Category Management & Its importance for retailers.

Determinants of Private label purchase

Insights from research studies

11OutlineIntroductionAbout Store brandsDeterminants of the purchase.Research Gaps to be exploredConclusion

2IntroductionOrganised retailing in India worth 396 Billion USD by 2011.Projected growth rate is 20 -25% per annum.Private label penetration in India is 10 -12 %.Major Private label players Trent (90%), Reliance (80%), Pantaloons (75%).3About Store brands \Private labelsBrands owned, controlled and sold exclusively by retailer by Baltas (1997).Nirmalya kumar and Steen kamps (2007) -Private labels are any brand to be produced and owned by the retailer which is sold exclusively in retailers outlet only.Private label manufacturer association (PLMA) has termed Private label products encompass all merchandize sold under a retailers brand4Out Look- Food and Grocery segment-India 60 % spending on Food and grocery segmentClothing & Fashion items 20 % of House hold consumption Food and Grocery segment it accounts nearly 1% and clothing and fashion has a share of 33% in organized retailing .Private labels presence in food and personal care products is limited to 19- 25 %.

5Determinants of Purchase based on Literature Price Quality perceptions Category Store imageExtrinsic and Intrinsic cuesPositioning, Others 6Price 7Consumer price consciousness and its consequent effect of consumers perceptions.Price consciousness - Perceived category risk and perceived price unfairness.Consumer Less price conscious where category risk is high(Batra and Sinha, 1999).S. Chan Choi and Anne T. Coughlan (2004) private label price should not be link to the National brands Price and the pricing need to be based on its quality and variable cost.Vertical and horizontal differentiation

7Price considerations have limited influence on consumers when private labels are of higher quality (Singh, Hansen and Chintagunta (2006) )Wanga, Kalwanib and Akcura (2007) private label purchase increases with the price discount.Private label is to follow an everyday low pricing strategy (Liu and Wang 2008). Private label price image perceptions are one of the major factors influencing the purchase of private labels (Chandon, Mbayefall and Jean, 2011)

8Quality perceptionsUncertainty about the private label quality - (Batra and Sinha, 2000). Perceived quality of private label is one of the major factors that influence the consumer decision(Sethuraman, 2000).Consumer perception study by (Beneke, 2010) -perceived quality .Benito (2010) stated the importance of quality oriented store brands to differentiate the store and to increase private label purchase. 9Quality variation in the private label or store brand can create a negative perception on consumers(Bao, Yeqing and Sheng, 2011). Value consciousness ,Product signatureness also influence the purchase. Category Keller and Ailawadis qualitative study (2004) -category determines the private label purchase.Private label purchase is category specific, purchase determined by quality - Wanga, Tolga and Kalwanib (2007).Retailers should enter a category which is strongly associated in the consumers mind (Bao, Yeqing and Sheng, 2011)

10Store and Brand Image Strong brand image for private labels can improve the quality perceptions about private labels (Dick, Jain, Richardson, 1994). Extrinsic cues are important. Consumers perceive store brands as the extension of store image (Dodd and Lindley, 2003).Keller and Ailawadi (2004) retailers create brand image - product assortment, merchandising, services and pricing strategies.Store image influences the perception and attitude of consumers towards private labels(Liu and Wang, 2008).Private label should be brand extension with retailer acting as the parent brand (Lee and Hyman, 2008).

11Surrogate and Objective indicators.1112Bao, Yeqing and Sheng (2011) store image on improving the perception about private labels.Extrinsic cues and Intrinsic Cues Consumers rely more on extrinsic cues for assessing the product quality (Dick, Jain, Richardson, 1994). Extrinsic cues like packaging, brand name and price are important for the success of private labels. Intrinsic cues : Minimal difference in ingredients for PLs and NBs (Dick, Jain and Richardson, 1994).PositioningBase demands for two national brands are equal - store brand to be positioned in between the two brands.In categories where first national brand one is stronger than other national brand target the First NB. (Hoch, Raju, Sayman (2002) .Manufacturer brands are horizontally undifferentiated then retailer has to differentiate private labels.( Choi and Coughlan (2004)). Private label should be imitate the stronger brand or the weaker ones (Choi and Coughlan, 2006). Feature differentiation.

1314Benito (2010) stressed the importance of positioning strategy based on the price than quality which can be favourable for the private label.Other Variables Liu, Wang and Cheng (2008) considered income as one of the major factor influencing the attitudes towards private labels.Income determine the private label purchase (Beneke, 2009). Store visit frequency is positively associated with store brand purchase (Wanga, Kalwanib and Akcura, 2007).Familiarity with private labels was also one of the major factors for private label purchase (Dick, Jain, Richardson, 1996).Research Gaps Private label purchase is determined by the no of variants private labels are offering.In store promotions can be vital for making the purchase decision of store brands.Shelf space allocation and display is also important for categories like apparel, personal care products.Cost of Living as a factor.15ConclusionPrivate labels or store brands increased consumer choice in terms of price, variety and quality. Quality parameters, value for money and variants available important for purchase.Consumer perceptions and attitudes governed by this factors which are detrimental16 THANK YOU17Jayakrishnan.S