Introducing National Brands at Discount Retailers: Implications for Brand Image

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Introducing NBs at discounters:

Implications for brand image

Bachelor Thesis Marketing
2010/2011
Word Count: 7,039

Emiel Hoosemans
Anr: 881442

Tilburg University
Marketing Department
Supervisor: F. Sotgiu
Abstract

The continued growth of the discount grocery industry has caused manufacturers of national brands to consider introducing their products at these discount stores. Little research has been done on the effects this has on the performance of the national brand. The objective of this study is to examine the implications of brand image when introducing the national brand. Consequences to brand image play a crucial role in determining the success of the launch. Manufacturers need to pay particular attention to the price positioning and the quality perception of the national brand with respect to private labels. Firstly, we examine the research background and acknowledge the type of consumers as a control variable. Then, two independent variables price positioning and quality perception are examined. We find evidence for pricing constraints and construct pricing strategies that affect brand image positively and negatively. The perception of quality is approached from the contexts effects literature. Drawing on branding, retailing, and pricing literature, we find promotional activities that can enhance brand image at discounters (i.e. advertising, packaging, innovation) or are potentially harmful for brand image (price promotion, display). Table of Contents

Abstract2
Table of Contents3
Chapter 1 Introduction4
1.1 Problem Definition4
1.2 Problem Statement4
1.2.1 Research Questions5
1.3 Research Background5
1.4 Academic Relevance6
1.5 Managerial Relevance7
1.6 Structure7
Chapter 2 Conceptual Model8
2.1 Conceptual Framework8
2.2 Defining Constructs8
2.2.1 Brand Image8
2.2.2 Quality Perception9
2.2.2 Price Positioning10
2.3 Control Variable: Type of Consumers10
Chapter 3 Price Positioning12
3.1 Price Perception & Pricing Strategies12
3.2 Promotional Activities15
3.2.1 Advertising15
3.2.2 Price Promotions15
3.3 Chapter Summary16
Chapter 4 Quality Perception17
4.1 Context Effects of Display and Products17
4.2 Context Effects of Store Image18
4.3 Feature Advertising18
4.4 Chapter Summary19
Chapter 5 Conclusions20
5.1 Conclusion20
5.2 Discussion21
5.2 Recommendations21
References23

Chapter 1 Introduction

1.1 Problem Definition
In the fierce competitive world of supermarkets and adding to this the economic regression, hard discount stores seem to be growing at an explosive rate. Many brand manufacturers have been reluctant to enter the hard discounters segment either put off by high entry barriers or by having insufficient information about the market (Nielsen, 2007). However, managers of national brands (NBs) are coming around to realise entering into the discount channel is a great opportunity (Deleersnyder, Dekimpe, Steenkamp & Koll, 2007). Although the hard discounter’s segment is receiving an increasing amount of attention in the academic field, not much is known about the effects of adding NBs to the discounters’ assortment. In particular, there is little information available on what this exactly means for the brand image of NBs. This insecurity poses a real challenge for developing marketing strategies and methodologies to introduce NBs at the discount channel.

1.2 Problem Statement
Drawing from the past literature on the discount grocery industry and brand management, this study seeks to provide further insights about how brand image is affected when introducing NBs at discount stores. The perception of brand image of NBs influences how managers can position their brands at discounters. Two of the most important variables to consider are price and quality positioning of the NBs. These variables determine how...
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