 27% 15. 70% 70. 93% 6. 10% 100. 0% apparel/footwear 3. 49% 29. 94% 49. 13% 17. 44% 100. 0 electronic goods 6. 69% 34. 01% 46. 51% 12. 79% 100. 0 Table 13: Customer satisfaction level with private label brands in electronic goods on the basis of age Crosstab: Items * Age 60 Total S EInPS EInGS P Profession SE HW R grocery Total highly dissatisfied dissatisfied satisfied highly satisfied highly dissatisfied dissatisfied satisfied highly satisfied 9. 5% 4. 4% 3. 2% . 0% 7. 4% 4. 5% . 0 18. 1% 2. 2% 9. 7% 50. 0% 14. 8% 4. 5% . 0 65. 8% 86. 7% 87. 1% 44. 4% 63. 0% 90. 9% 100. 0 6. 5% 6. 7% . 0% 5. 6% 14. 8% . 0% . 0 100. 0% 100. 0% 100. 0% 100. 0% 100. 0% 100. 0% 100. 0 3. 0% 2. 2% . 0% 5. 6% 14. 8% . 0% . 0 29. 6% 24. 4% 29. 0% 22. 2% 33. 3% 40. 9% 100. 0 49. 7% 46. 7% 38. 7% 55. 6% 51. 9% 59. 1% . 0 17. 6% 26. 7% 32. 3% 16. 7% . 0% . 0% . 0 100. 0% 100. 0% 100. 0% 100. 0% 100. 0% 100. 0% 100. 0 apparel/ footwear Total highly dissatisfied 7. 0% 11. % 3. 2% 5. 6% 7. 4% . 0% . 0 dissatisfied 36. 7% 44. 4% 19. 4% 38. 9% 33. 3% 9. 1% . 0 electronic goods satisfied 47. 2% 26. 7% 54. 8% 55. 6% 44. 4% 59. 1% 100. 0 highly satisfied 9. 0% 17. 8% 22. 6% . 0% 14. 8% 31. 8% . 0 Total 100. 0% 100. 0% 100. 0% 100. 0% 100. 0% 100. 0% 100. 0 23 Table 15: Importance/ranking of attributes in pu rchase of private label brands in different product categories Grocery Attributes Rank freshness/expiry 6. 80 price 6. 68 schemes/discounts 5. 84 range of product 5. 35 quality 5. 35 after sales service 5. 22 warranty/guaranty 5. 21 quantity 5. 11 brand 4. 72 sales team 4. 71 Apparels/Footwear Attributes Rank price 6. 5 schemes/discounts 6. 24 range of product 5. 79 quality 5. 53 warranty/guaranty 5. 52 freshness/design 5. 50 brand 5. 47 after sales service 5. 08 sales team 4. 68 Quantity/colour 4. 23 344 . 088 272. 049 9 . 000 Electronic goods Attributes Rank price 6. 42 after sales service 6. 30 warranty/guaranty 6. 26 schemes/discounts 5. 75 range of product 5. 36 brand 5. 32 freshness/look 5. 26 quality 5. 10 sales team 5. 05 added features 4. 17 N Kendalls W(a) Chi-Square Df Asymp. Sig. 344 . 082 253. 706 9 . 000 N 344 N Kendalls W(a) . 081 Kendalls W(a) Chi-Square 249. 302 Chi-Square Df 9 Df Asymp. Sig. .000 Asymp. Sig. a Kendall’s Coefficient of Concordance 24