Private Labels - The Role of Manufacturer Identification, Brand Loyalty and Image On Purchase Intention
Private Labels - The Role of Manufacturer Identification, Brand Loyalty and Image On Purchase Intention
Private Labels - The Role of Manufacturer Identification, Brand Loyalty and Image On Purchase Intention
Private labels: The role of manufacturer identification, brand loyalty and image
on purchase intention
Cristina Calvo Porral, Mark F Lang,
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Cristina Calvo Porral, Mark F Lang, (2015) "Private labels: The role of manufacturer identification,
brand loyalty and image on purchase intention", British Food Journal, Vol. 117 Issue: 2, pp.506-522,
https://doi.org/10.1108/BFJ-06-2014-0216
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Abstract
Purpose – In today’s highly competitive consumer marketplace, developing and managing successful
private label offerings has become a priority for many retailing companies. The purpose of this paper is
to analyze product, retailer, and individual factors from the private label brand that influence
consumers’ loyalty and purchase intention; along with the influence of the manufacturer identification
on the product package on purchase intention.
Design/methodology/approach – A structural equation model is run on a sample of 362 consumers,
and a multi-group comparison is developed to study the role of manufacturer identification.
Findings – Findings indicate that the influence of private label image and perceived quality on
purchase intention are partially mediated by loyalty and moderated by manufacturer identification.
Results also reveal that store image and corporate reputation enhance private label image and
perceived quality.
Originality/value – This study provides useful insights to advance the understanding of private
label branding and guidance to retailers who should consider store image and company reputation
when designing branding strategies.
Keywords Retailing, Purchase intention, Loyalty, Private label, Manufacturer identification
Paper type Research paper
1. Introduction
Since the introduction of private label products, there has been a substantial increase in
their market share. The annual sales revenue of private label brands worldwide now
approaches one trillion US dollars (Kumar and Steenkamp, 2007; Wu et al., 2011) with
penetration highest in Europe (Hoch, 1996; De Wulf et al., 2005). This is due in part to
higher retailing concentration, private labels’ evolution in quality, and positive
reception by the majority of consumers (Ailawadi and Keller, 2004; Anselmsson et al.,
2007). Private labels brands, also known as store brands, retailer brands, and
distributor brands are owned, developed, and managed by one retailer (Kotler and
Armstrong, 1996). Retailers build and develop private labels in order to increase profit
and differentiation (Richardson et al., 1996; Wu et al., 2011), retain customers, and
increase market share (Hoch, 1996; Wu et al., 2011). As a result retailers have develop
their brands into an alternative brand choice available to customers by offering a wider
British Food Journal variety of private label products, improving their quality and image (Choi and
Vol. 117 No. 2, 2015
pp. 506-522
Huddleston, 2013). However, private labels brands were traditionally perceived as a
© Emerald Group Publishing Limited low-quality alternative with their primary appeal rooted in lower prices than
0007-070X
DOI 10.1108/BFJ-06-2014-0216 manufacturer brands (Bao et al., 2011).
Due to the growing importance of private label brands, conceptual and empirical Role of
research has expanded its focus beyond manufacturer brands to more deeply manufacturer
investigate these phenomena (Ailawadi, 2001; Karry and Zaccour, 2006). More
specifically, research on private labels addresses consumer proneness to purchase
identification
private labels compared to manufacturer brands (Hoch, 1996; Ailawadi, 2001;
Garretson et al., 2002); and is related to the variables influencing consumers’ attitude
and preferences toward private labels and their consumption (Baltas, 2003; Semeijn 507
et al., 2004).
New factors may become relevant to the private label brands’ success and growth,
since they have expanded their appeal beyond price consciousness (Vahie and Paswan,
2006; Wu et al., 2011). First, consumers increasingly use store image and retailer
corporate reputation as cues for reducing the purchasing risk associated with private
label brands (Semeijn et al., 2004). Second, it is becoming more common for the current
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H7 (+) H9 (+)
H0 (+)
H4 (+) H10 (+)
508 Store image PL image
H1 (+)
PL PL Purchase
H2 (+) loyalty H6 (+) intention
2.1.3 Private label image. Aaker (1991) conceptualizes brand image as the set of
evaluations and associations in consumers’ minds linked to a brand or product.
Favorable brand image has been shown to lead to higher loyalty and purchase
intentions generally (Yoo et al., 2000) and specifically in the case of private
label products (Wu et al., 2011). The reason may be that consumers use private
label image as an extrinsic cue for evaluating product quality and reducing the
purchase perceived risk (Wu et al., 2011). Therefore, retailers that can maintain
positive evaluations and associations that lead to a favorable brand image,
will develop greater consumer loyalty and purchase intentions toward their
private label brands (Wu et al., 2011). Therefore, the following research hypotheses
are posed:
H5. Private label perceived quality is positively related to private label loyalty.
between image and perceived quality and purchase intent. Thus, the following
research hypotheses will be used to test the nature of the mediating relationship of
private label loyalty:
H6. Higher consumer loyalty leads to higher purchase intentions toward private
label products.
H7. More favorable private label image leads to higher purchase intentions.
H10. Manufacturer identification moderates the influence of private label loyalty on 511
purchase intention.
3. Methodology
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BFJ
512
117,2
Table I.
and reliability
Factor loadings,
internal consistency,
Construct Indicators Cronbach α λ CR AVE
Store image Stim1 Store X offers a wide range of products 0.716 0.561 0.704 0.504
Chowdhury et al. (1998), Stim2 Store X offers products with high quality 0.876
Beristain and Zorrilla (2011) Stim3 The store X offers the services that I am looking for
(e.g. pay over time, free parking, products’ return, etc.) 0.534
Corporate reputation Rep1 Retailer X behaves in an ethic honest way 0.725 0.701 0.709 0.606
Handelman and Arnold Rep2 Retailer X is concerned with consumers’ health and welfare 0.706
(1999) Rep 3 Retailer X has wide experience in retailing 0.601
PL image Im1 I associate products of private label X to positive characteristics
(e.g. good prices) 0.788 0.756 0.794 0.506
Aaker (1991), Netemeyer Im2 Buyer of products of private label X know how to buy
et al. (2004) (buy with common sense) 0.701
Im3 It gives me confidence buying a private label X 0.798
Im4 The prices of private label X products are adequate and affordable 0.535
PL perceived quality Qal1 The products of private label X have a high quality 0.876 0.839 0.878 0.708
Dodds et al. (1991) Qal2 The products of private label X are reliable/trustworthy 0.879
Qal3 The products of private label X give me the result I am looking for 0.804
PL loyalty Loy1 I consider myself a loyal consumer to the private label X products 0.874 0.904 0.876 0.779
Yoo et al. (2000) Loy2 I will keep on buying store brand X 0.861
Purchase intention Pint1 I would buy private label X 0.903 0.754 0.908 0.768
Netemeyer et al. (2004) Pint2 I am likely to buy private label X 0.915
Pint3 It makes sense to purchase private label X instead of other
competing brands 0.948
4. Results Role of
4.1 Analysis of the measurement model manufacturer
Structural equation modeling was carried out through Amos to analyze the
relationships proposed in the model (Figure 1). Confirmatory factor analysis indicated
identification
a clear factorial structure with the considered constructs and items presenting
acceptable dimensionality and convergent and discriminant validity (Anderson and
Gerbing, 1988). Factorial analysis showed that all standardized factor loadings 513
are significant, exceeding the recommended minimum of 0.50, and with a reliability
level of 95 percent indicating appropriate convergent validity (Fornell and Larcker,
1981; Steenkamp and Van Trijp, 1991; Diamantopoulos and Siguaw, 2006).
To assess internal consistency and reliability, composite reliability coefficients
and analysis of the extracted variance were calculated (Table I ). Acceptable
Cronbach α values ranged from 0.716 to 0.903 (Anderson and Gerbing, 1988; Hair et al.,
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1998). Composite reliability exceeded 0.70, satisfying normal criteria (Hair et al., 1998),
providing evidence of convergent validity. The average variance extracted ranged
from 0.504 to 0.779, exceeding the recommended minimum of 0.50 (Fornell and Larcker,
1981; Hair et al., 1998), demonstrating discriminant validity. Finally, the acceptability of
the model was established (CFI ¼ 0.970, GFI ¼ 0.922, RMSEA ¼ 0.041), considering
that the measurement model shows an appropriate fit as the corresponding critical
values are exceeded (Hair et al., 1998, 2006).
BFJ
514
117,2
Table II.
adjustment indexes
Structural modeling
Absolute fit measures Incremental fit measures Pars.
Structural model χ2 df p GFI RMR RMSEA AGFI NFI IFI TLI CFI Normed χ2
Direct 247.496 97 0.001 0.922 0.056 0.066 0.891 0.928 0.955 0.944 0.955 2.552
Partial mediation 295.180 125 0.001 0.918 0.054 0.061 0.888 0.929 0.958 0.948 0.958 2.361
Full mediation 336.325 127 0.001 0.907 0.065 0.068 0.875 0.919 0.948 0.937 0.949 2.648
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Causal relationships Direct effect model Partial mediation model Full mediation model
β (standardized coefficients) Path β t β t β t
(standardized
coefficients)
structural model
Table III.
Results of the
Role of
515
BFJ Following from these antecedent relationships, the relationships between private label
117,2 image and perceived quality with purchase intention are both significant: private label
image ( β36 ¼ 0.991**) and perceived quality ( β46 ¼ −0.255**), supporting H7 and H8.
The relationship between perceived quality and purchase intent is in the wrong
direction which was unexpected and against H8. This may be because, as quality
perceptions increase, perceived or expected price levels increase for consumers
516 and the obvious attractiveness of private label products begins to diminish. As
perceptions of quality increase, consumer intentions to purchase private label products
may decrease as they are compared more directly and equally to manufacturer brands
on quality and price dimensions. This effect may be exacerbated by retailers who
adopt a segmented or tiered strategy with premium quality private label products at
premium prices.
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5. Discussion
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Private label brands have been become a prominent and important strategy for
retailers today. As such, the understanding of how private labels are perceived and
evaluated and how they influence consumer behavior can benefit from incorporating
conceptual elements from the brands and their manufacturers. To advance this stream
of research, the objectives of this paper are to introduce factors from the branding
literature, integrate them with established private label factors, and assess their
influence on purchase intent of private labels. To accomplish these objectives, product,
retailer, and individual concepts and measures related to image, reputation, loyalty, and
manufacturer identification were examined in an integrated framework.
mediated effects. So, one major contribution is the finding that private label loyalty
plays a partially mediating role in the relation between private label image, perceived
quality, and purchase intentions. In our study we first considered the relationship
between private label loyalty and purchase intention, and subsequently we focussed
on the indirect relationships between private label image and quality perception on
private label purchase intention. The mediation of private label loyalty outperforms the
direct effects of private label image and quality perception on purchase intent; while
showing the positive influence of private label loyalty on purchase intention.
In the final analysis, the role of a product-level concept of manufacturer
identification was examined. The final contribution is that our findings reveal that
the presence of manufacturer identification moderates the effects of private label image,
private label quality perception, and loyalty on private label purchase intention. This
finding supports the hypothesis that consumer proneness to purchase private label
products is different for private label brands providing manufacturer identification,
compared to private labels without this information. When a private label brand is
associated with a specific manufacturer, consumers may perceive this as an implied
guarantee, and these private labels are perceived as offering better quality. So, the
presence of the name or identification on the private label product package has
conferred these brands a degree of security and protection against perceived purchase
risk (Gonzalez-Mieres et al., 2006). According to McNeill and Wyeth (2011), customers
tend to choose familiar brands and branded products rather than unfamiliar
brand names, making manufacturer recognition and familiarity a key variable in the
decision-making process.
This research has several limitations which provide opportunities for future
improvements and avenues for further research. The generalizability of our results
is limited by the fielding of the research in one specific European market, so
a cross-cultural study of these relationships would improve generalizability. Moreover,
it would be valuable for further research to incorporate additional variables or
dimensions into the model related to private labels; and also research differences
among product categories or retailer formats. Finally, future research could also
examine additional dimensions of the manufacturer identification construct.
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