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Introduction of private label products on purchasing decisions
Private Label:
private label products on purchasing decisions, Private labels are those manufactured provided by one company or another for offer under another company’s brand. Private label goods and services are available in a wide range of industries. They are preferred by customers as they are lower cost alternates to regional, national or international brands. They are preferred by retailers as they provide innovation into the gaps left in the market by brands as retailers are in a position to improve their products. (Nirmalya, 2007)
Literature review and Hypothesis
Literature review:
An examination of the core focus of this research paper is to evaluate the consumer level factors that moderate private label success across product categories and it focuses on consumer susceptibility in buying Private label brands. Richardson, Jain and Dick (1996) argue that the consumer propensity to purchase private labels depends on various factors. They include: Demographic matters
Age, Gender and income.
Product attributes:
A consumer perception of key product attributes and they include factors such as price, quality, innovation, value for money etc.
Factors such as price and quality play a key role when consumers purchase a private label product but the real question is what customers mean by quality and value. How are perceptions of quality and value formed across customers? This report focuses to these questions by:
• Researching testable hypotheses of how private labels affect consumer behavior.
• Relating the concepts in a model and
• Developing proposition about the concepts, examining the available concepts in support of the evidences and suggesting areas where research is needed.
Purchasing intention towards private label brand:
Brands are more than a product as it differentiates a product or service from competitor and are a critical success factor of companies. Brand Personality could be defined as the set of human characteristics associated with a brand (Aaker, 1997). It can help consumers to express themselves in terms of the brand. It tends to serve a symbolic function for the consumer and associated in the memory and associated in the memory. (Collins and Burt, 2003)
It is perceived that people who prefer famous or high quality brands are less likely to purchase private label brands and will prefer to buy well known brands. Consumers may avoid buying private label brands by purchasing national brands. People with less market and product knowledge will choose national label brands.
The dynamics of customer loyalty:
Customer loyalty is heavily interlinked with customer satisfaction. It is believed that a 5% improvement in customer satisfaction can improve profitability by 20-80% in the long run (Reich held and Sesser, 1990). A good quality product leads to customer satisfaction which leads to customer loyalty and which in turn leads to profitability. (Matos, 2007)
The following assertions by Buchanan and Gilles (1990) can elaborate this concept:
• Satisfied customers initiate free word of mouth promotions
• Long term customers will purchase high quality ancillary products and high margin complementary products.
• Long term customers are satisfied with the current retailers and won’t switch to competitors, which makes market for new entrants very difficult.
• Increased customer satisfaction makes employees jobs much easier which help them to maintain profitability for the company and keep the customer in the satisfaction cycle of the business.
Price and quality consciousness:
Retailers attempt to introduce private label products with low price and quality is as good as national brands. The economic recession has a severe impact on how consumers perceive the market and their perception about the market. Disposable income of many consumers has decreased to a large extent and because of that they are much more concerned about the price and quality of the product they purchase.
Quality is much more important to consumers than price. Consumers would not even consider buying a product if its low priced but of also a lower quality. Consumers often perceive that cheaper price is a key attribute of a lower quality product. That is why many consumers would not choose private label brands because of its low price range.
Hypothesis:
There are various factors which can create or change a consumer’s perception towards private label brands and it can be quite pivotal to the success or failure of that particular brand. Factors such as price, quality, service, innovation and advertisement play a key role n the success of a private label brand. The main influential factors of the propensity for consumers to purchase private label…
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