The development of a consumer value proposition for private label brands and its application in a South African context

Abstract

Private label brands are of strategic importance to retailers worldwide. However, there is a dearth of knowledge, particularly in emerging markets such as South Africa, as to the manner in which consumers cognitively assess these brands. This impacts on the development and marketing strategies adopted by such retailers. At the heart of the issue is a gap in knowledge as to how consumers formulate a value proposition in their minds and the effect of loyalty to existing brands in this respect. This thesis assumes a positivist, hypothetico-deductive approach by attempting to address the question: What are the key drivers of perceived value of private label branded breakfast cereals, taking price, perceived risk and perceived quality into account? Moreover, the study ponders how various attributes of brand image contribute to the perception of such brands and the extent to which loyalty to established national brands inhibits purchasing intent of private label merchandise. A conceptual model, encapsulating the above constructs, was developed to map these influences. The model was then examined using Partial Least Squares linear regression. Preceding the full-scale main study of 482 respondents, a smaller scale pilot study of 152 respondents was implemented to verify the basic theory and methodology. A validation study, thereafter, supplemented the findings by subjecting the quantitative results to a panel of twelve academic and industry experts. This qualitative dimension to the research provided elementary triangulation in order to solidify the results. The outcome reflects that consumers do indeed take cognisance of value through price, risk and quality cues, but that loyalty to national brands has little to no effect on the final component of the psychological process conceptualised. Furthermore, both in- and out-ofstore influences were found to play a significant role in the determination of product quality. The implications suggest that, whilst customers appear mildly satisfied with the private label breakfast cereal under consideration, further improvements across the board are recommended. Inter alia, these include optimising packaging and shelf placement to create a positive impression within the store environment, enhancing the quality of the product content and stimulating trial thereof, providing reassurances to customers through moneyback guarantees, ensuring the price differential is substantial enough to merit brand switching in favour of private labels, and consistently evolving the product suite so as to ensure it stays relevant and enticing to shoppers.