Private brands have seen a phenomenal growth in the past few years. As per Grewal et al.1, the private brands are priced at 10-15% lower prices as compared to the national brands. However, in India, most of the customers are unaware of private label brands because of lack of promotional strategies. Most of the private label brands are available in multi brand outlets (MBO’s) where customers visit the most, as it is convenient, as all the brands are sold under one roof. Customers still prefer National and international known brands.
Private label brands provide the products of good quality and economical prices which are comparatively cheaper than national brands. In order to compete with the national brands, the private brands have a good brand value. Thus there is a need for studying the factors affecting the purchase intention of private brands in India. This research works to test the proposed model of Aaker2 determining the variables/factors which affect the purchase intention of customers towards private label brands in India.
Past studies have listed many factors which influence the purchase intention. According to Dhar et al.3 product features such as low price/low risk offered to the customers and easy comparison between national brands and private brands, lead to competitive and distinguishing factors for the success of private label products. Private label goods compete directly with national brands, affecting both types of marketing that is market share and pricing.
Agreeing to Farquhar4 Brand equity increases the esteem of a brand. Aaker2 characterizes brand value as set of resources and liabilities connected to a brand, its title or image, which either increments or diminish the esteem of the item or a benefit to both company as well as customers. As per Yoo and Donthu5 brand value is characterized as the contrast in customer’s recognition for acquiring branded or unbranded item given the same level of product features. Brand equity is acknowledged as the customer’s overall utility in a brand. Brand equity takes place when the buyer recognizes with the brand and thus developed a great, solid and interesting brand association6. Store brand consider price as the main factor of marketing mix but are not considered as premium price brands. Authors like Aaker2 and Keller7 have proposed Store brand equity to evaluate the increase in purchase intention of customers through different variables. It states that brand equity is a multi-dimensional concept which comprises of variables like store brand awareness, store brand perceived quality, store brand loyalty, brand association .These variables have a vital role in purchase intention of customers.
According to Aaker8 there are different variables which affect the purchase intention. He took into consideration 6 variables which affect purchase intention. The same have been studied in the Indian context for private brands in India. The variables were store brand awareness, store perceived quality, store brand loyalty, store brand price image, store reputation and store commercial image
Brand awareness is the major and key factor of brand equity8. According to Keller7 brand awareness help the customer to recognize the brand name in their mind with ease. As per Aaker8, brand awareness involves brand mindfulness which comprises of the customer’s capacity to recognize and review a brand into a category of items9. Brand awareness appears to be operating as a cue to brand retrieval. This extrinsic cue plays a major factor in purchase decision of customers10. Extrinsic cue includes brand name, packaging, pricing and store name. The customers rely on store brand information cues for purchasing the product of particular brands. As stated by Aaker2 there are two components which define brand awareness that is brand recognition which means that the brand is well known to the customers and the other is brand recall which means testing the ability of customers to remember the brand name as per the specific product category. There are different levels of brand awareness among customers. The lowest level of brand awareness is brand recognition which is based on aided recall test. Brand recognition is important when a buyer chooses a brand at the point of purchase. The second most level of brand awareness is brand recall. It is also termed as “Unaided recall” which is more difficult than recognition and therefore is associated with stronger brand position. The next level brand awareness is top of mind awareness which means it is ahead of the other brands in a person’s mind. The strongest is brand dominance which means that the brand is recalled by a very high percentage of respondents. This provides a strong competitive advantage8.
Thus brand awareness depends on the level of notice ability the brand has achieved in the market place for customers to purchase the brand. So, higher the level of awareness the more impact it makes in the consumer’s superior buy decision. Therefore enhancing brand awareness increases the changes that the brand will be considered by consumers during their purchasing behavior11.Brand awareness strongly influences the purchase intention of customers.
The main objective of the research was to study the determination of variables/factors which affect the purchase intention of customers towards private label brands.
MATERIALS AND METHODS
The study was carried out India. For the purpose of this study, the selected state in India was New Delhi. This city witnesses the presence of many malls which have numerous national and private brands of India. The primary data were collected with the help of a structured questionnaire which was distributed to the respondents who buy from private brands in India. A simple random sampling technique was used 40 and 60 retailers from rural and urban market, respectively from each state. Based on the available lists, the overall sample size is 200 respondents. The total time taken for the research was 6 months in which the first 3 months were utilized to search the research gap, study of the Indian market and building the conceptual model with extensive literature review. The next 3 months have been utilized in data collection from the sample and data analysis and conclusions of the research. The study was done with the samples in the year 2019.
Hypothesis 1-Store brand awareness has an impact on purchase intention
Store brand perceived quality and its effect on purchase intention on customers: Perceived quality is defined as the customer’s judgment about the product’s overall excellence or superiority in comparison to the alternative brand8,12. Customers perceive an item as a set of qualities which may be utilized by the consumers6. Brands with superior quality motivate the customer to purchase the product8. Superiority is defined as all the features of a product that have an ability to satisfy the needs of the customers13,14. As stated by Aaker2 perceived quality is an intangible feeling of the brand which is usually based on underlying dimensions such as product’s characteristics like reliability and performance of the brands. Perceived quality is the result of the shoppers encounter with the brand and the competitive quality of a brand. Perceived quality is crucial when customers are purchasing product with supremacy and excellence12. Perceived quality depends on customer’s recognition for an item or brand qualities when he is making a choice of the brand.
Therefore store brand perceived quality is a major factor for customers to choose private brands. If store brands provide better quality, then the chances to purchase from such brands increases15. According to Sprott and Shimp16, store brands perceived quality plays a vital role in brand success resulting in higher purchase intention of customers. Thus better the quality of the brand product, higher is the purchase intention of customers towards the brand. There is a direct and positive relation between store brand perceived quality and purchase intention of customers.
Hypothesis 2-Perceived quality of store brand has an influence on purchase intention
Store brand loyalty and its effect on purchase intention of customers: Brand loyalty refers to the number of times the customer purchases the product from a particular brand over a period of time. According to Aaker2 brand loyalty means the attachment made in the mind of customers for the brand, which result in building regular customers. Kim et al.6 states that brand loyalty is the relationship between the brand and the customers. Customers are willing to pay a higher price when they are loyal to a given brand8. According to Keller7, the “Sense of Community” is the feature of brand loyalty which attracts customers towards the brand through friends and acquaintances.
Customer loyalty has ended up a significant objective for retailers which is that loyal customers don't switch too often to diverse brands. Store branding plays an vital part to influence consumer perceptions and drive the choice and loyalty of the store15. It is evident that once the client has been loyal to the store brands, the same increases the mindfulness of the consumer for the same store brands .Thu store brand loyalty has an effect on purchase intention of the consumers.
Hypothesis 3-Store brand loyalty has an influence on purchase intention
Store brand price image and its effect on purchase intention of customers: Price is considered as an important factor for purchasing behaviour of customers. As per Kotler and Armstrong17, price has been regarded as a product or service cost indicator. Ailawadi and Keller15 state that price is the ‘monetary expenditure’ to be incurred by the customers to make a purchase. Store brands price image effects the image of the brand as a cheaper private brand is perceived to be of a lower quality in comparison to producer brands18. Store brands are priced low in costs so that the store brands can be considered as a cost effective alternative choice as compared to the producer brands. Therefore according to Aaker8 the key variable affecting the store brands purchase process in comparison with manufacturer brand is the price gap among the two.
Price is an extrinsic cue and gives important information to the consumers for making a decision for the purchase the product. Value consciousness is also an important factor in store brand price image. Private brand buyers are value conscious consumers and get attracted by the good quality and image of the product available a low cost. Value depicts the amount of satisfaction customers get for the price paid or cost incurred in the product 17.
As stated by Baltas19, retailers are developing strategies that aim to highlight the good value for money for a product they choose. A number of studies have noted the benefits of store brands in terms of savings related with their purchase20. Therefore cost plays a major part in the setup of store brand value as demonstrated by Aaker2. It is expressed that affordable, adequate or generally low cost products have a positive impact on buyer’s intention to buy the private brand.
Hypothesis 4-Store brand price image has an influence on purchase intention
Store image (Store reputation and store commercial image): A Good store image increases store value. It can be formed by a good quality of service and an amicable physical environment in the store. Image of the store can be determined by product mix, price, location of the store, physical facilities and customer service. A good store image enhances the attitude of customers towards private labels. Thus retailers are keen to focus on store environment, quality/value of merchandise and customer service3,18. High quality customer service and good customer relationship leads to customers confidence in the store brand. According to Collins-Dodd and Lindley21, Store image is crucial for private brands retailers as it would play a key part to guarantee customer repurchase. Thus clients depend on the store image before purchasing to decrease the hazards related to of buying private brands. In the mind of customers, the image of the retailer or store is the basis of store brand equity and therefore retailers store image becomes an important basis of their store brand equity. These further influences the customer’s preferences and buying15. Store image could further be divided into store reputation and store commercial image that influence purchase intention of private brands.
Store reputation: Store reputation can be characterized as a set of affiliations connected to a specific store or retailer forming a final store image in the mind of the customers7. Store reputation is communicated in terms of the qualities of the store which the customers can see and assess22. As per Floor23 store reputation includes variables such as personality of store and its global corporate image. In this way reputation of the store gets to be a key variable of the stores brand value through its impact on customer’s inclinations and buying conduct.
Hypothesis 5-Store brand reputation has an influence on purchase intention
Store commercial image: According to Thompson and Chen14 and Bloemer and De Ruyter18, store commercial image is characterized as the way the store is characterized by the customers, partly by utilitarian qualities and partly by the store’s service properties. Most authors have stressed on the utilitarian properties of the store like the quality of the item advertised, the extend of administration support given to the customers, the item range, the physical facilities and the environment of the store13,24,25. Shoppers recognition of a store’s indoor atmosphere and environment can impact shoppers choices . It can also decide whether the customer will visit the store again or not and the frequency of their expenditure in the store1. As per Semeijn et al.9 customers utilize signals influencing their state of mind towards building a store commercial image. Subsequently commercial picture play a key part in building store brand equity. Empirical proves appears a positive commercial image of the store can impact the purchase intention of the customers. Thus it incorporates a positive connection in regard to buy purposeful of customers.
Hypothesis 6-Store brand commercial image has an effect on purchase intention of customers
Purchase intention and its effect on customers: Chi et al.26 have proven that there is an impact of perceived value on the purchase intention. This study also studied the celebrity endorser as the moderating variable in the study. The study can conclude that there is a strong relation between perceived value and purchase decisions.
Consumer’s purchase decisions are an unpredictable procedure and the intention to purchase is the part of this procedure17. As per Kim et al.6 purchase intention is therefore an important factor which could lead to a real purchase and thus could be used as a measure for the purchase activities of the customers. The social influence could play a vital role for increasing purchase intention of private brands. The same has been studied by authors previously27. The consumer could also show an increased purchase intention when influenced by online reviews28.
The attitude towards the private brand is the strongest factor of purchase intention13. Positive attitude in purchase of brands develops support for retailers and also enhances the business. It can be seen that the proposed theoretical model can be proposed for the research study as shown in Fig. 1.
According to Aaker2 there are different variables which affect the purchase intention. The 6 variables were considered which affect purchase intention.
Scales of variables for the conceptual model
Proposed model for the study
The variables had a positive impact on customers purchase intention which proved by the hypothesis given above, considering the research done by other authors too.
The research design used in this study is descriptive and explanatory where the cause effect relationship is being studied among the purchase intention and its antecedents as proposed by Aaker2. The research method used for the same was survey techniques. This is a quantitative method and a structured questionnaire was used for the survey which is needed for such a research.
The latent variables in the model have been measured by standard scales adopted by known authors. The sample size is the number of units selected for data collection. If a sample has more than 50 and less than 500 respondents, it is a suitable research. This study examines the awareness of customers towards private label brands. The research was conducted on 266 respondents who shop from multi brand outlets within India. A simple random sampling technique was used for the research16. The analysis of the findings has been done through a SEM technique to test the model fit for the proposed conceptual model present in Table 1.
Internal reliability: The 1st step was to check the internal reliability of the standard scale for all constructs. Although the same have been taken from authors who have worked on it but their reliability was checked for the Indian audience. The Table 2 lists the Cronbach values of the various scales used for the study.
According to Table 2, most of the scales were found to be reliable with the Cronbach value of more than 0.8.
Hypothesis testing: Hypothesis test results have been shown in the Table 3. It is seen that the H1, H2, H4 and H6 have been accepted but the H3 and H5 have not been accepted. The results show that the store brand awareness and purchase intention are correlated with the value of -0.56. The store brand perceived quality and purchase intention were found to be correlated with a value of 0.30. The store brand loyalty and purchase intention was not found to be correlated with a value of 0.17. The store brand price image and purchase intention was found to be correlated at a value of 0.4. The store reputation and purchase intention were not found to be correlated at a value of -0.27. The store commercial image and purchase intention was found to be correlated at a value of 0.32.
Value of Cronbach reliability test for latent variables
Results of hypothesis testing
Model fit (Self illustrated)
Model fit: Figure 2 shows the model fit and the SEM model for the various constructs in the proposed conceptual model.
The Goodness of fit indices for the structural model has been listed as follows:
|Estimated degrees of freedom
The value of Chi-Square is the traditional measure for evaluating the overall fit of the model and assesses the magnitude of the discrepancy between the matrices of the sample or the fitted covariance’s. The result which came from the data of Chi-Square statistical value is 201.0333 at non-significant level (p = 0.0088). Therefore the model is fit.
The result of RMSEA in this research is 0.0170. The results show CFI value to be 0.9883 which include a good fit model. Thus, overall fit measures indicate that this model shows a proper fit.
According to the findings of the research article, out of the 6 variables studied and tested, only 4 showed a correlation to purchase intention. The overall conceptual model although was found to be fit in the Indian environment for the private brands.
Hypothesis 1 stated store brand awareness and its effect purchase intention which showed a correlation of -0.56. This is in synch to the study of past review of literature where it has been proven that the level of awareness has an impact on the consumer’s buy decision. Past research has shown that enhancing brand awareness increases the changes that the brand will be in consideration in respect to customers and their purchasing behavior31. Thus it can be concluded that even in case of the Indian private brands brand awareness was found to have a strong influence the purchase intention of customers but the same was found to be negatively correlated.
Hypothesis 2 was that the store brands perceived quality affects the purchase intention of the private brand. The correlation was found to be a positive correlation of 0.30 among the 2 constructs. This result is in synch with the past review of literature which shows a strong relation of the store brand perceived quality and purchase intention of private brands. According to Barone et al.32 store brands perceived quality plays a vital role in brand success resulting in higher purchase intention of customers. If store brands provide better quality, the chances to purchase of the store brands increases15. Thus better the quality of the brand product, higher is the purchase intention of customers towards the brand. As per Sethuraman33there is a direct and positive relation between store brand perceived quality and purchase intention of customers.
Hypothesis 3 was store brand loyalty and its effect on purchase intention which showed no correlation with a value of 0.17. This means that loyalty of the private label brands had no impact on the purchase intention of customers when it came to the Indian consumers. Our results are contradictory to the study of past literature. Past literature however showed that store branding plays a vital part to influence consumer perceptions and drives their choice and loyalty of the store2. Store brand acknowledgments in certain categories can be a recognizing component for the retailers and increase the brand devotion of customers towards the brand. Thus the literature has shown that store brand loyalty has a positive impact on the purchase intention.
Hypothesis 4 discussed about store brand price and its effect on customers. The results showed a positive correlation among the 2 constructs with a value of 0.4. This result in synch with the past review of literature which shows a strong influence of the store brand price on the purchase intention of the customers. As per Baltas19 retailers are developing strategies that aim to highlight the good value for money they choose. A number of studies have noted the benefits of store brands in terms of price purchase, can compel the consumers to increase buying store brands20. Therefore cost plays a major part in setup of store brand value demonstrated by Aaker2.The affordable, adequate or generally low cost products of the store have a positive impact on purchase intention of the consumers20.
Hypothesis 5 is about store reputation and its effect on purchase intention. According to the results, there exists no correlation among store reputation with purchase intention with a value of -0.27. This means that customers purchasing decision towards private label brands does not depend on the store reputation when it comes to the Indian consumers. This is contradictory to the study done in the past review of literature. As per Floor23 store reputation includes variables such as personality of store and its global corporate image. Past research has shown that the store reputation has a positive impact on the purchase intention of consumers. Turban and Greening34 state that store reputation and the social image of the store increase the commitment of the customer with the store band this could further increase purchase intention.
Hypothesis 6 focused on store commercial image and its effect on purchase decision. The results showed a positive correlation between the variables store commercial image and purchase intention with a value of 0.32. This means that focusing on store commercial image will help in increasing the customer’s purchasing decision. Store commercial image is mainly the way the store is represented in the customer’s mind considering both functional and psychological attribute of the store. Past research has shown that there is a strong relation among the store commercial image of the private brand and the purchase intention of the consumers13,24,25. Shopper’s recognition of a store’s indoor a atmosphere and the store environment can impact shopper’s choices1. As per Semeijn et al.9, customers utilize signals influencing their state of mind towards building store brand image and this leads to a likelihood of their purchase from the store.
As per Fornell and Larcker35, the strength of correlation suggested for the absolute value of R would be 0.59 or above for a strong correlation among the 2 constructs. The same has been used to access the results.
Researchers using the technique of SEM must be comfortable with the area since assessing whether a specified model fits the data is one of the most important steps in modelling structural equations36.A good model fit would result in an insignificant result at that of threshold of 0.05 value36. The RMSEA is the second fit statistics reported in the program LISREL. An RMSEA below 0.08 shows a good model fit36. The CFI value of 0.90 cut off criterion has been advanced. Recent studies have shown that a greater value than 0.90 is needed to ensure that incorrect models are not accepted36. A CFI value of 0.95 is seen as an indication of good model fit36. These values were found to be appropriate in the model and thus the model was found to be a good model fit.
One of the limitations of the research study was that the research is limited to India. The same could be carried out to the other Asian countries. There is a scope that other qualitative techniques can be applied to understand the Impact of private label brands in multi-brand outlets on consumer awareness in this research. This study could be validated for a similar set of respondents through personal interview techniques. So this same conceptual model, proven to be empirically fit, could be tested on a similar sample using qualitative research techniques. The same could be done in other parts of the world as this study relates to Indian customers who visit multi-brand outlets. The model has proven that in the Indian context some variables like store brand loyalty and store reputation have no impact on the purchase intention. Thus the retailers who want to increase the sales of private brands in India, should concentrate on the other factors like perceived quality, store commercial image, brand price and brand awareness which have been found to have an impact on the purchase intention of Indian consumers for private brands in India.
This study discovered there are many factors which can affect the purchase intention of private brands which could be beneficial for the retail market. The major factors studied in the research were the variables for increasing purchase intention. The same were studied in the Indian context which had never been done before. Moreover this is the first such study done on private brands.
This study discovers the possible effect of factors like store brand awareness, store perceived quality, store brand loyalty, store brand price image, store reputation and store commercial image which effect purchase intention. This study will help the researcher to uncover the critical areas of “Factors effecting Purchase intention of private brands in India” that many researchers were not able to explore. Thus a new theory on factors effecting purchase intention of private brands could have been arrived at.