International Entrepreneurship and Management Journal

ISSN: 1757-1938 SJR : 0.847 SNIP : 1.89948

What Influences Customers for Choosing Manufacturer Brand to Retailer Own Label Products A Case Study of Tesco, London

Akmaral.Miraliyeva  (Senior Lecturer at Al-Farabi Kazakh NationalUniversity Department of International Relations)

Arshad Jamal (Professor at Northumbria University/Nazarbayev university)

Anargul Rakhmetzhan (Senior Lecturer at Al-Farabi Kazakh National University Department of International Relations )

Chapter One – Introduction

1.1     Research Background

The nature of customers is turning into more peculiar pattern when it comes to brand preference. They obviously consider choosing most popular brand products.  Customers’ sum up experience regarding the productfrom the starting moment they consume. For any business organization, branding has proven to be the very essentialmeasure to ensure best customer experience (Boutsouki et al., 2008)regarding their brand. In The UK, more than 40 percent of food and beverage items are sold by retailer organizations, establishing theirretaillabel. They have not stopped to invent new and creative ways to improve their brand range as customers are also demanding heavily for retail service (Berges-Sennou et al., 2007). Their evolvement seems to be increasing continuously in the globalmarket. Within these foundations, the study has aimed to explore the influence of manufacturers branding strategy and retailers labeling strategy on customer choice.

1.2     Rationaleforthe Research

The study shows that various factors relating to brand perception impact on customers’ choice. Not only manufacturers brand but retailers label system also influence on customers’ buying decision (Gabay, 2015). The main purpose of the study is to explore the various influencing factors related to manufacturers’ brand and retailers’ label over customers buying choice. The findings of the study will be very beneficial for many organizations including Tesco to prepare their branding and labeling strategy in terms of how and in which way branding and labeling becomes more effective to influence customers buying decision positively.

1.3     Research Aims and Objectives

1.3.1    Aims

As the research,aim is to gain understanding of underlying factors that influences the choice of consumers between manufacturer brand and retailer own labels depending on their needs.

1.3.2    Objectives

To obtain its aim, study has settled following objectives to follow:

  1. To study the various factors that shapethe decision to buy either manufacturer brand
    Alternatively, retailerown label product.
  2. To measure the ratio of manufacturer brand and retailer own label goods in the
    retailer’s shelves.
  3. To analyze the consumer’s decision at the time of purchase, making the choice between
    manufacturer brand and retailer own label.
  4. To evaluate the retailer inclusion of retailer own label products in the shopping shelves
    depending on consumers’ preferences.
  5. To find out popularity of Tesco’s label products compared to manufacturer brand
    products.

1.4     Research Questions

Following of research questions have been derived to fulfill the aim of this study:

  1. What impacts the decision to buy manufacturer product over retailer own label product or
    vice-versa?
  2. Is thepricethe prime reason to select retailer label product over manufacturer brand product?
  3. What encourages the retailer to increase the retailer own brand products in the shelves of theshop?
  4. How successful is Tesco on promoting its brand and increasing the sales volume of the ownlabel?

1.5     Significance of Research

The study holds motive to indicate factors affecting customers purchase choice depending upon manufacturers branding scheme and retailers label. It aims to conduct a comparative analysis ofinfluences made by manufacturers branding strategy and retailers labeling strategy over customers’ choice.  The findings of the study will be presenting a solid idea on how customers’ decisions are derivedwith the use of branding and labeling strategy of the certainorganization. One can know about, effectivenessof manufacturers branding strategy and retailers labeling practices to attract and retain customers in their business. Hence, conducting this research will be useful to marketing as well as business academics which will help them by providing plenty of knowledge regarding effectiveness of manufacturers branding and retailers labeling strategy to convert customers’ choice flavorings their business.

Chapter Two – Literature Review

2.1     Theoretical Framework

With the advancement in human civilization customers,preference choice also has been changed drastically. Customers’choice is directly relatedtocustomer buying attitude, product perception and in consumer behavior (Gabay, 2015). Product consideration and evaluation is akeypoint for any consumer to make customer choice. Customer choice is buying intention of consumers used as an effectivetool for predicting buying process.  Customers get driven by their purchasing intention, once they make their choice to purchase from acertainstore or of acertainbrand. However,their choice may be changed by the influencing factors like product price, perceived quality and value. Furthermore, customer purchase choice greatly depends on theexternalenvironment and internal impulse of any organization distributing theproduct.(Berges-Sennou et al., 2007)

Retailers’ label are definedas trademark applied on packaging and sold in retail stores. Retailers’ label products are private label. With the use of this, they are free to commence their marketing channel to promote those labeled product (Gabay, 2015). Retailers label products are usually found inlow price. These product acts as a consumers’ choiceproduct in the market. However Boutsouki et al. (2008) explains in their report  that customers having habit to make choice of product judging on product quality might show low interest in purchasing retail label product.These kinds of acustomerbelieve in thequalityof theproductthan theprice.  If to study the historical trend regarding customers’ preference of retail label product, the trend seems to be moving upward direction indicating acceptance of customers to consume retail brand and label and believed that the trend will represent a good value for price.

 There can be found numerous previous studiescarried on retail label products, but not much more research studies seem to be found carrying objective to explore on factors of retail label affecting customers’ choice. In past, several studies have been conducted withrespect to retail label product determining customers’ choice.However,only one of the studyLivesey & Lennon (2006) presenting view on effect on customers intention due to retailerlabel product, in which, thepresentstudy is based on. According to the report of Livesey & Lennon (2006), intrinsic factor, extrinsic factor and consumers attitude plays abigrole in influencing customers purchase decision.

2.2     Consumer Perception on Manufacturer Brand and Retailer’s Own Label While Shopping

If to compare with retail label product, manufacturerbrand offers unique benefits on which customers even wills to pay for thehighprice (Desai et al., 2015).To see on, retailer labeled products, they offer equal quality product in inexpensive price than by manufacturer brands, the difference in preferring  manufacturer brand and retailer labeled products is that, manufacturers ensures reasonable price according to derived benefits by their product.The trend of manufacturer brand and retail label collides in the point that, retailer label offers improved quality product with low price whereas, manufacturer brand ensures astandardquality of their product in reduced price level (Gabay, 2015).  Such scenarios have made themarketeven more competitive and became a place in which customers’ choice made on brands granting higher financial value. 

On the way that customer uses to think about retail label product, influences customers choice making theprocessas well as their perceived financial condition (Themistocli & Associates, 1986). Customers usually decide to save up money by buying retail label product, if their financial downturn is going on, and when, once, their financial condition is improved, they better like to move onto their familiar brand choice (Berges-Sennou et al., 2007). It isbecause, when an individual becomes familiar withspecific product, s/he start to define that product in their good way. Therefore, if to sum up customers choice regarding retail label product, retail organizations should allow their customers to feel free and confident about their product. The level of customers’ trust in retail label product is affected by perceived benefits (Boutsouki et al., 2008). This mean, perceived product quality and price by customer affects customer choice making process. According to Livesey & Lennon (2006) once, customers makes their choice to buy retail label product, their purchase experiences builds up their internal mentor and along with this, external memory will be created on other customers by transferring their information regarding product experience, which plays great role in increasing number of customer choice for retail label products.

2.3     What Influences the Choice to Opt Manufacturer Brand over Retailer Own Label

Manufactures brands are considered more superior than of retailerlabeled products in terms of quality, taste, reliability and service quality (Desai et al., 2015).This wasat the periods when, retailed brands used to be considered ass lower quality products in lower price. With the advancement of abusinesstrend, these days, customers have started to perceive the retailerlabel products equally with manufacturers brand in term of price and quality of theproduct (Gabay, 2015). Today, a huge numberof customer choice fall on behalf of retail label product rivaling manufacturers’ brand.  A considerable change has been foundin customers’ perception regarding retail label product. They now, fully trust that retail label products are also true on providing quality atthe fairprice. The purchasingretail brand is becoming extensively popular these days. In 1990 AD, sales of Tesco accounted 54 percent of their label products (Ruther, 2003). If to study, retail market trend ongoing on The UK, it can be seen thatmanufacturer brand and retail label are have gained 50:50 portion of market share. It can be said that trendof retail label preference isbeing increaseddue to increasing customers’ perception in terms of quality, price and due to decreased perceived risk while buying retail label product.  Current UK market trend shows that 30 percent of retailers are showing an increasing enthusiasm for premium and  fine quality retail product that pose an ability to compete with popular manufacturer brand on brand image and quality leaving high price according to (Desai et al., 2015).

2.4     Areas ofFocus to Promote Retailer Own Label

Livesey & Lennon (2006)in their report states that, intrinsic factor, extrinsic factor and consumers’ attitude mostly influence customers purchase decision. Improving these factors will lead to promote retailers label value. An intrinsicfactor to promote retailer label refers to quality features of theretailproduct in terms of risk value and quality (Boutsouki et al., 2008). These days, people’sare more concerned about product safety. They are more aware of theriskposed by consuming the product. The riskin product consumptions arises when thereappears uncertainties’ in theproduct.  Customers always think in a way that, choosing low price goods, packed in style with not renowned products pose quite ahigh risk because they reflect alackof confident and doubt in consumption of those products (Berges-Sennou et al., 2007).This isone of the prime reasons that customers fear to choose retail label product.  Retail organization need to make their customers understand that product pose no any threat in its consumption. They need to sell only high-qualityproducts along with sustainable pricing policy. Secondly, extrinsic factors are the external force outside aroused from organizations’ environment (Themistocli & Associates, 1986). It consists of marketing, promotional activities, building image, packaging, perceived price,and value,etc. Thesefactors influence on themonetaryvalue of theproduct.  There is a positiverelationship between customer choice-making process towards retailerproduct and price of theretailproduct (Boutsouki et al., 2008). Therefore, themajorityof customers’ choices are mad depending upon low price. Beside this, packaging maintained by retailers also plays vital role in turning customers’ choice on their side as  it is from packaging where customers read all the necessary information about product and decide to buy them or not. Furthermore, promotional and marketing activities act as key communication strategy that informs customers about service and product.  A successful advertisement brings a reputation label in corporate brand (Themistocli & Associates, 1986). The image of retail store plays abigrole to make customers choice towards retail products rather than manufacturers product. At last not the least, customers attitude includes customers trust towards thespecificretail brand, familiarity with retail products and the perceived financial condition of customers affect customers’ attitude towards retail label (Berges-Sennou et al., 2007). Any of ill feeling obtained by thecustomerdoes not make perceived value of retailers brand high. Therefore, these are sensitive factors that heavily affect in customers choice making process thatshould be lookedas less importantly. 

2.5     Conceptual Framework

Customers’ perception shapes the manufacturer’sbrand and retailer label on their level of perception about a specificproduct, customers’ choice-makingdepends on (Desai et al., 2015). Manufacturers brand and retailer labeled products are designed with the motiveto catch the customers’ intention. They put more focus on major factors that influence customers most to make their choice regarding manufacturer brand and retailer brand. Different from past days, labeled retailproducts are coming up as rivalry competitors for manufacturers’ brand. They are presenting themselves as alternative products for manufacturing brands (Kaynak et al., 2006). They have become able to catch up to this extent by improving their areas of intrinsic, extrinsic and customers’ attitude factor, which are key to promotingretailerlabel product.  

Intrinsic factor
Extrinsic factor 
Consumer Perception on Manufacturer Brand and Retailer’s Own Label While Shopping
What Influences the Choice to Opt Manufacturer Brand over Retailer Own Label
Customer attitude 
Areas to Focus to Promote Retailer Own Label

Figure 1 – Conceptual Framework

Chapter Three – Research Methodology

3.1     Research Philosophy

As the subject matter of the study is related to the human and social experience, interpretative research philosophy will be adopted to carry on research. Interpretative Research philosophy will be helping to explore the impact of manufacturer brand and retailers label on customers choice. Interpretative research philosophy was chosen to apply for the study because theinterpretativeparadigm is best to identify the influencing factors of subject matter on research. It explores all the experience and background related to subject matter of research in a realistic way (Saunders et al., 2012). Interpretative research philosophy is critical paradigm that researcher adopts to understand the influence of power created by study variables on society and the political and social ideology behind the subject matter of research (Bryman, 2012). Hence, to investigate on the stated research topic, interpretative research philosophy is found to be more appropriate to apply in this study. 

3.2     Research Method

The nature of this study will be of descriptive style. To ease its purpose, the study will be going through cross-sectional and non-longitudinal nature. Data needed to this study will be collected at a single point from different kinds of participants of research within relatively short period. Rather than to adopt longitudinal study, the study has chosen to follow cross-sectional study because  cross-sectional study facilitates necessary data to be gathered in short span of  time and the study criteria have time constraints, Furthermore, the study does not intend to examine any business trends. Therefore, to complete the study, cross-sectional study is indicated as appropriate method to conduct this study

3.3     Data Collection

From the nature of the study, the study seems to be requiring both qualitative and quantitative naturedata. Therefore, both the data will be collected.

3.3.1    Primary Sources

Primary source will be used to collect qualitative data and information. This will include the opinions of customers regarding brand preference, various executives’ opinions on branding and labeling strategy, acquiring past records of labeling strategies launched by Tesco, sales records of Tesco, and many other qualitative information. Qualitative data will be collected from the primary sources such as, interviewing Tesco customers and employees, conducting group discussions, taking views of marketing executives of various manufacturing organizations,  various records maintained by manufacturers organizations, etc. a couple of surveys will be conducted to reflect more quality on study. Furthermore, various questionnaire series also will be conducted through the internetand social media system.

3.3.2    Secondary Sources

Secondary sources will be used to collect quantitative data.It will be collected through various published and unpublished sources such as annual and financial reports of Tesco, branding strategy related articles published by various manufacturer organizations, from journals, newspapers, magazines, official records maintained by various organizations, business records etc.

3.4     Data Analysis

The study needs both qualitative and quantitative data. The specific variables related to this study such as customer age, income class, product category, quality perceived, brand and label strategy,etcwill be consideredwhile collecting data. These data will be collectedthrough theprimaryand secondary source of data collection. Collected data will be stored in theorganizedform using spreadsheetsand various statistical software. Once the data are stored and organized, they will be processed for data filtering process. In this, all unnecessary, unrelated and incorrect data will be removed. Remaining data and information will be organized in thevariouscategories systematized in most important least important order. Exploratory data analysis will be used to derive knowledge from collected data being in line with notion explained by Creswell (2014).

3.5     Validity and Reliability

The aims, objectives and research questions of this study are only basedon key variables of the subject matter. From this, it can be ensured that the findings produced by the study will be valid. Furthermore, the accurate results derived from survey and case study will help to prove this study as valid research. 

To test the reliability of this study, the finding of this study will be comparedto other previous researchers’ findings who had already conducted research on thesamesubject matter as this study does.According to Creswell (2014)Reliability of this study will be decided by being on thebaseof similarity reflected by findings of this research compared to findings resulted by several other previous researchers. 

3.6     Ethical Considerations

As being academic, it is necessary to follow a setof ethical morals while conducting research. Ethical considerations, in research, reflect thelevelof respect provided by researchers to their research participants (Saunders et al., 2012). It shows theattitudeof non-violating ethical principles related to society and business world. It includes all the rules and regulations regarding business organizations and individuals’ moral those related to research activity directly and indirectly (Bryman, 2012). Considering these ethical issues related to research activities, following set of ethical rules were designed to follow, so that high moral respect can be given to research associates, before, during and after conducting research: 

  • All the participants will be allowed to take part in research activities only according to their willingness to participate in this research. 
  • All the research associated will be fully informedabout the purpose of this research conduct, they will be provided any of research information if they feel required.
  • All the data and information for this research will be collected only on permission received.
  • All the collected data and information will be made secured using password protection in hard drives of computers, will be maintained high confidentiality, and will not be provided to any other third party without having permission from respective participants.
  • All the rules and regulation regarding business organizations will be followedstrictly
  • No any physical and mental harm and losses will be made to research associates 
  • No ideal time will be madeout of time provided by research participants
  • No,any copy and reuse purpose will be allowed for this research paper without permission of associated researchers
  • All the rules, regulations and criteria issued to conduct this research by Universitywill be strictly followed

Chapter Four – Time Planning (Gantt chart)

Although, issued timeframe by Universityis very limited to prepare the research paper, it is being planned to conduct the research within mentioned timeframe using research resources that become available during research activities.  As per guideline, research is supposed to be submitted within three months, the following timetableis being planned to conduct research activities:

Research ActivitiesFirst monthSecond monthThird month
Weeks123412341234
Initiating Research ( Introductory Part)            
Searching Literature            
Methodology Design            
Data Collection            
Field Visit (Conducting Survey, Interview, Questionnaire Series, Group Discussion, GatheringViews, and Opinions)            
Data Analysis,FindingsReporting            
Preparing Final Draft,Submitting, Revising, and Reediting            

Figure 2 – Gantt chart for Research.

As from table, it is clear, that research will be initiated from the scanning of thesubjectmatter of research and by allocating research resources. With this, research will be started by initiating introductory part of theresearch. It’sestimated time is one week. After introductory part, literature search will be followed, whose estimated time is three weeks as it is themosttime consuming and vital part in research. Research and method planning is will be completed within one week, in which, data collection will be accomplished by its following week, after then in next three week, field study will be accomplished. As for data analysis part, two week is being separated, which will be immediately commenced once field visit is done. Findings drawings will be donealong with data analysis. At last, thefinaldraft of study will be prepared; paper will be submittedto asupervisor. Considering necessary of the further edition on the study, extra one week has been separated, so that, revising, &re-editing can be done,and revised report could be submittedwithout being late. 

Chapter Five – Conclusion

The study spoke of manufacturer brand deliverstandard quality products with the fairpricing policy. They provide different and unique benefits to their customers than that retailer canprovide. Whereas retailers labeled product are of thelowprice than that of manufacturer brand. Itsperceived benefits and value are less than manufacturers’ brand. Furthermore, the study states the fact that customers choice regarding retailer label dependson three of themajorfactor that is anintrinsicfactor, extrinsic factor,and customer attitude.  On these factors,retailers should be concentrating on if to improve their perceived value in themarket. 

With all the proposed research design, it is believed thatthe study will be successful to get its aims and objective. Its objective and research questions are designed focusing more on key variables of subject matter. Therefore, the proposed study will be presenting accurate knowledge on customers’ choice regarding manufacturers brand and retail label.

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