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Introduction In recent years consumer goods markets, and frequently bought categories in particular, witnessed an increasing presence of private label products. Own label products are defined as consumer products produced by, or on behalf of, retailers and sold under the retailers’ own name or trade mark through their own outlets. This extensively discussed and documented trend in both practitioner and academic oriented literature, characterizes most western economies in Europe and North America. In the UK, own-label grocery products have risen their market share by an average of nearly 1 percent yearly, from 22 percent in 1977 to the current 39 percent. There appears to be an upsurge within this trend as in the past six years alone the private-label market share has grow by 8 percent. Most own labels are not actually produced by the retailer. Manufacturers may elect to produce own-label products for retailers in order to achieve scale economies in production and distribution, utilization of excess capacity, sales increase without marketing cost, as well as price discrimination because of image differentiation between branded and private-label products. Originally, private labels were only produced when capacity allowed it. Increasingly, entire factories are dedicated to production of private label products. Nevertheless, it appears that most own-label suppliers are small regional players not coincidentally playing on the major manufacturers’ field (Hoch, 1996). The producer of private-label products acts like the perfectly competitive firm of economic theory. The supplier faces a fixed and typically very tight product specification and a fixed price with no returns for innovation or differentiation. Therefore attention is concentrated in cost minimization. The most obvious benefit to consumers afforded by own brands is lower prices. On average, private labels are 10-30 percent cheaper than national brands in grocery product classes. Lower self prices for the consumer and better gross margins for the retailer clearly require a considerably lower supply price, compared with equivalent manufacturer brands. As discussed above, the power of large retailers to demand terms based on suppliers’ marginal costs and tight product specification are main contributory factors. Similarly, lower advertising and promotion cost and quality differences contribute to the formation of a lower supply price for own-label. In fact, own-labels tend not to receive any advertising support other than corporate where general benefits associated with the retailer are promoted. This means that the retailer is able to charge a significantly lower price and often make a higher profit margin. Determinants of store brand choice: a behavioral analysis George Baltas An executive summary for managers and executives can be found at the end of this article JOURNAL OF PRODUCT & BRAND MANAGEMENT, VOL. 6 NO. 5, 1997 pp. 315-324 © MCB UNIVERSITY PRESS, 1061-0421 315 Private label products Cost minimization

Determinants of store brand choice: a behavioral analysis

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IntroductionIn recent years consumer goods markets, and frequently bought categories inparticular, witnessed an increasing presence of private label products. Ownlabel products are defined as consumer products produced by, or on behalfof, retailers and sold under the retailers’ own name or trade mark throughtheir own outlets.

This extensively discussed and documented trend in both practitioner andacademic oriented literature, characterizes most western economies inEurope and North America. In the UK, own-label grocery products haverisen their market share by an average of nearly 1 percent yearly, from 22percent in 1977 to the current 39 percent. There appears to be an upsurgewithin this trend as in the past six years alone the private-label market sharehas grow by 8 percent.

Most own labels are not actually produced by the retailer. Manufacturersmay elect to produce own-label products for retailers in order to achievescale economies in production and distribution, utilization of excesscapacity, sales increase without marketing cost, as well as pricediscrimination because of image differentiation between branded andprivate-label products. Originally, private labels were only produced whencapacity allowed it. Increasingly, entire factories are dedicated to productionof private label products. Nevertheless, it appears that most own-labelsuppliers are small regional players not coincidentally playing on the majormanufacturers’ field (Hoch, 1996).

The producer of private-label products acts like the perfectly competitivefirm of economic theory. The supplier faces a fixed and typically very tightproduct specification and a fixed price with no returns for innovation ordifferentiation. Therefore attention is concentrated in cost minimization.

The most obvious benefit to consumers afforded by own brands is lowerprices. On average, private labels are 10-30 percent cheaper than nationalbrands in grocery product classes. Lower self prices for the consumer andbetter gross margins for the retailer clearly require a considerably lowersupply price, compared with equivalent manufacturer brands. As discussedabove, the power of large retailers to demand terms based on suppliers’marginal costs and tight product specification are main contributory factors.Similarly, lower advertising and promotion cost and quality differencescontribute to the formation of a lower supply price for own-label. In fact,own-labels tend not to receive any advertising support other than corporatewhere general benefits associated with the retailer are promoted. This meansthat the retailer is able to charge a significantly lower price and often make ahigher profit margin.

Determinants of store brandchoice: a behavioral analysisGeorge Baltas

An executive summaryfor managers andexecutives can be foundat the end of this article

JOURNAL OF PRODUCT & BRAND MANAGEMENT, VOL. 6 NO. 5, 1997 pp. 315-324 © MCB UNIVERSITY PRESS, 1061-0421 315

Private labelproducts

Costminimization

The consumer benefits, as the availability of a low-price product increasesalternative choices. More importantly, consumers may prefer the guaranteeoffered by a familiar store name on a cheap product than the uncertainty andthe risk of an unfamiliar minor national brand. It has been the minor brandsthat have disappeared from the market at the expense of own brands(McGoldrick, 1984).

The purpose of this empirical study is to present a framework of consumercharacteristics that affect own-label buying. Given the poor explanatorypower of simple demographic variables in previous research (Burger andSchott, 1972; Frank and Boyd, 1965; Szymanski and Busch, 1987) we focuson attitudinal and behavioral characteristics. Additionally, we introduce anew methodology, i.e. a qualitative response model calibrated on real-worldpanel data. We first present a brief review concerning consumercharacteristics and store brand proneness. Then we explain the methodologyand present our research findings. We conclude with a discussion andimplications for managers and researchers.

The store brand buyerResearch regarding private brands has been of substantial interest to bothmarketing academics and managers. The literature reflects three streams:

(1) relationships between market factors and private label success, e.g.Morris, 1979; Quelch and Harding, 1996,

(2) consumers’ perceptions of private brands, e.g. Cunningham et al., 1982;De Chernatony, 1989; Richardson et al., 1994, and

(3) consumer characteristics affecting store brand proneness which is alsothe focus of this research.

Differences in product attributes and marketing activities between nationaland store brands lead to different perceptions and heterogeneous preferencesamong consumers. The latter ultimately create different buying patternsregarding store brands across consumers. For instance, Rao (1969) found inhis study that when switching stores, own-label purchasers are prone to buythe own label of the new store.

Most studies examining the characteristics of the private brand buyer haveattempted to discover whether the propensity to buy own labels isassociated with demographic or socio-economic characteristics ofconsumers. However, the tendencies discovered were weak in mostinstances. Frank and Boyd (1965) concluded that both manufacturer brandsand private label are consumed by households with virtually identicalsocio-economic and total consumption characteristics. Myers (1967) foundthat consumers are best classified by their perceptions toward own-labelrather than their individual characteristics such as general personalityvariables and socio-economic factors. He also noted that respondents dotreat private label products differently from national brands. Similarly,Burger and Schott (1972) found that private-label buyers were spreadacross all socio-economic groups and that differences in attitudinal andbehavioral variables were better predictors. As Livesey and Lennon (1978)noted, possible reasons for perception differences are degree of experiencewith own-labels, differential response to marketing activities, differences inneeds, perceived risk and different product importance among consumers.Bettman (1974) found variables reflecting lower perceived risk and greaterinformation to be associated with private-label proneness. Szymanski and

316 JOURNAL OF PRODUCT & BRAND MANAGEMENT, VOL. 6 NO. 5 1997

Consumercharacteristics

Differentperceptions

Busch (1987) reached similar conclusions about the poor performance ofindividual demographic and psychographic factors relative to the role ofconsumer perceptions regarding product qualities and price. Omar (1996),however, found personal characteristics among other variables, to be usefulin identifying segments of national and store brand buyers. Recently,Richardson et al. (1996) identified familiarity with store brands, extrinsiccues usage in product evaluation, perceived quality variation, perceivedrisk, perceived value for money, income and family size as factorsinfluencing own-label proneness.

In short, studies attempting to identify characteristics of the store-brandprone consumer while providing useful insights about various factors whichaffect consumer propensity to buy own-label products, fail to provide areliable criterion variable of this propensity. Invariably, all studies use self-report measures of private brand proneness. In this respect, it is possible forthe characteristic under investigation, to be an unreliable proxy of realshopping behavior, or even worse, an artificial fact of the particularmethodology. As Richardson et al. (1996) point out, it would be useful toemploy a behavioral measure of this construct, preferably by using paneldata. They emphasize the need for a study with panel data because abehavioral measure of own-label proneness is clearly superior to any singleor multi-item variable attempting to measure the same concept. Theambiguity whether there exists a segment of private-label buyers in the firstplace stresses further the necessity of a behavioral approach to the problem.We are not aware of any other published research using panel data forassessing own-label proneness

Research methodologyIn this study, we assess the impact of various attitudinal and behavioralconsumer attributes on store brand buying. The dataset consists of interviewdata and purchase records from a nationally representative panel of 750British consumers kindly made available by a leading market researchorganization. The product is a frequently bought item that is typicallyconsumed everyday. For proprietary reasons we cannot reveal the productcategory. The series available cover a three-month period or a total of 2,447purchases of the panelists. The predictor variables have been collected fromthe panelists during home interviews on the initialization of the periodexamined. The 13 independent variables used fell into four main types:

(1) descriptors of shopping behavior,

(2) reasons for buying store brands,

(3) indicators of consumer relationship with store products, and

(4) consumer involvement with the category.

The framework is based on findings in related research areas and serves anintegrative role.

(1) Shopping behavior

• Decide about the brand before get to the shop (B1)

• Look for price promotions (B2)

• Go for the cheapest brand (B3)

• Buy the same brands (B4)

• Try new/different things (B5)

JOURNAL OF PRODUCT & BRAND MANAGEMENT, VOL. 6 NO. 5 1997 317

Store-brandproneconsumer

Consumerattributes

(2) Reasons for buying private labels

• Lower price (R1)

• Higher preference (R2)

(3) Store brands relationship

• Familiarity with store brands (FAM)

• Proximity between consumer and brand personality (PRO)

(4) Category involvement

• Importance of getting the right brand (IMP)

• Number of brands tried (TRY)

• Frequency of shopping category (FRQ)

• Satisfaction with available brands (SAT)

Verbally anchored and structured response questions constituted the formatof the predictor variables. The questionnaire used in the interviews washighly structured and contained straightforward questions. An improvementover previous research is that all measures are product-specific, i.e. theyrefer to the specific product category and not to grocery shopping in general.This issue has been also highlighted by other researchers (Richardson et al.,1996). The dependent variable was the actual purchases made during thethree-month period by each individual consumer and it is coded 1 for storebrand purchases and 0 for national brand purchases.

The relationship between the independent and the dependent variable(actual buying behavior) is examined by logistic regression analysis, i.e. abinary logit model for probabilistic choice (see Amemiya, 1981). We selectthis method because the dependent variable is not continuous but aqualitative response which is the outcome of the consumer decision processbetween store and national brands. In this case, the probabilistic frameworkimplied by logit analysis is most suitable. In addition this methodologyevaluates the importance of each consumer characteristic separately andtherefore do not aggregate over ad hoc consumer typologies or clusterswhich often have ambiguous interpretations. The logistic probability modelhas the form

In expression (1) the probability of choosing a store brand (yi = 1) is afunction of independent variables x and respective coefficients β.

The method yields parameters reflecting the importance of each predictorvariable and also probabilities for each value (0,1) of the dependent variable.Thus we can predict the actual purchase made on the basis of fittedprobabilities. If the probability of store brand is higher than that ofmanufacturer brand, we predict that a store brand is selected. In this way, wecan effectively assess the ability of our model to explain behavior bycomparing actual and predicted purchases of store brands across panelists.

Findings and discussion Table I summarizes the results of the calibrated logistic choice model. Themodel has been estimated by the maximum likelihood method.

Pr exp

expy

x

xi

T

T=( ) =

( )+ ( )1

1

β

β

318 JOURNAL OF PRODUCT & BRAND MANAGEMENT, VOL. 6 NO. 5 1997

Predictorvariables

Fittedprobabilities

Most variables and the whole model were highly significant and theframework predicts accurately more than 81 percent of the purchases (TableII). In addition, the model predicts symmetrically purchases of both storeand national brands, a property which supports our confidence in its abilityto explain adequately actual behavior.

Two descriptors of shopping behavior (B1, B2) were not significant.Consumer propensity to make brand decisions out of the store and to try newproducts did not have an important influence on probability of store brandpurchase. In this respect, both national and store brand prone consumers canbe targeted by in-store promotions, special displays, etc. It also seems thatstore brands have become mature, established products with appeal notrelated to consumer innovation.

Interestingly, we note that B2 had a negative sign, indicating that consumerswho usually search for price cuts and special offers were not store-brand prone.This is reasonable since typically store brands are at permanent lower pricesand do not promote as often as national brands do. By contrast, consumerpropensity to choose the cheapest alternative (B3) had a positive effect onpicking the store brand since the latter is offered usually at the lowest prices ofthe product category. The sign of B5 also points out that the private label buyerwas likely a switcher and not a shopper with a stable, narrow brand repertoire.

Examining the reasons for buying a store brand product we note that bothprice (R1) and consumer preference (R2) affect choices. Despite the

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Table I. The results of the calibrated logistic choice model

Variable Coefficient

Decide before you get to the shop (B1) 0.260Look for price promotions (B2) –0.678*Go for the cheapest brand (B3) 0.384*Buy the same brands (B4) –0.374*Try new/different things (B5) 0.047Price (R1) 0.755*Preference (R2) 0.608*Familiarity (FAM) 0.383Proximity (PRO) 0.269Importance of getting the right brand (IMP) –0.308*Number of brands tried (TRY) –0.157*Frequency of shopping category (FRQ) 0.235*Satisfaction with available brands (SAT) 0.123*Percent of total correct predictions 81.33Log likelihood (max) –1029.836Log likelihood (constant) –1620.398

Note: * Significant at the 0.05 level.

Table II. The success rate of the calibrated logistic choice model

Predicted choicesObserved choices Store brand National brand % correct

Store brand 792 197 80.08National brand 249 1,151 82.21

Actualbehavior

Notstore-brandprone

common conjecture that a private label product is purchased on a solelyprice base, we found that some consumers buy store brands simply becausethey prefer them. This reflects the serious quality improvements made byBritish retailers in recent years. However, the importance attached to thelower prices was slightly higher.

The familiarity variable reflects perceived risk and amount of informationavailable to the consumer about store brands. Brand purchasing is morelikely when the consumer is confident that she/he can obtain satisfactoryperformance. Familiarity relates to product related experiences that havebeen accumulated by the consumer through product use and marketingactivities, e.g. (Alba and Hutchinson, 1987). Particularly in inexpensive,frequently bought items familiarity may be sufficient for choice, even in theabsence of a well-formated attitude (Bettman and Park, 1980; Park andLessig, 1981). Given the stereotype of private labels as “risky” alternatives,familiarity is an important determinant of consumer choice. Lack offamiliarity may also increase the importance of extrinsic cue effects wherethe typical store brand is weak (Richardson et al., 1996). Further,psychological proximity is also important in affecting store brand choice.This variable reflects the matching of the brand profile with consumer self-perception. The consumer prefers brands perceived to be suitable for“people like me.” The low-profile, accessible image of the store brandstogether with a lack of advertising other than corporate, create an imagethat appeals to particular consumers. Moreover, the promise of good qualityat reasonable price leads to a “smart-buy” impression that may motivatesome individuals.

The importance of getting the right brand was negatively related to storebrand proneness. Consumers with special requirements from the category,high involvement and strong preferences toward specific brands are attachedto manufacturer brands. National brands provide a secure alternative whichin many consumption situations, e.g. guests, is more socially acceptable.Manufacturers have been building their brands for decades. Extensiveadvertising, strict quality controls and superior extrinsic cue effects(Richardson et al., 1994) have led to strong brand images signaling to manyconsumers a quality reassurance.

Number of brands tried had a negative effect on store brand choice. Thisvariable indicates also higher category involvement. Consumers highlyinvolved with the product class are more likely to experiment by tryingdifferent brands in order to form more confident opinions and preferencesregarding the available alternatives.

On the contrary, overall satisfaction with the product category affectspositively private label choice. Consumers that form favorable evaluationsfor the category as a whole tend to have lower perceived risk than shoppingin the category. This variable as well as the previous for brand importanceindicate that as more brands are perceived to be acceptable, private labelproneness increases.

The frequency of shopping category has a positive effect, something that hasbeen confirmed in other studies, e.g. Omar, 1996. Heavy users and otherconsumers with high quantity requirements are more likely to shop aneconomical alternative which results in significant savings.

320 JOURNAL OF PRODUCT & BRAND MANAGEMENT, VOL. 6 NO. 5 1997

Familiarityvariable

Qualityreassurance

Managerial implicationsThe results illuminate many important issues for brand management. Thestore brand shopper is identified as a price-cautious but not promotion-sensitive consumer. This highlights the necessity of permanent low price forthe store brand. The influence of familiarity on choice stresses theimportance of marketing activities such as trial packs, free samples, etc., sothat consumers get to know better the store products. Recently similarmarketing tactics are common in major multiples in conjunction with loyaltyprogrammes. For example, a loyalty-card holder gets money-off couponstoward private label products or free store products as loyalty awards.Similarly, the importance of the psychological proximity illuminates theappeal of the typical private label positioning for a particular segment ofconsumers. This also identifies a risk of “going upscale” for many own labelproducts. Moving upscale they may lose their traditional clientele andcompete for a different segment attached to the different strengths ofnational brands. The traditional value for money approach has the advantagethat it avoid direct competition with the national brands. The managershould move carefully. A reasonable policy is gradual line extensions withpivotal launches of “upscale” store products while retaining the successfulolder sister variants. Understanding and focussing on the consumers thathave made own-label a success is crucial. The study also suggests that theprivate label buyer shops more frequently the category. Managers canexploit this propensity by introducing bigger family sizes and bundle offers.

On the other hand, the manager of a national brand can exploit andstrengthen further the reassurance and the extrinsic cue effects that his or herbrand yields after decades of branding activities. The results also show alimited sensitivity of own-label buyers to promotional price cuts. In thisrespect, manufacturers should target price promotions to their regular buyerssince it is unlikely to cancel out the price differential with retailer brands andcause own-label buyers to switch. In addition, national brand buyers tend tobe more demanding and less satisfied by the available alternatives. Thesedemanding consumers are likely to remain loyal to a satisfactory nationalbrand since they do identify quality variations across different brands. Inshort, it is almost impossible to beat private labels’ prices on a regular basisand therefore competitive advantage for national brands relies on superiorquality and highly differentiated images via advertising, product innovation,creative and esthetically pleasing designs, etc. Sustaining high quality andhigh levels of marketing expenditures are vital for manufacturers. Forexample, high-scale branding investments by Procter & Gamble andUnilever in the detergents market have been proven to be effective inminimizing the inroads of private-label development (West, 1988).

Concluding commentsOur empirical study indicates specific consumer characteristics that lead tostore brand proneness. The findings have important implications for strategicbrand management in frequently bought product classes. This research is thefirst to examine these issues in the light of observed behavior using real-world behavioral data. A limitation is that we do not test the model acrossdifferent contexts. However, this is typical for studies using panel data. Inthis respect, a fruitful area for future research is to examine the impact ofsimilar variables in other contexts and also to investigate the effect of socio-economic variables on private-label purchase behavior. Another importantissue is the association of store loyalty and retailer loyalty programs to own-

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Permanentlow price

Promotionalprice cuts

brand purchasing. These are very important issues given the dramaticchanges in frequently purchased product classes today and the increasingrole of retailer brands in consumer choice behavior and competitivedynamics.

References

Alba, J.W. and Hutchinson, J.W. (1987), “Dimensions of consumer expertise,” Journal ofConsumer Research, Vol. 13 No. 4, pp. 411-53.

Amemiya, T. (1981), “Qualitative response models: a survey,” Journal of Economic Literature,Vol. 19 No. 3, pp.1483-536.

Bettman, J.R. (1974), “Relationship of information processing attitude structures to privatebrand purchasing behavior,” Journal of Applied Psychology, Vol. 59 No. 1, pp. 79-83.

Bettman, J.R. and Park, C.W. (1980), “Effects of prior knowledge and experience and phase ofthe choice process on consumer decision processes: a protocol analysis,” Journal ofConsumer Research, Vol. 13 No. 3, pp. 316-26.

Burger, P.C. and Schott, B. (1972), “Can private brand buyers be identified?,” Journal ofMarketing Research, Vol. 9 No. 2, pp. 219-22.

Cunningham, I.C.M., Hardy, A.P. and Imperia, G. (1982), “Generic brands versus nationalbrands and store brands,” Journal of Advertising Research, Vol. 22 No. 5, pp. 25-32.

De Chernatony, L. (1989), “Branding in an era of retailer dominance,” International Journal ofAdvertising, Vol. 8 No. 3, pp. 245-60.

Frank, R.E. and Boyd, H.W. Jr (1965), “Are private-brand-prone grocery customers reallydifferent?,” Journal of Advertising Research, Vol. 5 No. 4, pp. 27-35.

Hoch, S.J. (1996), “How should national brands think about private labels?,” SloanManagement Review, Vol. 37 No. 2, pp. 89-102.

Livesey, F. and Lennon, P. (1978), “Factors affecting consumers’ choice between manufacturerbrands and retailer own labels,” European Journal of Marketing, Vol. 12 No. 2, pp.158-70.

McGoldrick, P.J. (1984), “Grocery generics – an extension of the private label concept,”European Journal of Marketing, Vol. 18 No. 1, pp. 5-24.

Morris, D. (1979), “The strategy of own labels,” European Journal of Marketing, Vol. 13 No.1, pp. 55-78.

Myers, J.G. (1967), “Determinants of private label attitude,” Journal of Marketing Research,Vol. 4, February, pp. 73-81.

Omar, O.E. (1996), “Grocery purchase behavior for national and own-label brands,” ServiceIndustries Journal, Vol. 16 No. 1, pp. 58-66.

Park, C.W. and Lessig, V.P. (1981), “Familiarity and its impact on consumer biases andheuristics,” Journal of Consumer Research, Vol. 8 No. 2, pp. 223-30.

Quelch, J.A. and Harding, D. (1996), “Brands versus private labels: fighting to win,” HarvardBusiness Review, Vol. 74 No. 1, pp. 99-109.

Rao, T.R. (1969), “Are some consumers more prone to purchase private brands?,” Journal ofMarketing Research, Vol. 6 No. 4, pp. 447-50.

Richardson, P.S., Dick, A.S. and Jain, A.K. (1994), “Extrinsic and intrinsic cue effects onperceptions of store brand quality,” Journal of Marketing, Vol. 58 No. 4, pp. 28-36.

Richardson, P.S., Jain, A.K. and Dick, A. (1996), “Household store brand proneness: aframework,” Journal of Retailing, Vol. 72 No. 2, pp. 159-85.

Szymanski, D.M. and Busch, P.S. (1987), “Identifying the generics-prone consumer: a meta-analysis,” Journal of Marketing Research, Vol. 24 No. 4, pp. 425-31.

West, A. (1988), “Manufacturer/retailer relationships,” in West, A. (Ed.), Handbook ofRetailing, Gower, Aldershot.

(George Baltas is part of the Marketing and Strategic Management Group at Warwick BusinessSchool, University of Warwick, UK.)

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Executive summary and implications for managers andexecutives

Store brand success will change how brands are marketed

Store brands now represent an important part of the total market for manygrocery categories especially in the UK. Baltas notes in this article that 39percent of total grocery sales are of store brands and this suggests that forsome categories own-brand dominance must be almost total.

This situation means that product and brand managers must begin tounderstand what drives the growing share given to store brands. And theacceptance of such brands means that the traditional view of store brands asa riskier purchase must merit reevaluation.

Baltas records that contrary to the established view, buying store brandsdoes not depend solely on price. Some consumers have a preference for storebrands and hence a greater propensity to buy them. Such a finding mustaffect the way in which retailers promote their own brands.

In discussing Baltas’s findings I will focus on two important implications:first, the way in which retail brands develop and, second, the implicationsfor sales promotions and point-of-purchase marketing activity.

Retail brand developmentSupermarkets originally grew in competition to traditional grocers mainlyby providing low price shopping – “pile it high and sell it cheap” was themotto of one supermarket entrepreneur. To some extent this image remainswith most consumers perceiving supermarket prices to be lower than pricesin ordinary grocery shops. But the supermarkets have begun to add otherelements of differentiation to their branding. Issues such as freshness, in-store facilities such as cafés and baby-changing areas, and range ofproducts stocked now sit alongside the core pricing proposition. Somechains are branching out into consumer services by providing hairdressing,shoe repairs, key cutting and even financial services.

Within this overall retail brand are the store brands themselves. As Baltaspoints out such brands are seldom promoted on their own althoughsometimes they feature in general advertising. The assumption is that theoverall reputation for quality, value and range will carry people toward thestore’s higher margin own-brands.

Retail brands seem to have grown through steady, incremental extension toencompass a far wider range of products than the old fashioned grocer everstocked. Supermarkets now challenge other retail sectors like over-the-counter pharmaceuticals, children’s clothing, books and recorded music. Thebrand is promoted via glossy own-label magazines, some of which now rankamong the biggest circulation publications in the UK. The impression for theconsumer must be one of strength and quality reducing the risk usuallyassociated with buying other than national branded goods.

Today, the advent of store loyalty cards and related schemes helps toreinforce the position of the supermarket in consumers’ minds. Not only dothey see television advertising promoting the brand but they have a positivefinancial incentive to remain customers of the store. Such a situationencourages the supermarkets to give more shelf space to fresh food and theirown branded goods at the expense of national brands.

JOURNAL OF PRODUCT & BRAND MANAGEMENT, VOL. 6 NO. 5 1997 323

This summary has beenprovided to allowmanagers and executivesa rapid appreciation ofthe content of thisarticle. Those with aparticular interest in thetopic covered may thenread the article in toto totake advantage of themore comprehensivedescription of theresearch undertaken andits results to get the fullbenefit of the materialpresent

Whether new extensions into financial services, gas stations and estateagency succeed remains to be seen. Some argue that the banks and oilcompanies are more challenging targets than the fast-moving consumergoods manufacturers, while others see such sectors as ripe for a challengefrom a fresher and more dynamic brand. Furthermore, the constant brandextension activity may over time diminish the supermarkets’ core propositionfounded on value for money.

Promotions and pricing strategiesBaltas finds that store brand buyers are cautious about prices but notespecially sensitive to promotions. This challenges the growing emphasis onbelow-the-line activity by the owners of national and international brandsespecially where store brand buyers are growing in number. Certainly thereliance on short-term promotions and price cutting to deliver volume salesfor brands needs a fresh investigation.

The concept of efficient consumer response where brand owners undertaketo eschew price promotions in favor of consistent low prices now seems anattractive proposition. Certainly, the supermarkets, as the main customers ofnational brands, are keen on securing a more consistent approach frommanufacturers. And, as we’ve seen in recent years, the power of supermarketbuyers affects brand strategies very considerably.

Brand owners need to put the emphasis on product development andpromotional strategies that sustain and justify the price premium over ownbrand goods. Such strategies require not merely good advertising and aregular stream of product developments but a demonstration of thesuperiority of the branded product. In some categories where strong brandsexist (washing powders, coffee and soft drinks for example) the brandowners have succeeded in at least slowing down the growth of own-brandpurchases. In each case promotional strategies emphasise the uniqueness ofthe brand and in doing so reinforce the risk associated with a switch to own-label products.

Managers promoting brands under threat from own-label products need topay attention to the motivations of consumers switching to store brands.Assuming that your brand is strong enough to resist such attacks may be abig mistake and positive steps are needed to secure the future of manybrands. Retailers may suffer from taking their eye off the ball while chasingextensions into new areas, but brand owners cannot assume that this will bethe case.

(A précis of “Determinants of store brand choice: a behavioral analysis.”Provided by Marketing Consultants for MCB University Press.)

324 JOURNAL OF PRODUCT & BRAND MANAGEMENT, VOL. 6 NO. 5 1997