Purchase Intention Towards Private Label Brands (PLBs) in New Zealand

How do demographic factors, among others, influence consumer's purchase intention towards Private Label Brands (PLBs) in New Zealand?

Contents

1.0 Background of the Study:.................................................................................................... 1

2.0 Problem statement:.............................................................................................................. 2

3.0 Research questions and objectives:.................................................................................... 4

4.0 Significance and justification of study:.................................................................................. 5

4.1 Significance for industry professionals;................................................................................. 5

4.2 Significance for scholars;..................................................................................................... 6

5.0 Methodology and methods:.................................................................................................. 6

6.0 Proposed timeline:................................................................................................................. 7

7.0 Appendix:.............................................................................................................................. 8

7.1 Questionnaire;..................................................................................................................... 8

7.2 Models of previous investigations....................................................................................... 11

8.0 References:........................................................................................................................ 12

1.0 Background of the Study

The global retail industry was USD 23,460 Billion in 2017 and it is expected to have an annual cumulative growth rate of 5.3% (Business Wire, 2019). Similarly the New Zealand retail industry is growing and the retail spending was NZD 92.3 Billion in 2018 and predicted to reach NZD 120.6 Billion in 2030 (Retail NZ, 2018).

It is mentioned that, within next 10 years of 2018, successful retailers will focus on vertical integration in their business model and marketing Private Label Brands (here in after PLBs) (Retail NZ, 2018). In the global context, share of PLBs in Australia and North America comes nearly 18% while 42% in Spain, 41% in UK and 36% in Germany (Grimmer & Mortimer, 2018). By the year 2019, Spain, UK and Switzerland are expected to surpass 50% of PLB market share and 17 out of 20 European countries to record more than 30% share of PLBs (Private label manufacturer's association, 2019). In this background, PLB share in New Zealand is estimated to jump in to 40% in 2023 (Grimmer & Mortimer, 2018). Another opportunity for the growth of PLBs is that the value added PLBs will play a major role in increasing sales as well as profits for retailers (Morris, 2004).

In support of the above practical evidence from the industry, researchers like Mostafa and Elseidi (2018) investigated the factors influencing willingness to buy PLBs. As a future research direction, authors suggest investigating on the moderating effect of socio demographic factors. There are other evidence of research carried out in the area of consumer behavioral factors affect the intention to purchase PLBs (Batra and Sinha 2000; Jaafar, Lalp, and Naba 2013; Kakkos, Trivellas, and Sdrolias 2015; Beneke 2010).

This study aims to validate the findings of Mostafa and Elseidi (2018) in the New Zealand context, while attempting to address the future research areas by investigating the moderating impact of demographic factors. Hence the purpose of this research is to investigate factors affecting consumer purchase intention of private label brands and the moderating effect of socio demographics in New Zealand.

2.0 Problem Statement

Global retail industry is growing annually at an estimated rate of 5.3% (Business Wire, 2019).

Though the industry is growing, overall profitability of the retail sector is low and its nearly 3.7% in New Zealand (Retail NZ, 2018). In terms of the profit contributor for retail chains, Private Label Brands provide better margins than national brands (Morris, 2004). In the global context, retailers are focusing on their own brands (PLBs) to increase their revenue (Khan & Mehmood, 2018).

As per Harris (2016), opinion of general public on product quality matters for the movement of private label brands and it was revealed by Nielsen in 2014 that 62% of New Zealanders believe that the product quality of PLB products has increased. This is a positive sign for the future of PLBs in New Zealand. Also the share of PLBs in retail market is increasing globally (Private label manufacturer's association, 2019). And the share in New Zealand to reach 43% by 2023 (Grimmer & Mortimer, 2018).

Considering the above discussed opportunities for PLBs in New Zealand, it is evident that proper research needs to be undertaken to evaluate the factors which can influence consumers to buy PLB products. Majority of studies about private label brands are conducted in Europe and USA (Khan & Mehmood, 2018) and the behaviors of consumers from Europe and USA might different to the New Zealand context. There are considerable number of studies done under national brands but the evidence on Private Label Brands are less in New Zealand (Chen & Glynn , 2009).

Consumer perceptions of PLBs were investigated in the grocery sector of South Africa by Beneke (2010). Product quality, Price, Reliability, Attractive packaging and location were tested as independent variables against the perception. Under these circumstances, an extension to the study done by Batra and Sinha (2000) to investigate interrelationships between consequences of purchase mistake, degree of quality variances in a product category, "Search" vs "Experience" nature of a product category, price consciousness and the purchase decision, was assessed by Chen and Glynn (2009) in the New Zealand context. But it is noted that there is a gap in research, on the impact of Familiarity with PLBs, perceived quality of PLBs, perceived risk and price consciousness towards the purchase intention in the New Zealand context.

Conceptual framework

Source: (Mostafa & Elseidi , 2018)

3.0 Research Questions and Objectives

The investigation uses a framework based on one developed by Mostafa and Elseidi (2018), who considered Store Image as an extrinsic factor in their research into a specific hypermarket company. Store image has been eliminated from the framework for the current study to enable the findings to be generalised to the overall supermarket industry.

Moderating factors are extracted from the paper published by Shukla, Banerjee, & Adidam (2013). Accordingly, gender, age, education, income and family size are considered as demographics in this research. These factors to be modified as mentioned in the research questions to suit into the New Zealand context.

Research questions are as follows

1. Does familiarity with PLBs influence the customer's willingness to buy?
2. Does the perceived quality of PLBs influence the customer's willingness to buy?
3. Does the perceived risk of buying PLBs influence the customer's willingness to buy?
4. Does price consciousness influence the customer's willingness to buy?
5. Does the customer's age moderate the relationship between attitudes and willingness to buy PLBs?
6. Does the customer's gender moderate the relationship between attitudes and willingness to buy PLBs?
7. Does the customer's level of education moderate the relationship between attitudes and willingness to buy PLBs?
8. Does the customer's household income moderate the relationship between attitudes and willingness to buy PLBs?
9. Does the customer's family size moderate the relationship between attitudes and willingness to buy PLBs?

4.0 Significance and Justification of Study

4.1 Significance for industry professionals

Reports show that the market share of private label brands will increase in New Zealand as per global trends (Grimmer & Mortimer, 2018). Since the consumer is the person who pulls out the products out of the shelf, it is vital to retailers to identify the reasons of proneness towards private label products. If the familiarity of the PLB, perceived quality and perceived risk has an impact to the purchase decision, marketers of PLBs can investigate strategies of increasing the brand awareness, customers perception of the brand quality while reducing the perception of the risk. If the price consciousness plays a pivotal role in the purchase decision, marketers need to pay extra attention in the pricing strategy with clear comparison of national brands. Also, if the impact of price consciousness is not evident, there is room for marketers to further enhance the profitability of the PLBs.

4.2 Significance for scholars

There is evidence of research on private label brands but mostly in Europe and USA (Khan & Mehmood, 2018). The amount of investigations conducted in New Zealand is limited (Chen & Glynn , 2009). Further, investigations conducted on brand familiarity, perceived risk, perceived quality and price consciousness factors influencing consumer willingness to buy is not conducted in the New Zealand context. Also, the moderating influence of demographic factors are not investigated in the model tested by Mostafa and Elseidi (2018).

Hence this effort is firstly to fill the gap in research and strengthen the knowledge in the area of familiarity, perceived quality, perceived risk and price consciousness factors towards the PLBs willingness to buy and the moderating impact of demographics. Thereby providing valuable marketing insights for marketing professionals in the FMCG industry and scholars as a model to apply in similar contexts. Also, secondly the research seeks to validate the model used by Mostafa & Elseidi (2018) in other geographies such as New Zealand.

5.0 Methodology and Methods

A deductive positivism approach to be considered in the methodology by following a quantitative method. The sample frame of the intended survey will be supermarket customers in Rotorua, New Zealand who has made a purchase of PLBs. Similar to the sampling method of Mostafa & Elseidi (2018), customers to be intercepted in the supermarket, screened whether he/she has purchased a PLB product.

Countdown, New World and PaknSave are the main supermarkets located in Rotorua (Rotorua Travel Secrets). Hence customers of Countdown, New World and PaknSave to be used in the sample and using a self-administered questionnaire.

Both weekdays and weekends to be used in the survey to capture different shopping habits (Mostafa & Elseidi , 2018). Total of 350 respondents to be selected those who has made a PLB purchase during their shopping.

Questionnaire items for each variable and the format of the questionnaire will be selected from Mostafa & Elseidi (2018) and manipulated to reflect the modified framework for this research. In the three-section questionnaire, first section is to screen the customer and obtain information about general shopping habits, second section is related to independent and dependent variables. A five-point Likert scale questions to be used in the questionnaire. To measure the four variables, 22 items will be used in the questionnaire.

The third section to obtain information of demographics which is adapted from Chen & Glynn (2009) to gather data on moderating variables. Before the full data collection, a pre-test to be conducted with 25 respondents to assess any required modifications for the questionnaire.

Co-variance based Structural Equation Modeling and Analysis of Moment Structures (AMOS) to be used to analyze DATA for independent and dependent variables.

6.0 Proposed Timeline

7.0 Appendix

7.1 Questionnaire

Section one

1.1 How many times a month do you buy groceries?

1 time a month

2 times a month

3 times a month

4 times a month

5 times a month

1.2 From where do you usually buy groceries?

PaknSave

Countdown

NewWorld

Foursquare

Dairies

1.3 What are the most preferred Private Label Brand (Here in after PLB) of your choice?

1st choice	2nd choice	3rd choice
4th choice	5th choice	6th choice

Section two

Statement
2.1 Familiarity with PLB (FM)
2.1.1 I can distinguish PLB products from other	1	2	3	4	5
2.1.2 I am quite familiar with PLB products.	1	2	3	4	5
2.1.3 I have plenty of experience in using PLB	1	2	3	4	5
2.1.4 I know the available PLB products well.	1	2	3	4	5
2.2 Price consciousness (PC)
2.2.1 I tend to buy the lowest-priced brand that will fit	1	2	3	4	5
2.2.2 When buying a brand, I look for the cheapest	1	2	3	4	5
2.2.3 When it comes to buying, I rely heavily on price.	1	2	3	4	5
2.3 Perceived quality (PQ)
2.3.1 PLB products are high quality products.	1	2	3	4	5
2.3.2 PLB products are trustworthy.	1	2	3	4	5
2.3.3 PLB products give me the result I am looking	1	2	3	4	5
2.4 Perceived risk (PR)
2.4.1 I am afraid that its resistance level may not be	1	2	3	4	5
2.4.2 I am suspicious of the ingredients used in its	1	2	3	4	5
2.4.3 I think that buying PLB is a waste of money.	1	2	3	4	5
2.4.4 I am worried that it is not worth the money	1	2	3	4	5
2.4.5 I am afraid that it may damage my health.	1	2	3	4	5
2.5 Attitude (AT)
2.5.1 Buying PLB products makes me feel good.	1	2	3	4	5
2.5.2 I love it when PLB products are available for the	1	2	3	4	5
2.5.3 For most product categories, the best buy is	1	2	3	4	5
2.5.4 Considering value for the money, I prefer PLB	1	2	3	4	5
2.6 Purchase intention (PI)
2.6.1 I would purchase PLB product next time.	1	2	3	4	5
2.6.2 Although there are similar brands available, I	1	2	3	4	5
2.6.3 There is strong likelihood that I will buy PLB	1	2	3	4	5

Section three

3.1 What is your gender?

Male

Female

3.2 Which age group you are falling in to?

20 – 29 years

30 – 39 years

40 – 49 years

50 – 59 years

60 or over

3.3 What is your highest level of education?

High school or less

Vocational or trade qualification

Tertiary qualification (undergraduate)

Tertiary qualification (postgraduate)

Other

3.4 What is your annual household income (NZD before tax)?

0 – 30,000

30,001 – 50,000

50,001 - 70,000

70,001 – 100,000

100,001 – 150,000

150,001 – 180,000

More than 180,001

3.5 How many members are there in your family?

1 person

2-3 persons

4-5 persons

More than 5 persons

7.2 Models of previous investigations

Source; (Shukla, Banerjee, & Adidam, 2013)

Source; (Mostafa & Elseidi , 2018)

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