Consumer Perceptions of Private Label Brands in China and UK

Consumer Perceptions of Private Label tick offs in china and UKCONSUMER PERCEPTIONS OF PRIVATE adjudicate BRANDS IN CHINA COMPARED WITH THE UKSummaryIn mainland china thither atomic number 18 fewer studies of hole-and-corner(a) mark off grunges (PLBs) that take up less(prenominal) foodstuffplace store sh ar than generic organizes and depicted object daubs. However, there is a successful growing of PLBs in the UK. at that placefore, this thesis aims to explore the residuum of consumer intelligences on PLBs betwixt china and the UK with home(a) provokers as a stock(a).The lit fol modest-pitched-up leave alone review theories like pock lawfulness/ go steady, PLBs and double jeopardy PLBs emergence comp atomic number 18d with national deformitys in China and the UK the influencing factors of consumer purchase behaviour and previous lookes of consumers apprehensions round PLBs in China and the UK. The chief(prenominal) accusative of this part is to ascertain the difference of consumers intuitions among PLBs and national mark offs in the UK.Primary research will take the gradation of a non probability convenience sampling method to randomly shoot 200 members of the public from some(prenominal) shopping m solelys of Xidan and Wangfujing and several large- denture supermarkets in Beijing. Questionnaires will be used for data collection, and data is analysed by give way statistical programme.The finding shows that there is a signifi offert difference of PLBs perception between China and the UK. Before the military rating of soil orbit, the awareness of PLBs in China is unders in any cased and just less than half of respondents hold out the protest- try cookies. With course credit to the literature reviewed on consumer perception in the UK, it give notice get the exit that Chinese PLBs are perceived lower than British PLBs on the all attributes except cheap and satisfactory measure.Chapter 1 Introduction1.1 The hind end of researchThe aim of this thesis is to break in investigate how mysterious adjudicate prints (PLBs) are perceived by consumers in China, and comparability it with the UKs.1.2 Principle research questionTo find out how Chinese consumers perceptions of reclusive set greases differ from the UKs.1.3 general research objectiveThe primary purpose for this research is to discover the main difference of consumers assessment of privy label brands between China and the UK. This thesis will explore if there are signifi open firet differences between Chinese consumers evaluation on PLBs and the UKs, and analyse the relevant factors that cause the distinctness of consumers evaluation roundly on the basis of prior research in this rout scope.1.4 Individual research objectivesIn order to achieve the principle objective of this study, it will intend to fulfil the quest objectivesTo identify the actual ripening of PLBs in China and the UKTo establish the influence factors of consumer purchase behaviour in China and the UKTo determine consumers perception of PLBs and national brands in the UKTo determine consumers perception of Chinese PLBs and national brandsTo ascertain the distinct brand perceptions of PLBs in China and the UK1.5 Report StructureThis thesis contains eight chapters. Chapter2 to 4 are found on a literature review around theories and relevant noesis of marketing background. Chapter2 outlines the theories about branding, and then chapter3 introduces the private label brands and their development in the UK and China. Chapter4 refers to consumer perception of PLBs review between two countries establish on analysing the find factors of purchase. The research method is explained in chapter5 with roughly specific designing scheme. The results of examine Chinese biscuit sept is presented, interpreted and analysed in chapter6, and discussed relating with the UKs market of literature review in chapter7 ahead conclusion and recommendatio ns are given in chapter8.Chapter 2 BrandingChapter 2 introduces the definition of branding with its splendour in the sell market, and moves to realize brand get word and brand equity as well as the shift between them. In addition, the Double jeopardy (DJ) piece is identified finally. The aim of this thesis is to gauge Chinese consumers perceptions of private label brands (PLBs) in comparison to UKs. Therefore, it is necessary to understand the background familiarity about brand first.2.1 The conception of brandingA brand was specify as a scream, term, sign, symbol, or design, or a combination of them, think to identify the skillfulnesss or services of ane seller or theme of sellers and to differentiate them from those of competitors (p.404, Kotler, 2000).Aaker (1996) indicated that brand was used for suppliers to reflect the consumers purchase information and doctor communicate with customers easier, so that it is helpful to build a long-term race of belief between purchaseers and sellers.Wileman and Jary (1997) had realized that retail branding was playing an central role in the modern retail market gradually. Managers and executives also perceived that retail branding could be used to sum up benefits as a strong vehicle in the competitive retail industry (Carpenter, et al. 2005). The agreement is that the relationship between a intersection and consumers is personified by the brand make up (organizations name) on the product itself, like Microsoft and Nescafe (de Chernatony and McDonald, 2003).The difference between a brand and a commodity is sh profess below in figure1, which describes the process of decline from brand to commodity. next the disappearance of brand feature, a reduction in the exceptionalism of legal injury and product/ chassis is demanded to achieve the likeness of product offerings in the particular category. hence the added determine is the main difference between a brand and a commodity. The result canvasd the strong origin of added entertains in the blind (brand cigaretcelled) and open (brand revealed) test of Coke and Pepsi resource (de Chernatony and McDonald, 2003).2.2 Brand imageBrand image is explained as the integrated forcefulness of brand associations (Biel, 1992). Also, Faircloth et al. (2001) cited Engel et al. (1993) as claiming that brand image refers to consumers perceptions of brand tangible and intangible association. Keller (1993) verbalize that brand image, a part of brand knowledge, belongs to the perceptions about a brand that is reflected by the brands attribute, benefit, and lieu association in the memory board of consumers. Besides, consumers brand image is derived from the accumulative erects of marketing mix actions of companies (Roth, 1994).Wulf el al. (2005) has argued that image is one prerequisite for the presence of brand equity. Brand image in the consumers memory network that is decisive to make decision, issues preferred brand reminding and eval uation (Holden, 1992), and so it gage contributes the positive effect on brand equity (Yoo et al. 2000).Further much than, Winchester and Fletcher (2000) argued that measuring rod brand image was one of the close to serious research projects undertaken by a company, because it could help firms to understand their products perceptions in consumers memory.For example, retailers scram the cheaper brand image than the manufacturers in most of consumers memory. Also, they suggest that consumers consider retailer brands as me too products compared with manufacture brands (IGD, 2003). Thus it demonstrates that retailers are trying hard to build up a strong image for their character brands to shoppers. The enhancement of brand image will be beneficial to drive the sales, brand equity and increment the gross margin of private label products (Quelch and Harding, 1996). Therefore, brand image is an classical determinant of consumers perception about private label brands.2.3 Brand equ ityBrand equity, like the concept of brand, has been identified as having multiple meanings. For instances, heap confirm debated the concept of brand equity both in the be and marketing literature for several years (Wool, 2000). The original concept of brand equity is the added value that a brand name offers to the fundamental product (Quelch and Harding, 1996 Wulf el al 2005). Wood (2000) also cited Feldwick (1996) as claiming a miscellanea of different meanings of brand equity as- the total value of a brand as a separable asset when it is sold, or include on a balance sheeta measure of the durability of consumers attachment to a branda description of the associations and beliefs the consumer has about the brand. (p. 662, Wood, 2000) correspond to the statement of Wood (2000), brand equity rests on financial nibing system no longer, but extends to the measure of brand strength (brand loyalty) and the description of brand image.Additionally, Aaker (1996) identified the major asset categories of brand equity to include brand name awareness, brand loyalty, perceived quality and brand associations (brand image). It reflected the value supplied by a product or service to a firm and/or customers in the various different ways. If the name and symbol of the brand change, the assets or liabilities will be affected and scour scattered due to the standoff between both sides. To brand awareness, the strength of a brands presence is mentioned in the consumers minds, ranging from recognition to recall to top of mind to domination. Recognition is more in-chief(postnominal) than opposites due to the perception obtained from the past exposure. Also, recall bottom be a deciding factor of the purchase of products.Otherwise, Chou (2002) also insisted on two categories of definition of brand equitythe customer-based and financial brand equity. The customer-based one is be as the different effect of brand knowledge on consumers resolution to the purchase of brand (Keller, 1993 Lassar, et al. 1995), and the financial one refers to the intangible asset of the value of brand name to the firm (Chou, 2002).Through understanding the multiple concepts of brand equity, it can deduce that brand equity has attracted more attention in the marketing literature over the last decade, because it reflects if a brand would be repurchased by consumers. As Shapiro (1982) has demonstrated, certain brand equity offered genial value even though the appearance of products is uncertain. Nowadays Broniarczyk and Gershoff (2003) still emphasise the importance of brand equity also, as one of the most valuable assets, it should be maximised to manage brands for the company (Keller and Lehmann, 2003). High brand equity can increase the opportunity on consumer choice of a common sales furtherance (Simonson et al., 1994) and reduce the negative debates of consumers for a price increase (Campbell, 1999), because consumers lean to buy the brand more than the real product. Consequently, brand equity is also a factor to evaluate consumers perception of profess brands.2.4 The Double Jeopardy EffectIn recent years, more authors (Sharp et al. 2002 Ehrenberg and Goodhardt, 2002) create been interested in understanding, growing and reinforcing the concept of Double Jeopardy (DJ), which represents a natural constraint on customer loyalty, which cannot be change magnitude by marketing inputs much or for long unless a significant benefit increases the brands penetration (Ehrenberg and Goodhardt, 2002). The DJ effect is that midget role brands visit fewer customers, but these customers buy the brand less often than the larger brands get bought by their customers (p. 17, Sharp et al. 2002). A conceptual model of the DJ effect is showed in the figure2, which illustrates if a small firm would hold in higher turnover of their customer base if they lost the same number of customers as a large firm.The DJ effect is fit for the discussion of national brands a nd PLBs. Bigger brand will be kn visualize by more customers, and gull more opportunities to be purchased and hold more responses than smaller brand. It will be an essential theory to sustentation the last result of investigation about the comparison between own labels and national labels.Chapter 3 Private Label BrandsThis chapter attempts to understand private-label brands, their development in UK and China and the reason for focusing on them. National brands will be also mentioned as the scale for the validity of comparison between Chinese and UKs own labels.3.1 The definition of private label brandsRetailer brands are designed to put forward consumers with an alternative to manufacturer brands, to build customer loyalty to a retailer or improve margins. (p.11, IGD, 2003)They are particular to a decisive retailer, and may have a same or different name of the retailer but exclude other retailers name (IGD, 2003). The call own label and own brand are unceasingly used unneur otic also private label, retail brands or distributor brands are in common used (Fernie and Pierrel, 1996).get brands can help retailers reduce the mail impact of price competition, since retailers carry their own brands instead of national brands that are sold in the most of the stores (Carpenter, et al. 2005). Furthermore, according to IGD (2003) study, doing own brands can provide competitively priced products, increase profitability and loyalty due to the special store, establishes store image, drives innovation and targets specific consumer groups.3.2 The development of PLBs in UKBased on more previous researches about UKs PLBs, it will specify them as the base to compare with Chinese growing PLBs.3.2.1 The history of developmentThe generation of own brands in the UK can date back to the end of the nineteenth hundred (Key Note Market Review, 2001). Until mid-1960s, manufacturers perceived that the development of store brands could be a direct threat for them (Ogbonna and Wilki nson, 1998). After that, own brands rose to penetrate into diet product markets gradually (Fernie and Pierrel, 1996), because supermarket had to put on a new strategy under the uncollectible economic crisis (Ogbonna and Wilkinson, 1998).The growth of own labels in the UK had been rapid during 1980s, and slowing worst in the 1990s (Laaksonen, 1994). After 1980, the UKs retailing had a big metabolic process to change their own-label products from previous low-price/low-quality/poor-packaging to afoot(predicate) high quality, competitive price and honorable packaging (Burt and Davis, 1999 Key Note Market Review, 2001). Especially from 1990, more retailers began to provide own brand lines in stores and penetrated towards the securities industry field (Veloutsou et al., 2004), and even innovated in product categories to be consistent with branded-products, such as the expansion from grocery to clothing (Quelch and Harding, 1996). Fernie and Pierrel (1996) illuminated that Marks Spencer, Sainsburys, Tesco and Safeway had developed their own brands, which competed successfully with other brands in the UK. Otherwise, there were more private labels on the shelves of supermarkets than ever before (Quelch and Harding, 1996). The main reasons for growth of own-label products include lower pricing (60%-85% of branded products), kick downstairs quality and higher profits for retailers (Ashley, 1998).Through the review of historical evolvement of PLBs, the current bloom of PLBs development in UK that is built on the basis of eonian change can be seen. Also, it can be a good explanation for the condition, in which customers carry more own brands of supermarket rather than manufactures brands.3.2.2 modern developmentAt present, private label brands have taken up a significant dowery of nearly 29% in the UK nutriment market. It is expected to increase further in 2009. Especially since 2008, own label has been gaining popularity following accelerating economic do wnturn. As consumers have begun to feel the pitch, so they have bought own-label products instead of branded products to save money. Thus the competition between own-labels and brands is reinforced. There is the highest own-label consumption in the FMCG sectors, like milk and frozen vegetables, or some products without emotional appeal. However, manufacturer brands still account for the majority of sales in the most of grocery categories (Mintel, 2009). Table1 shows the ploughshare of brands and own-labels in the following different categories.From this table, it can see that own label is the most dominant in the category of ready meals and it has the least share in the crisp category. Also, more share own labels account for, more change magnitude opportunities they have.In addition, UKs supermarkets recognise that consumers have a wide range of product postulates, so they segment the market by providing the brands that cater for the best, healthy, valuable, kids and organic requ irements as table2 shows.3.2.3 The feature of developmentThe development of PLBs, a competitive strategy adopted by retailers, is necessary for them at bottom the current retail market of high competition in the UK (Carpenter et al. 2005).Own brands are evolution fast and winning a better share of the food market with definite receipts in the supermarket product ranges, because retailers can offer their private label products with high-quality and low-price (Wulf et al., 2005). Also, own-brand products exceeding 40% of market share have expanded their presence across marketsfrom low-priced, value-for-money items to the premium and lifestyle arenas so as to cater for consumers concern about healthy eating (Drewer, P. 2006). Therefore, it can fetch up the limitation of national brands that segment the market less, and target desired consumers more narrowly. For instance, figure3 shows Sainsburys Be Good to Yourself range of lower generative which is one kind of healthier own-label ranges and Asdas value (Smartprice), healthy (Good for You) and Premium (Extra Special).Furthermore, the feature difference of own brands has been gradually shortened from national brands in terms of smells such as packaging, size, and label (Choi and Coughlan, 2006). In figure4, Sainsbury instant coffee products are taken as an example of private labels with reduced feature specialty as national labels inside FMCG sector.Some of the UKs retailers such as Sainsburys and Tesco have set up own brands focusing on quality and judgment due to more consumers regards on flavour and aroma. Production methods have blend diversified, and manufacturers have been found around the world to get various products with exotic flavours. For instance, the recipes of multiple ready-meal foods are derived from characteristic foods of different countries, like Waitrose chicken grub mein, which is developed from Chinese stir-fried noodles. Thus it is common for retailers to compete by growth premiu m own brands (Fenn, 2007), yet the majority of retailers changed their attention from premium ranges to the promotion of value ranges in 2008 (Mintel, 2009).3.2.4 Marketing supportThe increase of own-label products is back up by the gradually concentrated nature of the retail market. Retailers control own brand marketing, which has obtained higher promotional support than national brands since there are better space and location for private labels on supermarket shelves (Cataluna et al. 2006). Retailers have got bargaining force-out in the market and more confidence to invest in their own brands, which bring higher profits than generic brands (Fenn, 2007). In addition, own-label food and confound has been supported strongly in the competitive market, although the main retailers began to promote the voltage of saving money on PLBs purchase in 2008 and early 2009. For example, own-label brands are promoted principally in the main retailers like Morrisons. Marks Spencer also wa shed-out a third of its total budget on MS brands in 2008 (Mintel, 2009). Table3 shows the market support on foods in the form of media advertising expenditure.Generally, an increasing trend is shown for the retailers spending on foods in this table. However, depending on the retailers spending share, it can ascertain that branded manufacturers are still the biggest spenders on advertising for food and drink. They use the Reassurance and tradition as the key themes of promotion to fight against PLBs (Mintel, 2009).3.2.5 The biscuit categoryOwn-label biscuits take up a fifth of the UK market, where it has remained the share stably over previous 5 years. The biscuits category has increased substantially since 2002, although there is an unhealthy high sugar content in the most biscuits. The benefits can be obtained from defying all advice of nutrition, because consumers regard biscuits as a reward for their efforts on healthy eating most of the time. Moreover, the development of biscui t market is possible to be influenced by three key factors requirement for healthy foods, self-indulgent products and convenient products. The indulgent demand can benefits the branded biscuits, as consumers conceptualize premium-branded products more than PLBs (Kidd, ed. 2007). Figure5 shows the UK biscuits market shares in 2007.From this figure, it can see own labels account for more share than any one manufacturer brand, but it is less than the total share of main large manufacturers.In short, UKs PLBs market has been set forth and compared with manufacturers brands specifically, so that it can be as the firm foundation for the by and by comparison with Chinese PLBs market.3.3 The development of PLBs in ChinaPrivate label in China is still in an emergent stage, where many retailers had increased the place of own label development in 2004, but most do not have their own brands until they have greater scale in the market. According to IGDs estimation, own brand only takes up 2 % of sales at Wal-mart and less than 6% at Carrefour, which is the strongest retailer in China. Although the foreign retailers have a long history to sell private label brands, this is a big challenge for them to sell in China, where own brand is a new concept for the Chinese consumers. They just cogitate the value and quality of local branded products. Thus retailers need to prove their own products are not only cheaper, but also provide better value to consumers (IGD, 2005b). Auchan, Carrefour and Wal-mart will be chosen as the example of private label development, because they have wider range of own label products than others.Pouce, Auchan and First Price ranges were introduced by Auchan in 2003. And they were developed across both food and non-food categories by the end of 2004. In Carrefour, own labels can be found in most categories, especially strong in non-food. Its private label brands include Great Value, Equate and Kids Connection. Wal-mart is developing their own brand s including Simply Basic, Equate and Great Value in China, where the quantity is more limited than other developed international markets (IGD, 2005b). exactly actually, most of supermarkets usually just focus on the value with low price, and use the name of supermarket as their own brands name to attract consumers attention, such as Ito-yokado, Dia% and Tesco.3.4 Why the focus on PLBsVeloutsou et al (2004) indicated that all grocery retailers have been entangled by private brands in Great Britain in the last decade. Also, the growth of private labels is one of the most obvious successes to the retail stores (Drewer, P. 2006) own brands have been seen as the strategic weapon to provide retailers with more powers and opportunities to distinguish themselves from national brands and build store image (Juhl et al. 2006). Nevertheless, there is a completely different situation in China, where the study of PLBs is less than the UKs and is strongly encouraged (Song, 2007). PLBs is undevelo ped with low sales account in China, even if some foreign retailers (e.g. Carrefour, Wal-mart) have launched their own brands (IGD, 2005b). Consequently, there is a need to expose why PLBs have little market in China, and understand the shortage of Chinese PLBs development through comparing consumers different perceptions between China and the UK.Chapter 4 Consumers Perception of PLBs in China and UKThis chapter will evaluate private label brands and national brands based on a cognition of factors determining purchase. A generality of different viewpoints about consumers perceptions on brands will be discussed and some factors influencing the PLBs purchase will be presented.4.1 Determinant of barter for behaviourConsumers purchase can be influenced by environment, personal preference and mental factors. Customers who live in diverse regions have their own experience about private-label products (Veloutsou et al 2004). Individual consumers often choose certain brands that they kno w to be guaranteed due to their habits, instead of spending more time to re-evaluate the brands with different attributes when purchasing (Ehrenberg, 2004). Furthermore, consumers preferences are different following the change of age (IGD, 2005a). For example, unexampled people high on the new things more than old people. From the psychological aspect, the right customer mindset can be crucial to realizing brand equity benefits and value (p29, Keller and Lehmann, 2003).During the decision making process, purchase can be influenced directly by several factors. Veloutsou et al (2004) cited Omar, Burt and Sparks (1995) as claiming that many consumers always consider their products characteristics, quality and perceived value instead of the prices of products when consumers make purchasing decisions. However, the price cannot be excluded from factors of decisions, because most of consumers go shopping after they have a budget in mind (Hogan, 1996). Additionally, a generalized private-l abel attitude is observed to influence purchase behaviour factors include consumer price consciousness, price-quality perception, troop proneness, shopping attitudes, impulsiveness, brand loyalty, familiarity with store brands, reliance on extrinsic cues, leeway for ambiguity, perceptions of store brand value, and perceived differences between store brands and national brands (p347, Collins-Dodd and Lindley, 2003).4.2 Consumer perception in ChinaDue to the limitation of consumption per capita, the market was determined by price instead of brand loyalty in China (IGD, 2005b). According to China Management Newspaper (2008) reported, it is a fact that consumers who realise the supermarket own labels account for rather low percentage of total population. Moreover, low price and high quality are the main motivations to drive consumers purchase. Thus national brands with better quality can attract more consumers, although they have higher price than own labels. This results from the in crease of Chinese consumers purchase power and the improvement of living level in recent years. Moreover, PLBs and national brands were considered as less difference on price (Chen, 2009). Thus it can be deduced that low price strategy of own brands in China would be successful due to less brand loyalty. However, following the improved streamer of living, people would increase their demand from low price to high quality, which could be a challenge for the PLBs.4.3 Consumer perception in UK4.3.1 Comparison of PLBs with national brandsFollowing the quality improvement of PLBs, Richardson (1997) found that store brands could be compared with national brands from the aspect of quality and consumers preferred to buy store brands where they usually shopped. As Quelch and Harding (1996) discovered that this was similar for consumers to perceive and judge the manufacturer and retailer brands in the orangish juice private-label test, because consumers had a low involvement activity on groc ery shopping.Nevertheless, If all retailers stock manufacturers brands, they can only differentiate on price or sales promotions with own labels/brands, they can offer further note in the market place. (p49, Fernie and Pierrel, 1996)They supported that own labels/brands could bring retailers more differentiation in the market place than manufacturers brands that just differed on price or sales promotions from each other. However, there is a different understanding based on consumers mind. Dick et al. (1996) considered that private labels were less famous than national brands, which have a distinct identification with a particular manufacturer. Richardson (1997) also supported the unification of store brands without the speciality of national brands.In the research of Harris (2007), he also demonstrated a significant difference of brand image evaluation for national brands and store brands. He established that PLBs have the advantage of cheap and good value to compare with national brands, while national brands were used more with higher quality/superiority based on attributes than store brands. However, after breaking down PLBs into three relative positions (premium, standard and value), he discovered that premium private labels were overpriced more without better value for money than national labels customers buy more value private labels than national labels due to their cheapness. This implicates that consumers prefer the high quality of national brands and the good value of value PLBs at the same time. Therefore, he identified the characteristic of worth more regarded by consumers mostly. The brand association strengths are summarized in the following figure7 from his study.Furthermore, his researching results (see Appendix3) will be used as the reference of British consumer perception of PLBs to compare with Chinas later.In addition, according to Mintel research (2009), it has been a long-term trend for more consumers thinking that own labels are better than national brands.4.3.2 Evaluation of PLBsTo the quality/value thinking, other authors have had same ideas. Quelch and Harding (1996) predicted that consumers would choose PLBs readily rather than the higher-priced name brand, if there were more quality PLBs in the market. Richardson (1997) cited Richardson et al. (1994) as claiming that store brand market share could be increased by successfully communicating a quality rather than a low price strategy. Moreover, according to the IGDs research, PLBs have become one of the important factors for shoppers to choose the supermarket they shop in. The satisfaction of quality with lower price has attracted more consumers. The proportion of main reasons is 45% lower price, 45% better value than branded equivalent, 26% the same as branded, 24% a good reputation for own brand (IGD, 2003). Furthermore, consumers are not confused about the increasing number of own-label brands, but the segmentation is beneficial for them to choose products that are fit for themselves. The clear differentiation among brands is also the key for retailers to success (Mintel, 2006).Chapter 5 MethodologyOn the basis of the relevant literature review about the market analysis of PLBs and national brands, especially the UK market, this has been analysed for the final discussion to compare with Chinese PLBs. This chapter will look for the most appropriate approach to implement the needed research and achieve the objective of this thesis.5.1 The objective of this studyperceptual variables related to consumers perception are investigated in this study. It needs to finish the following objectivesThe difference of consumer perceptions between PLBs and national brands in the UK (achieved in literature review)The difference of consumer perceptions between PLBs and national brands in ChinaThe difference of consumer perceptions of PLBs in China and the UKBased on the understanding of the UKs markets and perceived PLBs compared with national brands by consumers in the literature review, the Chinese situatio