customer perception retail
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STUDY OF CONSUMER PERCEPTION
TOWARDS PRIVATE BRAND IN
ORGANISED RETAIL SECTOR
A PROJECT REPORT
Under the guidance of
Miss Mamta Dua
(Faculty of MBA Marketing)
SUBMITTED BY:
Rakesh Kumar Sachdeva
(520915462)
(Webuniv Infoetch LTD)
(01504)
in partial fulfillment o f the requirement
for the award of the degree
Of
MBA
IN
Marketing
JANUARY, 2011
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Acknowledgement:
Survey is an excellent tool for learning and exploration. No classroom routine
can substitute which is possible while working in real situations. Application of
theoretical knowledge to practical situations is the bonanzas of this survey.
Without a proper combination of inspection and perspiration, its not easy to
achieve anything. There is always a sense of gratitude, which we express to
others for the help and the needy services they render during the different
phases of our lives. I too would like to do it as I really wish to express my
gratitude toward all those who have been helpful to me directly or indirectly
during the development of this project.
I would like to thank my professorMiss. Mamta Duawho was always there to
help and guide me when I needed help. Her perceptive criticism kept me
working to make this project more full proof. I am thankful to him for her
encouraging and valuable support. Working under her was an extremely
knowledgeable and enriching experience for me. I am very thankful to her for
all the value addition and enhancement done to me.
No words can adequately express my overriding debt of gratitude to my parents
whose support helps me in all the way. Above all I shall thank my friends who
constantly encouraged and blessed me so as to enable me to do this work
successfully.
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Bonafide Certificate:
BONAFIDE CERTIFICATE
Certified that this project report STUDY OF CONSUMER PERCEPTION
TOWARDS PRIVATE BRAND IN ORGANISED RETAIL SECTOR is
the bonafide work ofRakesh Sachdeva who carried out the project work
under my supervision
Signature Signature
Head of Department Faculty Incharge
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TABLE OF CONTENTS
CHAPTER
NUMBER
CHAPTER NAME PAGE NUMBER
1 Objective 5
2 Scope of the study 6
3 Limitations of the study 7
4 Introduction to retail industry 8
5 Private labels 27
6 Research methodology 57
7 Data analysis and findings 60
8 Suggestions and recommendations 90
9 Conclusion 9110 Bibliography 94
11 Webliography 94
12 Annexure 95
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OBJECTIVES
1. To see the consumer perception towards private Brands.
2. To see the factors that consumer consider while making the choice of the
brand.
3. To know how consumer see Private Brand in comparison to National
Brand.
4. To know the satisfaction level of the customers.
.
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SCOPE OF THE STUDY:
The survey for the study has been conducted at retail outlets of:
Vishal Mega Mart
Subhiksha
Spenser
City in which the survey has been conducted is Delhi. The whole of primary
data was collected through the survey of customers that has been shopping in
the above stated retail stores at Delhi.
The small interviews of the store managers of the retail outlets have been
conducted at Delhi at Visual Mega mart, Subhiksha and Spenser. The
information was collected through the conversation with store managers.
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LIMITATIONS OF THE STUDY
In attempt to make this project authentic and reliable, every possible aspect of
the topic was kept in mind. Nevertheless, despite of fact constraints were at
play during the formulation of this project. The main limitations are as follows:
The sample size is small as compared to universe.
Survey is conducted only in areas prescribed.
People were hesitant to disclose the true facts.
The chance of biased response cant be eliminated though all necessary
steps were taken to avoid the same.
Lack of published or unpublished literature on the study is also an
limitation.
Due to cost, time and human element involved project area was limited.
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INTRODUCTION TO RETAIL INDUSTRY
Retailing is still in its infancy in India. In the name of retailing, the unorganized
retailing has dominated the Indian landscape so far. According to an estimate
the unorganized retail sector has 97% presence whereas the organized accounts
for merely 3%. Industry has already predicted a trillion dollar market in retail
sector in India by 2010. However, the retail industry in India is undergoing a
major shake-up as the country is witnessing a retail revolution. The old
traditional formats are slowly changing into more complex and bigger formats.
Malls and mega malls are coming up in almost all the places be it metros or
the smaller cities, across the length and breadth of the country.
A McKinsey report on India says organized retailing would increase the
efficiency and productivity of entire gamut of economic activities, and would
help in achieving higher GDP growth. At 6%, the share of employment of retail
in India is low, even when compared to Brazil (14%), and Poland (12%).Govt
of India's plan of changing the FDI guidelines in this sector speaks of the
importance attached to retailing. Recently moves by big corporate houses like
Reliance Industries has further fuelled the major investments in retail sector. A
strategic alliance, land acquisitions in prime areas give the essence of the mood
in this sector.
Both MNCs and Indian firms want to get their share of this burgeoning pie.
Notable in Indian firms are Pantaloons Retail & Big Bazaar, Trent's
Westside, Shopper's stop, Reliance and Subhiskha, Wills Lifestyle stores,
Caf Coffee Day, which are present in India in different retail formats. Wal-
Mart stores have just started operations in India. Some leading retail coffee
chains of the world like Starbucks, Barnies are planning to expand in a major
way in India.
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THE INDIAN RETAIL SECTOR
India is the country having the most unorganized retail market. Traditionally it
was a family's livelihood, with their shop in the front and house at the back,
while they run the retail business. More than 99% retailer's function in less than
500 square feet of shopping space.. The Indian retail sector is estimated at
around Rs 900,000 crore, of which the organized sector accounts for a mere 2
per cent indicating a huge potential market opportunity that is lying in the
waiting for the consumer-savvy organized retailer.
There is no doubt that the Indian retail scene is booming. A number of large
corporate houses Tata's, Raheja's, Piramals's, Goenka's have already made
their foray into this arena, with beauty and health stores, supermarkets, self-
service music stores, new age book stores, every-day-low-price stores,
computers and peripherals stores, office equipment stores and home/building
construction stores
There seems to be a considerable potential for the entry or expansion of
specialized retail chains in the country. The Indian durable goods sector has
seen the entry of a large number of foreign companies during the post
liberalization period. A greater variety of consumer electronic items and
household appliances became available to the Indian customer. Intensecompetition among companies to sell their brands provided a strong impetus to
the growth for retailers doing business in this sector. Increasing household
incomes due to better economic opportunities have encouraged consumer
expenditure on leisure and personal goods in the country. There are specialized
retailers for each category of products (books, music products, etc.) in this
sector. Another prominent feature of this sector is popularity of franchising
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agreements between established manufacturers and retailers. A strong impetus
to the growth of retail industry is witnessed by economic boom and driver of
key trends in urban as well as rural India.
The 4 major organized retail sectors are Food & Grocery, Clothing, Consumer
Durables and Books & Music. In 20037-08, private consumption expenditure in
India amounted to Rs 1,690,000 crores (USD 375 billion) of which, retail sales
constitute about 61% (USD 230 billion).
KEY TRENDS IN URBAN INDIA:
1. Retailing in India is witnessing a huge revamping exercise.
2. Estimated to be US$ 200 billion, of which organized retailing (i.e. modern
trade) makes up percent or US$ 6.4 billion.
3. Ranked second in a Global Retail Development Index of 30 developing
countries drawn up by AT Kearney.
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4. India is rated the fifth most attractive emerging retail market: a potential
goldmine
5. Organized retailing in India has been largely an urban phenomenon with
affluent classes and growing number of double-income households.
6. Food and apparel key drivers of growth in retail.
KEY TRENDS IN RURAL INDIA:
1. Rural markets emerging as a huge opportunity for retailers reflected in the
share of the rural market across most categories of consumption.
2. ITC is experimenting with retailing through its e-Choupal and Choupal Sagar
rural hypermarkets
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THE HIDDEN CHALLENGES :
Modern retailing is all about directly having "first hand experience" with
customers, giving them such a satiable experience that they would like to enjoy
again and again. Providing great experience to customers can easily be said
than done. In India, as we are moving to the next phase of retail development,
each endeavor to offer experiential shopping. The problem here is retail
differentiation. Another problem in setting up organized retail operations
is that of supply chain logistics. India lacks a strong supply chain whencompared to Europe or the USA. The existing supply chain has too many
intermediaries: Typical supply chain looks like:- Manufacturer - National
distributor - Regional distributor - Local wholesaler - Retailer - Consumer. This
implies that global retail chains will have to build a supply chain network from
scratch. This might run foul with the existing supply chain operators. The
concept of container trucks, automated warehousing is yet to take root in India.
This results in significant losses/damages during shipping.
Merchandising planning is one of the biggest challenges that any multi store
retailer faces. Getting the right mix of product, which is store specific across
organization, is a combination of customer insight, allocation and
assortment techniques.
The private label will continue to compete with brand leaders.
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THE FOLLOWING FACTORS ARE THE PROS AND CONS
OF RETAILING
Employment Opportunities In Retail Sectors:
URBAN EMPLOYMENT:- Employment opportunities for youth, According
to PricewaterhouseCoopers (PwC) it is said that retailing will create additional
eight million jobs though retailing In India and will benefit population by
employing local (Urban) youth and others directly or indirectly. But it is feared
that our friendly neighborhood kirana shops where, one can make purchases in
small quantities and return the goods if not found good and many more friendly
services, will be on the verge of disappearance there by creating a vacuum
which cannot be filled by the big organized one.
RURAL EMPLOYMENT: - Contract Farming is the new mantra of organized
retailing in India. There is no doubt that the farmers are in some way benefited
by contract faming where in, the latest technology and equipment and scientific
farming is done by farmers with the help of retailers there by increasing the
productivity in agriculture, and uniform payment for their produce through out
the crop irrespective of fluctuations in market price. But one should also focus
on the freedom of farmers to sell their produce at will. It is evident in India that
rich farmers who possess vast lands are the beneficiary but farmers who have
little land and dependent on other trades are marginally benefited by this kind
of business.
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WHAT SMALL RETAILERS AND CUSTOMERS SAY?
"I've lost half my business," says Rajiv Das, who has been selling fruit and
vegetables for 18 years and now has to contend with a new Reliance store a
three-minute walk away. "I'm not able to fight, but I would if I could."
Similarly, Selva Kumar, who runs a kirana 100 meters from a Reliance
outlet in Chennai, says, "We have lost 40 percent of our business, and
that's the future. We're not closing, but there'll be no growth."
COMPETITION:
The organized retailers are financially sound in investing in Big Business
promotion, aesthetic looks, technology and Supply chain management etc. Its
business principle "The bigger the better". The Bigger retailers the better it can
counter competition from small retailers and sustain business. But the
unorganized retailer cannot compete and are trying fight hard against organized
retailers however they cannot afford to invest heavy on technology and other
inputs.
Due to tough competition, Customer have lot many opportunities and choices
to go for, unless local retailers offer them best prices they wont be interested to
come back, unorganized retailers stores are finally waking up to become
competitive and try to attract more consumers.
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FDI IN RETAIL SECTOR:
Government of India permitted up to 51% foreign direct investment in
single-brand retailing in the country. This rule, to some extent saved the
existence of unorganized retailers but in the long run there is a possibility thatIndian Government may allow 100% FDI there by permitting to setup
multinational retail operators which may wipe out the existence of unorganized
sector. The government is expected to examine FDI in multi-brand products
only after it receives reports from Indian Council for Research on International
Relations and the National Council for Applied Economic Research. Currently,
51% FDI is allowed in only single brand retailing.
Industry experts are sensitive to the point that local markets have an edge over
the retail investors in India as they have unique advantages such as an
understanding of local needs and extended service like home delivery. As the
FDI influence on the Indian retail sectorsets in, the total size of the retail trade
is expected to grow extensively in the coming years and the consumer segments
patronizing the big malls will create frenzy for organized retailing predicting a
growth of 25-30 per cent per annum over the next decade. Moreover, Indian
retail chains would get integrated with global supply chains since FDI will
bring in technology, quality standards and marketing thereby, leading to new
economic opportunities and creating more employment generation.
Industry trends for retail sector indicate that organized retailing has major
impact in controlling inflation because large organized retailers are able to buy
directly from producers at most competitive prices. World Bank attributes the
opening of the retail sector to FDI to be beneficial for India in terms of price
and availability of products as it would give a boost to food products, textiles
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STRATEGIES FOR THE GROWTH OF THE RETAIL
SECTOR
Right Positioning The effectiveness of the mall developer's communication of
the offering to the target customers determines how well the mall gets
positioned in their minds. At this stage, the communication has to be more of
relative nature. This implies that the message conveyed to the target customers
must be effective enough in differentiating the mall's offering from that of its
competitors without even naming them. The message should also clearly
convey to the target audience that the mall offers them exactly what they call
the complete shopping-cum-entertainment point that meets all their
expectations.
Effective Visual Communication Retailer has to give more emphasis on
display visual merchandising, lighting, signage and specialized props. The
visual communication strategy might be planned and also be brand positioned.
Theme or lifestyle displays using stylized mannequins and props, which are
based on a season or an event, are used to promote collections and have to
change to keep touch with the trend. The merchandise presentation ought to be
very creative and displays are often on non-standard fixtures and forms to
generate interest and add on attitude to the merchandise.
Strong Supply Chain
Critical components of supply chain planning applications can help
manufacturers meet retailers' service levels and maintain profit margins.
Retailer has to develop innovative solution for managing the supply chain
problems. Innovative solutions like performance management, frequent sales
operation management, demand planning, inventory planning, production
planning, lean systems and staff should help retailers to get advantage over
competitors.
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Changing the Perception
Retailers benefit only if consumers perceive their store brands to have
consistent and comparable quality and availability in relation to branded
products. Retailer has to provide more assortments for private level brands to
compete with supplier's brand. New product development, aggressive retail mix
as well as everyday low pricing strategy can be the strategy to get edge over
supplier's brand.
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THE GROWTH FACTORS OF ORGANIZED RETAIL IN
INDIA ARE:-
Increase in per capita income which in turn increases the household consumption
Demographical changes and improvements in the standard of living Change in
patterns of consumption and availability of low-cost consumer credit
Improvements in infrastructure and enhanced availability of retail space
Entry to various sources of financing
BENEFITS OF RETAIL SECTOR TO THE ECONOMIC
GROWTH:-
Better quality products and services would lead to better competition
More exports bring more foreign direct investments
Organized Indian retail sector would encourage tourism
Along with the employment boom there would be a vast development
in the expertise of the human resource
There would remain future scope for improvements in agriculture,
small, and medium scaled with the help of the Indian retail sector
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CONSUMER PERCEPTION
All marketing starts with the consumer. So consumer is a very important person
to a marketer. Consumer decides what to purchase, for whom to purchase, why
to purchase, from where to purchase, and how much to purchase. In order to
become a successful marketer, he must know the liking or disliking of the
customers. He must also know the time and the quantity of goods and services,
a consumer may purchase, so that he may store the goods or provide the
services according to the likings of the consumers. Now the whole concept of
consumers sovereignty prevails. As consumers, we play a very vital role in the
health of the economy local, national or international. The decision we make
concerning our consumption behavior affect the demand for the basic raw
materials, for the transportation, for the banking, for the production; they effect
the employment of workers and deployment of resources and success of some
industries and failures of others. Thus marketer must understand this.Consumer
perception is defined as a process by which an consumer selects, organizes and
interprets stimuli into a meaningful and coherent picture of the product. It can
be describes as how a consumer see the products in the market.
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CONSUMER BEHAVIOUR IN INDIA
The term consumer behavior is defined as the behavior that consumers
display in searching for purchasing, using, evaluating and disposing of products
and services that they expect will satisfy their needs. Consumer behavior
focuses on how individuals make decisions to spend their available resources
(time, money, effort) on consumption related items. That includes what they
buy, why they buy, when they buy it, where they buy it, how often they buy it,
how often they use it, how they evaluate it after the purchase , the impact of
such evaluations on future purchases an how they dispose of it.
The three drivers of successful relationship between the marketers and
customers are customer value, high levels of customer satisfaction, and
building a structure that ensures customer retention.
India is a big country with 28 states, over one billion people and 120
dialects/languages. From the market perspective, people of India comprise
different segments of consumers, based on class, status, and income.
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DIFFERENT SEGMENTS OF INDIAN CONSUMERS:
The Socialites: Socialites belong to the upper class. They prefer to shop in
specialty stores, go to clubs on weekends, and spend a good amount on luxury
goods. They are always looking for something different. They are the darlings
of exclusive establishments. They go for high value, exclusive products.
Socialites are also very branding conscious and would go only for the best
known in the market.
The Conservatives: The Conservatives belong to the middle class. The
conservative segment is the reflection of the true Indian culture. They are
traditional in their outlook, cautious in their approach towards purchases; spend
more time with family than in partying and focus more on savings than
spending. Slow in decision making, they seek a lot of information before
making any purchase.
The Working Woman: The working woman segment is the one, which has
seen a tremendous growth in the late nineties. This segment has opened the
floodgates for the Indian retailers. Today, she is rubbing shoulders with men,
proving herself to be equally good, if not better. Working women have their
own mind in decision to purchase the products that appeal to them.
Indias Rich: Indias rich can be categorized into five major categories as
follows:
The Rich: The rich have income greater than US$11,000/- per annum. Total
household having such incomes are 1,058,961. These people are upwardly
mobile. Some of them in this category are Double Income No Kids (DINK)
households. They spend more on leisure and entertainment-activities than on
future looking investments.
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The Super Rich: The Super Rich have income greater than US$22,000/- per
annum. Total number of households is 320,900. There are less DINK families
here than in the rich category. The Super Rich are mainly professionals and
devoted to consumerism. They buy many durables and are status conscious.
The Ultra Rich: The Ultra Rich have income greater than US$44,000/- perannum. The number of households in this category is 98,289. There are some
DINK households of middle-level executives. Some single earning households
are of first generation entrepreneurs. Some rich farmers, who have been rich
for a long time, belong to this category.
The Sheer Rich: The Sheer Rich is made up by households having income
exceeding US$110,000/- per annum. Such households are 20,863. They do not
have a homogenous profile. There are joint families as well as nuclear families
in this category.
The Obscenely Rich: The Obscenely Rich is made up of households having
income exceeding US$222,000/- per annum. There are hardly 6,515 such
households in India. They are first-generation entrepreneurs who have made it
big. Some of them are techies. A variety of people belong to this category.
They are just equivalent to the rich in the developed countries. They crave for
exclusivity in what they buy. Most premium brands are relevant to them.
Rural Consumer:
About three quarters of the Indian population are in the rural areas and with the
growing middle class, specially in the Indian cities, the spill over effect of the
growing urban middle class is also felt in the rural areas. The Indian rural
market has been growing at 3-4% per annum, adding more than 1 million new
consumers every year and now accounts for close to 50% of the volume
consumption of fast-moving consumer goods (FMCG) in India.
Increasing awareness of indian consumer:
Over the years, as a result of the increasing literacy in the country, exposure to
the west, satellite television, foreign magazines and newspapers, there is a
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significant increase of consumer awareness among the Indians. Today more and
more consumers are selective on the quality of the products/services.
This awareness has made the Indian consumers seek more and more reliable
sources for purchases such as organized retail chains that have a corporate
background and where the accountability is more pronounced. The consumeralso seeks to purchase from a place where his/her feedback is more valued.
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MARKETING STRATEGIES:
ONLINE MARKETING: A study by the Confederation of Indian Industry
(CII) and the International Trade Centre predicts that e-commerce activity in
India will rise from US$ 0.10 million in 2000-01 to US$ 5.8 billion in 2005-06,of which the business to business segment will account for US$ 5.41 billion.
Currently, the products Indian consumers are buying through online are
greeting cards, clothes, CDs/VCDs/DVDs, cassettes, books, magazines,
medicine and educational material.
The popular online shops in India include: www.ebay.in,www.shopping.rediff.com, www.reliablegreetings.com ,
www.shopping.expomarkets.com
CELEBRITY INFLUENCE: This is an important tool which is able to
influence Indian consumer buying behavior. In India, celebrities are being
increasingly used in marketing communication by marketers to lend personality
to their products. With the visual media becoming more popular the use of
celebrities in the TV media has increased. Celebrities create headlines. Their
activities and movements are being closely watched and imitated. What they
endorse sell like hot cakes.
QUALITY ORIENTED OUTLETS: Indian consumers looking for quality
choose expensive brands as they feel that price is an indicator of quality.
However, in the absence of well known brands in selected product range,
consumers are likely to take cues from well established retail outlets hoping
that these outlets carry quality products.
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FREEBIES: Indian consumer buying behavior is influenced by freebies.
Freebies are consumer products given free of charge as gifts to purchases of
selected products above a certain value. TVs, washing machines, refrigerators,
and ready made clothes are some of the product categories in which freebies are
given to Indian consumers. Freebies generally comprise tooth paste, soaps,detergent, cooking oil etc.
ECO FRIENDLY PRODUCTS: The environmental awareness in India has
started affecting marketing of products based upon their eco-friendliness. In
general, Indian consumers are likely to buy environmentally responsible
products and packs. The future key for marketing could be to select more
ethical and ecological responsible products and packaging, which is also
convenient for consumers, thus, balancing environmental concerns with
commercial considerations.
CHANGING TRENDS: Urbanization is taking place in India at a dramatic
pace and is influencing the life style and buying behavior of the consumers.
The working urbanites are depending more on fast and ready-to-serve food,
they take less pain in traditional method of cooking and cleaning.
TRENDY LIFESTYLES: The current urban middle and upper class Indian
consumer buying behavior to a large extent has western influence. There is an
increase in positive attitude towards western trends. The Indian consumer has
become much more open-minded and experimental in his/her perspective.
There is now an exponential growth of western trend reaching the Indianconsumer by way of the media and Indians working abroad.
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PRIVATE BRAND
Private Brand describes products manufactured for sale under a specific
retailers brand. They are often designed to compete against branded products,
offering customers a cheaper alternative to national brands. The mostcommonly known private label goods are the store brands sold by food
retailers, though this is just one example of many. Department stores,
electronics stores, and office supply retailers all offer private label products or
services.
Store brands are products developed by a retailer and available for sale only
from that retailer; some retailers may attempt to utilize this measure of
exclusivity to differentiate them from the competition. Store brands help
retailers to increase sales which indirectly add to the bottom line (profit).
However store brands are priced 20-30%less than the branded goods. Store
brands can used as a powerful tool i.e. The general feeling is that in times of
recession, private labels increase their market share, but tend to maintain that
market share as economies recover. Thus store brands prove to be a useful tool,
depending upon how it is created.
According to Nirmalya Kumar, Professor of Marketing and Director of the
Aditya Birla India Centre, London Business School, and co-author of
Private Label Strategy, At the moment, private labels almost do not exist in
the country. They are less than 5 per cent of the retail business and still have a
long way to go. But Indian retail is extremely hot and it offers a proposition
that cant be seen anywhere else in the world. Only in China and India can
retail chains have as many stores as they have in the US. In no other country
can one imagine companies having 5,000-6,000 stores of their own. Heres a
little
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calculation: in a few years, most retail chains will have close to 5,000 stores in
India. A profit of, say, Rs 5 lakh a store a month would mean a profit of Rs 250
crore. Ten such companies would mean profits of Rs 2,500 crore with their
combined turnover being more than Rs 25,000 crore In the next 20 years, the
richest Indian or one of the top three richest people in India will surely bea retailer. Private labels will have a huge role to play in this. As much as 50
per cent of Indian retail will be occupied by private labels.
HOW HAVE PRIVATE LABELS EVOLVED IN DEVELOPED
COUNTRIES: : Private labels have come a long way over the last three
decades. They started with retailers wanting to offer cheaper substitutes. This
was for two reasons. One, having a private label meant that retailers could
negotiate a better margin from the manufacturer. And the other, when they had
private labels they had a differentiator. While every shop sold a Coca-Cola and
Pepsi, a private label meant that the store now had something that other stores
did not.
The biggest change in the last decade or so has been the entry of premium
private labels. They are no longer saying buy us because we are cheap,
instead today, they are saying buy us because we are the best.
THE SAME CAN HAPPEN IN INDIA ALSO.The share of private labels in
any country depends on how consolidated the retail chains are. Developing a
good quality brand has a high development and innovation cost attached to it.
To be able to absorb such costs, Indian retail chains will need to scale up.
In India, the largest retail chain today has around 300-400 stores. Retail chainsin developed nations on the other hand have around 3,000-5,000 stores each. So
it will start with retailers reverse engineering manufacturers brands, and as
organised retailers grow larger, their
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labels, too, will move up the value chain. However, the transition will be faster
in India.
STORE BRANDS IN INDIA:
Store brands in India in a growing stage. It will be difficult to get the details of
sales in India because of the highly unorganized structure of Indian retailing.
But still it contributes a turnover of Rs.700 Cr in the organized structure.
Though the margin of Rs.700 Cr is considered as low when compared to other
countries, India is expected to achieve a sizeable volume in the coming 3-5
years. Moreover in India the products come under store brands include mainly
food and apparel industry.
Some of the retail players having store brands in India are as follows:
DECISION FACTORS FOR BUYING:29
FOOD AND GROCERY FASHION OTHERS
Spencer's Daily Shoppers' Stop Vivek's
Adani- Rajiv's Westside Planet MSubhiksha Lifestyle Music World
Nilgris Piramyd Crossword
Nirma-Radhey Ebony Gautier
Vishal Mega Mart Globus Lifespring
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Though the buying process goes like the above chart, there are some factors
that would influence the decisions of the buyer.
They are shown in the following chart:
CREATING RETAIL STORE BRANDS:
30
Values
Importance weights
Reference
group
Belief
About the
performance of the
retailers and
Culture
Values
Importance weights
Reference
group
Belief
About the
performance of the
retailers and
Culture
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Creation of retail store brands involves both long term and short strategies. In
order to a create retail store brand, are
o Things to be considered before introduction of the store brand
o Things to be considered during the introduction of the brand
THINGS TO BE CONSIDERED BEFORE INTRODUCTION:
For the introduction of the brand, the following are very important in order to
make the brand a successful one, if the following is not right then the brand
cannot have a long term success.
Target customers:
Though there is a good response for the store brands introduced by the retailers,
it should be directed towards target customers i.e. to whom the products must
reach. More over for a retail store, the target customers would be the people
above middle income group and people above high income group (very rich).
Identify the needs of target customers:
Having the target customers, the store has to find the needs of the people which
remain unsatisfied. The needs of the customers have to be given due
importance because the consumers buying behaviour starts with it. If the needs
are found, a product can made in such a way that it satisfies their need. If the
consumer finds that the product is satisfying him then the retail store brand can
be successful one.
Quality of the product:
First and foremost thing which makes the consumer to buy the product is the
QUALITY of the brand. If the quality of the product is good then customers
will be attracted towards it. When the quality is good, during alternatives
31
Values
Importance weights
Attitudes
Evaluation of
retailers and
products
Customer buying
decision
Family
Reference group
Attitudes
Evaluation of retailers
and products
Values
Importance weights
Attitudes
Evaluation of
retailers and
products
Customer buying
decision
Family
Reference group
Attitudes
Evaluation of retailers
and products
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(consumer behaviour) are evaluated, the consumer attaches more importance to
the retail brand.
Price of the brand:
Price plays an important role in the creation of store brand. Most of the storebrands are purchased because they are priced 10% to 40% below the national
brand. Because of this most of the consumers are attracted towards the brand
and this also used to differentiate the store brand and the national brand. the
store brands are normally priced below the national brands price. In some it can
also be premium store brands. There are two strategies for this. The first
strategy is to identify the gap in the market in accordance launch a premium
store brand. Supermarket Sainsbury did this while launching its brand 'Taste the
difference'.
Positioning:
Positioning attracts the customers a lot easily towards the brand. When
positioning of the store brand is perfect, then pricing the brand above premium
is possible. Moreover, when introducing store brands, retailers may use either a
differentiation strategy or an imitation strategy in positioning the store brands.
Examples of a high quality differentiation strategy where retailers introduce
high quality differentiated brands that differentiate them from the national
brands include "Sam's Choice" from Wal-Mart. Alternatively, the retailer may
differentiate by offering a white-label generic or a low quality store brand
targeted to low quality oriented customers. "Food Bazaar" positioned its private
salt brand as premium health salt which is available in the price of the ordinary
salt. It enjoys 40 - 45% market share in its category among all the "Food
Bazaar" outlets.
Packaging:
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Packaging plays a very important role because even if the customers are not
aware about the store brand, the packaging will make the consumer to see the
product and it make the customer to inquire about the product. The store have a
special unit for packing their store brands and the design, look etc., of the
package is vested with the packing unit.
Training to the employees:
Training is said to be important because the customers of the store will not be
aware about the store brands, its uses, its merits, etc. In order to fill this gap the
employees of the store must be given adequate training regarding their brand.
Every time when the store introduces its new store brand, they are providing
one month training to their employees
THINGS TO BE CONSIDERED DURING THE INTRODUCTION:
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Now the brand is available in the retail outlet. The following things are very
essential for the complete creation of the retail store brand.
Promotion of the store brand:
Promotion is that aspect of marketing communications that keeps the product inthe minds of customers and helps stimulate trial and repeat purchase. Most
retail owners and marketing managers are familiar with promotional strategies
such as:
Advertising
Personal selling
Sales promotions (buy one get one, coupons, introductory offers, etc.)
Public relations & publicity
For a retail store, media advertising is not needed, because it is already
provided by the national brand.
Feedback from the customers:
Feedback can be got from the customers regarding the store brand's
performance and its improvement. Feedback gives the satisfaction level of the
customers. The store receives feedback from the customers regarding their
brand's performance. Feedback can also be used for improving the qualities of
the brand.These are the things which should be considered during the
introduction of the retail store brand.
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WHAT IS THE FUTURE FOR PRIVATE BRANDS?
Private brands will continue to grow and in Europe especially, will become
international. Discount stores will develop their own private brands at the
expense of brand labeled products.
Apart from price driven private labels, the up market label will develop. This
has already been achieved in the UK with Sainsburys wines and Marks &
Spencer sandwiches. The private label will continue to compete with brand
leaders. The warning is if you have a branded product that is not a market
leader then your product could be seriously under threat in the next few years.
Private retailers will occupy 50 per cent of the market the world over. At 50 per
cent, they begin to saturate. If they try to occupy more than this, then
consumers feel that there arent enough choices. In countries such as
Switzerland and the UK, private labels have reached this limit and these
markets have saturated. But they will continue grow in the other countries till
they reach the same level. And this will happen very soon in India, too.
The private label brands in world:
Aldi 95% private label
Lidl 80% private label
Sainsburys 60% private label
Tescos 40% private label
Wal-Mart 40% private label
Carrefour 33% private label
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ADVANTAGES AND DISADVANTAGES OF PRIVATE
LABELS
Advantages to the retailer:
Reduce producer domination in the marketplace
Create more dependence on the retailer by the consumer
Customer sales increase
An opportunity to differentiate and provide variety
Customer loyalty in a situation where you can avoid comparisons
Positive image building
More freedom in your pricing strategy
Positive control over stock keeping inventory
Better bargaining position in a depressed economy
The potential disadvantages for the retailer could be:
A negative backlash on their image
Lack of standardization of private labels between categories upsets the
customer
Financial control concerns
Lower turnover, resulting in lost total sales per linear metre.
Excessive focus on the private label at the expense of other products
The retailer could be perceived as less powerful in the marketplace as
they dont promote recognized brands
Low price equates to low quality
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Lack of financial support from suppliers
If the product fails, the consumer doesnt forgive you
Advantages to the producer
It keeps out a competitor from using this opportunity
They can get into the marketplace at a lower cost
They have a secondary product that gives the company a new profile
They can produce a competitor product to position against their own
market leader
It is an opportunity for smaller suppliers who dont have the promotional
capabilities to enter a bigger marketplace
The supplier can get more shelf space in the store
An opportunity to build strategic partnerships with selected retailers
The main consumer advantages are
A guarantee of the same quality for a serious price differentiation
More variety within the category
A trusted retail name equals trust in the product
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Product provides a need based on a want, where products were missing
within the category. Eg ethnic foods, diet foods, sugar free foods and so
on.
The disadvantages to the producer could be
The relationship with the retailer could be threatened if the product
doesnt perform
They have created a competitor to their own brand
Other suppliers may introduce cheaper private labels and drive margins
downwards
High inventory costs and low profit margins
The disadvantage for a consumer could be
Low quality product. Consumers may have a prejudice to low price
equalling low quality
Previous customer failures could effect the whole private label range in a
store eg if their cereals arent good, then their jam will be the same.
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OPPORTUNITIES OF PRIVATE BRAND
Brand Loyalty :
National brands are sold all over, so there's no real sense of brand loyalty in
terms of where consumers buy them. Because private labels are unique to one
retail chain, there is the possibility for retailers to cultivate a sense of brand
loyalty. Though they used to be seen as knock-offs of "name brands", private
labels have become increasingly more accepted by the public as quality has
increased and retailers have expanded their offerings of private label goods.
Lower Prices/Higher Margins
Private label goods are generally much cheaper to produce than branded goods,
due to the lack of advertising and marketing expenses. As such, retailers are
able to purchase private label goods for much less than they would have to pay
for comparable branded products. The cost difference is usually large enough
that retailers can offer customers lower prices while still making higher profit
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Retailers as Marketers
In the past, retailers were merely the last stop on a product's way from the
manufacturer to the consumer. Retailers are now becoming increasingly
established as brands themselves, marketing their private label products as
alternatives to national brands. This has resulted in a growing shift in the
balance of power between retailers and manufacturers, with retailers not only
becoming less dependent on manufacturers for product offerings but actually
making manufacturers dependent on them for sales volume.
Store-brand in FMCG industry in India are on a complete upswing.
With more and more retailers offering products under their own private labels,
consumers have not had it so good as far as shopping for FMCG is concerned.
The Government of India is looking for foreign direct investment in retail
sector and therefore one can expect greater growth in large retail chains or
outlets in the first decade of the current century. Marketing managers struggle
between cost-saving standardization for a mass market and high-cost
customization for a specific niche to improve consumer-acceptance. Given the
technological developments in recent times, standardized products no more
enjoy unique selling propositions as imitations cannot be prevented from entry.
Organizations continuously strive to find a method of creating unique selling
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proposition (USP) to retain their existing customers and acquire new
customers. Such an outlook, in recent times, has called for a better
understanding of distribution channels in meeting specific customer-needs.
Retailers growing control over distribution channels:
The turn of the twenty first century witnessed many changes in distribution
channels in India. Smaller sized convenience stores encounter challenge
from large chains of departmental stores that offer many product
categories under one roof. Though convenience stores such as general
merchants, grocers and mini self-service outlets will continue to exist in
our country, large cities will witness the growth in one-roof shopping
malls of different kinds.
Already, large specialty stores such as Subhiksha, Food World in FMCG sector
have set their firm foot in South India, surpassing local chain stores such
as Nilgiris and Vitan in size and reach. As of September 2004, there were
over 72 outlets of Food World. Subhiksha has 115 outlets and is still
growing in number and gaining popularity among consumers. The RPG
Group that owns Food World has plans afoot to expand into the hyper
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store category even more vigorously. Home Store India Limited (HSIL)
is reported to be planning for expansion in the North. This will result in
expansion in two types of retail stores: one in the hyper malls and the
other in large chain of The Sabka Bazar. Mega malls such as Shoppers
Stop and Forum have gained currency among upper middle class
shoppers seeking one-roof shopping combined with class and
exclusivity, and discount stores such as Big Bazaar are frequented by
middle class families who seek one-roof shopping combined with value
for money. Shoppers Stop is said to have plans for expansion which
symbolizes more growth in private labels.
Economics of private branding
Store brands are the only set of brands for which the store is entirely
responsible. Thus, the store has to bear all the costs (development, sourcing,
marketing effort, time, risk and promotion) and it reaps all the rewards of the
brands success.
It is intuitively evident that a store will enter into that product category that has
(a) high profit margin (b) low entry barrier to branding and (c) low switching
cost to the consumers, which may be either monetary of affective.
Commodities offer the best scope to stores for private branding since
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competition. Against the store label will be minimal from the unorganized
market. Further, commodities are products over which, through allocation of
shelf or floor space, retail control can be quickly established. This is because
the suppliers of commodities do not purchase shelf-space and therefore there
will be little restriction or objection to the stores stacking and shelf-display of
its own brands. These commodities are called Destination categories,
normally stacked at the far end of a store, inviting the consumers to take a long
walk through a maze of other products so that they may pick up some of them
on the way.
For retail chains such as Food World, these categories represent high tactical
usage to bring in more customers and the price-related promotion of these
categories falls under aggressive classification. In the case of manufactured
products being introduced under private labels, the characteristics that enable
store brand introduction are (a)inexpensive, easy, low risk purchase for
customer (b) easy to make from commodity ingredients (c) perishable,
therefore local supplies are favored (d) category sales are growing fast,
enabling the private brands garnering reasonably high volumes and (e) low
number of national players dominating the category so the retailer feels the
need to reduce dependency on them.
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MANAGERIAL ASPECTS OF STORE BRANDS :
Motivation for store brand entry:
Store brand entry is motivated by the following:
(i)Store brand enables the store to discriminate consumers on price
dimension. In most of the product categories, there are two types of
consumers, namely, those who prefer quality-guarantee even at higher price
and those who expect reasonable quality at reasonably low prices. The former
display brand loyalty, purely due to their faith in the quality of nationally
advertised brand. The latter are not affected by national advertising. They are
either ready to risk the quality aspect for the gain in price or not ready to risk.
Those who are ready to risk quality for price choose one of those brands from
the competitive fringe in the store shelf. Those who are not ready to risk quality
need a brand that is an acceptable balance between quality and price..
(ii)Gap between marginal and average costs is another motivating factor
for the store brand.
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Normally, the average cost of the national brand is more likely to be higher
than the marginal cost, due to national level advertising. If not very high degree
of economies of scale is present in the product category, this difference
between average cost and marginal cost is an attraction to the store to launch its
private label. This cost-gap is availed by the store by getting its brandmanufactured or packed by a smaller producer, perhaps locally, or in its own
premises.
(iii) Store brands enable the retailer to differentiate the store from other
stores in the vicinity.
By standing guarantee to a variety of store brands, the retailer signals to the
consumers his USP of higher quality. When consumers face large number of
stores, their uncertainty about the outlets is high. Store labels cuts through such
uncertainty and enables their faster and frugal heuristic decision.
STRATEGIC POSITIONING OF STORE BRAND:
Store brand positioning is motivated by the aspects given below:
(i) In a situation when more than one national brand is sold in the store, it
makes profit-sense for the store to sell the store brand priced as high as the
leading brand to offer its customers the utility of perceived quality associated
with the price. Thus, though there may be a temptation to sell at lower price, on
par with fringe brands, the store will be better off reaping a higher profit
through a higher price.
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(ii) On aspects such as product packaging, pack size, design etc, it is suggested
that by positioning the store brand to mimic the leading national brand the
retailer can strengthen its bargaining position.
SUCCESS OF STORE BRAND AND PROFITABILITY:
Success of store brands depends on the following factors:
Introduction of a store brand in a category that consists of large number of
national brands increases stores profitability. A caveat must be added here that
this is possible only in such a situation where the competition among the
national brands is low . These two aspects should be present in conjunction for
the introduction of store brand to lead to greater category-profits. The intuitive
explanation of this phenomenon is as follows: In a situation when large number
of national brands is present, the stores dependence in any one brand is small.
Therefore, if the leading national brand retaliates to the store brands
introduction by stoppage of supplies, the loss of opportunity profits to the store
is minimal. On the contrary, when the national brands compete withinthemselves fiercely, the utility to the consumer about the quality of the brands
is high.
Dhar and Hock (1997) find six factors affecting the success of the store
brand. They are :
Quality of store brand relative to national brands is high.
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The quality of store brand is consistent over a period of time.
The product category is large in absolute value terms in stores sales
revenue.
The percentage of gross margins in the product category is high
The number of national players is fewer than in other categories.
MARKETING STRATEGIES TO COUNTER PRIVATE
BRANDING:
In this section, the competitive strategy from the national brands view-point is
studied. Marketing strategy will no more be restricted to boardrooms and
strategy tables. The real battle is taken to the war-field - the retail space - where
the thick of action is witnessed. Companies no more compete solely with other
companies for mind-space and shelf-space, but with their own distribution
partners. Distribution management will no more be confined to managing
distributors, ensuring supplies to retailers and sporadic managing of product
movement from retail shelves through promotions.
Managing large retail chains and mega malls will be a reality, which calls for
different types of business-deals, caliber, aptitude and attitude among the
boundary personnel. Pricing strategy will not be simply based on competitors
moves; it will consider how the retail outlets act as well as will react to the
companys strategy. This may have a bearing on the segment-targeting strategy
of national brands, due to the competition arising out of retailers private labels.
Introduction of private labels reduce advertising space at the points of sales,
since the retail outlets may prefer promoting their own brands to promoting
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national brands. Alternatively, advertising through points of sales may become
more expensive, with the retail outlets charging premium on shelf space and
advertising space. These may cause a fundamental change in the approach of
the national brands in their overall strategy of segmentation, targeting and
positioning. Companies may revert to mass-media advertising by giving up thecostlier point-of-sale advertising.
Manufacturers here need to realise and respect the strength of the retailer.
Today, most companies see retailers as the owners of small mom-and-pop
stores and not as a social or intellectual equal. But they need to understand that
retailers have equal weight and will soon wield a lot more power than them.
Hence manufacturers must start partnering with retailers.
They must start working closely with them as soon they will have to work
around them. In most developed nations like the US, the UK, South Africa and
Australia, manufacturers work closely with retailers. Even in countries like
Brazil, Mexico and Thailand one has witnessed this change. Hence Indian
companies can begin to build a partnership from now.
PRODUCT:
Introduction of private labels at retail stores implies to the national brands that
the consumers have greater options among products they buy. This means that
a wider product-range will be available. When the store competes vis--vis
national brands on product range, the short term inability of the national brands
to respond to the challenge is a matter to be contended with, since (i) a large
enterprise requires longer time to respond with changes in product-strategy and
(ii) the minimum quantity of production that enables the national brands to
avail the economies of scale may not be available when it reacts to a single
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store. Alternatively, if a chain store introduces a premium or economy brand in
a category, then the national brand gets the benefit of market testing from the
experience of the store brand and can thus decide whether or not it, too, should
enter that segment.
PRICE:
In case the store competes with the national brand on price range, it can
effectively do so by locally promoting the price-advantage to the price-sensitive
consumers and by highlighting the higher quality of the premium-range
products to quality-conscious consumers through its counter-salesmen. Under
such conditions, the national brand has two options: (i) it can fight the store
brands on price or (ii) it may increase its prices and highlight its higher quality
through national campaigns. Fighting is an option the national brand can
exercise when the customers loyalty to the national brand is greater than the
customers store-loyalty. The decision to fight price-reduction in kind has both
advantages and disadvantages. The advantage is that the store brand will find it
difficult to gain acceptance among consumers, if an established national brand
is available at a similar price. The national brand may succeed in nipping a
budding store brand. For a national brand, response to a reduction of price need
not be in kind.
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PLACE:
Private branding symbolizes the shift of intra-channel power downstream.
Whereas the national brands have conditioned the perceptions and preferences
of consumers by the quality of their brands and the content of their
communication, retailers who own private brand are in a position to dictate
terms to their manufacturers about the standards to be adopted in quality that
may well change the consumer perceptions and preferences away from the
national brands. Where the specific quality of the product is not contractible by
a private label owner, the retailer may contract the method of production or
insist on obtaining certain certifications such as ISO. This may result in shift of
certain investment costs upstream, an eventuality that the manufacturers of
national brands and private brands should be aware of. In essence, the major
impact of private labels may well be the increase in transaction costs for the
manufacturers. Every channel arrangement is characterized by a common goal
on the one hand and a channel conflict on the other. The common goal is to
achieve transfer of utility from manufacturer to consumer whereas the conflict
is about the sharing of costs and benefits of this transfer. Private branding
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heightens such conflicts by adding a dimension of contrary marketing interests;
that is, the national brand competes with the private label of the retail store for
shelf space and consumer-attention. Which way the needle will tilt in this
power struggle will depend on the relative degrees of brand loyalty and store
loyalty. When the national brand enjoys greater brand loyalty than store
loyalty, the retailer is compelled to store the brand. Besides, the national brand
manufacturer may be in a position to penalize an opposing retailer by supplying
less quantity of such high-loyal brands or withdrawal of supplies altogether, an
eventuality that may affect the image of the retailer among the public.
Promotion:
As is evident from the previous paragraphs, private labels take the brand-battle
to the point of sales. The national brands compete with the private labels for
stores shelf-space and consumers attention-space. With the store brands
understandably getting the best shelf space in terms of visibility at eye level,
strategic points such as entry point and shelf display, national brands need to
compete for the same facilities at higher cost than earlier.
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Private Label Products in FMCG
Additives-Preservatives Aftermints Dairy Products
Drinks-Beverages Health Food Home Care
Personal Care Ready to cook Ready to eat
Basic Staple Cereals Cooking Medium
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Flours Pulses Baby Food Spices
What does FMCG Manager,Vishal Megamart(Delhi) says for private
labels of their retail chain:
It is difficult to develop your brand across different categories whilst retaining
the core value of the master brand? Department Stores always know brands are
very protective of their product and image and have the power to make
demands as to how their products are sold, displayed and marked down.
Sometimes Department stores attract there customer by doing arrangements
with major designers to supply there products.
Private labels for Vishal are doing good business especially in FMCG. Theprivate labels products whose sale is high are
:chips,buiscuits,cornflakes,Jam,Macroni,Juice,Namkeen,Pickle,Sauce,Aga
rbatti,Air fresheners, Ear buds, Floor cleaner and Aluminum Foil.The
private label sale of cereals and spices of Vishal Megamart is extremely
good. It is above 40%.
While 85% of consumers continue to patronise small grocers (Kirana shops), asignificant 15% shoppers now prefer modern stores to meet their food &
grocery needs. Factors such as entry of new brands, availability of a wide
range of products, and the new-age shopping experience are slowly pulling
consumers towards the modern supermarkets
.
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http://www.indiaretailbiz.com/blog/2008/02/24/15-shoppers-now-buy-their-food-grocery-from-modern-stores/http://www.indiaretailbiz.com/blog/2008/02/24/15-shoppers-now-buy-their-food-grocery-from-modern-stores/http://www.vishalmegamart.net/spices-powdered.htmhttp://www.vishalmegamart.net/fmcg-babyfood.htmhttp://www.vishalmegamart.net/pulses.htmhttp://www.vishalmegamart.net/flours.htmhttp://www.vishalmegamart.net/cooking-medium.htmhttp://www.vishalmegamart.net/cereals.htmhttp://www.vishalmegamart.net/basic-staples.htmhttp://www.indiaretailbiz.com/blog/2008/02/24/15-shoppers-now-buy-their-food-grocery-from-modern-stores/http://www.indiaretailbiz.com/blog/2008/02/24/15-shoppers-now-buy-their-food-grocery-from-modern-stores/ -
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What does Manager of Spencer, Delhi says about the private
labels in Spencer?
Private Label is not merely a product with the store/retailers name on it. It
takes more to qualify as a Private Label. The consumer must see the Private
Label product as distinct from being just aproduct in a pack. There must be a
clear perception that it is produced by this store. Manager of the Spencer tells
that sale of private label products of Spencer is very low as compared to
national brands. Among all the products the sale of grocery products of Spencer
is maximum.. Low price is an easy one to transfer across. But if your brand is
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perceived as a high quality skin care product, it would be much harder to
transfer the brand benefit.
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What does manager of Subhiksha says?
Today, the consumer doesn't think twice about spending Rs. 200 on a movie
ticket in a multiplex, but will search for rice that is cheaper by Rs. 10/kg. To
the consumer, soap or toothpaste is not seen as providing much value or a
better quality of life, while a movie or a mobile phone is seen as doing that.
Subhiksha sold all its products all the time below MRP. It eliminated the
margins in the traditional supply chain consisting of the manufacturer-
wholesaler/dealer retailer network. Private labels and home grown brands in the
organized grocery and FMCG retailing segment were beginning to pose a
major threat to the brands of established players like HLL, Nestle and Tata Tea.
The margins of these private brands were believed to be higher because
manufacturing of these products was outsourced. Subhiksha had a very clear
strategy regarding private labels and competitors.
35% of the companys sales came from parent labels of rice, dhal, etc.
Price to be an important choice driver for Subhiksha
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The company had its own brands, but only in staples and other agri-
commodities where there were no national brands
RESEARCH METHODOLOGY:
Research in common parlance refers to a search for knowledge. It is a scientific
and systematic search for pertinent information on a specific study. So we say
that research is an art of scientific investigation. Research methodology is a
way to systematically solve the research problem. It may be understood as a
science of studying how research is done scientifically.
Research Design:
In this project the research design is exploratory through which an attempt is
made to obtain the relevant results regarding the study conducted. The
established objectives were kept in mind during the study, however no
hypothesis was formed. Questionnaires were prepared and get filled from the
customers. Exploratory research studies are also termed as formulative
research studies. This main purpose of such studies is that of formulating a
problem for more precise investigation. The major emphasis in such studies is
on the discovery of ideas and insights. As such the research design appropriate
for such studies must be flexible enough to provide opportunity for considering
different aspects of a problem under this study.
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Measurement Techniques:
A structured Questionnaire was administered for the purpose of obtaining
information from the respondents. Care was taken to put simple and few
questions in the questionnaire..The questions included were open ended,
dichotomous and offered multiple choice
Sampling Design:
Under this head we actually try to analyze the whole universe of items or
products available for the study. Universe represents the whole, the sampling
unit helps us with some percentage of all universe items to be analyzed and also
side by side managing reliable results.
Universe:
All those customers that were shopping from the retail outlets of Vishal
Megamart, Subhiksha and Spencer while conducting the survey
Sample Size:The sample size taken by me was of 100 customers but as out of
hundred only 67 customers were aware of the private labels than questionnaire
filled by them were taken in account and the rest was left.58
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Sampling Procedure:
The samples were selected on the basis of convenience sampling. A sample of
100 people was taken on the basis of convenience. The actual consumers were
contacted on the basis of random sampling.
Contact Method:
The customers were contacted through the visiting the retail stores and
approaching them.
Data Collection:
Data is important tool for the success of any survey. Moreover it reduces the
uncertainty in decision-making process. In order to make meaningful research
suitable methodology has been adopted.
Primary Data: Primary data has been collected through:
1.Questionnaire
2. Interviews of managers of Vishal Megamart, Subhiksha and Spencer.
3. Persons concerned like salesmen
Secondary Source:
The secondary data was collected from internet, References from Library.
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DATA ANALYSIS AND FINDINGS
1.Frequency of visit of the customers at retail store:
TABLE No.1
Diagram No.1
60
Sr.No No of times %age
1. Once a week 21
2. More than twice a week 5
3. Once in fortnight 19
4. Once in month 485. Once in two months 7
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The survey shows that maximum that is 48% of the total customers visit retail
stores once a month. 21% of the customers visit once a week, 19% of the
customers visit once a fortnight, 7% of the customers visit once in six months
and 5% of the customers visit retail stores twice a week. It suggests that there
are fewer customers who visit twice a week and those who visit once in sixmonths.
2. Awareness of customers regarding private labels:
Sr.No Particulars %age
1 Yes 672 No 37
Table No.2
Diagram No.2
The survey tells that 67% of the people are aware of the private brands of retail
chains but 33% of the customers dont know about them.
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3.Preference of customers between national brands and private
labels:
Sr.No Particulars %age
1. National brands 31
2. Private Labels 2
3. Both 34
Table No.3
Diagram No.3
It has been found that 31% of the respondents prefer national brands, 34% of
the customers say that they prefer both and only 2%of the respondents were
those that prefer private brands. It depicts that preference for private labels is
far less than the national brands.
4.Categories of products that customers prefer to buy from the retail store
Table No.462
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Diagram no. 4
Among the categories of products that customers prefer to buy from the retail
store, cereals, pulses and spices rank 1st .The second preference of the
customers is ready to eat products, the 3rd rank goes to additives-preservatives.
4th in the row is ready to cook products. The other rank goes for health food,
beverages, personal care products and cooking medium respectively.63
Sr.No Categories of products Grand Total Average Rank
1. Beverages 236 3.52 6
2. Health Food 336 5.01 5
3. Personal Care products 159 2.37 7
4. Ready to cook 345 5.15 4
5. Cereals, Pulses, Spices 405 6.04 1
6. Cooking Medium 97 1.45 8
7. Ready to Eat 398 5.94 2
8. Additives-Preservatives 370 5.52 3
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5.Choice of Categories between private labels and national
brands:
1. ADDITIVES-PRESERVATIVES:
Sr.No Particulars %age
1. National Brands 79
2. Private Labels 21
Table No.5
Diagram No.5
Among the private labels and national brands in the additives and preservatives,
79%of the customers prefer national brands and 21% of the customers prefer
private labels. Though it is far less than national brands but still more than
many other categories of products that people prefer in private labels.
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2. BEVERAGES:
Sr.No Particulars %age
1. National Brands 96
2. Private labels 4
Table No.6
Diagram No.6
Only 4% of the customers prefer private labels in Beverages. 96% of the
customers prefer national brands in beverages. It shows that preference of
private labels in beverages is very less than national brands.
3.HEALTH FOOD:
Sr.No Particulars %age
1. National Brands 98
2. Private Labels 2
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Table No.7
Diagram No.7
Only 2% of the people prefer to buy health food of private labels. The
percentage is very less. People are still loyal to national brands when it comes
to be health food
4. PERSONAL CARE PRODUCTS:Sr.No Particulars %age
1. National Brands 98
2. Private Labels 2Table No.8
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Diagram No.7
In personal care products also, 98% of the customers prefer national brands
while only 2% of the customers go for private labels. The preference of private
labels in personal care products is also far from satisfactory.
5. READY TO COOK
Sr.No Particulars %age
1. National Brands 92
2. Private Labels 8 Table No.9
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Diagram No.9
The survey depicts that 92% of the people buy national brands in ready to cook
products and only 8% of the customers prefer private labels.
6. CEREALS, PULSES AND SPICES
Sr.No Particulars %age
1. National Brands 67
2. Private Labels 33
Table No.10
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Diagram No.10
The ratio of preference of private labels is much more the preference of
customers for private labels in any other category. Here 33% of the customers
prefer private labels while only 67% of the people prefer national brands.
7. COOKING MEDIUM:
Sr.No. Particulars %age
1. National Brands 99
2 Private Labels 1Table No.11
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Diagram No.11
Only 1% of the customers (which is the lowest ration in any category for the
favour of private labels) prefer private labels for cooking medium. 99% of the
customers prefer national brands.
8. READY TO EAT:
Sr.No. Particulars %age
1. National Brands 73
2 Private Labels 27Table No.12
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Diagram No.12
It has been found that 27% of the customers prefer private labels while 73% of
the customers go for national brands. The favourable impression has been seen
of customers towards the private labels of ready to eat products.
6. Factors affecting the choice of customers between private labels and
national brands:
Sr.No Factors affecting choice %age1. Price 34
2. Quality 45
3. Advertisement/Sales Promotion 9
4. Novelty/New features 10
5. Loyalty 2
Table No.13
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Diagram No.13
The most important factor that affects the choice of private labels is Quality.
Price is the second important factor and the least affecting factor is loyalty.
7. Private labels in comparison with national brands in terms of:
1. Quality:
Sr. No Particulars %age
1. Low 45
2. Medium 54
3. High 1
Table No.14
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Diagram No.14
According to most of the customers the Quality of private labels is
medium. Only 1% of the people say that it is high than national brands
and that is the notable point. It depicts that people believe that the
products of the private brands dont match national brands when it comes
to quality and they still believe that private labels are low-quality brands.
2. Price:
Sr.No. Particulars %age
1. Low 54
2. Medium 46
3. High 0Table No.15
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Diagram No.15
Most of the customers believe that price of private labels is low as compared to
national brands that is major driver that people go for private labels. Nobody
says that price of private labels is high.
3. Good value:Sr.No. Particulars %age
1. Low 37
2. Medium 44
3. High 19Table No.16
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Diagram No.16
Good value of private labels whether it is for money or product is medium for
most of the customers when compared to national brands.44% of the customers
says it is medium. 37% believe it is low and is worth nothing but 19% believe it
is higher than national brands.
4. Reliability:
Sr.No Particulars %age
1. Low 37
2. Medium 45
3. High 28Table No.17
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Diagram No.17
Reliability is also affective when going for any brand. Most of the respondents
say it is medium as compared to other brands. But surprisingly 28% of the
people believe that it is high as compared to national brands.
5. Attractiveness:
Sr.No Particulars %age
1. Low 39
2. Medium 54
3. High 7Table No.18
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Diagram No.18
More than half of the customers respond that attractiveness of the private labels
is medium as compared to national brands.39% of the customers say it is low
and 7% of the customers say it is high.
6. Customer response for :
Does store staff motivates or facilitates you to buy private labels:
Sr.No Particulars %age1. Yes 15
2. No 85
Table No.19
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Diagram No.19
85% of the customers disagree that store staff motivate or facilate them to buy
private labels. But 15 % of the customers agree that store staff facilitates or
motivates them to buy private labels.
(b)Can private labels ever generate the type of consumer loyaltysome of the iconic manufacturer brands such as McDonalds and
Coca Cola have?
Sr.No Response %age
1. Yes 53
2. No 47Table No.20
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Diagram No.20
53% of the customers respond positively that private labels can generate the
same loyalty as iconic manufacturer brands have but 47% disagree with the
statement
7. Methods through which private labels can compete with
national brands:
Sr. No Methods %age1. Advertisement 8
2. New product development 21
3. Low pricing strategy(discounts) 29
4. Consistent good quality 31
5. Easy availability 11
Table No.21
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Diagram No.21
31% of the respondents say that private labels should have consistent good
quality to compete with national brands.29% of the people say that private
labels can compete with national brands through low pricing strategy.21%
believe new product development is the strategy to compete with national
brands.11% that private label goods should be easily available and 8% say it is
through advertisement that private labels can compete with national brands
7. To what extent customers agree with these statements:
1. Low price means low Quality
Response %age
Strongly agree 12
Agree 37
Neutral 2
Disagree 36
Strongly Disagree 13Table No.22
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Diagram No.22
There is a mixed response about the statement.37% of the respondents
agree with the statement and 36% of the customers disagree with the
statement. 12% strongly agree with the statement and 13% strongly
disagree with the statement whereas 2% of the resopondents are neutralabout the statement.
2.Trust on the store has positive affect on the private label purchases
Response %age
Strongly agree 26
Agree 44
Neutral 24
Disagree 6
Strongly Disagree 0
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Table No.23
Diagram No.23
Majority of the respondents agree with the statement that is 44%. Even 26%
strongly agree with the statement.24% of the respondents are neutral and 6%
disagree with the statement. But nobody is strongly disagree towards it.
3 Store ambience has positive affect on customer satisfaction :
Response %age
Strongly agree 33
Agree 54
Neutral 12
Disagree 1
Strongly Disagree 0Table No.24
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Diagram No.24
54% of the customers agree that store ambience is important for their
satisfaction .33% strongly agree with the statement.12% are neutral about it.
Only 1% of the respondents disagree with the statement. Nobody is strongly
disagree with it.
4. Premium Quality store brands can make customers store loyal.
Response %age
Strongly agree 4
Agree 38
Neutral 44
Disagree 12
Strongly Disagree 2Table No25
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Diagram No.25
44% of the respondents are neutral about the statement.38% of the respondents
agree with the statement that premium quality store brands make customers
store loyal.12% of the customers disagree with the statement. 4% of the
respondents agree with the statement.2% strongly disagree to it.
5. Private labels are imitations of national brands.
Response %age
St