An Investigation Into The Consumer Buyer Behaviour Of Private Label Products Within The UK Supermarket Industry.

The UK supermarket Industry

Supermarket retailing is dominated by 4 main retailers, ASDA, Tesco, Sainsbury’s, and Morrisons that take a combined share of 64.3% of the market (Mintel, 2014). However the landscape is changing and discount retailers like Aldi and Lidl becoming increasingly prominent within this sector taking 7% and 4% of the market respectively, thus broadening the spectrum of choice for consumers (Euromonitor International, 2014). Many customers are making use of this wider variety, whereby regardless of improving consumer sentiment after the recession, consumers haven’t lost frugal habits with 55% of consumers still looking out for special offers when doing their weekly shop. (Mintel, 2014) 

Price competition between the major retailers has kept market value growth low, it is expected that the market will grow by only 1.5% in 2014, and forecast to grow by 1.7 percent in the year of 2015 (Mintel, 2014). Growth levels are weak and also considering low inflation level, keeping food and beverage products at lower prices. This paper shall investigate how price deals impact consumer buyer behaviour, as an indication of their effectiveness in this competitive market.

The grocery retailers in UK are operating in a challenging trading environment led by short term marketing activities, through coupons mainly but also through price promise programmes like Tesco’s Price Promise or Sainsbury’s Brand Match, which are aimed at retaining the customer and preventing them from shopping elsewhere (Euromonitor International, 2014). This helps counter the rapid growth of discounters like Lidl and Aldi.

The private label foods market

In 2013, the market for private label food and drink is projected to reach £50 billion, which is a 19 percent increase from 2008. It is largely in line along with the wider market that with grew by 20 percent over the same period (Mintel, 2014). This also conforms to changing consumer attitudes after the recession, in the year of 2013, almost 50 percent of consumers have increased the private label goods amount they have bought. Now, private label products are embedded into grocery shopping habits of consumers with about 80 percent of customers purchasing private label food or non-alcoholic drink in the year of 2014 (Mintel, 2014).

According to Mintel (2014), he conducted a survey and showed that 55 percent of respondents indicated that price could be the main factor that will encourage them to purchase more private label products. Notably, the usage of value private label products is lower than standard private label measuring 36 percent as well as 64 percent respectively, indicating shoppers would not typically select low prices at any cost. Rather, product must deliver on an expectation of quality for being perceived to offer good money value.

According to Ailawadi et al. (2008), a study found that perceived and actual quality of private label differed to consumers. The majority of shoppers note that cheaper prices and better quality will encourage them purchase more private label products, and put the burden on retailers keeping trying to enhance the private label perception in these two areas (Ailawadi et al. 2008).

1. Psychographics

According to Mittal (2016), psychographics refer to the examination of people in accordance with their attitude, aspiration and other psychological aspects. It is about the personality, attitudes, opinions, values and interest of individuals. There are various elements which are part of this variable but this research will only focus on most important and relevant ones for this research. This research emphasises on self-perception of smart shoppers, impulsiveness, brand perception and brand loyalty which is developed for private label products of super markets (Kuesten et al., 2016). Researchers has identified various psychographic variables which they have also studied in their studies. Most commonly used psychographics are perception of being smart shoppers and their impulsive behaviour (Mishra, 2016; Schlegelmilch, B.B., 2016). The studies like Evans (2017) has mentioned that perception which is built towards a certain brand is also part of psychographics. Similarly, loyalty depicted by consumers is the attitude which is demonstrated by individuals (Iversen, Hem and Mehmetoglu, 2016).

2. Private label products of super markets

Private label products are manufactured by one organization but they are offered to customer under a particular company’s brand (Reinders and Bartels, 2017). These are also known as ‘phantom brands’ and these are more common in supermarkets. The range of products offered under private label are vast. These products are also lowest cost brands (Wu, 2016).

3. Consumer Behaviour

Consumer behaviour can be viewed as a process that involved groups or individuals select, purchase, use or dispose of services, products, experiences or ideas to satisfy their desires or needs (Solomon et al, 2013). Now, marketers recognize that consumer behaviour is a process, not just what happens at the point of purchase for services or goods (Solomon et al, 2013). An important facet to study would be consumer buyer behaviour in particular.

4.  Consumer buyer behaviour process

Every day, consumers make many buying decisions, and the buying decision is the main focus of marketer’s efforts. Consumer buyer behaviour looks at the buying behaviour of final households as well as consumers that buy services and goods for personal consumption (Kotler et al, 2013, P.159). It is essential for marketers to understand the factors that impact consumer decision making for encouraging the end consumers to make a purchase. However, it is not easy as every consumer is affected, as internal and external factors could be the reason to influenced the consumers.

Figure 1. The consumer purchase behaviour’ stimulus-response model (Kotler et al, 2013)

This model indicates a stage by stage process. It shows that the external motivators - the environment, impact on the internal stimuli before leading on to a buyer response.  Marketers want to understand how the stimuli are changed into responses in the consumer black box. It is referred to as the black box as it describes the reasoning behind behaviours, which is a difficult task for marketers to ascertain. (Kotler et al, 2013)

Trying to understand consumer behaviour on buyer to buyer basis is difficult as every buyer is different. Therefore consumers tend to be profiled into segments of a market, these include: demographic, geographic, psychographic and behavioural. (Baines et al, 2011)

Myers (1967) found that it is best classified that consumers by their perceptions towards private?label instead of individual characteristic. The private?label buyers were varied across all socio demographic groups concluded that differences in behavioural as well as attitudinal variables were better predictors. Therefore, this research shall be mainly looking at the psychographic profiling

Understanding the decision making process is another crucial aspect that needs to be further inspected within this study.

5. The decision making process

For the purpose to gain an understanding as to why consumers purchase private label goods, marketers need to take empathetic stance and understand the consumer’s perspective when purchasing products. Howard and Sheth theorised that buying behaviour is repetitive, whereby consumers establish decision making processes, taking into consideration the product and the likely frequency of their purchase (Howard & Sheth, 1969).The buying decision process of a consumer entails the following five stages:

Problem Recognition: This stage happens when perceived difference between an individual’s desired state and reality (Fill, 2009). It is during this phase that the consumer understands that they need a product.

Information Search: Within this period, the consumer will search for information on the sought after product. Should they find a product that meets their needs, they purchase the product. However, if not then additional information shall be sought (Fill, 2009).

Alternative Evaluation: Here additional products which could satisfy their needs are examined. The consumer weighs the advantages and disadvantages of each product so that they are able to make an informed decision (Fill, 2009).

Purchase Decision: Having evaluated each option the consumer’s intent to purchase is developed. This can be done my matching motives and selection criteria to the product attributes (Fill, 2009).

Post-purchase Evaluation: This stage takes place after the product has been purchased. The consumer establishes whether this product satisfies their original need and forms opinions and attitudes for the future (Baines et al., 2011)

The above-mentioned model outlines the stages that lead to the purchase decision. Howard and Sheth identified that for frequently purchased items, like grocery products, the stages that lead to a decision are short. Similarly when consumers are confronted with repetitive brand-choice decisions, they store relevant information in order to establish a routine (Howard & Sheth, 1969).

The researchers also recognised that it is important to observe the changes over time to decision making process as a result of the repetitive nature of certain products. This is done by looking at how a combination elements impact the decision making, akin to that of this research (Howard & Sheth, 1969).

However this model conveys that consumers are rational beings that solve problems to make purchase decisions. This neglects the emotional aspect of purchasing products, including subjective characteristics like experiencing the joy or elegance that consumers attribute when purchasing a product (Holbrook and Hirschman, 1982). Further to this the role of impulsiveness, brand perceptions, and brand loyalty shall be elaborated upon as part of this and are outlined in a conceptual framework below.

6. Conceptual Framework Development

According to McDonald and Dunbar, (1998), in today’s day and age, despite the importance of psychographics, many service companies and consumer product primarily focus on socio-demographics. It is difficult to offer directional hypothesis to analyse consumer buyer behaviour, hence research is quite ambiguous, often encompassing a range of variables that are not very useful to retailers (Baltas, 2003).

According to Mukund (2003), Global retailers like Tesco use socio-demographic as well as psychographic data to create private label brands’ sub segments. For example, Tesco Finest targeted the consumer on up-market segment and Tesco Value targeted the low end market. Retailer seems to adopt a fragmented strategy. According to Mukund (2003), increasing the quality, diversity and package of their up market private label brand links to compete with that national brands. While private label brands’ the value range reached out to constrained segment of socio economically.

Taking into account the theoretical aspect of consumer behaviour as explained from figure 1 and the aforementioned, this framework has been adapted to fall within the scope of this research from (Shukla, et al., 2013). It proposes that the following psychographic variables: smart shopper, impulsiveness, self perceptions brand loyalty and brand perception to have effect on consumer buyer behaviour of private label brands. Also, this study looks to profile the consumers that purchase private label products by looking at their behavioural trends, allowing retailers to better promote their products.

5. Hypotheses development:

5.1.Impulsiveness and smart shopping perception

According to Inman et al., (2009), in today’s retail market, time-poor consumers are acting impulsively. Impulsive buying behaviour is characterised by thoughtless actions measured by quick acting. Impulsive consumers seem unconcerned about how much they spend and tend to do not plan their shopping (Martos-Partal & Gonzales-Benito, 2013)

Mukund (2003) suggested with retailers like Tesco offering own label brands on the dimensions of quality, packaging and price, few factors differentiate between the two types of brand compete along with national brands. By taking into account the similarity between the two types of brand, referring back to the decision making process,  the information gathering involved will reduce, necessitating the conditions for impulsive behaviour when buying private label goods.

Although on the other hand, impulsiveness is low when the thought required in the decision-making process are high (Burton et al. 1998). The irrespective of improving consumer sentiment, 55% of consumers still looking out for special offers when doing their weekly shop (Mintel, 2014). This specifies that consumers are actively seeking information and looking for alternatives which hinders impulsiveness, and boosts the consumer’s smart shopping perception.

Smart shopper self-perceptions take into account how consumers that place thought into their purchases, feel about themselves after making a purchase intention (Shukla, et al., 2013). With private label brands promoting their similarities to national brands, it might impact the smart shopper self-perceptions of those consumer that is oriented to private label brands, as this kind of consumers are offered with advantageous with lower price (Shukla, et al., 2013). So it can be observed that both impulsiveness and smart shopping perceptions are important for consumer buyer behaviour.

5.2.Brand Perception and brand loyalty

This study examines the cues in determining perceptions of private label products. The consumer’s evaluations of private label products are mainly derived from extrinsic cues as opposed to intrinsic ones (Richardson et al. 1994). The extrinsic cues refer to the price, quality, packaging that relate to a product which are elements of the brand perception.

Palmeira and Thomas, (2011)  found that consumers make decisions frequently on limited information basis. The consumer needs to select from several product categories and options, with some products known and others are not. Some of goods have been famous to the customer, however others are not. A common insinuation is that expensive products are viewed with higher quality. Therefore, when encountering two products from the same category, consumers infer more expensive one is higher quality but with different prices markedly (Bettman, 1974). Studies indicate that compared with national brands, private label brands suffer from an image of low quality (Choi & Coughlan, 2006). Likewise, the brand loyalty for certain international and national brands prove harmful for the private label brands; as this results in less preference for these brands. Consumers become more likely to select those brands to which they are loyal from their previous experience (Reinders and Bartels, 2017). So this already developed loyalty is also important for determining the consumer behaviour for private label products.

5.3.Socio-demographics

Research studies like Dubé, Hitsch and Rossi (2016) has mentioned that the behaviour of consumers is more likely to be influenced with the age, gender, and income and education level. Kumar, Gurunathan and Reddy (2016) said that females are more likely to be attracted towards private label products as they are more cheap products. Mehra (2016) said that younger customers are more brand conscious therefore their orientation for renowned brand is always higher as compared to older customers. Choi (2007) mentioned that education and income level also have significant effects on consumer buying behaviour. Therefore, it is hypothesised socio-demographics act as the moderator.

H1: Psychographics (i.e. impulsiveness, smart shopper self-perception, brand perception and brand loyalty has significant influence on the consumer buyer behaviour of private label products.

H2: Socio-demographics moderates the relation between psychographics and the consumer buyer behaviour of private label products. 

This paper investigates the role of psychographics in the purchase of private label products within the UK supermarket industry. The reasons for analysing the interrelationship between psycho graphics as well as consumer buyer behaviour are outlined below.

1.1Research gap

Firstly, profiling consumers through socio demographics is crucial to assess since they are readily accessible and available data. Also, they can profile to markets segments with moderate ease when compare with other segmentation variables. However, in order to target consumers neglecting psychographic profiles, retailers focus on using sales data with demographics. According to Hyman et al (2010), prior studies focussing on psychographics have not examined how they interact in consumers’ decision making processes.

Secondly, the majority of researches focus on private label brands are mainly centred on US. This is particularly of concern as many other countries have developed market for private labels. In a study that reviewed literature concerning private label products found that of 45 out 61 empirical studies looked at were US based. This clearly suggests that geographic bias as well as more research needs to be conducted.

According to Shukla (2010), consumer culture researchers put forward to understand country speci?c factors are in?uential in developing the socio-demographic signi?cantly and make up of consumers purchase behaviour (Shukla, 2010). Therefore, it showed that consumers of US might not hold in countries like UK, especially considering that market conditions are different. The aforementioned reasoning for this research justifies that it is timely to revisit the consumer buying behaviour of private label products within the UK. Further to this, the research studies conducted by Dubé, Hitsch and Rossi (2016), Seock and McBride (2017), Chou, Chou, Wang and Wang (2017) and Mehra (2016) [See table 1] has also highlighted the research gap of studying the private label products with more factors like psychographic, therefore this research will also minimise the research gap. 

Table 1: Key Literature

1.2Research question:

What influence do psychographic variables have on private label products’ consumer buyer behaviour within the UK supermarket industry?

1.3Aims:

To examine the private label products’ consumer buyer behaviour within the UK supermarket industry.

1.4Objectives:

• To review existing frameworks that define consumer buyer behaviour
• To identify consumer’s impulsiveness and self-perceptions towards private label products
• To examine the brand loyalty of consumers to brands  
• To establish the influence of brand perception on buyer behaviour of private label products.
• To understand how socio-demographic factors could moderate the relationship between psychographic factors and consumer behaviour for private label products.

For this research, the aim is to gain insight into individual opinions and behaviours, to identify factors intervening in the purchase decision process. This research shall use positivism as a philosophical approach. A positivist approach refers to the collection of data from an observable reality so therefore by looking at patterns and trends researchers can produce rigid generalisations into their area of study (Saunders, et al., 2012, p. 134). Due to the quantitative nature of this study it would be necessary to undertake this approach as it enables the researchers to identify patterns and trends from a study adopting questionnaires.

However, Interpretivism advocates that it is necessary for the researcher to comprehend the unique differences between humans and the distinctive set of characteristics that collectively influence social behaviours (Saunders, et al., 2012, p. 137). This approach is normally used with qualitative analysis, as it allows the researchers to gain a deeper understanding of the research area, and promotes the distinctiveness of each respondent.

The study looked to investigate research hypothesis using primary data. With primary research, the data is relevant as it is tailored to meet the research aims and objectives, improving the external validity of the research (Saunders, et al., 2012). With secondary research, it can be challenging to find appropriate data. In this case, the bulk of prior research looks at the buyer behaviour of private label products from the US. It is difficult to generalise two distinct populations that live under different market conditions, highlighting the necessity to carry out primary research.

The data for this study will be gathered using self-administered questionnaires following the methodology of earlier studies, (Burton, et al., 1998; Ailawadi, et al., 2001; Boutsouki, et al., 2008) as they are inexpensive and can be collected within a relatively short period of time.

Questionnaires will be used in this research as it enables the dissimilarities in different factors to be recognised and defined (Saunders, et al., 2012, p. 416). When applied to this specific research, it outlines the psychographic variables that impact on the buyer behaviour of private label. Questionnaires could also be used to examine and explain relationships between variables. Although, questionnaires do not allow participants to give adequately detailed answers and express their feelings. Hence, close ended questions by adopting a 5 point scale from strongly disagree to strongly agree are used to overcome this. Adopted scale will be used for this research.  The details about items are provided in appendix 1.

The selected sample for this study will be 100 participants, this amount will be selected as it is the most practical for the time frame allotted and allowed to make sufficient conclusions useful for this study. The sample size needed will be collected within a 2 week time frame on the high street outside 2 major supermarkets. Participants were approached at random during different times of the day, so that the final sample was more aligned to the population.

IBM SPSS Statistics 20 will be used to analyse the quantitative data collected from the questionnaires on consumer buyer behaviour. It is an effective tool that can quickly and accurately perform a range of statistical tests and produce graphs (Saunders, et al., 2012, p. 474). This enabled the data to be interpreted with more statistical sophistication than an alternative program such as Microsoft Excel.

For this study, ethical approval will be needed in order to begin researching which ensured a strict set of rules and procedures will be followed to protect the researchers and respondents alike. All participants will be provided with a participant information sheet, so that the respondents could get an understanding as to what research is being undertaken. Participation will completely voluntary, this allowed respondents to freely answer the questionnaire being under no pressure, this help sustain reliability of the results. Participants will be informed that no personally identifiable information is collected which could be an invasion of their privacy. They have the right to withdraw at any time and do not have to answer questions they felt uncomfortable with.

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Appendix A

Perception of smart shopper - Gómez-Suárez, Quiñones and Yagüe (2016)

• When I go shopping, I take pride in making smart purchases.
• Making smart purchases makes me feel good.
• I get a real sense of joy when I make wise purchases.

Brand loyalty – Petzer et al., (2014)

• I consider myself loyal to this brand
• I buy this brand whenever I can.
• I buy as much of this brand as much I can.
• I feel this is the only brand of this product I use.

Brand perception – Barajas-Portas (2015)

• This brand pays attention of my needs.
• The products of this brand are of high quality.
• The products of this brand are useful.
• This brand induces feelings and sentiments
• I have strong emotions to this brand.
• This brand is an emotional brand for me.
• This brand makes me feel good.

Impulse buying behaviour  - Youn and Faber (2000)

• I go shopping to change my mood.
• I feel a sense of excitement when I make an impulse purchase.
• After I make an impulse purchase I feel regret.
• I have difficulty controlling my urge to buy when I see a good offer.
• When I see a good deal, I tend to buy more than that I intended to buy.

Buying behaviour for PLP. – Chan  and Lau (2002)

• Over the next one month and for the purpose of personal use, I will consider buying private label products.
• Over the next one month and for the purpose of personal use, I will consider switching to other brands which are private label
• Over the next one month and for the purpose of personal use, I plan to switch to a brand of private label product.