Consumer Perceptions of Private Label Brands in China and UK

Consumer Perceptions of Private Label checks in chinaware and UKCONSUMER PERCEPTIONS OF PRIVATE LABEL BRANDS IN chinawargon COMPARED WITH THE UKSummaryIn China at that place are fewer studies of occult stigmatise dishonors (PLBs) that memorise up less market share than generic labels and bailiwick scores. However, thither is a successful development of PLBs in the UK. Therefore, this thesis aims to explore the difference of consumer learnings on PLBs among China and the UK with subject field prints as a standard.The books review give review theories like punctuate equity/image, PLBs and double jeopardy PLBs development compared with subject discolourations in China and the UK the influencing factors of consumer purchase behaviour and introductory queryes of consumers perceptions nearly PLBs in China and the UK. The main objective of this lay out is to ascertain the difference of consumers perceptions between PLBs and study discolorations in the UK.Primary investigate pass on take the form of a non probability convenience sampling method to randomly select 200 members of the public from two shopping malls of Xidan and Wangfujing and several large-scale supermarkets in Beijing. Questionnaires will be used for data collection, and data is analysed by Snap statistical programme.The finding shows that there is a significant difference of PLBs perception between China and the UK. Before the evaluation of brand image, the awareness of PLBs in China is d ingeststairss aliked and just less than half of respondents know the witness-label biscuits. With reference to the literature reviewed on consumer perception in the UK, it can discombobulate the result that Chinese PLBs are perceived kickoffer than British PLBs on the all attributes except cheap and erect abide by.Chapter 1 Introduction1.1 The topic of researchThe aim of this thesis is to come apart investigate how private label brands (PLBs) are perceived by consumers in China, an d compare it with the UKs.1.2 Principle research questionTo understand how Chinese consumers perceptions of private label brands differ from the UKs.1.3 Overall research objectiveThe primary purpose for this research is to discover the main difference of consumers assessment of private label brands between China and the UK. This thesis will explore if there are significant 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 open(a) scope.1.4 Individual research objectivesIn order to hit the principle objective of this study, it will intend to fulfil the following objectivesTo identify the actual development 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 study brands in the UKTo determine consumers perception of Chinese PLBs and bailiwick brandsTo ascertain the different brand perceptions of PLBs in China and the UK1.5 Report StructureThis thesis contains eight chapters. Chapter2 to 4 are establish on a literature review about theories and relevant knowledge 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 based on analysing the determining factors of purchase. The research method is explained in chapter5 with some precise designing scheme. The results of surveying Chinese biscuit category is presented, interpreted and analysed in chapter6, and discussed relating with the UKs market of literature review in chapter7 before conclusion and recommendations are given in chapter8.Chapter 2 BrandingChapter 2 introduces the definition of branding with its vastness in the sell market, and moves to realize brand ima ge and brand equity as well as the shift between them. In addition, the Double peril (DJ) Effect is identified finally. The aim of this thesis is to evaluate Chinese consumers perceptions of private label brands (PLBs) in comparison to UKs. Therefore, it is necessary to understand the background knowledge about brand first.2.1 The conception of brandingA brand was defined as a signalise, term, sign, symbol, or design, or a combination of them, intended to identify the wells or services of one seller or group 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 make communicate with customers easier, so that it is reformatory to build a long-term relationship of belief between buyers and sellers.Wileman and Jary (1997) had realized that retail branding was playing an important role in the modern retail market gradually. Managers and executives also perceived that retail branding could be used to increase bene controls as a strong vehicle in the competitive retail industry (Carpenter, et al. 2005). The reason is that the relationship between a harvest-tide and consumers is personified by the brand name (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 admit below in figure1, which describes the process of decline from brand to commodity. Following the disappearance of brand characteristic, a reduction in the note of scathe and product/image is demanded to achieve the likeness of product offerings in the particular category. Thus the added esteems is the main difference between a brand and a commodity. The result proved the strong power of added values in the blind (brand cancelled) and open (brand revealed) test of Coke and Pepsi mouthful (de Chernatony and McDonald, 2003).2.2 Brand imageBrand image is explain ed as the integrated effect 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) stated that brand image, a part of brand knowledge, belongs to the perceptions about a brand that is reflected by the brands attribute, benefit, and attitude association in the memory of consumers. Besides, consumers brand image is derived from the accumulative effects of marketing mixing 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 stopping point, provides preferred brand reminding and evaluation (Holden, 1992), and so it can contributes the positive effect on brand equity (Yoo et al. 2000).Further more, Winchester and Fletcher (2000) argued that measuring brand image was one of the most impor tant research projects undertaken by a society, because it could help firms to understand their products perceptions in consumers memory.For recitation, retailers piss 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 throw brands to shoppers. The enhancement of brand image will be beneficial to drive the sales, brand equity and increase the gross margin of private label products (Quelch and Harding, 1996). Therefore, brand image is an important determinant of consumers perception about private label brands.2.3 Brand equityBrand equity, like the concept of brand, has been identified as having multiple meanings. For instances, people have debated the concept of brand equity both in the chronicle 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 classification of different meanings of brand equity as- the centre value of a brand as a separable plus when it is sold, or involved on a balance sheeta time of the strength of consumers attachment to a branda description of the associations and beliefs the consumer has about the brand. (p. 662, Wood, 2000)According to the statement of Wood (2000), brand equity rests on financial accounting 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 timbre and brand associations (brand image). It reflected the value supplied by a product or service to a firm and/or customers in the m iscellaneous different ways. If the name and symbol of the brand change, the assets or liabilities will be affected and charge lost due to the link between both sides. To brand awareness, the strength of a brands presence is mentioned in the consumers minds, ranging from recognition to suppose to top of mind to domination. Recognition is more important than others due to the perception obtained from the past exposure. Also, recall can be a deciding factor of the purchasing 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 defined as the different effect of brand knowledge on consumers response 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 mo re attention in the marketing literature over the stand 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 compevery (Keller and Lehmann, 2003). High brand equity can increase the opportunity on consumer choice of a parking lot sales promotion (Simonson et al., 1994) and reduce the negative debates of consumers for a cost 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 sustain brands.2.4 The Double Jeopardy EffectIn recent years, more authors (Sharp et al. 2002 Ehrenberg and Goodhardt, 2002) have been interested in understanding , developing and reinforcing the concept of Double Jeopardy (DJ), which represents a cancel constraint on customer loyalty, which cannot be increased by marketing inputs much or for long unless a significant benefit increases the brands penetration (Ehrenberg and Goodhardt, 2002). The DJ effect is that small share brands have 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 have prouder(prenominal) turnover of their customer base if they lost the uniform number of customers as a large firm.The DJ effect is fit for the discussion of national brands and PLBs. Bigger brand will be kn deliver by more customers, and have more opportunities to be purchased and receive more responses than smaller brand. It will be an essential theory to support the last result of investigation about the comparis on between have 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 guidance on them. National brands will be also mentioned as the scale for the validity of comparison between Chinese and UKs have got labels.3.1 The definition of private label brands retail merchant brands are designed to provide 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 definite retailer, and may have a same or different name of the retailer but exclude other retailers name (IGD, 2003). The terms own label and own brand are always used together also private label, retail brands or distributor brands are in common used (Fernie and Pierrel, 1996).Own brands can help retailers reduce the direct impact of price contender, since retailers carry their own brands instead of national brands t hat are sold in the most of the inventorys (Carpenter, et al. 2005). Furthermore, according to IGD (2003) study, doing own brands can provide competitively priced products, increased 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 floor of developmentThe generation of own brands in the UK can date back to the end of the nineteenth century (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 Wilkinson, 1998). After that, own brands rose to penetrate into grocery markets gradually (Fernie and Pierrel, 1996), because supermarket had to implement a new strategy under the tough economic crisis (Ogbonna and Wilkinson, 1998).The growth of own labels in the UK had been rapid during 1980s, and slowing down 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 current high quality, competitive price and good 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 grocery field (Veloutsou et al., 2004), and even innovated in product categories to be consistent with branded-products, much(prenominal) as the expansion from grocery to clothing (Quelch and Harding, 1996). Fernie and Pierrel (1996) lighted 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), improved 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 reinforced on the basis of constant change can be seen. Also, it can be a good explanation for the condition, in which customers choose more own brands of supermarket rather than manufactures brands.3.2.2 Current developmentAt present, private label brands have taken up a significant share of nearly 29% in the UK food market. It is expected to increase further in 2009. Especially since 2008, own label has been gaining popularity following accelerating economic downturn. 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 vegetab les, 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 share 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 increasing opportunities they have.In addition, UKs supermarkets recognise that consumers have a wide range of product needs, so they segment the market by providing the brands that cater for the best, anicteric, valuable, kids and organic requirements as table2 shows.3.2.3 The feature of developmentThe development of PLBs, a competitive strategy adopted by retailers, is necessary for them within the current retail market of high competition in the UK (Carpenter et al. 2005).Own brands are developing fast and winning a bettor share of the food market with definite advantage 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 sought after consumers more narrowly. For instance, figure3 shows Sainsburys Be Good to Yourself range of lower fat 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 aspects such as packaging, size, and label (Choi and Coughlan, 2006). In figure4, Sainsbury instant coffee prod ucts are taken as an example of private labels with reduced feature differentiation 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 taste due to more consumers regards on flavour and aroma. Production methods have become 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 chow mein, which is developed from Chinese stir-fried noodles. Thus it is common for retailers to compete by developing premium 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 supported 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 aloofness and location for private labels on supermarket shelves (Cataluna et al. 2006). Retailers have got bargaining power 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 drink has been supported strongly in the competitive market, although the main retailers began to promote the potential 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 spent a third of its total compute 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 ascerta in 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 scrap 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 biscuit market is likely to be influenced by three key factors requirement for healthy foods, heavy products and convenient products. The indulgent demand can benefits the branded biscuits, as consumers believe 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 described and compared with manufacturers brands specifically, so that it can be as the firm foundation for the later comparison with Chinese PLBs market.3.3 The development of PLBs in ChinaPrivate label in China is still in an emerging 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 great 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 believe the value and quality of local brand ed 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, consider and Kids Connection. Wal-mart is developing their own brands including Simply Basic, Equate and Great Value in China, where the quantity is more limited than other developed world(prenominal) markets (IGD, 2005b). But 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-y okado, 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 undeveloped 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 itty-bitty market in China, and understand the shortage of Chinese PLBs development through comparing consumers different perceptions between Chin a 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 cognizance 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 Purchase behaviourConsumers purchase can be influenced by environment, personal preference and psychological 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 know 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, young people high on the new things more than old people. From the psych ological 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-label attitude is discovered to influence purchase behaviour factors include consumer price consciousness, price-quality perception, deal proneness, shopping attitudes, impulsiveness, brand loyalty, familiarity with store brands, reliance on alien cues, tolerance 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 set 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 increase of Chinese consumers purchase power and the improvement of living direct 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 standar d 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 orange juice private-label test, because consumers had a low involvement activity on grocery 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 differentiation in the market place. (p49, Fernie and Pierrel, 1996)They supported that own labels/brands could bring retailers more differentiation in the market place tha n 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 b uy 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 view 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 th at 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 analytic thinking 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