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Student’s family name: First names: Student ID No: Course: Tutor: Dissertation Title:
Mohammed Fazlur 0163GGGG1106 M.B.A Prof. Dennis Adcock
A study of buying behaviour in the detergent market of UK. Why some consumers purchase Manufacturer’s Brands when similar quality and low price Retailer’s Own Brands exist.
Declaration I certify that this dissertation is my own work. I have read the University regulations concerning plagiarism.
I am willing to allow Coventry Business School to use my dissertation as a sample for future students.
Signed (Mohammed Fazlur Rahman)
Author would like to express his sincere gratitude,
appreciation and a message of thanks to the Dissertation Supervisor Prof. Dennis Adcock for providing valuable guidance, supervision, mentoring as well as encouragement for carrying out research for the topic “A study of buying behaviour in the detergent market of UK. Why some consumers exist”. Author wishes to thank Dr. Rajendra Kumar and Dr. Peter McGee for providing valuable comments, support and guidance through out the course and research. Special thanks to the staff and management of London School of Commerce for providing an opportunity to enhance my career with MBA and establishing this research. A message of thanks is also conveyed to Coventry University for the opportunity provided, to conduct research, by accepting the research proposal and providing Athens login, a data base of literature which played a significant part in gathering secondary data for the research. Author conveys sincere thanks to his family and friends for their life-long support. Author specially owes his life to purchase Manufacturer’s Brand (MB) when similar quality and low price Retailer’s Own Brand (ROB)
motivation through out his life. The contributions of all the above have been very crucial in carrying out this research.
Contents List of Tables and Figures Executive Summary Chapter 1: Background and Objectives Topic of Research, Research Objectives, Problem Statement: Chapter 2: Literature Review Introduction, Brand, Brand loyalty, Brand Equity, Advertising, Consumer Buying Behaviour, Environmental Influences, Culture, Social Class, Groups/Family, Situational factors, Marketing efforts, Individual Influences, Psychological factors, Demographics, Life style and Economic situation, Decision Making Process, Problem or Need recognition, Information Search, Evaluation of Alternatives, Purchase decision, Post purchase behaviour, Marketing Mix: 7 P’s, 1) Product, 2) Price, 3) Place, 4) Promotion, 5) People, 6) Physical evidence, 7) Process. Chapter 3: An overview of detergent market. Detergents, Retailer’s Own Brand (R.O.B), Why retailers display MB(s), ROB Growth in UK, Tesco, Sainsbury’s, Asda, Five Forces model of ROB, Competitive Rivalry within a market, Barriers to entry, Threat of substitutes, Bargaining power of Suppliers and Bargaining power of Buyers.
Page No. i iii 1 2 3 4 9 10 12 13 14 15 16 17 19 21 22 23 27 28 29
Chapter 4: Research Plan Introduction. Choice of product (Brand). Coupons. Quality. Importance of store environment: Location. Secondary data. Shelf Display. sources of information. Education. and Personal Reflection 68 69 . Newspaper. pack size. Promotion offers. Price. Questionnaire. Sampling. SWOT Analysis of ROB(s) Strengths. Factors influencing consumer behaviour: brand. Research GANTT Chart. Opportunities. Barriers to entry. Research on Animals. Age group. Influence of media advertising: Television. Work. In store promotions. Price. Questionnaire Analysis: Frequency of detergent purchases. Family status. Sponsorship and Co-branding . Bargaining power of Buyers. feelings about the product. Research Time Table. Brand Leverage. Validity. Pilot study. Demography: Gender. Reliability. Opportunities. Research Ethics. Atmosphere. Internet. Bargaining power of Suppliers. Unilever. Chapter 5: Data Analysis. Radio. Cleanliness. Financial Resources. Threat of substitutes. Five Forces model of Manufactured Brands Competitive Rivalry within a market. Quantity. Price discounts. Global Expertise. Limitations of Research. Magazine. Data collection methods. Searchable in store. Reason for purchase. Sign Boards. Primary data. Research Design. Design.SWOT Analysis of ROB(s) Strengths. Packaging. experience of switch. Threats Manufactured Brand (MB) Procter and Gamble (P&G). Weakness. 30 31 32 35 38 38 39 40 40 41 42 43 44 45 48 49 50 50 51 53 54 55 57 58 59 61 62 63 65 66 Chapter 6: Conclusions Recommendations. Weakness. Threats. Brand share.
3. Fig 4.K.2.31 The 7 P’s of Marketing Mix Figure 3.21 Ariel product benefits Fig 184.108.40.206 Buyer Decision Process Table 2.41 P&G share of Clothes washing detergents in UK Figure 3.2.1 The Research Process Page 2 2 9 10 14 14 15 17 23 23 24 24 25 27 33 34 34 35 36 37 38 43 . Fig.70 Porter’s Five forces model (MB).21 Segmented market share of clothes washing detergents in UK Fig.2.2.51 Maslow’s hierarchy of needs Fig 2. Fig.61 Brand shares of Clothes washing detergents in UK Fig.25 UK Differentiation % Sales in ROB.23: Source of Own Label Growth Fig.1 Price comparisons of Detergents in U.2 A frame work of Consumer Buyer Behaviour Figure 2.30 Washing up liquids Figure 3.Chapter 7: References: Appendix 1: Questionnaire 72 (1-3) i List of Tables and Figures. 3.22 UK House hold detergent expenses.2.2.2. Fig 3. Fig.2. 1.24: Retailer concentration of the most developed ROB Markets Fig 3.51 Unilever shares of Clothes washing detergents in UK Figure 3. Table 1. 3.32 Market shares of Clothes washing detergents in UK Figure 3.31 Market size of Detergents in UK Figure 3.2. 3.22 ROB growth in UK.2. Fig. 220.127.116.11 Porter’s Five forces model. Fig.1 Diffusion of Innovation model.2.
Fig 5. 54 55 55 56 56 57 57 58 58 59 59 60 61 61 62 63 63 64 64 65 66 66 66 67 . Fig 5. Fig. Fig 5. Fig: 5. Fig 5.9 (f) Influence of Internet sign boards. Fig 5. Fig 5.12 Age.6 Switch between brands and the experience of the same.11 Gender.9 (4) Influence of Magazine advertising. 45 49 50 50 51 51 52 52 53 53 54 ii Fig: 5. Fig: 5.10 (b) Store Design. Fig 5.8 (a) Importance of Brand. Fig.3 Reason for purchase.8 (f) Importance of Promotion offers.2 Pack size purchased. Fig 5. 5.2 Consumer’s choice between MB and ROB.7 Sources of Information Fig 5.8 (d) Importance of Quality. Fig 5. Fig.9 (c) Influence of News paper advertising. Fig: 5.13 Education.9 (e) Influence of Internet advertising.10 (e) Shelf displays.1 Choice of the product or brand. 5.8 (e) Importance of Packaging. Fig 5. Fig 5.10 (f) Searchable in store.9 (a) Influence of Television advertising. Fig.2 Survey Route. Fig 5. Fig 5.8 (h) Importance of Coupons. Fig: 5.8 (c) Importance of Quantity.8 (g) Importance of Price Discount.1 Frequency of detergent purchase Fig 5.5 Consumer response about the product in use.4.8 (b) Importance of Price. Fig 5. Fig 5.14 Work pattern.4.Table 4.10 (c) Store Atmosphere. Fig: 5. Fig 5.10 (d) Store Cleanliness. Fig 5. Fig: 5. 5.10 (a) Store Location. Fig 5.9 (g) Influence of In-store promotions. Fig 5.9 (b) Influence of Radio advertising.5. Research GANTT Chart Fig 5.
usually not manufactured by retailer. 67 iii Executive Summary The report is about consumer buying behaviour. whether it is correct or otherwise requires research. The author has used two specific terminologies during the report. for example ‘Tesco washing powder’ is sourced. not manufactured by Tesco. for example ‘Ariel’ detergent is manufactured. Hence through literature review author presents arguments based on different authors. academics and researchers on the relevance of these focus questions. Consumers perceptions influencing purchase of MB(s) against ROB(s) like ‘high price_ high quality’ and ‘low price-low quality’. The report starts with background and objectives where author explains the reasons for topic selection and objectives of the research.Fig 5. market share statistics were used to highlight the . Retailer’s Own Brand (ROB) the private brand or own label of a retailer. Manufactured Brand (MB) refers to brands which are supplied by manufacturers directly.15 Family status. factors that influence consumers towards MB(s) when less price and similar quality ROB(s) exist. owned as well as supplied by Procter and Gamble (P&G). The topic reflects an assumption that consumers choose MB(s) against ROB(s). further what factors influence consumers towards such decisions also need investigation.
domination of the market by MB(s). The importance of 7 P’s of marketing and how significantly it is used to influence consumer perceptions and decisions. the forces influencing ROB market. In order to grow what strategies are applied by ROB(s). the previous growth of both of these segments can give a likely indication about the same. It is quiet possible that consumers change their preferences between MB(s) and ROB(s) in the future leading a change in market share structure. creation of brand equity through advertising and other promotional tools have been discussed. while the growth trends reflect the future prospects and hence future consumer preferences. These notes present a crucial understanding of consumers perceptions about ROB(s). The ROB(s) market share against MB(s) present the statistics required to understand the current consumer preferences. market growth and strategies of some of the major ROB(s) (Tesco) and MB(s) (P&G and Unilever). iv The overview of detergent market in UK empowers the reader about relevant information regarding the total market share. The study of ROB market share and growth reflects the current standing (Market share) as well as the indicative growth trends. the reasons why they display MB(s) instead of only ROB(s).e. brand share. market growth explains the current market situation regarding MB(s). helps in further understanding the area of study. The analyses of ROB market is further highlighted through 5 forces model. market share. why consumer preference is high for MB(s) against ROB(s) are the key areas discussed in this topic. i. importance of brand and brand loyalty. the strategies they have adopted to offset threats of low price ROB(s). friends and society) as well as their significance in influencing decision making process. areas ROB(s) are lacking behind MB(s) and how ROB(s) are increasing their . SWOT analyses present the internal capabilities of ROB(s) against external influences. The study of MB(s) with respect to market share. The report presents relevant areas of interest about prominent MB(s) like P&G and Unilever. Maslow’s hierarchy of needs and buyer decision process model presents a better understanding of consumer influences. Consumer buying behaviour model is described to explain key factors like Individual(personal) factors and External factors (family.
How ROB(s) can over come their weakness to compete with MB(s) and some of the strategies that ROB(s) can adopt are also discussed. what factors were considered during questionnaire design. The topic on research methodology presents the methods utilized for conducting the research as well as research design. The conclusions and recommendations chapter presents the final conclusions about the research. focus was drawn towards the significance of each question on consumer influences. Data analyses presents the questionnaire analyses of all the 15 main as well as other sub questions. penetration and growth.e. pilot test. i. In the end there is a list of references in alphabetical order and appendix contains the questionnaire format used for survey. The main factors that influence consumers towards MB(s) against ROB(s) were concluded in detail.The analysis of MB market is further highlighted through 5 forces model. why it was done so as well as the hurdles faced during the surveys. and the indicative future trends about the competition between MB(s) and ROB(s). sponsorship and co-branding strategies by MB(s) to influence consumer perceptions and behaviour towards MB(s). With the aid of pie diagrams. the lessons learnt and how this information will be applied by author for his future endeavors. Apart from that conclusion also presents the likely future trends based on previous year’s growth. SWOT analyses present the internal capabilities of MB(s) against external influences. The personal reflections chapter is based on author’s personal reflections observed through out the research. The recommendations focus on how ROB(s) can increase their market share. financial resources. In the end of this chapter the limitations of this research were also discussed. v Questionnaire design presents the key focus areas like. . Sampling explains in detail about the methods used to select the sample for survey. reliability and research ethics. the precautions taken about accuracy. the forces influencing MB market. tables and conclusions about each factor. This chapter highlights the utilization of factors like global expertise.
Chapter 1: Background and Objectives. The study of consumer perceptions regarding MB and ROB empowers the author for future endeavors. Consumer behaviour about ROB compared to MB. adults and amateurs. in 5 different countries. Research Objectives: The objectives of research are to study the consumer perceptions about brands. Topic of Research: 1 The research topic was chosen by the author according to the interest on the relevant subject i. These were determined and focussed on the relevance of the topic rather than studying wider areas i. models and analysis. to study what factors of buying behaviour influence consumers towards selection . hence the research tends to present a clear understanding of clothes washing detergents in UK from consumer’s perspective. The purpose of this research is based on consumer perceptions about brands in the UK market. This research also considers different categories of consumers. male and female. Recommendations for MB(s) and ROB(s).e.e. Different aspects of consumer behaviour including the reasons for choosing certain detergents and consumer response to stimuli. and their perceptions about detergents available in the UK market. Relate other theories.g. Author held various sales positions in different organizations during past 12 years. how they impact on the market. consumer buying behaviour. e. The following areas will also be considered. working and not working. Variations in perceptions about ROB and MB.
the reasons behind market domination by MB(s).88/Kg). ROB costs £0.99 £5. BOLD Automatic Washing Powder 2.98 £5. Procter & Gamble or P&G (47%).K (Tesco 2007 & Sainsbury’s 2007) (The prices stated above were checked at “Tesco Price Check at www. during this period of 4 months. ROB Budget Washing Powder 3 Kg.com” on 23-10-2007 and11-06-2007.41 £1. the table shows price comparison of 3 brands (Ariel & Bold belongs to P&G and Persil is with Unilever in UK) against Retailer’s Own Brands.41 Fig.41 £1.98 £1. This leads to an investigation about current market share between MB(s) and ROB(s).85 Kg. clothes washing detergents are valued at £1.98 £5.98 £5.85 Kg. 1. Tesco Sainsbury's price price Asda price Morrisons price £5.1. together they control more than 3/4 th market share.98 £5.47/Kg. while MB costs in the range of £1.between MB(s) and ROB(s).99 £5.10 per kilogram (Avg. Problem Statement: The total market size of UK detergents was valued at £2 billion in 2006.99 £5. £1.19 billion. growth trends and speculations about future indicative market growth.£2.41 £1. discuss existing theories.98 £5.) As shown in figure 1. Unilever (30%). prices remained constant. ROB(s) are estimated to be around 17% and the rest 6% by other companies.2. the following conclusions can be drawn (National Household Statistics 2006) .00 £5.2. The total number of households in 2006 were around 25 million in UK.98 £5.tesco. With the average household purchasing 1 Kg of detergent in a week. PERSIL Automatic Washing Powder 3 Kg. (Mintel 2007) 2 Photo Image Description ARIEL Bio Washing Powder 2. There are 2 major MB(s) in the detergents market of UK.98 £5.67.1 Price comparisons of Detergents in U. published literature and findings of researchers.
hence consumers still perceive it risky to switch over to ROB. Literature review enables the researcher to explore all important variables.Description MB ROB Savings Detergent / Week £1. pulling customers towards its products as well as encouraging customers to pull the product off shelf. the bad experience about ROB in detergents as well as other categories.03 £6. including those having repeated impact as well as influence over the problem.11/month) by switching to ROB and in total the whole of UK can save around £2 billion.41 Detergent / month £8. critical analysis in terms of debate and arguments about the merits as well as de-merits of the published records and establish relations between this secondary information with primary data collection. companies create a ‘pull’ effect.11 Detergent / Year £97. pull customers towards purchase of the product which in turn pushes the product off shelf.22 UK House hold detergent expenses. The likely effect of a bad purchase and the resulting ill effects on the clothes could also add up for this perception.47 £1. There is a need to know what work has already been done.32 Table 1. sub-brands particularly benefits and attributes. A single house hold can save £73. (Saunders et al 2003). More over the habitual purchases. Thus creates a ‘push’ effect for its products. Chapter 2: Literature Review: 3 Literature review avails the opportunity to explore the published research material about relevant area of interest. Every company influences customers towards ‘pull’ effect in order to achieve ‘push’ effect.e. familiarity and high level of confidence in manufactured brands. brand. The purpose of this research is to study buying behaviour in the UK market for detergents.14 £2. natural tendency ‘resistance to change’ are some of . In the global environment we live today. there are different choices for a consumer to adapt. critical analysis of the previous findings as well as scope to do further research. In short.88 £0. retention of stimuli about the company.76 £24. why consumers choose Manufacturer’s Brands (MB) even when Retailer’s Own Brands (ROB) exists at a low price and similar quality. Finally relate the primary data collected with the previous secondary research. The consumer perception about Retailer’s Own Brands (ROB) is similar but not equal to the quality standards of Manufactured Brands (MB).32 per year (£6.44 £73. Through marketing tools. i.
In response to quality concerns ROB(s) have developed internal quality control systems ( Senker 1987 sited in Davies & Brito 2004) and have developed premium ROB(s)( Quelch and Harding. reliability and low risk by the consumers. like specific behaviours ( Baltus. (Aaker 1996 retrieved from Mieres et al 2006) However Uncles (& Ellis 1989 sited in Davies & Brito 2004) contradicts these views and argues that consumers perceive ROB(s) as similar to MB(s). which in turn is viewed as a sense of quality. Due to the low cost strategy of own brands. retailers spend less on advertising. Consumer perceptions about ROB(s) are influenced by different factors apart from price. 1997 sited in Davies & Brito 2004). for example an ‘Ariel’ customer will find it at any grocery. . corner shop or retailer and hence finds it convenient to stick or be brand loyal. grocers or corner shops. (Mieres et al 2006) 4 Consumers generally are not confident to make judgments on the basis of product attributes to determine the best available alternative. customer will find it practically inconvenient to be brand loyal for ROB. while MB(s) have reached market leader status with a focus on high quality production. DelVecchio 2001. ROB lack behind due to less price (low price-low quality perception). Consumers perceive MB as superior to ROB in terms of various factors like quality standards (ingredients and final product). 1996 sited in Davies & Brito 2004) to place them on par with MB(s). MB(s) have a degree of advantage over ROB. (Davies & Brito 2004) One of the important focus areas in the debate about consumer choice between MB and ROB is the availability. (Sethuraman & Cole 1997. performance standards. retrieved from Mieres et al 2006). lack in strong brand recognition. rigorous advertising and promotion strategies (investments) for their brands. hence depend on brand name and price to gauge the product quality. though it is effective in offering low costs but at the same time lacks promotion of the ROB.the reasons why consumers choose MB over ROB. MB is higher in price and from a well known manufacturer hence preferred to ROB. demographics(Hoch 1996 sited in Davies & Brito 2004) and the risks involved(Batra and Indrajit 2000 sited in Davies & Brito 2004). these perceptions are common to any product irrespective whether it is ROB or MB. and fragrance and hence the final outcome. while a ‘Tesco washing powder’ customer may not find the same even in Tesco shops (metros) apart from other retailers. Hence MB enjoys a level of brand image and brand equity along with quality standards that is difficult to offset by low price ROB. negligible or non existent advertising at the national level and lack a distinct identification with a particular manufacturer. instead of launching a search to the next available Tesco store where it is available. reliability.
(Fig.01%) while ROB(s) have shown higher growth (+12%) despite slow growth of the total market. According to author’s primary data collection. (Mintel 2007). 5 As per 2006 statistics (UK clothes detergent market share).MB(s) ensure availability in retail stores as well as grocers. future looks favourable for ROB(s). MB and ROB). why consumers buy and the factors that influence the buyer. Even though at present market share is heavily dominated by MB(s) if the same growth rates continue for all the 3 segments (Total market. Pg :75) The UK clothes detergent market from 2004 (£1.15 per adult and amounts to a saving of £371 per person annually. higher growth rate of ROB(s) and de-growth of MB(s) will lead to a situation where market share of MB(s) will be captured by ROB(s).4. ROB stands at 10% while MB shares 90% of the market share.95 billion in 2004 to £0.01%).201 billion) (Mintel 2007).0. Consumer buying behavior brings the focus to the key area of research i.e.94 billion in 2006) while ROB(s) have grown by +12% (from £0.01% (from £0. the total market has grown by a slow progress (0. However with reference to market growth. MB(s) have shown de-growth (-0. more than 80% of market share is with MB leaving less than 20% for ROB. consumers find MB easily accessible compared to ROB.1 Brand: . this leads to a situation where in times of need.179 billion to £0. According to a research commissioned by Somerfield supermarket UK (published in Private label magazine). 5. it is estimated that consumers through out UK save around £336 million per week with ROB which amounts to a weekly saving of £7.178 billion) to 2006 (£1.01% for the total 3 year period.190 billion) reflects a growth of + 0. 2. in short the focus and attention MB(s) pay towards availability is rarely seen with ROB. (Knothe 2007) Brand and advertising study enables the reader to understand what a brand is and why it is important to build a brand.2. Analyses of the above statements reflect market share in favour of MB whereas ROB has a very little effect and way behind MB. MB(s) reflect a growth of . while ROB are just another own label product which are subject to availability.
quality.Brand is a very important factor for detergent markets (for both MB and ROB). as all detergents serve the purpose of cleaning. Brand empowers (a product/service) to demand and retain a better price from consumers as well as to project itself as a value for their money. According to Temporal. It is important to note that while all leads to sales of a particular brand. brand image or brand building over a period of time. fashions in business models may come and go – but cash flow remains a trusty and constant yardstick. 6 “As to valuing brands. every time a customer comes in contact with the brand combined with tracking of competitor activity. chief executive. brand ensures secured income or cash flow. It is a reservoir. Retaining as well as increasing sales or market share depends on the influence of brand on consumer buying behaviour. The allegiance that a consumer feels towards a favourite brand – the predisposition to purchase that is built on a better product and a more useful bundle of benefits – is a capital asset. it takes years of planning as well as “trial and error” methods in terms of R&D costs to establish a brand which is again a subjective matter. is essential for the long term growth of the brand. There is a stiff competition for detergents to compete for business as well as survival. According to FitzGerald as quoted above.” (Niall FitzGerald. (Temporal 2002) detergents are placed in the same shelf next to one another. with the variety of global as well as regional brands available for consumers at competitive prices. This process involves constant monitoring of attributes like values. packing. which can be achieved only by building a brand that is perceived by the consumers. as a symbol of high quality backed by product benefits and attributes. ultimately the intended revenues targeted depend mainly on consumer choice. otherwise there is no much a results. it is the brand choice of the consumer which difference in terms of . etc. (CIM 2003) CIM explanation points towards the actual process. Unilever. as stated in CIM 2003). Chartered Institute of Marketing states that the brands originate from planning documents and end up in the hearts as well as minds of customers. this leads to long term profitability as well as growth which is the main purpose of brand. positioning as well as perception by customers. of future cash flow. if you like.
For example. “An indication of the importance of well-known brands is the premium asset valuation that they obtain. • • • • Hard core consumers who will always prefer to buy a single brand.2 Brand Equity: The measure of customer confidence or the value(s) perceived by customers in a brand is called brand equity. According to Giddens. this also incurs less costs on brand marketing as well as advertising.1. brands have reached a stage where it sells for a price that exceeds well beyond the cost of its ingredients. (Giddens & Hofmann 2002) According to Rowley (1997). 2.1 Brand loyalty: Brand loyalty is an important aspect of brand. Temporal emphasizes the importance of building brands over a period of time through monitoring customer perception as well as competitor activity. Switchers keep switching between brands. Soft core consumers exhibit loyalty between 2 to 3 brands.1. “It can take 100 years to build up a good brand and 30 days to knock it down”. (Rowley 1997). Brand loyal customers can be classified into 4 main groups. i. high barriers to competitor entry and exit and resilience against competitor promotional activities (Farquhar. USA) speaking on the importance of brand said.The explanation given by Temporal highlights the time factor. (Klien 2000) 2. sited in Lassar et al 1995). Shifting Consumers change brands very often. Brands can charge premium prices where as consumers are less sensitive in terms of pricing for preferred brands. There is emphasis on areas like the need for higher sales volumes with respect to gaining new customers as well as loosing old ones. 90% of the total price of $220 million paid by . brand loyalty is the commitment of a customer to continue purchasing the product as well as recommending to others. what makes it so important to create a “consistent” brand (De Chernatony & McDonald 2003) 7 In 1999.e. one of the main aims of brand creation is to create brand loyalty. With the aid of packaging and promotion. David D’Aessandro (President of John Hancock Mutual Life Insurance. 1989. this statement reflects the importance of not only building a brand but also maintaining the brand. Firms having high brand equity gain a competitive advantage in terms of successful line extensions.
Print media includes printed material like newspapers. performance. 1991). online news papers. online reviews. Schlossberg. Brand in short is a representation in terms of a product or a service. expectations. their experience. 1991. Electronic sources used for advertising are search engines (Google. solicited as well as unsolicited emails (spam). Every day consumer stimuli receives attention from advertising of brands through print as well as electronic media. online trading sites (eBay). ROB companies (Tesco.Cadbury-Schweppes for the “Hires” and “Crush” product lines of Procter & Gamble is attributed to brand assets” ( Kamakura and Russell. performance in . firms need to differentiate their product from competitors as well as identify the product with certain parameters of accordance with customer expectations. etc. online articles. however their experience of own brands is a couple of decades old. msn). Most of the MB’s (Ariel. Sainsbury) are also around a century old. e-journals. and Persil) comes from companies which are around 100 years old. Advertising can be local. 2. Tide. ( Srivastava and Shocker.3 Advertising: Advertising is an important factor to convey the message about brands. 8 Brand equity is created with the aid of different tools like Advertising as well as in house promotions. magazines. Since the customer has to make the ultimate choice. R&D and resources have enabled them with the opportunity to build brands worth millions of dollars. Electronic media is gaining more importance due to the increased usage of internet on a daily basis by vast majority of consumers for information as well as shopping. 1990 sited in Lassar et al 1995) Brand equity consists of two main components. product catalogues as well as brochures.1. regional as well as international. hence are of no match when comes to expertise and experience. yahoo. knowledge. brand strength (“brand associations held by customers”) and brand value (“brand values are the gains that accrue when brand strength is leveraged to obtain superior current and future profits”). write ups as well as critical analysis of brands are also part of print media. enabling the customer to identify as well as differentiate in terms of requirements. Expert opinion. (Sited in Lassar et al 1995).
e. “why consumers buy”. External influences as well as traditional and additional elements of marketing mix. match it with product/service features and benefits. discounts.Kotler explains the importance of advertising in terms of establishing a strong brand position or in short. this will help in creating “Tailor made” solutions for consumer needs as well as long term profitability for the sellers. legitimization as well as reassurance. coupons as well as persons promoting the product as promoters distributing leaflets. . It is important to note that “There is no shortcut to success”. hence the next chapter will present this important area of study i. 9 In house promotions consist of tools like. advertising is an important tool for branding. this leads to encouraging as well as creating competitive advantages (Kotler 2006). POS stands. Firms have to work as leverage between consumer needs. however the choice still lies with the consumer as brands can be measured on the success scale depending mainly on consumer choices. POS posters. The study of consumer behaviour consists of the factors that influence the consumers towards purchases. hence theoretically strategies could be planned but practical implications are much more complex than that. Innovators (2. 2.e. Advertising aids branding in different ways like building brand awareness. generation of leads. From this chapter the importance of brand and advertising has been highlighted as a way of differentiating the product from competition in order to achieve long term growth.5%) in the diffusion of innovation”: • Early m ajority (34%) Late m ajority (34%) Laggards (16%) adoptors Innovators 2.2 Consumer Buying Behaviour: Consumer Buying Behaviour enables the readers to understand the most important area of this research i. The following summarizes a widely accepted model of the roles of customers (13. these can be classified as Internal. rebates.5%) Early According to Rowley (1997) “Purchasing will also be influenced by individuals’ attitudes to risk and innovation. samples as well as educating consumers at the retail stores.5 per cent. efficiency in reminding consumers. pack on pack offers. consumer buying behaviour or simply the study of the factors influencing consumers towards making purchases. influences and decision making process on the one hand and on the other.
2.2.2. Pg: 75) With the aid of “A frame work of Consumer Buyer Behaviour” as in fig. the various influences on consumer buy behaviour leading to the ultimate purchase outcomes have been explained in detail.2.2. “(Rowley 1997)” Fig. Early majority 34 per cent.• • • • Early adopters 13. Laggards 16 per cent. 10 Environmental Influence Culture Social Class Groups / Family Situational factors Marketing efforts Individual Influence Psychological aspects Demographics Lifestyle Economic situation Memory Decision Making Process Feed back Motivation Search Evaluation Purchase choice Purchase outcomes Fig 2.1 Diffusion of Innovation model. (Lancaster et al 2002) .5 per cent.2 “A frame work of Consumer Buyer Behaviour” (Lancaster et al 2002. Late majority 34 per cent.2. These influences can be classified as Environmental (external) influences and Individual (internal/personal) influences.
Hindus and Buddhists keep them selves on vegetarian diets.e. choice of outlets. While Jews avoid “non kosher” food and alcohol. Racial groups (White/Black/Asian/Hispanics).2. colleagues and neighbours. 2. etc. for instance the major detergent brands (Persil. passed from generation to generation.3. etc. these are as follows. and Religious groups (Christian/Muslim/Jew/Buddhist/Hindus).2. mainly outside influences on one’s personality. (Lancaster et al 2002) Low income groups may have very less income levels. ethics. quality.2. friends. This can be classified into 3 main groups. being used or at least known to 2 generations where as ROB (Tesco & Sainsbury own labels) are known only to the current generation and hence could also be one of the reasons in favour of MB. Muslims avoid “non halal” food and alcohol. first they have income to dispose of on purchases and second they constitute a majority among the social classes. environment. Tide. 2.2 Social Class: This class exhibits the various income levels of the individuals. Middle class are usually the target group of marketers for two obvious reasons. most consumers. These sub cultural groups are influenced by the different media they are exposed to. off springs tend to follow the same. Middle class individuals are also conscious about factors like price.1 Culture: Culture is a broad spectrum consisting of various aspects or sub cultures like nationality groups (US/UK/Indian/Polish). Primary groups consist of family. what parents follow.3. indicated “habitual” decision making which exhibits a strong indication of cultural influence. brand. 11 According to author’s experience. in short.2. Ariel) are almost half a century old i. hence they are not regular buyers and tend to buy the lowest or cheapest goods irrespective of quality or brand concerns. when asked about their purchase choice. Secondary groups consist of celebrities . Low income group (income support and unemployment benefits).3 Environmental Influences: These are external or environmental influences. Elite buy premium products and are not bothered about the price. peers. 2. product contents.3 Groups/Family: These are classified into Primary groups and Secondary groups. Middle class (working class paying taxes) and Elite (high incomes).2.3. In case of ‘habitual purchases’ Manufactured Brands have a degree of advantage compared to ROB.
Persil. they invest millions of dollars on marketing efforts like. promotions. availability of time and waiting periods at tills are some of the important situational factors.3. the same cannot be achieved by ROB as their target customers are far less than the MB and hence cannot justify huge investments. .3. Fairy. “Beckhem” brand endorsements are not only popular in UK or Europe but also globally. price variations in terms of discounts and offers. advertising. etc. 2.4 Situational factors: The choice of purchase or consumption can change according to convenience. Surf) through TV commercials and soap operas. Bold.from various fields like sports. Both of these groups have a major impact on consumer decision making process due to the choice of products used and recommended. author realised the fact that consumers rated “convenience” as on of the top priorities for decision making.2. P&G and Unilever advertise and promote not just their respective companies but also individual detergent brands (Ariel.2. (Lancaster et al 2002) Since the target customers as well as availability of MB covers vast geographical areas. electronic and print media as well as in store promotions. (Lancaster et al 2002) While “Tesco detergent” is exclusively available in Tesco outlets whereas “Ariel” is available at corner shops. hence in terms of convenience also MB has a degree of advantage over ROB. Marketers are using this information in terms of “Celebrity brand endorsements” and “Brand Ambassador”. results in firms launching marketing campaigns through various sources like. whereas ROB are either local players or with limited geographical coverage and hence cannot match MB in terms of marketing resources and expenditure. market research. entertainment and fashion industry. (Lancaster et al 2002) 12 2. During primary data collection. local groceries as well as retailers like Tesco. The availability of the product at the store near to the place of residence or work.5 Marketing efforts: The marketing information gathering (data collection) about consumer choices with respect to a firm’s own products as well as competitor activities. For instance. Manufactured Brands extensively afford to use “Brand endorsements” as it reaches larger audiences in terms or investments and return on investments. These actions also influence decision making process in terms of creating “Pull & Push” effects.
3 Life style and Economic situation: The term “purchasing power” of consumers is a matter of primary concern for marketers specially in terms of pricing. “One airlines advertising campaign designed to promote its push leather seats urged customers to ‘fly on leather’ translated for its Latin American and Hispanic customers. education. like fragrance with ‘Febreze’ and reducing CO2 with ‘Turn to 30 degree’. (Lancaster et al 2002) The way consumers interpret or even translate advertisements are important. ends up with the meaning ‘fly naked’”(Ghauri & Cateora.2. 2.4.2. occupation have a specific influence on individual choices about wants. While a teenager may prefer fashion. etc.where as Tesco and Sainsbury concentrate there marketing efforts on just the ‘company’ not individual product. These include income levels. 2. personality. latest trends and celebrity endorsements. 13 The interpretation of stimuli. competitive prices and previous experience. spending attitudes.1 Psychological factors: This is a broad spectrum of consumer’s personal behaviours like perception. comparatively ‘Tesco Price check’ reflects more focus on price than other areas.4. shopping and partying habits. 2. if positive then firms benefits otherwise negative attitudes have to be dealt with changing the brand itself.2. stimuli retention.2 Demographics: Factors like age. etc. exposure and comprehension results in a specific attitude towards a brand. a middle age person would prefer quality. location. motivation. credit status of the consumers.2. pg: 87) Ariel ‘Febreze’ and ‘Turn to 30 degree’ attracts the consumer stimuli as it conveys the message that in spite of laundry cleaning there are other benefits too. which determine the nature of spending as well as amount available for the same. attitude. (Lancaster et al 2002) .4. sex. 2006.4 Individual Influences (personal or internal Influences): 2.
environmental concerns and to some extent even supporting charitable causes worldwide. sense of belonging) Safety needs (Security. either of the two or a combination of both can trigger a need. 14 Self actualisation needs (Self development & realisation) Esteem needs (Self esteem. by new products.2.2. this area it seems is mostly dominated by MB(s).1 Problem or Need recognition: It is human nature to act only in times of need. society.Life style conscious customers tend to choose branded detergents since they offer other interesting benefits apart from cleaning.Another similar explanation about buy behaviour is provided by Maslow’s hierarchy of needs. Need Recognition Evaluation of Alternatives Purchase decision Post purchase behaviour Information Search Fig 2. advertisements.2. A person’s internal influences like hunger. This argument seems very important as it helps not . Once the purchase is executed. it leads to “habitual” purchases or even “Brand loyalty” which is not easy to break in. recognition. If the product is up to the accepted levels of the consumer. status) Social needs (Love. 2. like fragrance. thirst.51 “Maslow’s hierarchy of needs” “Lancaster et al 2002. Thirst) Figure 2. security. shelter. cleanliness. consumer’s expectations come into focus.2. friends. etc or external influences like family. Pg: 80” The buyer decision making process explained (by Kotler & Armstrong 2006) is similar to the Maslow’s hierarchy of needs with a detailed explanation. Experts have always emphasised the need for marketers to examine the needs that influence consumers towards purchase decisions.52 “Buyer Decision Process” (Kotler & Armstrong 2006:155) 2. motivates consumers towards making a decision about purchases by matching the features and benefits of products on one hand and wants. Protection) Physiological needs (Hunger.5. requirements and necessities on the other. protection.5 Decision Making Process: The various environmental and individual influences over the consumers and the retention of stimuli (memory).
only to understand consumer needs but also to place the product as a “tailor made” offer for those needs.com. garments retain colour and hence looks vibrant in addition to the expected levels of Sensitive cleaning. stain removal. Persil. Ariel product Biological Febreze Colour & Style Benefits Brilliant cleaning. this detergent offers various benefits apart from contributions in reducing effects of global warming by using Ariel at 30 degrees mode of the washing machine.co.co. www. Mass media (advertisements and communication) Product ratings (www. (Ariel.com) Critical analysis and views Expert advice (CIAO Shopping Intelligence. With no bleaching agents used.nextag. more are the chances of consumer inclination towards that particular product.2. Tide. the more visibility of the product benefits and reviews present in these sources.ciao. fragrance and clothes retain just washed freshness all the day. clothes remain fresh and look new.5. family and colleagues.uk) Product catalogues and websites. The following are the some of such sources.Tesco. great cleaning. they will tend to search the best available product to match their needs.2 Information Search: Once the consumers fully recognize the need. 2. (Czinkota & Kotabe 2001) Personal hygiene cleanliness and personality are the needs that trigger a consumer towards purchase of detergents. Suggestions from friends. whites remain whiter.com) Price comparison sites (Tesco price check) As per Ariel website. This lands the consumer in front of the shelf where detergent products are available however which product to choose is next step that again depends on other factors as discussed in this chapter.com. Recommended for sensitive skin apart from expected levels .uk. There are several sources a consumer can explore to search for information. 15 • • • • • • • • Personal knowledge.
21 Ariel product benefits (Ariel 2006) As shown in table 2.5. the . fragrance. It is a very broad and complex spectrum of factors used by consumers during evaluation process. price. colour protection.5. brand.2.2. A range of factors can influence purchase decision like. at times it could be impulse or some times due to intuition.4 Purchase decision: Usually purchase decisions are taken after a care full study of alternatives but some times time restrains could force quick decision making. such detailed information about individual detergent store brands is not yet available.44. Some consumers tend to make decision at the POS also however such chances are limited to special offers and well organised marketing campaigns of own brands. 2. In case of ROB. etc these are some of the features which have considerable influence on the buying process. Ariel is not just a cleaning solution provider. it will result in 2 ways. etc. Zimbabwe. Table 2.2. fair price practises and environmental efforts of Tesco.5. • • • • • • Personal experiences Experiences of friends and family Price wars between brands Special offers (pack on pack offers like buy one get one free) Unstable economy (Eg. sensitive skin. prices change many times in a day) Fluctuating forex values (price variations in global and non local brands) (Boone & Kurtz 2005) 2. first the consumer is retained and ends up brand loyal and second. it highlights various benefits like stain removal.of cleaning. more over consumers are aware of the fact that Tesco does not have manufacturing facilities and its own label products are sourced from different manufacturers. quality. freshness. 16 2. If the consumer is satisfied with the product.5.com) gives information about Tesco marketing efforts.3 Evaluation of Alternatives: The information gathering process ends up with alternatives being evaluated by the consumers in terms of various factors like benefits. for example Tesco (Tesco.5 Post purchase behaviour: This area can make or brake brand loyalty.2. however there is no such benefits or detailed information regarding ‘Tesco washing powder’.
17 1) Product 5) People 2) Price Consumers 3) Place 6) Physical Evidence 4) Promotion 7) Process Fig 2.person will recommend the product to friends. Consumers are influenced to a greater extent by elements of marketing mix. fragrances in producing the detergent as well as quality control. . will promote “negative marketing” about the product to others. The traditional 4 P’s of marketing have been extended to include 3 additional P’s of People.31 The 7 P’s of Marketing Mix (Lancaster et al 2002 & Kotler and Armstrong 2006) The 7 P’s of marketing mix acts like (air pressure) forces acting in all directions inwards. it is the various chemical compositions. However a dissatisfied customer can cause harm in terms of a “double edged sword”. 1) Product: The combination of different components. Physical evidence and Process. in short it enhances sustainable growth and brand building efforts. first the consumer is lost and second. resulting in encouragement as well as motivation of consumers towards decision making. variety and brand name associated with the product delivery process. parts and services involved in delivery of the final product/ service to the consumer. (Kotler & Armstrong 2006) A product from P&G or Unilever is perceived to be both higher in quality and standards compared to the same from Tesco or Sainsbury by the consumers due to reasons like.3 Marketing Mix: 7 P’s. Hence 7 P’s of marketing can be explained as follows. • Established brands of companies with 100 of years of experience and expertise. family and colleagues through word of mouth. 2. hence marketers need to pay high attention to these elements. Another important area of study in order to understand consumer buy behaviour are the elements of marketing mix. In case of detergents.
through there are savings with own brands limited consumers choose the same as own brands are still perceived to be low price low standards compared to high price. fashion and sports live events. Habitual purchases from generation to generation.• • R&D. transportation. Manufactured brands charge higher prices compared to own brands. music. sponsorship of TV soap operas. which are limited with own brands. list prices. retailer margins. Hence consumers are still willing to pay a premium for their perception of high results. the risk here is that consumers may switch to other stores which offer both and hence may loose out to competitors. 18 3) Place: Place includes not just point of sale but also supply chain management (logistics. etc. in store promotions. 2) Price: The final price paid by the consumer for the end result. storage. though they can restrict MB presence in their stores and decide to display only own labels. ROB(s) also have a similar situation to face. marketing efforts and advertising reaching global audiences apart from national and local consumers. it is not practical for MB(s) to limit the supply of their brands to retailers even with ‘own brand’ stores like Tesco or Sainsbury as this will limit their sales in the short term and in long term there are threats from other MB competitors as well as own brands. The effective management of these elements leads to on time delivery . MB does not have their own franchises or wholly owned departmental stores and hence are dependent on groceries and other departmental stores for retail distribution. high standard perception of MB. advertising costs. production. discounts. coupons. Advertising through media (print & electronic). 4) Promotion: The various “Pull & Push” strategies involved in marketing as well as sales activities. transport. However own brands are improving the brand and marketing efforts to reach more consumers but still remains behind MB. includes a variety of costs incurred from raw materials. offers. schedules. (Kotler & Armstrong 2006) inventory management) and channels (supplier-producer-agent-distributorwholesaler-retailer). In short all these costs are recovered from consumers. etc.
production work force. An excellent explanation of which was termed by Porter as “Value Chain”. etc as well as the experiences during consumption. personnel involved in storage and supplies as well as customer service and sales force. It can be understood from an example of how credit card is issued. 5) People: All people either directly or indirectly involved in the delivery of end result. work like a sequential chain in terms of adding value to the process. They have developed several key brands (Areil. promises. consumers rate them to be of higher value compared to ROB which spend less. etc).The promotion efforts of MB(s) like P&G and Unilever in terms of advertising and marketing investments are to the tune of millions of dollars. the more an applicant earns in a month. Comparatively own brands are not as organised as MB and hence lag behind. In short both tangible and non tangible elements are involved. 6) Physical evidence: The features and benefits offered in terms of quality. the result is product benefits are highlighted in a user friendly way and more sub categories are introduced as per consumer demands with separate departments being setup to monitor consumer complaints (like toll free numbers). similarly the more MB(s) spend on promotion. (Sutherland & Canwell 2004) 19 Raw material suppliers. Ariel Febreeze. and Persil) for detergents and again each key brand includes sub brands (Ariel biological. these efforts end in up in constantly improving the results as desired by consumers. guarantee. Recommendation of experts. Tide. warranty. particularly the earnings reflected in the bank statement of the applicant for the past 3-6 months. There are well co-ordinated departments specially in R&D and Marketing to gather maximum information on improving the quality and services provided to the end user. critical views also encourages consumers to perceive the high standards of quality. etc. Credit card companies look at the credit history of the applicant. the higher credit limit is given as it reflects the higher capacity to pay back. commitment. health care. These huge investments are perceived by the consumers as a sign of higher standards and higher results. . hygiene. concerns addressed by marketers regarding environment.
otherwise competitors can exploit this situation to capture the market share. Thus creates a ‘push’ effect for its products. Availability of inventory through out the retailer network. . i. strong penetration into the consumer base. product from companies with high brand values. (Lancaster et al 2002) As discussed the penetration of MB is much higher compared to ROB and the various departments MB(s) use for product development. companies create a ‘pull’ effect. pulls customers towards purchase of the product which in turn pushes the product off shelf. In short. pulling customers towards its products as well as encouraging customers to pull the product off shelf. long standing credibility of the manufacturers along with product features. As discussed in the Marketing Efforts of Consumer Buying Behaviour model. recommendations on the pack from fabric and washing machine manufacturers act as a form of physical evidence that the product offers results as per expectations and hence consumers stick to these brands. accessibility in terms of convenience.e. there are different choices for a consumer to adapt. 7) Process: The efficient process management is ultimately responsible for sustainable growth in sales revenues. In the global environment we live today. in short the effective utilization of the process is the key to success. sourced from ‘different manufacturers’ and availability only in particular stores are a few of the limitations when comes to physical evidence. every company influences customers towards ‘pull’ effect in order to achieve ‘push’ effect. Through marketing tools. In case of ROB ‘low price’.The availability of MB through out the retail sector. appeal to the maximum end users. 20 In short. has to be ensured by manufacture-retailer network. the product should be made available to the consumer as per consumer needs and convenience.
Chapter 3: An overview of detergent market. French are believed to have developed detergents before the middle of 19 th century. the focus will be on clothes washing detergents or laundry detergents.1 Detergents: 21 Detergent can be explained as a substance which when dissolved increases the capacity of water to clean or rinse the fabric or cloth. 2) Dish washing detergents. However detergents were developed for commercial use only by 1950. tablets and gel. strategies adopted by them to succeed. Leading detergent manufacturers. Detergents consist of a variety of products but the two main bifurcations are 1) Laundry or Clothes washing detergents. available in various forms like powder. The positions of Manufactured Brands like P&G and . (The Columbia Encyclopedia 2007) The following chapter relates to detergents market in detail. however the shortage of soap fats in first world war lead to its further development by Germans during 1916. For the purpose of study. 3. Records show that Europe was producing soaps in 7 th century and English during 12th century.
Due to legal protection like Trademarks. Asda and Marks and Spenser have developed their private labels or ROB(s) for most of the consumer products.Unilever as well as Retailer Own Brands in the UK market are discussed. shelf rentals. Competition: If retailer decides to display only ROB instead of MB or provide maximum area for ROB compared to MB.1 Why retailers display MB(s). they will lose sales on MB(s) and risk competition. copy rights and patents.2. 22 According to Datamoniter. in total the net result is high . special charges for promotions. Morrison’s. MB demand a high price from consumers and offer minimal margins to retailers. 1999. Margins are less with MB(s) but the volume is high. Consumers may switch to other stores due to unavailability of their choice. It is estimated that ROB growth rate stands at 11% of the total product lines sold in Europe (Corstjens & Corstjens 1995 cited in Davies & Brito 2004). By 1990. These manufacturers are either certain ‘brand’ manufacturers willing to generate incremental revenues from excessive manufacturing capabilities or ‘non brand’ manufacturers exclusively producing for retailers. cited in Davies & Brito 2004). 3. France. ROB accounted for one-quarter of retail sales in countries like Britain. 3. Belgium and Holland (The Economist. Germany and Switzerland and more than 15% in other nations like USA. Retailers explored a better way to deal with such scenarios by creating their own private brands with the aid of different manufacturers. 1995. etc. listing fees.O.2 Retailer’s Own Brand (R. iii) Retailers earn more on MB(s) compared to ROB due to margins combined with volume of sales. Denmark.B): These are also known as Private labels or Store brands. Detergents can be classified mainly into 2 main groups ROB(s) and MB(s). Sainsbury’s. i) ii) Due to legal restrictions it is difficult to refuse brands. Retailers do not refuse to list MB(s) in their stores due to the following factors. retail giants in UK like. cited in Davies & Brito 2004). Tesco. MB(s) are facing intensive competition from ROB(s) (Dunne & Narasimhan.
SC Johnson. while more than half (59%) respondents preferred buy-one-get-one-free style offers at least once in a week. PLP.15 per adult and equivalent to a saving of £371 per person annually. the estimated value of clothes washing detergent market in UK is £1. it is estimated that consumers through out UK save around £336 million per week with private label products which amounts to a weekly saving of £7. Majority (63%) expressed price comparison as the main factor in shopping and almost all of them (97%) compare prices in search of the best deal. However own brands detergents are worth £200 million.2. Ecover.070 6% Total 1. The findings of this report also indicated that the household cleaning products featured twice within the Top 10 ratings of ROB purchased at UK supermarkets with washing up liquid rated at 8 th position and cleaning products rated at 9th position.revenues however with ROB(s) margins are high but with low volume. 3. iv) ROB requires direct investments however there are no direct investments on MB. further MB(s) are profitable from day one while for ROB(s) there are risks involved with respect to time. the result is less revenues compared to MB(s). ROB and Others (Acdoco. (Knothe 2007) 23 According to Mintel. mainly dominated by 3 segments MB.19 billion.2 ROB Growth in UK: According to a research commissioned by Somerfield supermarket (published in Private label magazine).19 100% MB (77%) ROB (17%) Others (6%) Figure 3.919 77 % Brands (MB) Retailer’s Own 0.2.201 17% Brands (ROB) Others 0. and Dylon International).21 Segmented market share of clothes washing detergents in UK (Mintel 2007) While 77% of market being controlled MB and 6% by others only 17% market share lies with ROB. During this survey. this reflects the situation that market is dominated by MB leaving very little scope for ROB. though there is a slow growth in ROB detergents however the total ROB market is growing as per the estimates (in . Segment Year 2006 % Market (value in Share £ billions) Manufacturer’s 0. investments and are subjective to success. majority of the respondents (62%) expressed their preference for ROB for weekly purchases.
3.1 billion) 2007 ( £ 85 billion expected) 1998 2000 2003 2007 30.1 85. The estimated value of ROB in UK in 1998 was £30billion (Key note Jan 2000) increased in 2000 to £57.23) and according to experts there are chances of this situation improving further. 3.(Key note Jan 2001).1billion in 2003. yearly avg. specially in the grocery segment. the estimated value will increase by £55 billion or 283%. growth of 31% or £6 billion.22 ROB growth in UK. Year Estimated Value (£) billions 100 80 1998 ( £ 30 billion) 2000 ( £ 57.fig. .2.2.4 61.2.6%.1%(Key note June 2003).4billion compared to 1996 it exhibits a growth rate of 18. (Key note April 2003).0 (expected) 60 40 20 0 ROB Grow th in UK Fig. by end of 2007 ROB(s) will cross the £85 billion in estimated value.0 57. from 1998 till 2007.22 & fig.3. compared to 1998 this reflects a growth by 15. The same figures were £61.4 billlion) 2003 ( £ 61. Key note is predicting a growth of 39% by the end of 2007 for the ROB in UK. 24 If the predicted growth rate of 39% by 2007 is taken into account. in a span of 9 years.
UK ROB share is 28% against retailer concentration of 65% in the EU.Source of Own Label Growth UK 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 34. . the following are the main reasons fuelling an up ward trend. 3.4 % in 1975 to 30. UK was ranked among the top 5 EU nations along with Switzerland. and increase of 13.2. (Oxford 2005) According to Oxford University journal (figure 3. i.6% annually. “Across the 38 countries and 80 categories included in this study Private Label sales accounted for 17% of the value sales over the 12 months ending the first quarter of 2005.2.7 16. 3.8 15.4 13. If this trend continues.6 8.8 30.23 above) ROB has grown from 16.4 14. (Perrin 2005) 25 There are various reasons for the growth of ROB. at this rate there will be a 6% rise leading to 36% market share of own labels by the end of 2007. Spain and Belgium in the list of EU countries with highest ROB shares.6% in a span of 22 years or 0.7 15. Low income households and large families prefer ROB(s) for savings. According to this report.2. UK consumers choose ROB for most (82%) of their purchases. According to Oxford university journal. Private Label sales grew by 5%”.3 19.24: “Retailer concentration of the most developed ROB Markets ”(Perrin 2005:11) Market research firm A C Nielsen conducted a survey on ROB.23: “Source of Own Label Growth – UK”. • Vertical integration of UK retailers.0 Brand Leader No 2Brand Brands over 2% Brands under 2% Own Label 1975 1997 Fig. particularly grocery segment.e.0% in 1997. Fig. Germany.2 31. In comparison to year ago.
• Convenience in planning competitive strategies for ROB(s) against the innovations launched by MB(s). Brand management and inventory controls. . The brand plans of MB(s) are being updated to the retailer. • • • Opportunities for retailers to earn higher margins on ROB as well as MB. (Oxford 2005) 3.3 Tesco: Tesco was founded by Jack Cohen in 1919 but the brand ‘Tesco’ appeared in 1924. Sainsbury's. The word ‘Tesco’ came into existence when Cohen used 2 alphabets from his name ‘CO’ and 3 alphabets ‘TES’ from T. (Key note Jan 2000) 100 80 60 40 20 0 Tesco (51%) Sainsbury (54%) Asda (54%) Safeway (47%) Somerfield (36%) National Average (45%) Fig 3. Tesco.2. an increase of 1. Retailers list both ROB and MB in their stores. empowering retailers to initiate brand plans for ROB(s).2. Asda and Safeway together they accounted for a total estimated value of 67.• Highly effective and coordinated Supply Chain Management (SCM) of the retail giants both internally (within the company) as well as externally (with the suppliers).25 UK Differentiation % Sales in ROB. E. The retail giant Tesco plc is a UK based company in the market segments like grocery and general merchandising. (Oxford 2005) According to Key note ROB market is dominated by four major players in UK.5% of grocery sales in 1999.2% compared to 1996 statistics. Stockwell (from whom he bought a tea shipment).
291stores world wide. Tesco declared a profit of £2. Tesco Carb Control has been specifically developed to guide consumers for a low carb eating program. (Perrin J. some of the main Tesco ROB segments are as follows. encouraged Sainsbury’s to penetrate non food segments with (ROB(s) like) Perform+Protect and Active:Naturals. (tutor2u 2007) Asda: Asda’s clothing range of ROB ‘George’ is valued at £1billion. incrementing Asda to be the leading cloth retailer in UK. Tesco Healthy Living constitutes a range of over 500 products having reduced fat. • Tesco brand equity also includes personal finance. sugar and sodium for ‘diet’ conscious consumers. wheat or dairy. (tutor2u 2007) . free from gluten. Way to Live. ‘Taste the Difference’ premium range ROB is valued between £200m and £300m. France) and at 1 st position in UK. USA and Carrefour. insurance and telecom portfolio.26 Tesco stands at a 3rd position globally (after Wal-Mart. • • • • Tesco Organics the organic range of foods from cookies to sausages and 150 products in the free range. ROB(s) account for more than a third (38%) of Sainsbury’s total revenue. Tesco Fair Trade includes a range of products procured from small suppliers of third world countries. guaranteed to receive fair price for their produce due to fair trade certification.028 employees and operates 2.55 billion in 2007 and employs 273. 2005:20) Sainsbury’s: Sainsbury’s have ROB segments like Free From. Blue Parrot Café as well as value and premium range. it has started its operation in India in 2007. (Wikipedia Tesco 2007 & Tesco corporate 2007) According to A C Nielsen. Tesco is present in 11 different countries globally. Almost a third (30%) of the total UK grocery market share is with Tesco (almost equal to the combined strength of its two main rivals Asda and Sainsbury’s). The competition from Tesco. Tesco serves around 15 million customers globally.
(Tutor2u 2007) Analysis of the above statistics conclude an intense as well as competitive rivalry among them (Tesco.4.5% of grocery sales in 1999. Tesco is far ahead with almost equal to their combined strength. UK ROB market is dominated by four major players. Asda and Safeway together they accounted for a total estimated value of 67.4%) with a neck to neck race between Asda (16.(Key note Jan 2001). The estimated value of ROB in UK in 1998 was £30billion (Key note Jan 2000) increased in 2000 to £57.com) . Tesco. Bargaining power of Suppliers Threat of Substitutes Fig.1billion in 2003. Tesco dominates the ROB market share (31.2.6%. While there is a cut throat competition between Asda and Sainsbury with a difference of 0.1 Competitive Rivalry within a market.4 Five Forces model of ROB: Barriers to Entry 27 Bargaining Power of Buyers Competitive Rivalry within a Market. (Key note Jan 2000) According to Tutor2u. 18.104.22.168% market share.5%) and Sainsbury’s (16%) followed by Morrisons (11.2. compared to 1998 this reflects a growth by 15. in 2006 in UK.4billion compared to 1996 it exhibits a growth rate of 18.net. Sainsbury’s. Asda and Morrisons) along with other small players. The same figures were £61.8%). Sainsbury's. 3. (Source: Porter 1980 /amazon.3 %) and other retailers (24.41 Porter’s Five forces model.1% (Key note June 2003). According to Keynote.
2 Barriers to entry.28 With an upper trend in ROB growth. in case of threats form new players these companies can offer ‘price-cuts’ apart from attractive offers to the consumers. the major retailers are in stiff competition and with projected growth in ROB market share. this competitive rivalry while increase its intensity further with years to come. fair price issues.2. however given the competitive advantages the major retailers like Tesco have in terms of market share. it can affect ROB(s) in the long run.3 Threat of substitutes.2.2. Overall there are no immediate threats from substitutes. There are certain legal barriers to entry for new players in terms of minimum distance between retail stores and the number of stores that can be opened up in a borough or county. In particular this helps in keeping costs low and passing on the same to the consumer. For new players it is very difficult to sustain price wars or price cuts against these market leaders. The external factors like legal regulations to control retail growth (concerns about monopolistic rise of Tesco in the UK retail segment). environmental concerns. 3. With the growth of the total ROB market. Retailers like Tesco source ROB products from different sources or manufacturers in order to extract maximum benefits with respect to costs. However if MB increase their advertising and marketing expenditure combined by attractive offers for consumers.health issues and animal testing (from manufacturer sources) are some of the issues which may effect ROB(s). presence and financial resources is highly unlikely to get affected by new players.4. 3. . there is less number of threats from substitutes.4 Bargaining power of Suppliers. however unlikely events in the future can affect them. Given the mass penetration of these major retailers in most parts of UK and considering the growth of retail market and legal regulations governing the location of retail stores in a particular area. instead of suppliers.4. quality control. hence there is a very little scope for new entrants given the low margins they have to settle for along with high cost of exit and hence on practical grounds there are strong barriers to entry. future threat perceptions exist with less effect immediately. and supply chain management in order to achieve a competitive advantage over other retailers and MB(s).4. in addition to that they can increase advertising and marketing investments. 3. ROB(s) have the bargaining power. In case of these retail giants. penetration. child labour .
this creates a favourable scenario for retailers. Negligible bargaining power of suppliers.4. through various sources like Internet. However external influences like environment. moreover there is no direct link between suppliers and consumers. Finally there seem to be no immediate or direct threat from bargaining power of suppliers. Limited threat of substitutes. 3. particularly in UK. Consumers face problems like time. legal and political situations may affect the suppliers. High barriers to entry and exit. which is again a subjective matter. magazines. Most ROB consumers represent price conscious segments of the market. buyers have limited bargaining power compared to retailers. within one store only that particular store ROB is available while MB(s) cost more which is again in favour of retailers. The legalities with respect to how many retail stores can be opened in an area. The numbers of buyers are more for one single retailer in that particular area considering factors like time and convenience. Retailers highlight the best discounts to attract consumers and earn on other products not on the discount list. suppliers are dependent on them more than vice versa. Flyers. as consumers shop for a variety of products while present in a retail stores. news papers. High competitive rivalry. catalogues. Final conclusion on 5 forces model of ROB(s). etc this leads to increased savings for consumers. Consumers give high priority to convenience for retail shopping. . consumer interests lie in the final product and not basic ingredients.5 Bargaining power of Buyers. convenience and emotional distress in case they want to travel to another store in search of their choice. however increasing number of consumers search for best bargains for maximum products they shop. restricts the number of retail stores.29 Since ROB(s) have the purchasing power in terms of volumes. Limited bargaining power of buyers.2.
2. for example. while a ‘Price’ conscious ROB customer is unlikely to switch over to MB(s) with prices higher than ROB(s). Pg:23. home plus and one stop). ROB growth in UK). 3. hence the situation favors ROB(s). Tesco metro and Tesco extra) not in small stores (Tesco express. (Mintzberg et. Mintzberg has discussed the SWOT analysis in the book ‘Strategy safari’ it forms the for designing any business strategy. ROB(s) still lag behind MB(s) in terms of advertising and promotional strategies. ROB(s) have their own stores giving them the leverage to offset any strong competition from MB(s) and other ROB(s).3.5 SWOT Analysis of ROB(s): 30 Strengths. The availability of ROB(s) is confined to certain stores of that particular retailer. ( Fig.2. 3. ‘Tesco detergent’ is available only in large Tesco stores(Tesco super. local groceries or corner shop. In general ROB(s) are confined to the geographical regions. (Wikipedia / Tesco 2007) basis . Weakness. Sommerfield. Asda.2.2 Weakness: Consumer perception about ‘Low cost-Low quality’ ROB(s) still exist and a limited number of consumers tends to switch to ROB(s) from MB(s).22. local areas and stores in terms of reaching the consumers. Consumer strength has also shown growth trends. combined are known as SWOT. 3.1 Strengths: The ROB market share in 2004 was 15% (£179 million) and in 2005 it was 16% (£186 million) these figures have shown a consistent growth of 1% annually.al 1998).5. while MB(s) have national and global out reach. SWOT analysis is an important field of information to know the internal capabilities (Strengths and Weakness) in order to exploit external influences (Opportunities and threats). growth trends and exhibits the strength of the ROB market. It is important to note that with the ROB focus on quality along with price. it is highly likely that ‘Brand’ conscious customers will tend to switch towards ROB(s). Opportunities and Threats. increasing to 17% (£201 million) in 2006. Morrisons.5. ROB market share for the consecutive 3 years (2004-05-06) have shown an upward trend reflecting strong potential.2. while MB(s) do not have retail infrastructure and hence they are dependent on retailers. Apart from this ‘Tesco detergent’ is not available in retail stores like Sainsbury’s. (Mintel 2007) The market for ROB in general is growing at an estimated rate of 31% annually or £6 billion per annum since 1998.
2007. 3. acquiring other smaller retail chains are some of the local and national opportunities available. market share. This helps retailers to keep track of ‘Sale demographics’ empowering them with information like age. quality and supply chain management. (Wikipedia / Tesco 2007) Major ROB(s) (Tesco. purchases to plan their strategies in accordance with consumer trends. in the area. (Prynn 2007:18) The concerns regarding ‘monopolistic’ dominance of ROB(s) like Tesco can create public attention leading to new legal frame work governing restrictions on increasing market share. 3. Sainsbury’s.5.2. this can affect growth. (Wikipedia / Tesco 2007) International operations not only provide opportunities to increase revenues through sales but also provide opportunities to source ROB products at competitive rates in terms of price.2.3 Threats: In Nov.5.31 The limited availability of ROB(s) can force customers to switch to either competitor ROB(s) or even MB(s) when influenced by factors like time and convenience. In the global market. . penetration and consumer reach. venturing into new avenues through strategic partnerships with local firms as well as direct foreign ownership are some of the methods used by ROB(s). (May 1987 Hillards chain of 40 stores in the North of England and 1994. London borough of Marylebone received media attention with the resident and Liberal democrat activist Martin Thompson called for rebranding Westminster as “ Tescoland” when the opposition organised by him failed to stop the 10 th ‘Tesco’ store from coming into existence. acquiring other retail networks and opening new stores. Tesco operates in 11 different countries of the world and has started its operation in India in 2007.2 Opportunities: Retailers like Tesco have taken over other retail chains to increase their market size.area of residence. Asda and Morrisons) have introduced ‘Loyalty Cards’ a rewards program for loyal customers. (Wikipedia / Tesco 2007) Expansion through opening new stores (subject to legal conditions). needs and demands. Scottish supermarket chain William Low).
Unforeseen circumstances like war. aiding it with legal tools like patents. . 3. fair price issues. This is a very complex and lengthy procedure. Logistics (supply chain management between stores from international stores to national. natural disasters. quotas. Hostile takeover bids. concerns with suppliers like environmental issues (CO2 emissions). excise. Production. high interest rates are some of the threats existing in the market. MB(s) are facing lot of challenges from competitors like ROB. they are investing highly on advertising and direct brand marketing to retail consumer or brand loyalty. however it is one of the best methods available. regional and local media and channels). Threats existing in the market are subjective not certain and could affect in the long term while in the short term they are limited. national. Research and Development costs. customs.32 Increased focus on advertising and promotional strategies of MB(s) and attractive offers to offset ‘price’ factor competence of ROB(s).3 Manufactured Brands (M. local and retailer). economic downturn. MB have to pay on listings. increase in unemployment. regional. In the current global scenario. hence it provides long term profitability for the manufacturers. health issues and animal testing. Advertising costs (global. in order to compete. in order to develop a brand. increasing dominance through ‘stock invest’ by rival ROB(s) in the business of major retailers like Tesco. national and local taxes).): Manufacturers invest a lot of capital and resources on their products over a period of time.B. ‘Quality at low prices’ marketing strategies of other ROB(s) are some of threats existing in the market. child labour. Competitors find it difficult to copy or replicate such products. shelf rentals and promotions to retail outlets as well as compete specially on price ROB. copyrights and trademarks. Tax structure (tariffs. The prices of manufactured brands are almost 3 times higher than retailer’s own brands because of the various costs involved like.
the total market size of UK detergents was estimated to be £2 billion in 2006.2%. the total market size of detergents is £2. an increase of 2. effects on skin as well as environment. There are 4 major companies in the detergents market of UK. almost 50 % of market share is dominated by US Muti-national company P&G. EJM 38 1/2) The manufacturing cost of Persil is lower than for ROB and leading MB (Fairy). Mintel estimates clothes washing detergents. an increase by 7. eco friendly. Unilever.06 billion. EJM 38 1/2) According to Market research firm Mintel.165 billion in 2002. (Mintel 2007). household cleaning and dishwashing detergents. Reckitt Benckiser and SC Johnson.& Brito E. Human resource costs (employees from Executive management to sales person involved). valued at £1. However these figures include fabric care. 2004: 40. there are around 17 million wash cycles carried out every day by UK consumers.19 billion in 2006 against £1.30 “Washing up liquids” (Source: Davies G.8% compared to figures in 2002. Infrastructure costs. . stain removal. the emphasis here is on multiple factors like convenience. ROB sells at a price 44 % lower than MB1(Fairy) “The major explanation for the difference in the consumer selling prices is in the difference in the manufacturer’s overheads and profit on the product line that was being spent elsewhere in the firm”. (Davies & Brito 2004: 40).(Market Research 2007) According to market research firm Keynote. According to Market Research. (Kidd 2007). contents like natural ingredients. 33 Fig 3. Procter & Gamble (P&G).
19 bn (58%) Other detergents £0.19 b.8 1. clothes washing detergents have increased by 2.201 0.360 0.32 Market shares of Clothes washing detergents in UK (Mintel 2007) .16 1. during 4 year consecutive period (2002-2006).19 2. Clothes washing detergent market in UK is mainly dominated by 4 major players Procter and Gamble (P&G).8% increase in value of total detergent market.. (Mintel 2007) Analyzing the data given by the market research firms (fig. PLP.91 Year 2006 (value in £ billions) 2.070 1.87 bn (42%) UK Market size for Detergents Clothes washing detergents 7. while there has been a 7. Ecover.2%.06 billions of which Clothes washing detergents constitute 58% at £1.19 % Market Share 47 % 30% 17% 6% 100% P&G Unilever ROB Others Procter and Gamble (P&G) Unilever Retailer’s Own Brands (ROB) Others Total Figure 3.559 0.2 Figure 3.34 Sector Year 2002 (value in £ billions) 1.06 % Growth Clothes w ashing detergents £1. Dylon International). 3.31 Market size of Detergents in UK. Unilever. The total market size of detergents in UK is around £2.31) the following calculations can be drawn. Company Year 2006 (value in £ billions) 0. ROB and Others ( Acdoco. SC Johnson.
(Kidd 2007) P&G Brands Ariel Bold Daz Fairy Others Year 2006 (value in £ millions) 160 130 68 65 136 % Share within P&G 29 % 23% 12% 11% 25% Ariel £ 160 m n (29%) Bold £130 m n (23%) Daz £68 m n (12%) Fairy £65 m n (11%) Others £136 m n (25%) (P&G . (Kidd 2007) In tune with the “Environmental concerns”. 35 In this chapter MB refers to two major players (P&G and Unilever) since they are the leaders in UK (Market share and Brand share). P&G site proudly proclaims that “Three billion times a day P&G brands touch the lives of people around the world. (Wikipedia/P&G 2007) In October 2006 a new fragrance was introduced in Bold portfolio called” Crushed Silk & Jasmine” available in powder. a product which is dermatological tested and is endorsed by Allergy UK. there was a line extension in Fairy for the fabric softening sector. “P&G 2007” . Daz and Fairy.13 billion and employs more than 1 million employees working in 80 countries worldwide. 23 brands worth 1 billion dollars & 18 brands between $500 million and $1 billion. hence contributing to less CO2.5 billion in revenue and $10. Ariel “Turn to 30 degrees” was launched in 2007. making life a little better every day”. market is dominated by MB. Major Brands in UK: Ariel. 3. Annual Report 2007). which claims to give excellent results even at 30 degrees (washing machine mode) in addition to saving 40% of energy.3 billion income during fiscal year 2007.While 77% of market being controlled by P&G and Unilever and 6% by others and17% with ROB. In 2007 Ariel “Febreze” was introduced as an additional feature (fragrance) to Ariel. UK operations started in 1930. During the same period. UK turnover for 2005 was £5. • • • • • • Founded in 1837 in USA. tablet and liquid formats.4 Procter and Gamble (P&G): P&G is a US based MNC and one of the world’s largest consumer products company with $76. Tide laundry detergent launched in 1946 in USA. Bold 2 in 1. Investment of £100 million in 2006 for the laundry detergent sector. Ariel laundry detergent launched in 1969 in UK.
most other European countries. which is shared by Ariel at £160 m. Fairy £65 m (11%) and Other P&G brands at £136 m (25%). The official website claims that “Every day. a share of 29 %. Unilever Brands Year 2006 (value in £ millions) Persil 205 Surf 45 Others 110 Total Unilever 360 sales % Share within Unilever 57 % 13% 30% 100% Persil £ 205 m n (57%) Surf £45 m n (13%) Others £110 m n (30%) . Persil is Unilever's premium brand in the UK and the Republic of Ireland. 160 million people choose our brands to feed their families and to clean themselves and their homes”. Daz £68 m (12%). Unilever invested €1 billion in research and development during 2006 and for the same year investments in advertising and promotions amounted to €5 billion. In 2005 it posted a turnover of £918 million. some are available on country basis whereas others are available globally. Henkel manufactures Persil in countries like Germany. UK and Ireland. (Wikipedia/ Unilever 2007). Persil Colour Gel tables were introduced. Unilever has reported over $50 billion in global turnover (€ 39. In July 2006. (Unilever key facts 2007) Unilever owns around 400 brands. It employs 179. (Kidd 2007) “Persil” brand belong to German company Henkel. (Wikipedia/ Unilever 2007 & Richards 2001) In UK Unilever is the second largest player in clothes detergent market after P&G.5 Unilever: Unilever is one of the prominent MNCs in consumer products and is the second major player in the UK clothes detergent market after P&G. (Wikipedia/ Unilever 2007). 3.41 P&G share of Clothes washing detergents in UK (Mintel 2007) 36 Analyzing the figures from figure 3. (Kidd 2007) Surf is a laundry detergent from Unilever introduced in 1950 and is a global product specially in countries like USA. the total sales of P&G clothes detergents in UK stands at £559 million in 2006. Egypt and Saudi Arabia.41.Total sales 559 100% Figure 3.000 people in 100 countries around the globe. major brands are Persil and Surf.6 billion). Netherlands. Bold at £130 m (23%). This product claims convenience and strong washing power due to the presence of a gel layer and a composition of pre-treating agents to deal with tough stains. Unilever acquired rights of Persil in 1931 for other countries worldwide.
3.6 Brand share: P&G (51%) and Unilever (29%). together have a brand share of 80% of the total brand share of clothes detergent market in UK. . Bold at £130 mn (15%). the total sales of Unilever clothes detergents in UK stands at £360 million in 2006. the trust in brand. The top brand in terms of sales revenues is Persil from Unilever with a share of almost a quarter (24%). the total brand share of clothes detergents in UK stands at £848 million in 2006. Fairy at £65 mn (8%). PLP. Surf at £45 mn (5%). a share of 57 %. Dylon International) at £40 mn (5%). quality. SC Johnson. Brand & Company Year 2006 (value in £ millions) Persil (Unilever) 205 Ariel (P&G) 160 Bold (P&G) 130 Daz (P&G) 68 Fairy (P&G) 65 Surf (Unilever) 45 Retailer’s Own 135 Brands (ROB) Others 40 Total 848 % Market Share 24% 19 % 15% 8% 8% 5% 16% 5% 100% Persil £205 m n (24%) Ariel £160 m n (19%) Bold £130 m n (15%) Daz £68 m n (8%) Fairy £65 m n (8%) Surf £45 m n (5%) ROB £135 m n (16%) Others £40 m n (5%) Figure 3. a share of 24 %. Daz at £68 mn (8%).(Mintel 2007) Brand share in the clothes washing detergent segment of UK. Surf at £45 m (13%). which is shared by Persil at £205 m. and Other Unilever brands at £110 m (30%).61 Brand shares of Clothes washing detergents in UK (Mintel 2007) Analyzing the data from figure 3.61.Figure 3. Ecover. desired results and resistance to change or switch to any other product. Habitual consumer purchases being passed from generation to generation. which is shared by Persil at £205 m. ROB at £135 mn (16%) and Other brands (Acdoco.51 Unilever shares of Clothes washing detergents in UK (Mintel 2007) 37 Analyzing the figures from figure 3. Ariel at £160 mn (19%).51. this could be due to various reasons like.
(Mintel 2007) Investments in R&D. While other companies (smaller brands) implement lower pricing structures in order to compete with these giants. Competitive rivalry among them is intense along with other players ( Acdoco.7. For new players it is very difficult to invest heavily either in advertising or pricing to (Source: Porter 1980/Amazon. 3. SC Johnson. Bargaining power of Suppliers Threat of Substitutes Fig. Hence from both companies point of view.1 Competitive Rivalry within a market. 3. advertising. PLP. promotions and line extensions during 2006 amounted to millions of US$. etc).70 Porter’s Five forces model. in case of threats form new players these companies can offer attractive offers and increase advertising and marketing strategies.3.7 Five Forces model of Manufactured Brands: Barriers to Entry 38 Bargaining Power of Buyers Competitive Rivalry within a Market. hence these factors mainly contribute to the intensive competition over pricing structures.2 Barriers to entry. Ecover. like P&G and Unilever invest heavily on promotion and have crafted an image on consumer perceptions which are very difficult to break in.com) . the market looks potential as well as attractive. P&G and Unilever concentrate there efforts on Brand more compared to pricing. 3. they together have a 80% brand share (Mintel 2007) which is highly unlikely to get affected by new players. P&G and Unilever together hold a 77% of the market share and 80% of the brand share in the UK Clothes detergent market. There are certain legal barriers to entry for new players in terms of minimum distance between retail stores and the number of stores that can be opened up in a borough or county.7. Dylon International.
4 Bargaining power of Suppliers. However if own brands improve their consumer perception about quality over the period of time combined with less price.7. Since manufactured brands have global presence. they can source the ingredients (chemicals and packing materials) from different parts of the globe to achieve economies of scale. Given the long standing of manufactured brands like P&G and Unilever with respect to brand image. which has been a part of habitual purchases from generation to generation.7. Retailers who also act buyers cannot refuse to buy due to legal restrictions. However external influences like environment. which is again a subjective matter. Finally there seem to be no immediate or direct threat from bargaining power of suppliers. fair price issues. competition and profit of margin on brands. 3. In the long term external factors like environmental concerns.4 Bargaining power of Buyers. it can affect manufactured brands in the long run. manufactured brands seems to have the bargaining power. health issues and animal testing are some of the issues which may affect manufactured brands. The brand loyalty and brand image along with high quality perception of brands enforce customers to remain loyal and hence less chances of switching even though own brands and other manufactured brands exist. Overall there are no immediate threats from substitutes.7. Low prices have less impact on the majority of brand conscious buyers compared to price dependent buyers.3 Threat of substitutes. child labour. With the growth of ROB there are future threat perceptions but not immediately. moreover there is no direct link between suppliers and consumers. Hence bargaining power of buyers remains low and subjective. 3. Since manufactured brands achieve economies of scale in production (global distribution or national production for regional and local distribution) instead of suppliers.compete with these market leaders. 39 3. there are less number of threats from substitutes. . as consumers are only interested in the final product and not the basic ingredients. however unlikely events in the future can affect them. quality and consumer perception. there is a very little scope for new entrants given the low margins they have to settle for along with high cost of exit and hence on practical grounds there are strong barriers to entry. legal and political situations may affect the suppliers. The number of buyers and suppliers are more in general however in specific terms brands are few and buyers are more and hence brands dictate prices not the buyers.
40 Final conclusion on 5 forces model of manufactured brands. Limited competitive rivalry. High barriers to entry and exit. Limited threat of substitutes. No or very less bargaining power of suppliers. Less bargaining power of buyers.
3.8 SWOT Analysis of Manufactured Brands: Strengths, Weakness, Opportunities and Threats, combined are known as SWOT. Mintzberg has discussed the SWOT analysis in the book ‘Strategy safari’ it forms the basis for designing any business strategy. (Mintzberg et. al 1998). SWOT analysis is an important field of information to know the internal capabilities (Strengths and Weakness) in order to exploit external influences (Opportunities and threats).
3.8.1 Strengths: The major advantages the MB (P&G and Unilever in particular) have over ROB is that they are decades old in the market (P&G, Unilever operations in UK since 1930). P&G and Unilever together hold a 77% of the market share and 80% of the brand share in the UK Clothes detergent market. (Mintel 2007). 22.214.171.124 Global Expertise: P&G and Unilever are known and used by millions of consumers around the globe. “Three billion times a day P&G brands touch the lives of people around the world, making life a little better every day”. (P&G 2007) “Every day, 160 million people choose our brands to feed their families and to clean themselves and their homes”. (Unilever key facts 2007). Given their global presence, P&G employs more than 1 million employees working in 80 countries worldwide. (P&G Annual Report 2007).
Unilever employs 179,000 people in 100 countries around the globe. (Unilever key facts 2007)
126.96.36.199 Financial Resources: 41 P&G and Unilever are global brands and invest heavily on brand strategies like advertising and promotional campaigns (P&G £500 million & Unilever £5 billion in 2006) ( Wikipedia/P&G 2007 & Unilever key facts 2007). Unilever has reported over € 39.6 billion in global turnover (Unilever key facts 2007) P&G global turnover is $76.5 billion in revenue and $10.3 billion income during fiscal year 2007, UK turnover for 2005 was £5.13 billion (P&G Annual Report 2007). Unilever owns around 400 brands, some are available on country basis whereas others are available globally. (Wikipedia/ Unilever 2007 & Richards 2001) Among the major brands of P&G, 23 brands are worth $ 1 billion & 18 brands between $500 million and $1 billion. (Wikipedia/P&G 2007) The expertise MB(s) have in global and financial resources enables them to compete and lead through aggressive advertising, strong distribution network, sponsor major global events, implement brand endorsements, etc. these factors contribute to the strength of MB. 3.8.2 Weakness: 188.8.131.52 Price: The major weakness from ‘price conscious’ customer’s perspective is ‘high price’ compared to ROB. This is the segment where retailers are exploiting, to ensure the placement of ROB. MB cannot reduce price to the level of ROB due to the high costs involved in brand administration, however MB can use advertising and promotional strategies to offset this weakness. In store promotions like pack on pack (buy one get one free) offers, incremental quantities (get 3.5 kg for the price of 3 kg) and coupons to win gift hampers can also portray the message. 184.108.40.206 Research on Animals: P&G research and development activities include animal research or animal testing. This is to ensure the safety or efficacy of their raw materials and finished products. Some animal rights activists are protesting to stop animal testing at P&G labs through public awareness campaigns (Uncaged Campaigns in UK and Stop Animal Exploitation Now in the USA). However another animal rights activist, The Humane Society of the United States, has recognized the efforts of P&G for "advancing alternatives to animal testing". (Wikipedia/P&G 2007) Unilever is facing criticism from PETA (People for the Ethical Treatment of Animals) for using animal research. Apart from animal concerns, Unilever has been accused for causing environmental pollution by environmental activists like Green peace. Unilever has also been criticized for being involved in child labour. (Wikipedia/ Unilever 2007).
MB(s) have various opportunities to grow within the existing markets as well as explore new territories. Strategic decisions regarding in house activities, special displays in retail stores, advertising space in print and electronic media, prime advertising slots on air (TV and internet) certain areas to explore in terms of opportunities. 220.127.116.11 Brand Leverage: MB(s) have established brands this can be explored to provide leverage in terms of sales and growth. Their national as well as global presence enhances brand value in terms of popularity as well as usage. In case of competitive threats, they have resources to launch massive advertising and promotional campaigns. Line and brand extensions are another way of capitalizing the brand leverage. 18.104.22.168 Sponsorship and Co-branding: The sponsorship of major live entertainment, sports and cultural events enhances brand value. Sponsorship of social causes like charity for aids in Africa, education for third world countries direction’. 3.8.4 Threats: MB faces different threats from within and outside (ROB). • • • • • • • Price wars due to struggle for existence between MB(s) and ROB(s). Competition with respect to prime slots for media advertisements and shelf display at retail stores. Retailers negotiating terms in favour of ROB. Surplus or unnecessary expenditure in advertising with respect to cost realization. ROB focus on quality at low price segments. External factors like environmental concerns, fair price issues, child labour, health issues and animal testing. Un foreseen circumstances like war, natural disasters, and economic downturn. is a way of reflecting ethics. Recommendations by washing machine manufacturers, apparel houses and designers can be termed as ‘A right step in the right
questionnaire design. sample selection and limitations of research will be discussed with reference to relevance. Data collection (facts and information) have a clear purpose. (Ghauri & Gronhang 2005 sited in Saunders et al 2007:5). The process justifies the objectives of the research. The main areas of study like research objectives. however they are subjective to future. with reference to relevance. research design. Hence being aware of the surroundings and taking necessary steps about the threats can limit their occurrences. 1) Topic of Research: Formulation and Identification 2) Research Objectives 3) Research Design 4) Data Collection Secondary Data Sampling Primary data: Questionnaires 5) Data Analysis . During the research the areas stressed upon by Walliman (2001) (sited Saunders et al 2007:4) have been taken into account. pilot study. It also includes description and explanation about the problem. author exhibits understanding of the problems and a critical analysis of the existing published material. Interpretation of recorded facts and information with respect to relevance.Threats exist at various levels. The research process is based on ‘logical relationship’ and not just beliefs. Chapter 4: Research Plan Introduction: 43 Research methodology chapter will describe the research methods applied as well as the justification for the same. of this report.
Fig 4.1 The Research Process (Saunders et al 2007:10) Research Topic and Research objectives have discussed in Chapter 1 Background and Objectives and hence author does not find to repeat the same in this chapter.
Brown (2006 sited in Saunders et al 2007:31) states that the main purpose of the research design is to offer relevant answers to the research question. (Saunders et al 2007:31) According to Jankowicz (2005) research design has been classified into 3 types, a) Exploratory research (Identification of key issues to address the main problem). b) Descriptive research (explanation of issues systematically). c) Causal research (explanation of the reasons behind the outcome). (Ghauri and Gronhang 2002:48-52, sited in Jankowicz 2005:197), Exploratory research was quiet helpful in the initial stages of this report, particularly when author did not had enough understanding of the research areas (Malhotra 2004) According to Robson (2002) descriptive research can de explained as an extension of exploratory research while Malhotra (& Birks 2003) stresses that the objective of descriptive research is to give a description, for example certain market characteristics or functions. Descriptive research was used by the author in the form of questionnaire. Data collection methods: Secondary data: Data is collected from previous research published material from different authors about relevant areas of study, material from books, journals and articles to present a critical analysis in the literature review chapter of this report. Secondary data and literature was extracted from various sources. Books from authors like Kotler, Lancaster, Ghauri and Cateora and Saunders, Journals from Oxford University, CIM, European journal of marketing and Journal of Consumer Marketing, Market research reports from Mintel, Emerald and Keynote, were used due to concerns about credibility, reliability and authentication. Sampling: Saunders (et al 2007:206) highlights the importance of sampling due to following reasons, • • Survey of entire population is not feasible on practical grounds. Financial resources required are difficult to procure.
Time management will be a difficult task. Data collection and analysis require large volume of resources.
45 Author approached 400 samples of consumers in view of the expected practical responses and received 100 responses, vital for the primary research. Survey was started with friends and neighbours using non-probable, convenience, door to door survey method for the initial 10 responses. Some of the hurdles faced during door to door surveys are follows, • • • • Respondents have concerns about the surveyor (author) an intruder asking questions about their purchases. Respondents not present or unwilling to respond, as it disturbs their privacy at home. Security controls restricting door to door surveys in certain buildings and apartments. Time consuming process in retrieving results.
Due to the above mentioned reasons, author designed a structured process to over come the problems faced. The survey was conducted in London Transport Buses for the balance 90 responses. Author personally travelled in the buses covering different areas (routes) of London given in the Table 4.2 below. Bus Number 12 Destination Route
Dulwich Library - Peckham - Camberwell - Walworth - Elephant Westminster - Oxford Circus 25 Ilford - Manor Park - Stratford - Bow - Whitechapel - Aldgate - Bank - Holborn - Oxford Circus 35 Clapham Junction - Clapham Common - Brixton - Camberwell Walworth - Elephant - London Bridge - Shoreditch 40 East Dulwich - Camberwell - Walworth - Elephant - London Bridge Aldgate 133 Streatham - Brixton – Kennington - Elephant - London Bridge Moorgate - Liverpool Street Station 148 Camberwell - Walworth - Elephant & Castle - Westminster - Victoria - Marble Arch - Notting Hill Gate - Shepherd's Bush 188 North Greenwich - Greenwich - Surrey Quays - Bermondsey Elephant - Waterloo - Aldwych - Holborn - Russell Square (Table 4.2 Survey Route, Source: http://www.londonbusroutes.net/routes.htm#main retrieved 20-11-2007) The reasons for conducting the survey on buses are as follows, • • Maximum coverage of London areas. Cluster as well as random methods apply, cluster / passengers present in the bus, random as passengers change (get in or get out) at every bus stop.
Convenience in terms of respondent’s accessibility. The bus routes chosen travel for a minimum of 30 minutes before reaching end of the route from author’s residence (Elephant and Castle).
46 • • This provides a minimum of 5 responses on each trip, contributing to 10 responses for around an hour (return journey). Prospective respondents do not mind spending around 5 minutes for answering the questionnaire as they are bound to spend time travelling in the bus till they reach their destination. This method is also called as ‘Captive Respondents’. • • Provides opportunities in terms of time and financial management. A week bus pass cost less than £10 (£9.70) for students. Author’s physical presence during questionnaire administration ensures accuracy, validity and reliability. It also helps in minimising errors and bias like non responsive error, prejudice, un answered questions and clarification about specific questions. • Buses provide convenience, security and cordial environment necessary for smoother conduct of the survey. Primary data: In order to investigate the practical situation in order to retrieve primary or first hand information relevant to the report and relate the findings to secondary research, it was necessary for the author to collect primary data. Primary data was collected through administration of 100 questionnaires. Questionnaire (Appendix 1) Questionnaire is based on 15 questions. The first 10 questions are related to consumer buying behaviour about the purchases, importance of the particular brand (ROB or MB), switching products, importance of retail outlets used for regular shopping, influence of advertising on the media, all the 10 are multiple choice questions with the option ‘Others please specify’ to extract and relevant additional information. The last 5 questions are related to demographics, this has be done in order to avoid non response as respondents may not like questions relating to their age group or work at the initial stage. According to Bell (2005) (sited Saunders et al 2007, 354-356) certain areas are to be considered while preparing questionnaires Appropriately designed to produce necessary information. Clear and easily understood by respondents.
work) which can discourage initially were asked in the last section. 10.150) Reliability: .21) Validity: To present the data on part with validity. The following areas were taken into consideration while designing questionnaires. 8) Questions were designed to encourage respondents to take part in survey. This has been done for standardising the data collection process to ensure that the primary data obtained is internally consistent with respect to relevance and can be analysed in a uniform and coherent manner. 9) Lay out. education. 6) Structured. 1) Questions were developed that respondents could easily answer and yield the desired relevant information. co-operate as well as complete the questionnaire. multiple choice questions using a Likert scale were used to yield clear and maximum accuracy. quality of print and paper were taken into consideration. (McGee 2006). 10) Questionnaire was shown to the dissertation supervisor prior to administration. 5) Un clear or confusing areas were revised and eliminated during pilot survey of first 10 responses. 4) A single questionnaire is viable and suitable for all 100 respondents in regard to relevance. (Saunders et al 2007) 47 Author has designed questionnaire according to lecture notes (McGee 2006). 7) Wordings were designed to avoid or at least minimise non response. age. the questionnaire was designed to ensure that “the findings are really about what they appear to be about” (Saunders et al 2007. 3) Response error (in accurate answers and bias leading to mis-recorded or mis-analysed data) is minimised due to the physical presence of the author during all the 100 responses. questions pertaining to demographics (sex. in order to avoid as well as eliminate potential problems. The data obtained from questionnaires is analysed by univariative method (analysis of a single variable at one time) with aid of pie diagrams. design. motivate and encourage the respondents to become more involved. (Jewell 2007. Easy to analyse and interpret the data gathered. 2) Questions uplift. Questionnaire has been designed specifically to obtain quantitative primary data for the descriptive research as required for this report.
confuse or harm the respondents in any way have been excluded from the questionnaire. Questionnaire analysis was undertaken by the author in most accurate manner avoiding bias and prejudice. Author’s physical presence ensured accuracy and doubt clarifications during the survey.Robson (2002) (sited Saunders et al 2007. personal details like name. however author tried to avoid it by acting neutral while interpreting and reporting results as well as data. The following ethics were considered during designing and administration of questionnaires. for example they were marking Tesco as well as Ariel for product choice assuming these are 2 different options from different questions. questionnaire completion by respondents to explain and ensure that respondents answer the questions as . there are 4 threats to reliability. author has completed the questionnaire survey during 2 weeks period (between 24-9-07 to 7-10-07) by travelling in various areas of London. • • • • In view of the ‘Data protection’ concerns. 48 1) Subject of participant error: As this area is difficult to control. date of birth or contact details have not been included. political or legal) influences. Research Ethics: Questionnaire are designed for ‘anonymous’ response. Pilot study: A pilot survey was conducted with 10 questionnaires on the basis of which.149) states. Respondents were displaying signs of confusion between the store and ROB. hence author revised this question from ‘Tesco’ to ‘Tesco washing powder’ enabling customers to answer without confusion. it was observed that Question 4 regarding the choice of product tends to confuse respondents. The questionnaire available in the appendix is the revised questionnaire format used for the balance 90 responses. 3) Observer error: Questionnaire had been set with open and closed questions along with options like “if others please specify” in order to reduce errors. Questions which can distract. 2) Subject of participant bias: The author was physically present at the time of accurate as possible in order to limit bias. 4) Observer bias: It is challenging to control such bias. in order to reduce the risk of external (environmental.
2. Author approached around 400 consumers to complete questionnaires about relevant research but was successful only in retrieving 100 responses.• • Questionnaire introduction explains the reasons and the purpose of the survey and offer thanks for participation. There is a huge amount of secondary data and literature available in the books. it can be termed as biased towards London bus passengers. Prospects were approached with a humble manner and unwillingness of the respondents was dealt in a polite manner. time and resource constraints. The report is about UK. Limitations of Research 49 This research has a number of limitations like constraints in terms of time. however primary data collection is based only on London residents and due to time and resource constraints other parts of UK were not considered for the survey. 7. 1. only 100 consumer responses were considered for primary research. 3. hence cannot represent the views of 300 consumers who refused to take part in the research. 5. Research GANTT Chart: Description Review of Literature Research Design Research Methodology Sources of Data Collection of Data Data Analysis Draft Completion Final Report Week 1 Week 2 Week 3 Week 4 Week 5 Week 6 Week 7 Week 8 Week 9 Week 10 . however very less information was utilised due to space. Software (like SPSS) could not be availed and utilised. Out of a population of around 61 million in UK. Lack of time and resources to present the data in detail. The 10 respondents were chosen from residential areas and 90 were bus passengers. (National Statistics 2006) 4. journals and internet. 6. It is difficult to present the data in detail because of the following reasons. the ratio is 4:1. resources and the word limit.
.Editing Document Binding Chapter 5: Data Analysis Questionnaire Analysis conclusions and analysis about every main and sub question. Frequency of detergent purchases: Once in a week Once in 2 weeks Once in a month Once in 3 months once in 1 w eek (30%) Once in 2 w eeks (17%) Once in 1 m onth (46%) Once in 3 m onths (7%) 50 Questionnaire analysis has been under taken with the aid of tables and pie charts followed by 30 17 46 7 Fig 5. Q: 1. followed by 17% once in 2 weeks and only 7% purchase once in 3 months. Q: 2.2 Pack size purchased.1 Frequency of detergent purchase. majority (46%) of consumers purchase once in a month. Which pack size do you buy? 1 kg (small) 2 kg (medium) 5 kg (large) 1 kg (sm all) (21%) 2 kg (m edium ) (46%) 5 kg (large) (33%) 21 46 33 Fig 5. In response to question 1 about the frequency of detergent purchase. while 30 % purchase once in a week.
followed by 33% choose large or 5 kg pack and small 1 kg pack is preferred by 21% only. 92 Washing at laundry. Reason for purchase of a detergent? Washing at home. 8 51 Washing at hom e (92%) Washing at laundry (8%) Fig 5. majority (46%) prefer medium or 2 kg pack. Q: 3. In response to Q3. Q:4 Which product do you buy? Ariel Bold Persil Tide Fairy Surf Daz Linor Ecover Tesco washing powder Sainsbury’s washing powder Morrison’s washing powder Lidl’s washing powder 33 19 29 1 2 2 2 1 1 6 1 2 1 . most (92%) answered washing at home compared to only few (8%) washing at laundry. Reason for purchase of detergent.3 Reason for purchase.In response to Q2. Since most households have washing machines at home and is convenient to wash at the available time compared to laundry where it is only in day and during fixed time plus there could be waiting periods. Which pack size do you buy.
MB (90%) dominates the consumer choice. in total manufactured brands are the leaders while only a tenth (10%) choose own brands (Tesco 6% and others 4%).Ariel (33%) Bold (19%) Persil (29%) Tide (1%) Surf (2%) Daz (2%) Linor (1%) Fig.4. Q: 5. How do you feel about the product you are using at present with respect to results (clean washing)? Highly Satisfied Satisfied No difference 23 71 6 . Bold (19%). the leading brand is Ariel (33%) followed by Persil (29%). The purpose of this research i.4.e. In response to Q4. 5. what is the reason behind such choices have been discussed in detail through out this report. Ecover (1%) 52 90 10 Manufactured Brands (MB) Retailer’s Own Brands (ROB) Manufactured Brands (MB) (90%) Retailer's Ow n Brands (ROB) (10%) Fig 5.1 Choice of the product or brand. about choice of the product or brand.2 Consumer’s choice between MB and ROB.
Have you ever switched.6 Switch between brands and the experience of the same. about switching brands and the resultant outcome. What sources do you usually use to obtain information about detergents? Friends 10 . 5. majority have not switched their brand and hence answered no (62%) while only a third (38%) have switched and felt satisfied (22%) or no difference (11%) only a little (5%) were not satisfied. In response to Q6. about the product they are using. what was your experience regarding results (clean washing of clothes) (Appendix 1) No 62 Yes 38 % Satisfied 22 No Difference 11 Not Satisfied 5 No (62%) Satisfied (22%) No Difference (11%) Not Satisfied (5%) Fig. if yes.5. In response to Q5. however once they switch.Highly Satisfied (23%) Satisfied (71%) No difference (6%) Fig. It is difficult to change choice of the brand. most of them (94%) felt they are satisfied with the results only 6% felt no difference. it is not hard to retain as majority of consumers who switch were either satisfied or felt no difference with the new choice. Q:7.5 Consumer response about the product in use. However none answered dissatisfaction and hence they stick to their habitual purchase or ‘brand loyalty’. 53 Q:6.
Q:8. 5 = Very High) a) Brand (importance) Very Low Low Medium High Very High Very Low (1%) Low (4%) Medium (29%) High 40%) Very High (26%) 1 4 29 40 26 Fig 5. ( 1 = Very low. where consumers were asked to choose more than 1 choice if appropriate.7 Sources of Information 54 In response to Q7. .Past Experience Television News Paper Magazines In store promotions Friends (10%) 90 15 1 1 5 Past Experience (90%) Television (15%) New s paper (1%) Magazines (1%) In store prom otions (5%) Fig. On the basis of what factors do you choose the product? Please rate by circling the relevant number. while 15% use television as a source of information while 10% rely on friends. 3 = Medium. about the sources of information used for purchase decision making.8 (a) Importance of Brand. most of them (90%) reflected past experience. 4 = High. in store promotions stand at 5%. 5. 2 = Low.
while 21% felt high importance and 12% very high importance while only small number of respondents (14%) felt price is not important. Hence ‘Brand’ name is a very important factor that influences a consumer choice. 55 In response to Q:8. c. importance of price. Hence. more than half (53%) felt at the medium level. most of them (90%) felt quantity is important with 2/3rd (64%) felt at the medium level. b. price stays an important factor with an average of ‘high’ status for the respondent. a . only a few (5%) disregarded the importance of brand. In response to Q:8.8 (c) Importance of Quantity. almost all of the respondents (95%) stressed the importance of brand name to an average of “High” importance.8 (b) Importance of Price. importance of quantity. importance of brand. while 16% felt high importance and 10% very high . Q:8. Q:8. c) Quantity (importance) (Appendix 1) Very Low 4 Low 6 Medium 64 High 16 Very High 10 Very Low (4%) Low (6%) Medium (64%) High 16%) Very High (10%) Fig: 5.In response to Q:8. b) Price (importance) (Appendix 1) Very Low 3 Low 11 Medium 53 High 21 Very High 12 Very Low (3%) Low (11%) Medium (53%) High 21%) Very High (12%) Fig: 5.
most of them (97%) felt quality is important with half (50%) felt at the high level. Packaging at times also results in impulse buying. packaging remains an important factor with an average of ‘High’ status for the consumer. Q:8. while around a tenth (12%) felt packaging is not important. while 25% felt very high importance and 22% felt medium importance. Hence. most (88%) felt packaging is important with 38% felt at the medium level. e) Packaging (importance) Very Low Low Medium High Very High Very Low (7%) Low (5%) Medium (38%) High 36%) Very High (14%) 56 7 5 38 36 14 Fig: 5. while only a negligible (3%) felt quality is not important. quality remains an important factor with an average of ‘High’ status for the consumer. Hence.8 (e) Importance of Packaging. In response to Q:8. the quality of the product is usually judged by consumers with the way it is packed or how it looks. In response to Q:8. d.8 (d) Importance of Quality. d) Quality (importance) (Appendix 1) Low 3 Medium 22 High 50 Very High 25 Low (3%) Medium (22%) High 50%) Very High (25%) Fig: 5. Q:8. quantity remains an important factor with an average of ‘medium’ status for the consumer. importance of quality.importance while only a tenth (10%) felt quantity is not important. . importance of packaging. while 36% felt high importance and 14% felt very high importance. e. Hence.
Hence. while 14% felt low level. h) Coupons (importance) Very Low Low 68 6 . In response to Q:8.Q:8.8 (g) Importance of Price Discount. Hence. promotion offers remains low on the order of preference and not as important as other factors. Promotion offers also results in impulse buying with respect to pack on pack offers. while 14% felt high importance and 10% felt very high importance. g) Price Discount (importance) Very Low Low Medium High Very High Very Low (44%) Low (14%) Medium (20%) High 13%) Very High (9%) 57 44 14 20 13 9 Fig: 5. The other half (50%) felt promotion offers are not important. In response to Q:8. respondents were divided while half (50%) felt packaging is important with 26% felt at the medium level. f. f) Promotion offers (importance) Very Low Low Medium High Very High Very Low (44%) Low (6%) Medium (26%) High 14%) Very High (10%) 44 6 26 14 10 Fig: 5. promotion offers remains in the centre of the scale. majority of the respondents (58%) felt price discount is not important with 44% felt at the very low level. Q:8. g. while less than half (42%) felt promotion offers are important. importance of price discount. Q:8. importance of promotion offers.8 (f) Importance of Promotion offers.
In response to Q:8. Hence coupons remain ‘Very low’ on the order of preference and not important. Please rate by circling the relevant number. h. influence of television advertising. To what extent you are influenced by the advertising on the following media.Medium High Very High Very Low (68%) Low (6%) Medium (12%) High 10%) Very High (4%) 12 10 4 Fig: 5.9 (a) Influence of Television advertising. 4 = High. a . while 6% felt at low level. while (26%) felt coupons are important. Hence the influence of television advertising is a very important factor that influences a consumer choice with an average of ‘High’ status. In response to Q:9. while a third (38%) felt they are not influenced by television. majority (62%) reflected they are influenced by advertising on television with 18% felt at the medium level. 5 = Very High) a) Television Very Low 24 Low 14 Medium 18 High 25 Very High 19 Very Low (24%) Low (14%) Medium (18%) High (25%) Very High (19%) Fig 5. importance of coupons. 58 Q:9. more over majority of consumers do not earn rewards through coupons and term such practises as a ‘gimmick’ by companies to attract sales.8 (h) Importance of Coupons. 25% at the high level and 19% at the very high level. ( 1 = Very low. 3 = Medium. Coupons cannot influence the consumers to the level that they switch their product choice it can only accelerate once consumers have decided to make a product purchase. 2/3 rd of the respondents (74%) felt coupons are not important with 68% felt at the very low level. 2 = Low. .
. the increase in the viewer ship of television and increasing use of internet have decreased radio listeners. celebrity brand endorsements in the form of TV advertisements are some of the techniques used by companies. c) News papers Very Low Low Medium High Very High Very Low (45%) Low (17%) Medium (26%) High (9%) Very High (3%) 45 17 26 9 3 Fig 5. Q:9. hence television remains the most dominant advertising tool today. while only few (15%) stated they are influenced by advertising on the Radio. Hence the influence of radio advertising is not an important factor that influences a consumer choice with an average of ‘Very Low’ status. 14% at the low level. b) Radio (Appendix 1) Very Low Low Medium High Very High Very Low (71%) Low (14%) Medium (11%) High (3%) Very High (1%) 71 14 11 3 1 Fig 5. Q:9.9 (c) Influence of News paper advertising. sports and live entertainment show coverage. most of the respondents (85%) reflected they are not influenced by advertising on radio with 71% felt at the very low level. Since television channel viewer ship attract mass media beyond national boundaries and geographical locations (Global viewers). Most consumers does not even listen to the radio and hardly knew about any radio programmes. advertisers pay millions of dollars for per second slot and attracts billions of consumers world wide. b .9 (b) Influence of Radio advertising.Sponsorship of soap operas. 59 In response to Q:9. influence of radio advertising.
majority of the respondents (62%) reflected they are not influenced by advertising in news papers with 45% felt at the very low level. 17% at the low level. Hence the influence of magazine advertising is not as important as other factor that influences a consumer choice with an average of ‘Low’ status. majority of the respondents (61%) reflected they are not influenced by advertising in magazines with 51% felt at the very low level.In response to Q:9. while a third (39%) stated they are influenced by advertising in the magazines. 10% at the low level. d) Magazines Very Low Low Medium High Very High Very Low (51%) Low (10%) Medium (27%) High (10%) Very High (2%) 51 10 27 10 2 Fig 5. 60 In response to Q:9. d. e) Internet Very Low Low Medium High Very High 52 12 12 15 9 . Q:9. Hence the influence of news paper advertising is not as important as other factor that influences a consumer choice with an average of ‘Low’ status. hence though it has some influence but not as high as TV advertising. influence of magazine advertising. while a third (38%) stated they are influenced by advertising in the news papers. Q:9.9 (4) Influence of Magazine advertising. Most consumers read news papers (mostly free news papers supplied daily at bus and tube stations in London). however they overlook the advertising content and focus mainly on news and other sections. influence of news paper advertising. Magazines are read mainly for news about celebrities. current issues as well as health issues. c.
Internet is mainly used for email communication and information search (Google). majority of the respondents (64%) reflected they are not influenced by advertising on internet with 52% felt at the very low level. Hence the influence of sign board advertising remains at ‘Low’ status. majority of the respondents (64%) reflected they are not influenced by advertising on sign boards with 49% felt at the very low level. g) In-store promotions Very Low 19 .9 (e) Influence of Internet advertising. (2%) In response to Q:9. while a third (36%) stated they are influenced by advertising on the sign boards. influence of sign board advertising. Hence the influence of internet advertising remains at ‘Low’ status. email communication. 12% at the low level. f) Sign boards Very Low Low Medium High Very High 49 15 26 8 2 61 Very Low (49%) Low (15%) Medium (26%) High (8%) Very High Fig 5. e. however at present internet advertising is not as effective as TV advertising. Internet advertising will prove very effective and even could surpass TV advertising in the days to come. while a third (36%) stated they are influenced by advertising on the internet. etc. f.9 (f) Influence of Sign borads.Very Low (52%) Low (12%) Medium (12%) High (15%) Very High (9%) Fig 5. In response to Q:9. Q:9. 15% at the low level. banking. Q:9. influence of internet advertising. Internet has been on the rise specially in the third millennium with a lot of activities like internet shopping.
Q:10. 5 = Very High) a) Location Very Low Low Medium 4 3 19 . 2 = Low. How important are the following factors regarding the environment of the store. influence of in-store promotions. In shopping seasons like Christmas. 31% at the high level. 62 Consumers first check for in-store promotions like bargains. Majority of stores have separate display areas for in-store promotions. Experts are of the view that half of the consumers (50%) switch between brands due to product unavailability or in-store promotions.Low Medium High Very High Very Low (19%) Low (13%) Medium (28%) High (31%) Very High (9%) 13 28 31 9 Fig 5. majority of the respondents (68%) reflected they are influenced by in-store promotions with 28% felt at the medium level. Hence the influence of in-store promotions remains at ‘High’ status. clearance items and discounts before proceeding to main shelves. g. According to Datamoniter. (Khan 2001) In response to Q:9. Please rate by circling the relevant number. 3 = Medium. ( 1 = Very low. pack on pack offers. it also contributes to impulse purchases. research conducted by P&G exhibits a large number of consumers (85%) make purchasing decisions at the point of sale and hence. in-store promotions can strongly influence consumer decisions. in-store promotions are very effective through the “pull & push” effect.9 (g) Influence of In-store promotions. while a third (32%) stated they are not influenced by in-store promotions. 4 = High.
majority (56%) reflected they are influenced by the design of the store with 27% felt at the medium level.e. Consumers tend to shop at the nearest store available mainly to save on time and expenses related to the journey. location of the store. parking problems. most of them (93%) reflected they are influenced by the location of the store with 19% felt at the medium level. while less than half (44%) felt they are not influenced by store design. In response to Q:10. 43% at the high level and 31% at the very high level. design of the store. b . 17% at the high level and 12% at the very high level. Hence the influence of store design is an important factor that influences a consumer choice with an average of ‘medium’ status. b) Design Very Low Low Medium High Very High 34 10 27 17 12 63 Very Low (34%) Low (10%) Medium (27%) High (17%) Very High (12%) Fig 5. Hence the influence of store location is a very important factor that influences a consumer choice with an average of ‘High’ status. while a few (7%) felt they are not influenced by store location. is one of the most important factors i.10 (a) Store Location. Store location or convenience. a .10 (b) Store Design.High Very High Very Low (4%) Low (3%) Medium (19%) High (43%) Very High (31%) 43 31 Fig 5. near to the place of residence or work. In response to Q:10. etc. .
c.10 (c) Store Atmosphere. Friendly and cordial atmosphere is usually preferred by consumers. offering free home deliveries and even certain credit facilities to their regular customers. majority (65%) reflected they are influenced by the atmosphere of the store with 30% felt at the medium level. while one third (35%) felt they are not influenced by store atmosphere. atmosphere of the store. . however a majority of the customers also felt that corner shops or grocers provide better and conducive atmosphere than stores as grocers have less customers and keep a personal touch by enquiring about their well being. In response to Q:10. d) Cleanliness Very Low Low Medium High Very High Very Low (2%) Low (3%) Medium (13%) High (50%) Very High (32%) 64 2 3 13 50 32 Fig 5.c) Atmosphere Very Low Low Medium High Very High Very Low (24%) Low (11%) Medium (30%) High (24%) Very High (11%) 24 11 30 24 11 Fig 5. usually the sales counter staff at stores greet customers with a smile and welcome gestures. 24% at the high level and 11% at the very high level.10 (d) Store Cleanliness. Hence the influence of store atmosphere is a very important factor that influences a consumer choice with an average of ‘high’ status.
e. d. Usually FIFO (first in first . 65 In response to Q:10. most of them (95%) stressed on store cleanliness with 50% at the high level. e) Shelf display Very Low Low Medium High Very High Very Low (7%) Low (6%) Medium (26%) High (48%) Very High (13%) 7 6 26 48 13 Fig 5. Hence the influence of store cleanliness is a very important factor that influences a consumer choice with an average of ‘high’ status. while a few (5%) felt they are not influenced by store cleanliness. most of them (87%) stressed on better shelf display with 48% at the high level. while a few (13%) felt they are not influenced by shelf display.10 (e) Shelf display. Hence the influence of shelf display in the store is a very important factor that influences a consumer choice with an average of ‘high’ status. All major stores and grocers have some cleanliness mechanisms in place where display areas in particular are cleaned more than once a day. cleanliness in the store. f) Searchable in store Very Low Low 7 5 offers instant details about price and quantity as required by the consumer. Stores like Tesco and Sainsbury have automated machines to clean the store and display areas 3-4 times a day. Good shelf display attracts the customer and saves time in retrieving the product and out) principle is applied in shelf display to control expiry problems. 13% at the very high level and 26% felt at the medium level. Cleanliness is a human nature hence consumers want the store areas to be clean. shelf display in the store.In response to Q:10. 32% at the very high level and13% felt at the medium level.
less time and convenience in shopping.Medium High Very High Very Low (7%) Low (5%) Medium (22%) High (48%) Very High (18%) 22 48 18 Fig 5. Age : Under 20 8 . With large mega stores and hyper markets. most of them (88%) stressed on easy to search basis with 48% at the high level. Author has tried to approach equal number of respondents with respect to gender in order to reflect proper view point. while a few (12%) felt they are not influenced by easy to search basis.11 Gender. In response to Q:10. however majority of the males (63%) participated while female response was a little over one third (37%). customers tend to switch over to other stores where it is easy to search. consumer choice Q: 11. searchable in the store. Products should be searchable in store as it provides easy accessibility. Q: 12. Gender: Male Female 66 63 37 Male 63 Female 37 Fig 5. A large number of females refused to take part in the survey and hence their views could not be considered for analysis. f. it becomes very tedious if products are not displayed section wise with respect to time and ease of shopping. If products are not easy to search.10 (f) Searchable in store. 18% at the very high level and 22% felt at the medium level. Hence the influence of searchable in store is a very important factor that influences a with an average of ‘high’ status.
Professional qualification. According to Kotler (1994) age is an important consideration for research. 67 In response to Q:13. 22 were between 20-25 years (less than 25 years of age).20 – 25< 25 – 30< Over 30 22 22 48 Under 20 yrs = 8 20 yrs to less than 25 yrs = 22 25 yrs to less than 30 yrs = 22 Over 30 yrs = 48 Fig 5. 34% had a Bachelors degree and only a few (8%) had Masters degree at the time survey was conducted. another 22 were between 25-30 (less than 30 years) and majority of the respondents (48) were older than 30 years at the time survey was conducted. Q: 14. a quarter (26%) were found with no degrees. Have Masters Degree. 8 were less than 20 years of age at the time of survey. Q: 13.13 Education. Out of the 100 respondents who participated in the survey. while 32% had professional qualification.20 hours a week) Working Full Time (more than 20 hours a week) 10 24 66 . Education : No degree. 26 32 34 8 No Degree = 26 Professional Qualification = 32 Have Bachelors Degree = 34 Have Masters Degree = 8 Fig 5. Have Bachelors degree. Work : Not working Working Part Time (between 10 .12 Age. Education level of respondents.
. Family status of respondents. Conclusions 68 Consumer perceptions and the factors that influence buying behaviour determine the consumer choice between MB(s) and ROB(s). a tenth (10%) were not working. 50 4 46 Living Alone (50%) Single Parent (4%) Living in a family (parents or partner) (46%) Fig 5. In response to Q:14.15 Family status. Living in a family (with a partner or parents). only a few (4%) were single parents and less than half (46%) were living in family with either parents or a partner. In response to Q:15.Not Working = 10 Part time (10-20 hrs/week) = 24 Full time (more than 20 hrs/week) = 66 Fig 5.14 Work pattern. Q: 15. Work patters of respondents. 24% were working only part time (10-20 hours a week) and majority (66%) were on a full time position (more than 20 hours a week) at the time survey was conducted. Family status : (see Appendix 1) Living alone. Single parent. half of them (50%) were living alone.
Detergent market (in UK) is dominated by MB(s) as most of the market share is controlled by them. features. used by millions of consumers world wide. Moreover the availability of MB(s) is independent of the particular ‘store’ unlike ROB(s). promotional and R&D strategies combined with enormous pool of high skills. effective supply chain management. results in increasing quality levels as well as developing innovations. 69 UK detergent market has reflected slow growth during the last few years. sourcing of ingredients from different parts of the world. The risks involved in sub-standard detergent on clothes and laundry appliances influence consumers towards MB(s). line extensions and co-brands in accordance with consumer expectations that have resulted in repeated purchases. ROB(s) have shown strong growth despite sluggish market conditions. Massive production facilities. Over the period of time consumers have developed an inclination to the particular product leading to ‘habitual purchase’. Presence of MB(s) for a long time as well as delivering consumer expectations (to a certain extent) from generation to generation. Brand reflects a unique identity for the product standards. Aggressive advertising and promotional campaigns through electronic and print media. . hence also contributes to brand loyalty. The effective and hi-tech systems developed by MB(s) for administration of different process involved in the delivery of final product to the consumer. Power of brand is another factor that influences consumer buying behaviour. MB(s) have developed brands. expected by consumers.Consumer perception about MB(s) associated with high price act as a reflection of high quality standards. strong distribution network. particularly through Television advertising on regional. however MB(s) are facing significant challenges from ROB(s). benefits and attributes. national and global level have significantly contributed towards brand building efforts over a period of time. massive global turnover to the tune of billions of pounds enabling millions of pounds worth advertising. enabling the consumer to identify the product during every purchase. ensure product availability according to performance standards. while MB(s) are affected to a minimum level. commitment and expertise. combined with human nature ‘resistance to change’ results in brand loyalty.
The conventional print media like news papers. attributes and high quality standards through individual sales promoters at high volume and strategic locations of retail stores. Recommendations for MB(s). discounts. MB(s) should implement following measures to offset the strategic challenges faced from ROB(s). magazines. ROB(s) are investing in quality control. with a special focus on electronic media like Television. however this situation can change with time to come. catalogues and write ups from experts should also be explored for maximum consumer reach. Donations to charitable causes on sales. Internet and SMS technology. • Increase advertising and promotional strategies to enhance brand value. In the current situation they still lack behind the efforts of MB(s). ROB(s) will significantly increase their market share to a level that MB(s) will face severe competition. Statistics and data from credible sources highlight the growth as well as ‘brand development’ efforts of ROB(s). • Focus on R&D to develop new innovations as a competitive advantage against ROB(s) and other MB(s). 70 • Collaborations with laundry appliance manufacturers and apparel firms to improve quality standards for the end user and encourage recommendations and media focus.If the market grows at similar trends. displaying messages on the products about the same. gift vouchers and gift hampers. • In house promotions explaining brand features. advertising and promotional strategies to have an edge over competition in the future. . ROB(s) are investing in developing premium brands at lower prices to place themselves on par with MB(s). • • Promotional offers like pack on pack.
• Increase market penetration by expanding existing store areas. Loyalty programmes similar to ‘Loyalty card’ concepts of ROB(s). Invest in ethical concerns like Aids awareness. reducing effects of global warming. • Investments on quality control and supply chain management to ensure product availability as per perceived consumer standards. opening new stores and acquiring other retail network on regional. education in the third world. ROB(s) should implement following measures to increase their market share ensuring current and future prospects.• • • • Stock investments (shares and debentures) in retail and media sectors to enhance the interests of MB(s). sponsorship of global charities. recommendations from experts should be used to enhance brand value. • Branding techniques like creation of brand equity through celebrity endorsements. advertising and promotional strategies on regional as well as national level. Aggressive marketing. These steps should take into consideration the strategic presence of retail stores and specific prospective segments of the population. Recommendations for ROB(s). These measures will provide a high social credibility and enhance brand loyalty as consumers view these measures in high moral spirit. poverty control. Exploring untapped markets like countries in Eastern Europe and Africa for new avenues to grow through collaborations with local partners and foreign ownership. national and global level to increase consumer reach. These efforts should highlight high performance and quality standards to offset consumer perceptions of low price – low quality. . • • Increase brand extensions to provide better choices for consumers. 71 • Develop and source more products to provide alternatives to the consumers.
features. Questionnaire design and analysis opened up new horizons in terms of extracting relevant primary data and analysis to establish solutions for the problems faced. The most important lesson is regarding research administration i. Reducing prices only will not yield a competitive advantage against a high quality (perception) competitor.uk/index. customer loyalty requires branding measures.co. Consumer buying behaviour model explanation provided an insight into the different factors that influence consumers and the effective implementation of strategies should consider these factors.ariel. to enhance brand perception. how to conduct the research.htmlretrieved 9-11-2007 . attributes and quality standards are the focal areas for long terms profitability and survival of any commercial venture. Decisions can be taken depending on successful research undertaken on the subject relevance. References: 72 1) Ariel (2006) Ariel washing advice. critical analysis of the same and testing the same through primary research.• Loyalty programmes like ‘Loyalty card’ should further develop to increase customer loyalty. Brand and advertising study has empowered the author with knowledge of brand significance in long term success through brand building. Personal Reflection Author has learnt significant lessons from this research to ensure career growth in future endeavors. Price reductions only increase sales not customer loyalty.e. Developing solutions for the problems faced through gathering secondary data relevant to the topic from credible sources. educating the customer about product benefits. • Support of charitable. creating brand equity leading to brand loyalty. The effective utilization of advertising as well as promotion techniques. Long terms investments. http://www. ethical and social causes to increase credibility. • Sponsorship of live sports and entertainment events like London 2012 Olympics will influence consumer perceptions.
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g) Asda Washing Powder. c) Laundry business. b) Once in two weeks.org/wiki/Tesco retrieved 6-11-2007 57) Wikipedia/Unilever (2007)http://en.wikipedia. b) Washing at laundry. retrieved 6-11-2007 Appendix 1 : QUESTIONNAIRE Pg: 1/3. d) Others Please Specify _________________________________________ 4) Which product do you buy? a) Ariel. c) Persil. 1) Frequency of detergent purchases. d) Once in 3 months. conducting research on consumer buying behaviour towards selecting Retailer’s Own Brands (ROB) or Brand Manufacturers of Detergents in U. Thank you very much for your cooperation. if you reside in the U.K.wikipedia.org/wiki/Unilever.K. d) Tide. The information gathered will remain anonymous and shall be used for statistical analysis. b) Bold. Section A: There are 10 questions regarding consumer buying behaviour towards Retailer’s Own Brands v/s Brand Manufacturers.org/wiki/Procter_%26_Gamble retrieved 6-11-2007 56) Wikipedia Tesco (2007)http://en. Kindly answer the following questions. e) Tesco Washing Powder. i) Others Please Specify _________________________________________ . Author is an MBA student of Coventry University.55) Wikipedia P&G (2007)http://en. UK. e) Others Please Specify _________________________________________ 2) Which pack size do you buy? a) 1 kg (small) b) 2 kg (medium) c) 5 Kg (large) d) Others Please Specify _________________________________________ 3) Reason for purchase of a detergent? a) Washing at home. f) Sainsbury’s Washing Powder. h) Morrison’s Washing Powder. c) Once in a month. a) Once in a week.wikipedia.
5) How do you feel about the product you are using at present with respect to results (clean washing) ? a) Highly satisfied b) Satisfied c) No difference d) Not satisfied e) Highly un satisfied f) Thinking to switch g) Others Please Specify _________________________________________ Pg: 2/3. 5 = Very High ) . 3 = Medium. ( 1 = Very low. 2 = Low. 5 = Very High ) a) Brand Name b) Price c) Quantity d) Quality e) Packaging f) Promotion offers g) Price discounts h) Coupons 1 1 1 1 1 1 1 1 2 2 2 2 2 2 2 2 3 3 3 3 3 3 3 3 4 4 4 4 4 4 4 4 5 5 5 5 5 5 5 5 9) To what extent you are influenced by the advertising on the following media. 2 = Low. what was your experience regarding results (clean washing of clothes) a) No b) Yes i) Highly satisfied ii) Satisfied iii) No difference iv) Not satisfied v) Highly un satisfied 7) What sources do you usually use to obtain information about detergents? a) Friends b) Past experience c) Television d) Radio e) Newspapers f) Magazines g) Internet h) Sign boards i) In store promotions j) Others Please Specify _________________________________________ (Please select more than ONE if appropriate) 8) On the basis of what factors do you choose the product? Please rate by circling the relevant number. 6) Have you ever switched. (1 = Very low. 4 = High. 3 = Medium. 4 = High. if yes. Please rate by circling the relevant number.
11) Gender 12) Age: a) Under 20. Please rate by circling the relevant number. 5 = Very High ) a) Location b) Design c) Atmosphere d) Cleanliness e) Shelf Display f) Searchable in store 1 1 1 1 1 1 2 2 2 2 2 2 3 3 3 3 3 3 4 4 4 4 4 4 5 5 5 5 5 5 Section B: There are 5 questions of demographic information.a) Television b) Radio c) Newspaper d) Magazine 1 1 1 1 2 2 2 2 3 3 3 3 4 4 4 4 5 5 5 5 Pg: 3/3. d) Have Masters Degree. b) Working occasionally (less than 10 hours a week) c) Working Part Time (between 10 . 14) Working: a) Not working. 2 = Low. 13) Education: a) No degree. d) Over 30. 3 = Medium. c) Have Bachelors degree. b) 20 – 25. e) Internet f) Sign Boards g) In store promotions 1 1 1 2 2 2 3 3 3 4 4 4 5 5 5 10) How important are the following factors regarding the environment of the store. c) 25 – 30. ( 1 = Very low. b) Professional qualification.20 hours a week) Male_________ Female__________ (Kindly tick as applicable) . 4 = High.
c) Living in a family (with a partner or parents).d) Working Full Time (more than 20 hours a week) 15) Family status. a) Living alone. b) Single parent. d) Others Please Specify _____________________________________ .
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