Customer Perception of Private L

Topics: Private label, Brand, Retailing Pages: 10 (3031 words) Published: May 12, 2013
A Study on Customer Perception of Private Label Brands

Retailing in India is steadily edging its way towards becoming the next boom industry. Retail industry in India is expected to rise 25% yearly owing to strong income growth, changing lifestyles, and favorable demographic patterns. One of the new things seen in the Indian retail Industry is the growth of Private Brands in the organized retail. But as companies line up to grab a bigger and bigger slice of the retail pie, another battle is likely to change the face of the industry, the one between the manufacturer brands and the retail chains private label brands, which are far from being just cheap generics. Private labels, or store brands, are those owned and sold by retailers in their stores typically at a lower price because of minimal marketing and advertising expenses. Worldwide experience shows that as retailers become more powerful, they have increasingly focused on their own brands at the expense of manufacturer brands. A consumer survey was done based on four major retail outlets in Ernakulum including people from different economic strata, to see how PLB products are perceived. The results of Mann Whitney & Kruskal-Wallis Test procedures show that PLB image perceptions are the same irrespective of age, education & gender and it also indicate that PLBs are increasingly well perceived by consumers especially in urban areas. It was also found that PLBs were most preferred in the grocery segment. KEYWORDS: Private Label Brands, Image Perception

Working Definition:
Private Label Brand – In this study PLB is limited to Grocery, FMCG Food & FMCG Non Food segments only

Private Labels Brands (PLBs), also called store brands (SBs), are goods owned and merchandised by retailers. PLBs have long been considered as an important aspect of merchandising practice, both as a strategic tool for retailers and a unique source of competition for manufacturers. Over the past years, the growth of private label (store brands) has been exponential. Across retail channels and product categories, private label brands have consistently grown at rate double that of leading national brands. And since store brands sales bring retailers an average of 10% higher margins than national brands, it is easy to see why retailers are making aggressive efforts to push this figure higher. Increasingly, they are transforming private label from “niche” products into mainstream brands

What works for private labels, according to retailers, is that consumers trust a retailer brand to sell quality products. People buy goods from a chosen grocer, from whom they buy loose biscuits, rice, cooking oil and other staples because of the assurance of right price and quality. The success of private labels finds its roots in this practice. The product retains its price attractiveness; Private labels tend to be 5 to 20 per cent cheaper than established brands. Since retailers are able to cut out middlemen, they pass on the cost benefit to consumers. Key benefits for a retailer of having their own successful private labels are higher margins than the branded products, offer something unique, greater freedom with pricing strategy, freedom to create and schedule your own marketing plans, create stronger customer loyalty, positions yourself better in economic downturns Retailers also get the upside. They not only make more profits by selling private labels than the brands (margins are 60 per cent more than what they get from FMCG companies), these labels help differentiate themselves from their rivals. And in the long run, they can use the private labels to attract customers. Private labels 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 it was a differentiating factor. While...
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