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The Emergence of Local Brands/Private Brands in

the Retail Sector

Master Thesis/Dissertation Final Presentation


Harshit Kumar
20PGPIB079
Agenda
Introduction
01 An overview of the different types of brands in retail sector, what
are private labelled brands increasing popularity of local/private
labelled brands,

Research methodology
02 Qualitative and Quantitative research was conducted to determine
the behavior of people towards private labelled brands

Result and Analysis


03 Analysis of the results to understand the behavior and draw
conclusions

Conclusion
04 The insights gained can help in adopting appropriate strategies
for selling private labelled brands
FMCG Brands

These Brands have their presence


across countries with a uniformity in

Three types terms of name, logo, persona, etc.


While the Global brands also try to
maintain consistent Brand positioning
and Brand personality, there are
Global Brands geographical areas that compels them
to make changes to the same.

These are the type of brands that sold


their product or marketed their brand’s
Private brands, also known as private product in a small (or) restricted
label and store brands, are made and geographical area. This type of brand
sold for a specific retailer and meant Private label can only be found in one country or a
to compete with brand-name goods. Brands Local Brands specific region.”
Private brands tend to be cheaper For example, Mapro currently taps into
than name brand goods and provide the region of Gujarat and Maharashtra
retailers with higher margins.. in category of syrups.
Private Label brands
What are they?
A private label product is manufactured by a contract or third-party
manufacturer and sold under a retailer’s brand name. As the
It is possible for Pvt labels to retailer, you specify everything about the product – what goes in it,
reach 50% of total organized how it’s packaged, what the label looks like – and pay to have it
retail in the next decade – produced and delivered to your store. This is in contrast to buying
assuming that organized retail
can reach 30% of total retail
products from other companies with their brand names on them.
by then, Pvt labels could
account for as much as 15%
50% As we shop in our favorite retail outlets, be it online or offline, it is
of total retail in India by 2025. hard to miss the increasing presence of private labels or what we
call the store brands.

For example, Target sells a variety of branded snacks from


companies like General Mills and Frito-Lay, but it also sell its own
chips and crackers under the Archer Farms brand – Target’s private
30% label brand.

15%
Executive Summary
Private Label Brands provide a platform to small retailers and local businesses by enabling them to participate in the economy and contribute
to it. Being devoid of any advertising and hype creation in the market, private label brands are hence preconceived to be low cost products
and hence, sometimes, low quality. However, the perception surrounding these brands is now changing worldwide, with private label retailers
manufacturing products that offer the same, or similar, quality as national branded products

TEXT
Numerous studies have been conducted on the consumer perception of private label brands and how this perception drives purchase
intention and purchase decision

Small retailers and local companies benefit from Private Label Brands because they are able to engage in and contribute to the economy.
Private label companies are perceived to be cheap and, as a result, poor things due to a lack of promotion and buzz generating in the market.
But, public view of such products is shifting around the world, with private label shops producing products of the same, or similar, quality as
national names

The FMCG sector continues to be a big contributor to the Indian economy, and properly so, as it is inextricably linked to several elements of
human existence. Consumer buying behavior is evolving at a quick rate as a result of consumers' ever-changing tastes and preferences as a
result of globalization. While brands operate in a variety of sectors and target different market segments, it is critical that they remain aware of
these developments and incorporate them into their product offerings. While this may appear difficult at first, having this insight aids in
preserving or gaining market share

The goal of this study is to figure out what elements contribute to success of various Private Labels/Local Brands across different categories
of product in the FMCG sector
Local and private label brands
Private Due to globalization, consumers enjoy the access the wide portfolio of products across categories today. This makes it a lot easier for
the consumers to at least be aware of both, Global and local brands existing in the marketplace. The extent to which the awareness levels
translate to the final buying decision depends on availability, affordability, and adoptability of the FMCG products.
While the FMCG companies try to reach out to the wider array of the defined Target audience, the channel through which they can do the
same is majorly Retail Stores. As the sole objective of the retailer is to make profits, he/she always seeks out ways in which they can increase

TEXT
the profitability of the store. The very reason why we have seen a surge in the number of launches of private labels. Due to larger margins,
greater bargaining power with national brands, and increased store loyalty, retailers market their own private-label products. Moreover,
Retailers use these private label trademarks as bargaining tools to demand better business conditions from manufacturers, such as lower
prices, more promotional products, faster delivery, and so on

According to the KPMG report, Private labels account for 10-12% of India's regulated retail market. Consumers in India prefer the private label
rather than the domestic brand because of the supply and price advantages in that category. Having said that, an interesting thing that we
noted during our research was that Private Label usually finds success in the non-food category. (6) In the non-food category, house cleaners
come first and account for almost half (48%) of private label sales.
Research Methodology

Aim
01 To learn about different factors that affect the buying behaviour and purchase
intentions of Indian population in respect to private labelled brands in Indian retail
market
Method : Part 1
02 Questionnaire was created including multi choice/Likert scales to capture the
responses

Method : Part 2
03 For the qualitative part, interviews were conducted to capture the responses and
understand the behaviour of the respondents

Analysis
04 Analysis was done and correlation was carried out to see which factors affect the
behaviour and which factors are correlated
Research Methodology
Private Due to globalization, consumers enjoy the access the wide portfolio of products across categories today. This makes it a lot easier for
the consumers to at least be aware of both, Global and local brands existing in the marketplace. The extent to which the awareness levels
translate to the final buying decision depends on availability, affordability, and adoptability of the FMCG products.
While the FMCG companies try to reach out to the wider array of the defined Target audience, the channel through which they can do the
same is majorly Retail Stores. As the sole objective of the retailer is to make profits, he/she always seeks out ways in which they can increase

TEXT
the profitability of the store. The very reason why we have seen a surge in the number of launches of private labels. Due to larger margins,
greater bargaining power with national brands, and increased store loyalty, retailers market their own private-label products. Moreover,
Retailers use these private label trademarks as bargaining tools to demand better business conditions from manufacturers, such as lower
prices, more promotional products, faster delivery, and so on

According to the KPMG report, Private labels account for 10-12% of India's regulated retail market. Consumers in India prefer the private label
rather than the domestic brand because of the supply and price advantages in that category. Having said that, an interesting thing that we
noted during our research was that Private Label usually finds success in the non-food category. (6) In the non-food category, house cleaners
come first and account for almost half (48%) of private label sales.
Theory
After extensive research through research papers, certain parameters were decided to gauge the perception towards private label brands.
Then survey questions were designed to ask questions related to these parameters to form an understanding of perception. These
parameters are as follows:
Store Image
Store image is defined as the 'personality of a store,' or the mix of functional and psychological characteristics that generate a mental
image of the store in the mind of the customer.” Store picture is characterized as the sentiments that shoppers create towards a store
throughout some undefined time frame which impact their buy conduct and underwriting towards the store. Store picture is surveyed
by purchasers in view of various factors, for example, store vibe, format, client care, nature of items, assortment and grouping,
accommodation, and so forth. Assuming a client loves a store, they will be leaned to buy things from that specific store as well as the
other way around. Hence, negative store picture adversely influences buy goal while a positive store picture emphatically influences
buy expectation. In this manner, constructing a positive store picture by upgrading apparent quality in the personalities of customers
is vital to build buy goal towards private name brands

Price consciousness
Price is a significant component in affecting buy goal and inclinations, while additionally assisting merchants with drawing in more
clients and gain upper hand. Price consciousness is the degree of reluctance of a customer to follow through on a greater expense
for an item or the level of selective shopper center around cost while buying an item. The price of an item is the crucial constituent of
any commercial center exchange, since it is representative of the financial worth of an item which should be paid to buy the item.
Price can be classified into three categories - (i) objective price, (ii) perceived price, and (iii) monetary sacrifice. Objective price is the
actual price of the product as is displayed on the price tag. Perceived price is the price that a consumer assumes the product to have
in their mind, ie. the ‘value’. Price consciousness is a prescient component while working out the buy aim towards a private label
brand as they are relatively lower priced than national/international branded products.
Brand Image
Brand image, is a series of emotional and mental connections and associations that a consumer makes with a brand which is
established in their memory. Brand associations are the mental connections that consumers form with a brand over a period of.
Brand experience, brand awareness, brand affect and brand trust are the three types of brand perceptions that influence consumer
experience while interacting with a brand, consequently affecting repurchase intention.
Brand awareness is the degree to which a brand is recognized or summoned to memory Brand experience is a subjective perception
experienced by a customer post purchase, which is signified by buying behaviour and emotional responses elicited by the brand’s
appearance, environment and communications. Brand affect defines the degree of psychological satisfaction that a consumer
receives from a brand, which is an emotional dimension; brand trust signifies the level of confidence a consumer puts in a brand.
Brand experience, affect, awareness and trust together indicate whether the degree of consumer purchase intention towards a brand.
Positive brand image leads to higher brand loyalty and increased purchase intention, which is also true in the case of private label
brands Brand perceptions play a very important role in influencing brand image; store image, store value, and matching the perceived
quality of national brands all positively affects private label brand image, enhancing purchase intention For purchase intention of a
private label brand to be high, customers must have either had a previously positive experience with the brand or must have a
positive perception towards the brand.
 

Perceived Risk
Buying implies risks and buyers will generally take their purchasing choices in light of the apparent risks. Having this at the top of the
priority list, this theory concerns perceived risk as a purchaser factor impacting the mentality towards private label brands.
Value consciousness
Value consciousness is the degree to which consumers are aware of the value that a particular brand offers, which is ascertained and
influenced by their needs and satisfaction and is also defined as the concern towards a lower price paid in terms of quality received
subject to certain constraints.
Value consciousness surpasses the one-dimensional aspect of the price of a product to gauge whether the product meets the ‘need
satisfaction’ expectations of the consumer and assess its intangible. A value conscious consumer will form extensive judgements
about the utility that a product offers by making a comparison between the cost and benefits and the perceived equilibrium between
the two. This means that the consumer evaluates the value of products by weighing the pros and cons of making a purchase through
actions such as reading the labels on products, comparing unit price, analysing the inherent characteristics of varied brands and their
benefits in comparison, and making trial purchases to try out the products first hand.
A brand is perceived as valuable for varying reasons which are peculiar and individual to every consumer, which means that two
different consumers can perceive a single brand as valuable for two very different reasons.
These findings are pertinent for the purpose of this study because private label brands offer low-priced products which are
manufactured by one company and sold under another company’s name. Initially, private label brands were intended as a profit-
enhancing activity, but later became a means to compete with manufacturer brands through lower prices and better quality, especially
after a fall in demand due to low perceived quality.
Research Objectives
Purpose of this study was to determine how likely Indian customers are to buy private labelled goods and how they feel
about private label brands. The study sought to attain the following goals:
Analyzing effect of value consciousness on private label buying intent

Understanding the influence of Analyzing effect of price on private


brand image on private label brand label buying intent
buying intent

Analyzing effect of store image on Analyzing perceived risk associated


private label buying intent with the private label brands
Research Methodology
Research Methodology
Results & Discussions
The questionnaire was divided into two parts, first part aimed at profiling the respondents based on the demographic data like gender, age,
income level and general information related to buying pattern for private labelled products in popular retail chains in India.
Analysis/Discussions
As can be seen from this analysis, most popular retails stores for private labelled products were Big Bazaar, D Marty and Reliance Fresh. Also, since the majority
of the sample population belonged to the age group of 21-30 years, online retailers like BigBasket, Grofers were also popular. The Next step in analysing the
results were to get an average of ratings obtained from various respondent across different questions, take an average and arrive at calculation for different
variables.

As can be seen from this we can see that factors like Social Image and Perceived risk are relatively less important. From our analysis Price Conscious and Quality
Conscious also come out as important factors.

When comparing results across genders, we see that there isn’t a huge difference for factors like Brand Image, Price Consciousness, Social Image and Perceived
Risk. Male are significantly more Quality conscious when it comes to private labelled brands whereas Store Image is important for females as compared to
males. Data across other segmentation factors like Age, Income, Education level was not analysed because there were not enough responses to give a
significant conclusion.
Analysis/Discussions
Next step was to analyze the correlation between these factors and between each other as well.
Limitations, Scope and Future Research

Because of the character of said research, I decided to construct, distribute a online survey rather than handing the same out in stores
to reach a larger audience. Snowball sampling, on the other hand, indicates that the number of times a participant submits the
questionnaire ahead is beyond the researcher's control. As a result, it is difficult to ensure that a certain number of people fill the survey.
Furthermore next studies on this topic could use a variety of sampling approaches to reach a much larger sample population.

This study was also limited to specific grocery goods, so that we can assure data accuracy and acquire a better grasp of the topic. Other
grocery goods, specifically, and retail items in general, were not considered. Future studies could look into measuring purchase intent for
private label products in additional areas such as apparel.

The study focused just on the physical retail stores. With ecommerce accelerating at a very fast pace, private labelled brands of e-
retailers like Big Basket, Blinkit (Grofers) are also becoming very popular amongst Indian population. Factors related to purchase
intention of private labelled brands can play out differently for such brands.

Another potential geographical constraint of the sampling procedure was that the majority of the people addressed by the researcher
were residents of tier 1 cities. The majority of the participants were most likely based in India because of a limited control over the
survey's dissemination. Future studies should look at conducting focused area-specific research to see how consumers in various cities
and counties feel about private label products.
Conclusion
The findings of analysing both quantitative and qualitative data are intriguing. Respondents' personal responses revealed that
“all five elements - store image, brand image, price, product quality, and product value - influence purchase intention
of private label brands if one or more other factors are met, i.e. they are interdependent”. As can be seen from the
correlation table there is a weak correlation between the purchase intention which suggests that store image does not influence
buying behaviour of private label brands very strongly.
Interestingly, from the analysis it was observed that there is a strong influence of price and quality on the goal of purchasing
private label brands. It signifies that quality and price play an important role in the mind of Indian consumers when buying
private label brands. Social Image is the least significant factor which shows that peer pressure and societal pressure is not
influential when it comes to buying private label brands. It demonstrates that brand perception has a strong positive association
with store image, meaning that the impression of a store in the mind of a customer has a direct and beneficial influence on the
brand image. This indicates a positive image increase for a store can lead to a positive image boost for a private label brand,
and vice versa. One interesting finding in this analysis was the negative relation between brand image and the price of the
private label product. “The impression of private label items as low-cost alternatives to national brands influences consumers'
price-conscious and brand-conscious associations”. “A customer who looks at and evaluates the prices of different
products prior picking one is less likely to buy an expensive product just because it is of a certain brand, and is more
likely to purchase one that provides greater value fulfilment and quality at a fair price.”
Store Image

“Store image is defined as the 'personality of a store,' or the mix of functional and psychological
characteristics that generate a mental image of the store in the mind of the customer.”(6) Store
picture is characterized as the sentiments that shoppers create towards a store throughout some
undefined time frame which impact their buy conduct and underwriting towards the store. Store
picture is surveyed by purchasers in view of various factors, for example, store vibe, format, client
care, nature of items, assortment and grouping, accommodation, and so forth. Assuming a client
loves a store, they will be leaned to buy things from that specific store as well as the other way
around. Hence, negative store picture adversely influences buy goal while a positive store picture
emphatically influences buy expectation. In this manner, constructing a positive store picture by
upgrading apparent quality in the personalities of customers is vital to build buy goal towards private
name brands
“Store image is defined as the 'personality of a store,' or
the mix of functional and psychological characteristics that
generate a mental image of the store in the mind of the
customer.”(6) Store picture is characterized as the
sentiments that shoppers create towards a store
throughout some undefined time frame which impact their
buy conduct and underwriting towards the store. Store
picture is surveyed by purchasers in view of various
factors, for example, store vibe, format, client care, nature
of items, assortment and grouping, accommodation, and
so forth. Assuming a client loves a store, they will be
leaned to buy things from that specific store as well as the
other way around. Hence, negative store picture adversely
influences buy goal while a positive store picture
emphatically influences buy expectation. In this manner,
constructing a positive store picture by upgrading
apparent quality in the personalities of customers is vital to
build buy goal towards private labelled brands
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 Presentation  Presentation
 Portfolio Presentation  Portfolio Presentation
 Simple Portfolio  Simple Portfolio

We Create
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Item 1 Item 2 Item 3 Item 4 Item 5 zing and appeal to your Presentations.
PORTFOLIO
PRESENTATION

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LOREM IPSUM DOLOR SIT AMET,
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THANK YOU
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Fully Editable Shapes
Fully Editable Shapes
Fully Editable Icon Sets: A

You can Resize without


losing quality
You can Change Fill
Color &
Line Color

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Fully Editable Icon Sets: B

You can Resize without


losing quality
You can Change Fill
Color &
Line Color

FREE
PPT
TEMPLATES
www.allppt.com
Fully Editable Icon Sets: C

You can Resize without


losing quality
You can Change Fill
Color &
Line Color

FREE
PPT
TEMPLATES
www.allppt.com

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