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Factors influencing the consumers buying decision of Private Label brand: A

case study on Big Bazaar

Article · November 2014

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VSRD International Journal of Business and Management Research, Vol. IV Issue XI November 2014 / 309
e-ISSN : 2231-248X, p-ISSN : 2319-2194 © VSRD International Journals : www.vsrdjournals.com

RESEARCH PAPER

FACTORS INFLUENCING THE CONSUMERS BUYING DECISION OF

PRIVATE LABEL BRAND : A CASE STUDY ON BIG BAZAAR
1Ajay Singh* and 2Nripendra Singh
1Research Scholar, 2Associate Professor, 1,2Department of Management Studies,
Jaypee Business School, Noida, Uttar Pradesh, INDIA.
*Corresponding Author’s Email ID: ajaysingh.bvu@gmail.com

ABSTRACT
The purpose is to identify the factors which are considered by Customers while deciding between opting for a national brand and a
private label and how can a company increase the sales of its private labels by working upon these factors. The study is descriptive in
nature. A case study is conducted on Big Bazaar private labels for this purpose. The data is collected using a structured questionnaire.
The research came out with three parameters of judgment from a customer point of view. These are Merchandise Assortment, Brand
Equity and Brand Awareness. The research shows how a customer makes a purchase decision when private labels come into picture.
The parameters change to some extent due to a completely different value proposition provided by the private labels as compared to
national brands. The responses are collected in a limited time frame for a particular industry – Food & Grocery. Future research is
required in order to test the generalization of the proposed parameters.

To boost the sales of private labels and enhance their image in minds of the customers, it is important for the company to focus on few
key areas identified in the findings. The merchandise assortment of the store should reflect a proper mix of store brands and national
brands. The brand equity of the retailer helps in increasing the private labels sale as the retailer becomes a brand in itself emphasizing
the private labels also to be treated as a brand in the mind of the customer. Knowledge about brand can increase the reliability factor
for customers by reducing their perceived risks about a product. .If worked out properly these parameters can bring out substantial
improvements in the sales of private labels.

Keywords: Private Labels, Food and Grocery, Merchandise Assortment, Brand Equity, Big Bazaar.

1. INTRODUCTION efforts to increase the share of private labels in their

There has been a significant increase in Private Label
brands in recent years worldwide. Private Labels are
growing faster than manufacturer’s brands. They are more
popular today than at any time before. Private Labels have
gained an increased market penetration and are growing at
a rapid rate. A Private Label is defined as ‘the products
retailers sell under their own names”. According to the
Private Label Manufacturers’ Association (PLMA),
“Private Label products encompass all merchandise sold
under a retailer’s brand. That brand can be the retailer’s
own name or a name created exclusively by that retailer”.
The term retailer’s own-brand is often used
interchangeably with private label, own-label, retailer
brand or store brand. Private labels have come a long way
over the past three decades. In the past, Private labels were
a cheap, low-price alternative to manufacturer brands but
today, private labels have taken on a premium brands
image. They are no longer seen as just cheap and poor
quality products bought by less affluent customers but
rather they Endeavour to be an alternative option of value
or quality to manufacturer’s brands. Retailer’s brands are
to be found next to national brands in every category.
In India, however the contribution of private labels is just
10 – 12% of the total organized retail (Images Retail
Report 2009). Positively the growth of private labels in
recent years is phenomenal, giving retailers a lot of scope
to increase their profitability. Many retailers are making
offerings, Big Bazaar being one of them. For example
Spencer’s in India has private labels in 60% of its 650
product categories, and the sales of private labels are
increasing at the rate of 40% annually. In Lifestyle
International private labels contribute to 25% of its sale
etc.
2. INTRODUCTION TO THE COMPANY
Big Bazaar was launched in September, 2001-by first
generation entrepreneur KISHORE BIYANI - with the
opening of its first four stores in Calcutta, Indore,
Bangalore, and Hyderabad in 22 days. Within a span of
ten years, there are now 148 Big Bazaar stores in 80 cities
and towns across India.
Big Bazaar is designed as an agglomeration of bazaars or
Indian markets with clusters offering a wide range of
merchandise including fashion and apparels, food
products, general merchandise, furniture, electronics,
books, fast food and leisure and entertainment section.
Food Bazaar, a supermarket format was incorporated
within Big Bazaar in 2002 and is now present within every
Big Bazaar as well as in independent locations. Most of
the Big Bazaar stores are multi-level and are located in
stand-alone building in city centre as well as within
shopping malls. These stores offer over 200,000 SKUs in a
wide range of categories led primarily by fashion and food
Ajay Singh and Nripendra Singh
products.
Big Bazaar is a part of FUTURE GROUP and is owned
through a wholly owned subsidiary of Pantaloon Retail
India Limited, that is listed on Indian stoke exchanges.
3. LITERATURE REVIEW
For conducting this research it was important to get an
insight about the concepts of the development of private
labels, their importance, and consumer perception for
brands and store image etc. There are various factors
which can influence a customer’s purchase decision. Some
of them are discussed below:
A brand-image is defined as the total sum of brand
associations held in consumer memory that lead to
perceptions about the brand (Keller, 1993). These
associations of brand image are multidimensional and
consist of the affective dimension or the attitudes towards
the brand and the perceived quality dimension (Keller,
1993). Consumer uses different cues, benefits, symbolic
meanings etc. to relate to a brand. The cues used by the
customers can be intrinsic or extrinsiccues.
Extrinsic cues refer to cues which are extrinsic to a
product and do not have to be experienced in order to
make judgments, like the packaging, brand name, price
and advertising. Intrinsic cues refers to the factors like
taste, quality etc. which can be judged only by
experiencing. These two types of cues are also considered
responsible for building brand image. For national brands
it is comparatively easier to develop the brand image, as
they spend more on marketing, packaging etc. and are
always positioned as high quality offerings.
In case of Private labels it’s more complex. Here
customers do not have a strong brand association.
However, authors observed that the store image acts as an
important indicator of store brand quality (Semeijn and al.,
2004). Researchers have studied a multitude of retailer
attributes that influence overall store image, e.g., the
variety and quality of products, services, and brands sold;
the physical store appearance; behavior and service quality
of employees; the price levels, depth and frequency of
promotions; and so on (Burt and Carralero-Encinas, 2000;
Ailawadi and Keller, 2004; Sorrenberg and Erasmus,
2008). In case of private labels customers tends to go more
on the extrinsic cues. Therefore, factors like packaging,
display etc. have to be taken care of. Although this will
increase the cost for the retailer but he can keep saving
margins by squeezing the supply chain and then play on
volumes. Also for private labels the efficiency of a
salesman to convince the customer plays a major role.
Although there is a causal relationship between the store
image and the salesman’s reliability as considered by the
customer.
But then the overall strategy defined by the company will
depend on other factors also. The overall strategy and
positioning of retailer will also define what a consumer
VSRDIJBMR, Vol. IV (XI) November 2014 / 310
expects and what factors he/she consider for coming to a
conclusion, while selecting a brand. Here comes the role
of the brand architecture. Esbjerg et al. (2004) adapted
Aaker and Joachimsthaler (2000) brand architecture
concept to the retail setting by defining retailer brand
architecture as a retailer’s assortment of manufacturer
brands, retailer brands and generic products. The brand
architecture can differ based on two dimensions: the
quality of retailer brands and visibility of retailer brands
(Esbjerg et al. 2004).
As we saw customer while deciding among the National
Brands and the Store brands consider various factors.
Relying on various literatures discussed above some of
these factors can be identified as are store image (the trust
factor), variety and quality of products, options available
in national brands i.e. The kind of brand architecture,
promotional offers going on, prices, service, salesman’s
explanation and features. So, this research has narrowed
down on these factors.
4. RESEARCH METHODOLOGY
The objectives of this research is to identify factors which
a customer considers for selecting a brand, the consumer
perception for store brands, reasons for low contribution of
private labels in a retail outlet and in the end coming up
with a set of parameters which can be worked upon to
enhance store brand’s image and increase their
contribution in the total sales. For this purpose in Big
Bazaar Primary data was collected for which Survey
method is used for obtaining information which is based
on questioning the respondents. Structured questionnaire is
used to ask prearranged questions from the respondents.
Most of the questions are close ended with multiple
choices to assist customers in answering. Most of the
questions are framed on 5 point Likert Scale. The personal
detail of respondents is limited to Age, Qualification and
Area of Residence.
Sampling Design
Sampling Technique: Judgment Sampling
The selection of sampling units is based on judgment of
the interviewer. In this research the interviews are taken
from the customers on the shop floor at the time when a
sale is closed.
Sample Size : 760
Number of Respondents
for National Brands : 620
Number of respondents
for Big Bazaar Private
Label : 140
Assumption: Sample Size of760respondents is true
representative of the population.
Ajay Singh and Nripendra Singh VSRDIJBMR, Vol. IV (XI) November 2014 / 311

Demographic Profile

Table 1: Demographic Profile of Customers

Gender Male Female Percentage
Total
Age of
Percentage within Age group Percentage within Age group Percentage
(In years) Total
15 – 25 57 43 100 37
25 – 35 62 38 100 54
35 -45 53 47 100 37
>= 45 72 28 100 26
Percentage of Total 62.5 37.5 100

5. RESULTS AND ANALYSIS
As shown in Table 2, cross tabulation was done to identify
the level of awareness about Big Bazaar private labels
among the male and female respondents. It can be seen
that male customers are comparatively more aware about
Big Bazaar private labels, but the difference is not
significant enough. This can be interpreted by the data that
number of male respondents was more than number of
female respondents (refer to Table 1).

Table 2: Private Label Awareness * Gender Cross Tabulation

Gender Total
Male Female
Count 240 130 370
% within Private label awareness 64.9% 35.1% 100.0%
Yes
% within Gender 50.5% 45.6% 48.7%
Private
% of Total 31.6% 17.1% 48.7%
Label
Count 235 155 390
Awareness
% within Private label awareness 60.3% 39.7% 100.0%
No
% within Gender 49.5% 54.4% 51.3%
% of Total 30.9% 20.4% 51.3%
Count 475 285 760
% within Private label awareness 62.5% 37.5% 100.0%
Total
% within Gender 100.0% 100.0% 100.0%
% of Total 62.5% 37.5% 100.0%

Table 3: Customers Responses on Factors Considered for Preference of National Brand (Percentage)
Neither
S. Factors for Preference to National Strongly Strongly
Disagree Agree nor Agree
No. Brand Disagree Agree
disagree
1. It has high credibility 0 16.93 12.90 22.58 47.58
2. This brand’s products are of high quality 0.80 6.45 33.06 44.35 15.32
The features available in this brand were
3. 8.06 9.67 9.67 20.16 51.61
not available in any other brand
Prices were affordable and less than
4. 17.74 16.93 12.09 35.48 17.74
other brands
The brand provides excellent after sales
5. 20.16 29.03 21.77 12.90 16.12
services

As shown in Table 3, customers prefer National Brands as these are more credible and customers can rely on its quality.
Feature play a major role in deciding about a brand, main reason being the category we are dealing with. Customers who
are more national brand prone do not consider prices to be a determining factor.

Table 4: Customer Responses for Factors Considered for Preference of Big Bazaar Private Labels (Percentage)
S. Factors for Preference to Big Strongly Neither Agree Strongly
Disagree Agree
No. Bazaar Private Labels Disagree nor Disagree Agree
1. I found it value for money 0 3.57 14.28 60.71 21.42
2. It is a high quality product 3.57 17.85 60.71 14.28 3.57
The offer provided was better than
3. 7.14 39.28 25 21.42 7.14
offers on other brands
4. The prices were affordable 0 7.14 3.57 17.85 71.42
I liked the features provided in the
5. 3.57 10.71 21.42 28.57 32.14
private label
6. I trust the brand Big Bazaar 3.57 0 21.42 35.71 39.28
Ajay Singh and Nripendra Singh VSRDIJBMR, Vol. IV (XI) November 2014 / 312

As mentioned in Table 4, there are certain factors which play significant role in generating positive inclination towards
the store brand. Customers preferring store brand give more importance to factors like price, good features differentiating
them from the national brands, after sales support and positive inclination towards store as a brand. This clearly shows
the key areas on which a retailer should focus on.

Table 5: Customer responses on Factors Responsible for Rejecting Big Bazaar Private Labels (percentage)
S. Factors for Rejecting Big Bazaar Strongly Neither Agree nor Strongly
Disagree Agree
No. Private Label Disagree Disagree Agree
1. No other option was available 29.83 20.96 12.90 14.51 21.77
I was less aware about Big Bazaar 26.61
2. 2.41 9.67 24.19 37.09
Pvt. Label
3. CSA’s didn’t explained me about it 21.77 20.16 29.03 16.93 12.09
4. Didn’t found it value for money 22.58 10.48 48.38 16.93 1.61
5. Did not liked it’s quality 26.61 8.87 56.45 5.64 3.22
6. Had bad experience with it earlier 88.70 3.22 4.83 3.22 0
I am brand loyal towards the other
7. 6.45 25.80 15.32 26.61 25.80
brand
I do not trust Big Bazaar Pvt. Labels
8. 17.74 25.80 10.48 16.93 29.83
(Lack of credibility)

As shown in Table 5, 63% respondents didn’t purchase

Big Bazaar private labels as they didn’t found it in that Communalities
particular category. This shows that there are many Initial Extraction
potential customers for private labels which can be No of Option 1.000 .644
captured through better product availability. The statistics Awareness 1.000 .628
also highlights the importance of proving satisfactory
CSA's explanation 1.000 .537
information regarding the product by the sales executive.
18% customers didn’t purchased Big Bazaar private labels Value for money 1.000 .871
because they were not given satisfactory information Quality 1.000 .798
regarding them by the Customer Sales executives. This Experience with the brand 1.000 .829
communicates a lack of effort by the sales side. As brand loyalty towards other brand 1.000 .542
mentioned above the sales executive’s assistance plays an
important role in aiding the decision making of the Lack of Trust 1.000 .626
customers, all possible efforts should be made to minimize Extraction Method: Principal Component Analysis
this percentage. Further to identify the relevance of the
factors, Factor analysis has been conducted considering Rotated Component Matrix
these set of parameters as mentioned in Table 5. Component
1 2 3
Factor Analysis: Factor analysis has been conducted to No of Option .772 -.249 .094
categorize these factors in relevant components based on Awareness -.071 .776 .146
consumer perception about the store brands and CSA's explanation .30 .012 .373
expectations with them. It can be identified that customers Value for money .933 .005 .008
consider these factors for eliminating an option as well as Quality .891 .061 -.021
for considering one. Therefore, it is to be understood that Experience with the brand .114 .043 .902
these components when applied to the private labels Brand loyalty towards other brand -.209 .670 .224
strategy of a company, can prove beneficial in obtaining Lack of Trust .121 .766 -.154
the overall company’s objective in the long run. Extraction Method: Principal Component Analysis.
KMO and Bartlett's Test Rotation Method: Varimax with Kaiser Normalization. A
Kaiser-Meyer-Olkin Measure of Sampling Rotation converged in 4 iterations.
.886
Adequacy.
Variables having value >.3 are grouped in to one
Bartlett's Test Approx. Chi-Square 2706.685
component. Following are the three components extracted.
of Df 153
Sphericity Sig. .000 Component 1  No Of Options (.772) + Value for money
(.933) + Quality (.891)
Feasibility of the Test: KMO test is used to check the Component 2  Awareness (.776) + Brand loyalty
towards other brand (.670) + Lack of
feasibility of the factor analysis. As in given table KMO is
0.886 which is greater than .5 and Approx chi square value trust (.776)
is 2706.685 which is too high, Therefore Factor analysis Component 3  CSA’s Explanation (.373) + Experience
can be done on the findings. with the brand (.902)
Ajay Singh and Nripendra Singh
Above inferred component can be interpreted as
following constructs:
Components 1 refer to Merchandise Assortment,
Components 2 refers to Brand Equity and component 3
refers to Brand Awareness.
Merchandise Assortment here refers to the options
available for the customer in a particular category that
comes under his/her consideration set. It means private
labels to be available across the category and in a wider
price range. Another important component is the Brand
Equity, which refers to the brand image in case of national
brands and more prominent store image in case of private
labels. Usually the low level of store brand equity reduces
the sales of private labels in a store. The third component
is knowledge about the brand. For customers’ source of
knowledge is either their own past experience or the
reviews coming from the public and aids given by the
sales executives. Therefore, it also becomes an important
consideration.
The above parameters are considered by the customers for
deciding which brand to consider, either being a national
brand or a store brand. The final choice depends on the
best option customer finds after evaluating the options on
the above parameters.
6. CONCLUSION
In this fast growing retail industry, if retailers want to
survive and perform well, the only way is to seek
assistance of store brands to create differentiation .The
current work provides an insight about the customers
decision making process by coming up with the
consolidated factors responsible for brand selection by a
customer. The study tries to evaluate factors for both
national brands and store brands, keeping in mind the
objective of enhancing the performance of store brands in
a store. The results give us few parameters for the
customers making a purchase decision for Food &
Grocery. Following are the key findings of the study:
 High level of credibility which brands develop
through years of marketing and promotional activities,
excellent services and word of mouth, is an important
factor for customers. Therefore, to attract customers
to purchase private labels, it is important for the store
to be strong brand in itself to pursue them for the first
purchase.
 In Food & Grocery retail industry quality is one of the
most important drivers of sales. Private labels have a
better chance to differentiate themselves from the
store brands by coming up with better quality.
 Salesmen play a major role in influencing the
customers, by giving them proper cues to aid the
purchase of customer. They can justify a private label
to a customer and induces him/her to make the
purchase.
 Earlier prices used to be the only Unique Selling
Proposition for the store brands, but now other things
like efficient after sales support by the retailer for it’s
in- house brands, etc. are also becoming an important
parameter to consider by the customers.
 The merchandise assortment, brand equity and brand
awareness are identified as the key components for
VSRDIJBMR, Vol. IV (XI) November 2014 / 313
consideration of a brand, especially store brands.
7. FUTURE SCOPE
The paper discusses the factors influencing the purchase of
private labels in a store. The study is of continuous
importance for the retailers who intend to increase their
store brands acceptance in the market. As in the present
competitive market store brands act as a differentiator,
giving companies a competitive edge, most of the retailers
would come under this category.
However, as the research is at present restricted to the food
& grocery of retail industry, need arises for further
research covering other sectors. This will be able to
generalize the proposed parameters across industries as
well as different formats.
Further research can also be conducted to correlate the
consideration of these parameters based on customer’s
socio – demographic profiles.
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