Sylvia

CONSUMERS’ PERCEPTION TOWARDS PRIVATE LABEL BRANDS IN KENYA
A Case Study of Consumers in Kirinyaga County
MUGURE SYLVIA
HR211-0122-2013
A research Project Submitted to School of Business and Economics in Partial fulfillment of

the Requirement for the award of Bachelor of Commerce (Marketing Option) of Kirinyaga
University
MAY, 2017
i
DECLARATION
This research proposal is my original work and it has not been presented in this or any other
university.
Signature………………………….. Date………………………..
This research project report has been presented with my approval as the university supervisor.
Signature………………………….. Date……………………………
Dr. Hannah Wambugu

School of Business and Economics, Kirinyaga University
ii
DEDICATION
This research project is dedicated to my family which has given me the support I needed as I
wrote this work. I sincerely appreciate both their financial and non-financial support provided to
me.
ii
ACKNOWLEDGEMENT
I would like to acknowledge and give much gratitude to my supervisor Dr. Hannah Wambugu
whose guidance and positive criticism made writing this project a success. I would also like to
thank my parent and the entire family for their much support whether material or emotional and
also their prayers. I would also like to give much thanks to God Almighty for giving me good
health and protection throughout this research period.
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LIST OF FIGURES
Figure 2.3: Conceptual Framework
Figure 4.2.1: Gender of the Respondents
Figure 4.3: Level of Satisfaction
Figure 4.6: Willingness of buying PLBs
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LIST OF TABLES
Table 2.2.2: Margins of private label brands penetration
Table 4.2.1: Age of the respondents
Table 4.2.2 Income Groups of the Respondents
Table 4.3.1 Frequency of Purchase of Private Label Brands
Table 4.3.2 Primary Reason for Purchasing Private Label Brands
Table 4.4 Statements on Consumers’ Perception on Price.
Table 4.5 Consumers’ Perception towards Quality of Private Label Brands
Table 4.5: Statements on consumers’ perception on the availability of PLBs.
Table 4.6.1 The percentage of influence of consumers’ to buy PLBs
v
LIST OF APPENDICES
APPENDIX I: INTRODUCTION LETTER
APPENDIX II: QUESTIONNAIRE
vi
ABBREVIATIONS
PLBs: Private Label Brands
PLMA: Private Label Manufacturers Association
FCMG’S: Fast Moving Consumer Goods
COFEK: Consumer Federation of Kenya
KAM: Kenya Association of Manufacturers
vii
TABLE OF CONTENTS
DECLARATION.......................................................................................................................................ii
DEDICATION...........................................................................................................................................ii
ACKNOWLEDGEMENT.......................................................................................................................iii
LIST OF FIGURES..................................................................................................................................iv
LIST OF TABLES.....................................................................................................................................v
LIST OF APPENDICES..........................................................................................................................vi
ABBREVIATIONS.................................................................................................................................vii
TABLE OF CONTENTS........................................................................................................................vii
ABSTRACT...............................................................................................................................................x
CHAPTER ONE........................................................................................................................................1
INTRODUCTION.....................................................................................................................................1
1.1: Background...........................................................................................................................1
1.2 Statement of the problem.......................................................................................................5
1.3 Objectives of the study...........................................................................................................6
1.3.1 General Objectives..................................................................................................................6
1.3.2 Specific Research Objectives.................................................................................................6
1.4 Research Questions................................................................................................................6
1.5 Significance of the Study.......................................................................................................6
1.6 Scope......................................................................................................................................7
1.7 Limitations of the study.........................................................................................................7
1.8 Definition of terms.................................................................................................................8
CHAPTER TWO.......................................................................................................................................9
LITERATURE REVIEW.........................................................................................................................9
2.1 Introduction............................................................................................................................9
vii
2.2 Theoretical framework...........................................................................................................9
2.2.1 Consumer perception..............................................................................................................9
2.2.2 Private labels.........................................................................................................................10
2.3 Empirical review..................................................................................................................14
2.3.1 Prices of PLB........................................................................................................................14
2.3.2 Quality of PLB......................................................................................................................16
2.3.3 Availability of PLB...............................................................................................................17
2.3 Conceptual framework.........................................................................................................19
CHAPTER THREE.................................................................................................................................20
RESEARCH METHODOLOGY...........................................................................................................20
Introduction................................................................................................................................20
3.1 Research Design...................................................................................................................20
3.2 Target Population.................................................................................................................21
3.3 Sampling Methods and Procedures......................................................................................21
3.3.2 Sampling Methods................................................................................................................22
3.4 Development of the Questionnaire......................................................................................22
3.5 Methods of Data Collection and Procedures........................................................................23
3.6 Methods of Data Analysis....................................................................................................24
CHAPTER FOUR...................................................................................................................................25
DATA ANALYSIS AND PRESENTATION.........................................................................................25
4.1 Introduction..........................................................................................................................25
4.2: Respondents profile............................................................................................................25
4.2.1: Gender of the respondents...................................................................................................25
4.2.2: Age of the Respondents.......................................................................................................26
4.2.3: Income of the Respondents..................................................................................................26

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4.3: Consumers’ Perception towards Prices of Private Label Brands...........................................29
4.4: Consumers’ Perception towards the Quality of Private Label Brands...............................30
4.5: Consumers’ Perception towards the Availability of Private Label Brands........................32
4.6: The future of private label brands.......................................................................................33
4.7 Discussion of the results......................................................................................................33
CHAPTER FIVE.....................................................................................................................................37
SUMMARY OF THE FINDINGS, CONCLUSIONS AND RECOMMENDATIONS......................37
5.1 Introduction..........................................................................................................................37
5.2 Summary of the study..........................................................................................................37
5.3 Conclusion...........................................................................................................................38
5.4 Recommendations of the study............................................................................................38
REFERENCES........................................................................................................................................39
APPENDICES.........................................................................................................................................42
APPENDIX I: INTRODUCTION LETTER.........................................................................................42
APPENDIX II: QUESTIONNAIRE.......................................................................................................43
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ABSTRACT
The main objective of this study was to determine the consumer preference towards private label
brands a case study of Kerugoya/Kutus towns. The specific objectives included to find out the
consumers objectives towards the price, quality and availability of private label brands. A survey
research design was used for the study. Qualitative data was gathered using methods such as
questionnaires, interviews and observation. The study involved 150 respondents. The target
population was the supermarket shoppers. The study also made use of secondary data attained
from books and various previous researches conducted on the same study topic but on different
parts of the world. The data was analyzed using percentages and later presented using tables, pie
charts and graphs. The study findings concluded that most of the consumers bought private label
brand products because of their lower prices while most considered their quality to be of lower
standard as compared to those of the national brands. It was recommended that the retailers
improve on the quality of their products or even produce a category of premium products that
will be of the same or even higher quality than the national brands, but at the same time fix
higher prices. This will enable consumers to change their view of lower quality while also
retaining those price conscious consumers by retaining a category of your products with the same
lower price. The national brands manufactures should also come up with strategies in order to
keep up with the private label brands.
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CHAPTER ONE
INTRODUCTION
This chapter is concerned with the background of the study, statement of the problem, objectives
of the study, research questionsand justification of the study, scope of the study and limitations
of the study.
1.1: Background
Healey (2008) defined brand as a measure of satisfaction. It’s a sign, a metaphor operating as an
unwritten contract between the manufacturer and the consumer, a seller and a buyer. A brand
resides primarily on the minds of the customers, and it’s often synonymous with the reputation,
when consumers respond favorably to a brand it's said to have brand equity (Granell, 2012)
consumers view a brand as an important part of a product and hence branding can add value to a
product. Private label brands (store brands) have been defined as a retailers name, as used on a
product sold by the retailer but manufactured by another company. They are generally brands
created for, controlled by, and/ or sold to specific retailers (Narasimhan& Wilcox 1998;
Suthuraman & Cole 1999). The private label brand is sold only at the outlets that have ownership
of it. In contrast, a brand sold by a manufacturer through many retailers is called a national or
manufacturers’ brand (Narasimhan& Wilcox 1998). According to the private label manufactures
association (PLMA, 2012) private label brand products encompass all merchandize sold under a
retail store private label. The label can be the chain’s own name or a brand name created
exclusively by the retailer for their stores.(PLMA, 2012)
Private label brands are not a new idea as they have been happening in the rest of the world for
over 50 years. Perceptions about private label brands are generally favorable around the world
but are more accepted in developed regions like Europe, North America and Australia (private
label magazine). Private label brands success is strongest in commodity driven high purchase
categories and those where consumers perceive little differentiation. Private label brand growth
typically comes at the expense of small and mid-sized brands while category leaders remain
relatively safe. Private label brands are struggling to perform well where consumers are fiercely
brand loyal (Hoyt, 1967).
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In Europe retailers such as Boots, Marks and Spenser, and Tesco have sold store label brands for
generations. During the recession in the late 1980s, generic ‘no name’ brands were introduced in
the United States as low cost alternatives to national brands. In the late 80s and 90s, private label
growth rate was at 15% (private label magazine,2002). The private label market experienced
robust growth over 2007-2012 period when the recession first hit the developed economies.
Between 2007 and 2008 private label for fast moving consumer goods flourished as consumers
cut expenditure drastically. Following a recovery of the economy in 2010, there was a renewed
increase for the demand of FCMG’s. This was partly attributable to an increase in private label
prices in developed premium ranges that competed directly with branded products. In 2012
private label sales fell by 1% by current value as real economic growth slowed to around 3%
(private label magazine, 2012). This was partly due to the influence by the major brands, which
sought to compete with premium private labels by running numerous promotions and stepping
up advertising.
According to the Private Label Manufacturers’ Association, store brands account for one of
every four items sold in the USA supermarkets, drug chains and mass merchandizers up from 19
percent in 1999 (PLMA, 1999).
Private labels are different from generics. Generics are unbranded, plainly packaged, less
expensive versions of common products such as paper towels. They are of lower standards and
offer a lower price that maybe as much as 20% to 40% lower than nationally advertised brands
and 10% to 20% lower than the retailers’ private label brands. The lower price is made possible
by lower cost of labeling and packaging and minimal advertising and sometimes use of lower
quality ingredients (Kottler, 2003).
Past research has shown that the retailers are going for private label brands as they are more
profitable as costs such as research and development, advertising, sales promotion and physical
distribution are much lower hence generating a higher profit margin(). Retailers are also able to
generate exclusive store brands to differentiate themselves from their competitors. Many price
sensitive consumers prefer store brands in certain categories hence giving retailers increased
bargaining power with marketers of national brands(keller, 2004).
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In the confrontation between manufacturers and private labels, retailers have many advantages
and increasing market power. Since shelf life is scarce, many supermarkets charge a slotting fee
for accepting new brand, to cover the cost of stocking and listing it (A.Nielsen, 2005). Retailers
are also charging a special display space and in-store advertising space. Retailers are hence
building better quality into their store brands or creating new products that lack direct
competition. They are also emphasizing on attractive and innovative packaging and use of
aggressive advertising to tout their store brand quality(A,Nielsen, 2005).
History of private labels in Kenya started with nakumatt supermarket; the largest supermarket in
Kenya by sales volume through their blue label brand and since then it has spread out to both
large and small supermarkets. Nakumatt through their holdings business development manager
Neel Shah outlined their process whereby they shortlisted the manufactures that they want to
work with based on the products quality, bench mark the quality with that of the national brands
and see whether the shortlisted manufacturers would be able to produce products of the same
quality and hence offer them at a lower price. Some of the products that they produce include
milk, flour, sugar, water, milk, tea, cleaning materials among others.(Business Daily Newspaper,
2013)
The idea of the blue label brand started out as a reward scheme to their loyal customers who
would get the same high quality products at a cheaper price. This collaboration with the
manufactures to produce for blue label rather than listing their product on the shelf as an
additional product have made the manufacturers to benefit through the high sales than what they
would have sold on their own. Shah however refuted the claim that private labels deny the
consumer the freedom of choice saying that they also stock other products giving the consumer a
variety of choice. The lower price of blue label comes about due to the lack of marketing and
brand awareness campaigns (Business Daily Newspaper,2013)
Other retailers in Kenya that have ventured into private labels include Tuskys, Ukwala and
Naivas supermarkets mainly packaging sugar, rice, bread, grains and maize flour. The private
label practice has however been opposed by the Consumer Federation of Kenya (COFEK) as the
consumers will risk buying substandard goods. COFEK secretary General Stephen Mutoro once
said that the supermarkets should work as a bridge between the manufacturers and suppliers and
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customers as the private label move would bring about the losses of jobs and hinder the growth
of the manufacturing company.(Kenya Association of Manufacturers, 2013)
COFEK legal team started investigations on the legality and quality of private label brand
products. COFEK is also pushing the government to stop supermarkets from shelving their
branded products and urged the customers not to buy supermarket owned labels.
The Kenya Association of Manufacturers’ (KAM) through their chief executive officer Betty
Maina has come out to support the private labels by pointing out that its giving opportunity for
local manufacturers to take their products to the shelves and reducing the marketing costs. Maina
however urged the supermarkets not to use that channel to import goods that can be made locally
as it would kill the manufacturing industry. (Business Daily Newspaper, 2013)
The growth of private labels has been attributed to such factors as retail landscape consolidation
whereby retailers are concentrated in one area giving them a greater bargaining power over brand
manufacturers and developing the critical mass needed for investmenting in the development of
more sophisticated private label programs. Secondly is improved product quality which has
removed the quality gap between the national and private label brands. Third is enhanced retailer
capabilities whereby the retailer is able to hire brand managers and increase his branding
capabilities(LoblawsInc, 2007)
Manufacturers’ have come up with ways to respond to the private label threat by investing
heavily in research and development to bring out new brands, life extensions, features and
quality improvements to stay a step ahead of the store brands. They are also investing in a strong
pull advertising programs to maintain high brand recognition and preference and overcome the
in-store marketing advantage that private labels have. Top brand marketers are also seeking to
partner with major mass distributors in a joint search for logistical economies and competitive
strategies that produce savings for both sides, hence cutting all the unnecessary costs allowing
the national brands to have a price premium(A.Nielsen, 2005)
Various studies have been done on growth of private labels in Kenya.(Kariuki, 2010) Researched
on the factors contributing to growth of private labels in Kenya). Research done by North
Carolina’s Ian Benedict E.M Steenkamp and London business school Nirmalya Kumar came up
4
with four strategic recommendations to compete against or collaborate with private labels. They
include fighting selectively whereby the manufacturers’ can concentrate on working brands and
sell the loosing brands, partnering effectively by seeking win-win relationships with retailers
through strategies that complement the retailers private labels, innovating brilliantly new
products to help beat private labels and lastly creating winning value propositions by creating
brands with symbolic imagery as well as functional quality that beats private labels. However, no
study in the accessible literature has focused on the perception of the consumers on the private
labels in Kenya.
The target study group for this research will include consumers of both national and private
labels of retail stores in Kerugoya, Kirinyaga County.
1.2 Statement of the problem

There are two major criticisms of private labels; one that it will be able to kick out local
manufacturers from the market especially if the retailers will collaborate with external
manufacturers. The other criticism comes from the consumer rights protection association
whereby it argues that private label brands are only here to provide low quality goods to the
consumer since most of them are offered at a cheaper price than the national brands. What is
clear however is the continued growth in consumption of the private labels in major economies
such as in the USA, Europe, India and now in Africa. The growth of private label brands have
come out to be a problem as it has been seen to reduce competition as supermarkets are pushing
out their competitors making it difficult for small firms to enter the market. Supermarkets have
monopsony power over manufacturers as they have market power insqueezing the margins of the
manufacturers to gain bigger profits margin. Private labels are also seen to reduce innovation as
private labels don’t innovate or create new products as they are essentially copying successful
products that have gone before. It is not understood what consumers think about private labels
compared to other brands in terms of quality, price and continuous availability. The aim of this
research is hence to investigate the consumer perception of the private labels available in Kenyan
market for food products. The issue is that the consumers may be paying for private labels that
are cheap but have compromised the quality attribute.
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1.3 Objectives of the study
1.3.1 General Objectives

The main objective of this study is to investigate the consumers’ perception towards private
labels available in the supermarkets in Kenya.
1.3.2 Specific Research Objectives

1. To investigate the perception of consumers towards the price of private labels compared to the
normal brands.
2. To analyze the consumers’ perception towards the quality of private labels compared to that of
normal brands.
3. To investigate the availability attribute of private labels compared to that of normal brands.
1.4 Research Questions

1. How does the consumer perceive the pricesof private labels in Kenya?
2. How is the consumers’ perception towards the quality of private labels compared to other
brands?
3. How is the availability of private labels compared to the other brands in supermarkets in
Kenya?
1.5 Significance of the Study.

Retailers may benefit from this study in that, the information generated could help them to
understand consumers’ perception of private labels. This understanding could assist retailers
when making decisions whether to stock their businesses with private labels or not.
To new product developers, this study fills an identified need by shedding light on product
characteristics that should be taken into account when developing their products. It will also seek
to show the consumers perception toward various aspects of private labels such as price, quality
and availability as compared to normal brands. It will seek to provide useful information to
retailers who have not yet embraced this concept of private labeling so that after seeing its
6
advantages it can be able to embrace it By understanding consumers’ perception of prices,
quality and availability of private labels, the manufactures can adjust those characteristics
accordingly in order to meet customers’ needs.This will reduce uncertainty in customers’
decision-making process when choosing private labels. This will increase the level of
consumer’s satisfaction and loyalty to private labels, which is one way for retailers
(supermarkets) to gain competitive advantage in the competitive retailmarket environment.
This study contributes to the body of knowledge on perception of private labelsin that the theory
of perception was tested.
1.6 Scope
The study was limited to consumers of private labels in Kirinyaga County. Consumers of the
normal brands (both local and international) were excluded from the study. This is because, from
the statement of the problem, the issue of concern is the consumers’ perception of private
labels.The study covered only consumers of private labels in Kirinyaga county.
1.7 Limitations of the study

Limitations of the study refer to the challenges encountered when carrying out the study. One of
the challenges faced when collecting the data was that the respondents feared disclosing the
information they considered personal. This was particularly information related to incomes and
cash at hand during purchase. This challenge was addressed by assuring respondents that their
responses were to be treated with utmost confidentiality.
The study will be carried out in kerugoya and Kutus towns whereby majority of the people
consist of one ethnic group, which is Kikuyu. The challenge was that the questionnaire was in
English and not all respondents could understand English. Kiswahili which is the national
language in Kenya was used to clarify questions where necessary….. Interpretor
7
Lack of enough time and inadequate funds to carry out my research, were other challenges. To
save on time and money, I established strata, within the town depending on the population and
understanding of the English language, where the consumers from the university formed the
largest strata from where I got much of the information that was needed for this study.
1.8 Definition of terms

 Consumer perception- according to www.mbaskool.com customer perception refers to the
process by which a customer selects, organizes and interprets information/stimuli inputs to
create a meaningful picture of the brand or the product.
 Private labels- they are a retailer’s name as used on a product, sold by the retailer but
manufactured by another company.
 Supermarket- according to www.thesaurasdictionary.com, a supermarket refers to any
business or company offering unusually wide range of goods or services. It’s also a large retail
market that sells food and other house hold goods that is usually operated on a self-service basis.
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CHAPTER TWO
LITERATURE REVIEW
2.1 Introduction
This chapter covers the theoretical framework, empirical literature and the conceptual
framework.
2.2 Theoretical framework
2.2.1 Consumer perception

Perception according to the oxford English dictionary has been defined as a belief or an opinion
that is often held by many people and based on how things seem. Consumer perception is the
process by which a customer selects, organizes and interprets information or stimuli input to
create a meaningful picture of the brand or product (www.chrom.com/smallbusiness).
Perception follows four stages which include:
a) Selection.
It describes what occurs when a person’s senses initially are exposed to the external stimulus of a
brand or product through senses such as sight, sound, smell and texture.
b) Attention.
It’s whereby a person lingers and gives mental processing capacity to the external stimulus from
a product or brand. Selective attention is when a consumer pays attention to messages that are
consistent with her attitudes, beliefs and needs. When a brand is inconsistent with these factors,
the consumer withdraws his attention.
c) Interpretation.
A person assigns a meaning to the sensory stimulus from a product or brand. It’s aided by
expectation or familiarity through the use of that particular product or brand. PLBs uses this
when packaging their products through designs such as logos, colors and other elements that are
similar to NB that consumers are generally more used to.
d) Retention. It’s the storage of a particular product or brand in the short term and long term
memory (www.smallbusiness.chrom.com/stages-perception-marketing).
In the consumers’ perception theory by Chris Blank, he looks at three types of perception that
consumers use in making a purchasing decision.
9
 Self-perception: It relates to the values and motivations that drives the buying
decision e.g. if a consumer is environmentally friendly he will end up buying
‘green’ products that have minimum effect on the environment.
 Price perception: It’s whereby a consumer is influenced by perceived quality and
value for their money when it comes to purchasing products. Another factor he
will look at is comparing prices between competing brands.
 Benefit perception: It’s whereby a consumer will buy a product by looking at the
benefit that he will reap from the said product.
2.2.2 Private labels

Private label brands (store brands) have been defined as a retailers name, as used on a product
sold by the retailer but manufactured by another company. They are generally brands created for,
controlled by, and/ or sold to specific retailers (Narasimhan & Wilcox 1998; Suthuraman & Cole
1999). The private label brand is sold only at the outlets that have ownership of it. In contrast, a
brand sold by a manufacturer through many retailers is called a national or manufacturers’ brand
(Narasimhan & Wilcox 1998). According to the private label manufactures association (PLMA,
2012) private label brand products encompass all merchandize sold under a retail store private
label. The label can be the chain’s own name or a brand name created exclusively by the retailer
for their stores. (PLMA, 2012)
Private label brands are not a new idea as they have been happening in the rest of the world for
over 50 years. Perceptions about private label brands are favorable around the world but more
accepted in developed regions like Europe, North America and Australia (private label
magazine).
Store brand grocery items enjoy an enormous popularity in Europe. In the USA e.g. the volume
market share for store brands packaged goods exceeded 35% of the total sales (the economist
1995). For the past decade store brands have enjoyed only modest success in the USA
accounting for 13% of the market share. While significant gains in the store brands performance
have occurred in the past decade in the 1990s they now accounts for 19% of market share in the
USA trailing their European counterparts by wide margin (the economist 1995). Erdem and
colleagues stated that the reason as to why the growth rate of store brands is higher in Europe
10
than in the USA was due to the store brands commanding high equity in Europe. Brand equity is
the additional value with which a brand endows a product (Farquhar 1989).
Occasionally store brands may sell their own labels to noncompeting retailers or wholesalers for
sale in markets in which they do not compete e.g. Loblaw’s in Canada. Store brands can be
different from generics as generics do not have a brand name associated with them and they are
generally packaged in plain ‘white labels’ packages with little or no information identifying the
manufacturer. They were popular in the late 1970s and early 1980s where they appealed to the
extremely price sensitive segment and they were usually priced 20% lower than the store brands
(the economist 1995).
Studies usually consider store brands to be of low quality than national brands (Belizzi et al
1981; Cunninghan et al 1982). The trend towards higher retail concentration, global recession
and changing consumer habits has influenced the growth of store brands. The market share of
store brands vary by product and class across countries (Nielsen 1984). This leads to the uneven
penetration of store brands share by country.
Table 2.2.2: Margins of PLBs penetration

Country Region Private Market Private
label growth label
growth [%] [%] share [%]
1 Croatia Emerging markets 77 0 2
2 Greece Europe 24 2 4
3 Thailand Asia pacific 18 8 1
4 Argentina Latin America 18 22 3
5 South Asia pacific 17 1 1
Korea
6 Finland Europe 16 -3 10
7 Spain Europe 16 6 26
8 Singapore Asia pacific 16 1 3
9 Colombia Latin America 15 6 2
11
10 Hungary Emerging market 15 5 10
SOURCE:AC NIELSEN 2015

Differences in market concentration, store brand positioning and consumer price sensitivity are
responsible for this phenomenal (Bell, Davies and Howard 1997). The risk of buying store
brands becomes an issue when considering about price and quality. Consumers’ will have less
interest in buying private brands if they perceived that the risk is high. Batra and Sinha (2000)
stated that if the risk of buying store brands is high then the interest in private label brands will
decrease. However, Richardson (1997) pointed out that if retailers can communicate a products
quality with a lower price image to consumers, it will benefit them and they can obtain a high
level of private label brand market share.
Based on economic theory, a key factor of a market is product differentiation, which is achieved
through branding. In a competitive industry, the manufacturing of a similar product achieve
sales by appealing to the attributes which the consumer perceive as important
(cooper&Nakashini, 1998). PLB traditionally appeal to the perceived attribute of low cost while
national brands may appeal to the perceived attribute of high quality (Nenycz-Thiel&Romaniuk,
2012). Retailers can customize the products to suit its consumers and optimize production to
meet demand. PLB tend to be cheaper than national brands due to reduced costs such as
advertising costs.
From Ural (2008) several factors have led to the success of PLB include store image- layout,
product assortments, merchandizing and service quality. The latter three can be reflected in
product attributes and their effect can be measured by considering related risk perception from
consumers’ perceptive. The risk perceptive that are significant include perceived quality, value,
price and risk. These perceived risks and aspects such as store location affect the customer’s
intention to purchase hence influencing the success of store brands.
A lot of research has been done to determine the factors that influence the purchase of PLBs. The
first factor is the socio-economic and personal characteristics of the customer. Fan Quan&Huang
12
(2008), indicate that some studies such as Omar (1996) found that PLB are extensively used by
younger customers but other researchers such as Eva&Teresa (2008) found no correlation
between age and PLBs. Contradictory results have also been found regarding household income
levels as Richardson (1996) found that low income households are more sensitive to PLBs but
Dick (1995) found that households with the highest sensitivity to PLBs are those with average
income. Another demographic factor is education levels as Omar (1996) found that those with
low education are more prone to PLBs whereas Richardson (1996) found no substantial
relationship between PLBs and education levels existed.
A second factor is shopping habits and orientation such as price consciousness, impulsiveness,
deal proneness and loyalty. An additional factor is perceived risk which is the expected negative
utility of buying a product. It’s the consequence of making a wrong brand choice hence the fear
that a product may not possess desirable attributes.
Another factor is quality versus value perception. Quality of a PLB affects the market share of a
PLB (Dhar&Hoch, 1997). A value conscious shopper will maximize the quality/price ratio of
their purchases (Fan, 2013).
Another factor is familiarity. It’s the number of product or brand related experiences that have
been accumulated by the consumer including direct and indirect experiences such as advertising
exposure (Alba&Hutchinson, 1987). The more one is familiar to a PLB, the more they are likely
to purchase it. Differentiability of a product also affects PLBs purchase decisions as they tend to
me more purchased in products where there is little differentiation and where there is zero
differentiation the location of a store will highly matter as in fresh produce whereby people tend
to believe that vegetables and fruits tend to be more fresh in a supermarket rather than a kiosk.
The last factor is space shelf allocation. According to Gomez&Okazaki, (2009) shelf space is a
limited resource which should be optimally divided among a diverse range of brands. Shelf space
can be considered as a form of advertising that puts products on the top of consumer minds and
suggests the popularity level of products (Brown&Lee, 1996).
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2.3 Empirical review
2.3.1 Prices of PLB

From a consumers’ perspective price is what is given up or sacrificed to obtain a product. The
components of prices include objective price, perceived non-monetary price and sacrifice. Jacob
and Olson (1977) distinguished between the objective price (the actual price of a product) and
the perceived price (the price as encoded by the consumer). Studies reveal that the consumers’ do
not always remember the price of a product but instead they encode prices in ways that they
seem meaningful to them (Dickson and Sawyer 1985). Levels of consumers’ attention,
awareness and knowledge of prices appear to be considerably lower than necessary for
consumers’ to have actual internal reference price for many products (Dickson and Sawyer
1985). Another recent study shows that price awareness differs from among demographic
groups, the greatest levels of awareness being in consumers’ who are female, married older and
do not work outside the home (Zeithamil and Bery 1987). Attention to prices is likely to be
higher for higher priced goods and services than for lowly priced products.
Price is a very important influencer when a consumer decides on which brand to buy (Alvarez
and Casielies, 2008). It constitutes up to 40% of the average consumer information needs.
Private labels are more affordable than their alternatives in the stores. A private brand may cost a
retailer 25% less to produce than a national brand (KPM2, 2004). This is as a result of the retailer
not experiencing any costs on activities such as marketing, research and development. The
amount spent on advertising, promotion, transport and distribution as well as operational profit
accounts for the low price (Davies and Brito, 2004). In the emerging markets the price
differences between private and national brands could even go as high as 40% on average
(AC.Nielsen, 2005) which may be responsible for the growth of private brands in the emerging
economies. Private brands are designed to attract price sensitive consumers who do not want to
pay for things such as packaging and labeling.
Price consciousness is the degree to which the consumer focused exclusively to paying low
prices (Lichteinstein and AL, 1993). The price consciousness of private brands may differ within
different product categories (J.N and Suh 2005) as a consumer may choose to buy a cheap
14
product in one product category and purchase a more expensive product in another product
category. The price label manufacturers association identifies that the difference between private
label brands and national brands is normally 20% (PLMA,2004) which is significant to price
conscious consumers’. Price conscious consumers are hence more likely to develop a positive
attitude towards the store brands and have a high purchase intention towards the private label
brands (Burton et al 1998). Consumers’ may hence choose to buy widely known brands when it
comes to large purchases such as electronics and prefer to buy PLB when it comes to small
purchases such as foodstuff or in goods where there is little differentiation as they are cheaper
and hence offer value for money. According to a study that was done by Nielssen, 69% of his
respondents globally felt that it was important to get the best price on a product. 70% said that
they purchased private labels to save on money. Private labels are hence seen to offer value for
money (AC Nielsen, 2014).
According to Grewal and Levy (2009) top retailers have lowered their prices from 10-15% than
the prices charged by the national brands. Private label manufacturer association revealed that
consumers prefer PLB because they are lowly priced than national brands. A study conducted by
Rubial (2005) concluded that consumers purchase PBL on the basis of price and quality.
However if PBL were to offer the same quality of national brand then price would be used as the
purchasing parameter at that moment.
2.3.2 Quality of PLB

Both psychologist (Fishbein 1967) and economist (Lancaster 1967) suggested that consumers’
perceive products as having several attitudes. Consumers’ view a product as to where it lies
between the set of attributes relevant to its product class and they are likely to develop
perceptions about where different brands are on each attribute.
Consumers’ maybe imperfectly informed and thus uncertain about product attributes according
to research in information economics. As in previous research (Aaker 1991, Erdem 1998) the
term quality is used to reflect any intangible or tangible attributes (which may not be perfectly
observable by the consumers’). This uncertainty may persist even after experience with a product
hence consumers’ perceptions of quality levels may deviate from true levels (Erdem and Keane
15
1996). Furthermore there maybe inherent product variability i.e. the levels of quality of different
units of the same product may differ over time (Robert and Urban 1988) which adds to consumer
uncertainty.
Consumers’ generally have the perception that the PLB are of low quality than the corresponding
national brands as they are formulated with poor ingredients and hence lack the necessary level
of quality (batra &sinha, 2000). Walter (2006) suggests that due to relatively low prices quality
perceptions are negatively impacted. PLB are thus seen as inferior quality alternatives. There are
two types of qualities to be considered.
Intrinsic quality cues are those characteristics that are part of the physical product which cannot
be changed without changing the physical product itself (Olson, 1977). They are related to
technical specifications hence are largely unperceived by customers as they are ignored or the
information is completely not provided for.
Extrinsic quality cues are those characteristics that are related to the product but are not
physically part of the product (Olson, 1977). It includes things such as the price, brand name,
packaging and advertising and they are determined by marketing efforts (Steenkamp 1989).
Consumers’ are mostly influenced by the extrinsic qualities of a product when deciding to buy
the product as they have not yet been able to use the product. Levels of quality have improved
more consistently especially in categories historically characterized by little product innovation
(Harvard business review). Distribution of premium and luxurious PLB puts them at similar
quality levels. On a study done by consumer report.org (2015) on one of the retailing stores in
the USA 63% of consumers were satisfied with the quality of store brands while 5% were
dissatisfied. On a study done by Aaker and Keller (1990) emphasized that the quality perception
is one important aspect of the private label brand usage.
16
2.3.3 Availability of PLB
Availability of PBL is seen to be more consistent as many manufacturers are seen to supply to
the retailers the PBL instead of the national brands. Retailers usually choose high quality
manufacturers for their premium store brands and low quality manufacturers for their low end
store brands. Consumers will tend to go for products that are consistently available and close to
their reach will reduce time and cost spent to go and purchase those products from a far location.
Retailers use their brand as negotiating tools with the manufacturers in order to get quick
deliveries (chintanguta, bonfrer&song, 2002).
Some research studies have been done on the topic of consumers’ perception on private label
brands all over the world but the following are just a sample of such studies. For instance, Bekele
(2009) investigated the effects of consumers’ perception towards fast moving private label
brands in the South African grocery food sector. He considered several factors such as price,
availability, trust and packaging. His target population was the urban supermarket shoppers
while his sample size consisted of 346 respondents while 178 of the respondents were
interviewed through an online questionnaire. 84% of his sample had purchased PLBs with 66%
not satisfied with the quality of PLBs. A further 78% stated that they had bought PLBs primarily
for their prices. In conclusion he noted that the respondents did identify an inverse relationship
between price and quality. A descriptive survey research was used with methods of data
collection including the use of questionnaires and interviews.
Kumar (2015) carried out the study in India on consumers’ perception towards PLBs and the
consumers’ preference over usage of PLBs and NBs products to satisfy their needs and wants.
The study tried to differentiate between things such as their quality and price. The researcher
came to a conclusion that the consumers would buy any product that would be able to satisfy
their needs whether it’s a PLBs or NBs. Data was collected using a structured questionnaire. The
survey research design was used with a sample of 200 people.
In another study that was carried out by Batra and Sinha in 2001 on the factors that influence
consumers’ purchasing intentions of PLBs among Thai students. They looked at four factors
such as collectivism culture, perceived risk, price, quality and store loyalty. The research showed
17
that price and quality of PLBs are highly related as most of the targeted consumers tend to
associate expensive with high quality and vice versa. The effect of store loyalty was found out to
be insignificant.
Macharia (2015) carried out a research study to show consumers’ perception towards PLBs by
analyzing factors such as brand awareness, perceived price and quality and consumers’ switching
behavior. From the study she concluded that consumers were aware of PLBs and the primary
motivator of purchasing PLBs was the price. Perception towards availability, quality and shelf
display was positive as most of the consumers still had intentions to continue purchasing PLBs
even into the future.
Ng’ang’a (2012), carried out a research on the factors that contribute to the success of PLB bread
in four large supermarkets namely Uchumi, Nakumatt, Naivas and Tuskys supermarkets in
Nairobi.. The factors that were under consideration included perceived quality, value, price and
risk. In conclusion he noted that quality, value and price are the significant factors that are
driving the success of PLB bread.
Although, a lot of research has been done mostly in developed countries, this research will
however fill the gap when it comes to researches that have been done in small and semi-rural
towns as on the two research studies that were done in Kenya they were all done in the capital
city. This research will hence show whether the factors that affect consumer perception will be
the same for all the consumers regardless of their economic and purchasing power.
2.3 Conceptual framework

Dependent variables Independent variable
PRODUCTS’ QUALITY
CONSUMERS’
PREFERENCE
PRODUCTS’ PRICE
TO PLB
PRODUCTS’AVAILABILI
TY 18
Figure 2.3:Conceptual Framework
It’s a diagrammatic expression which tries to show the relationship between the independent
variables and the dependent variables under investigation.
19
CHAPTER THREE
RESEARCH METHODOLOGY
Introduction
This chapter outlines the research design, target population, and describes sampling methods
including determination of the sample, instrumentation. It also describes data collection methods
and defines the variables being investigated. Methods of data analysis employed are also
described in this chapter.
3.1 Research Design

Marketing researchers choose from among five research designs; case study, ethnographic
experiments, time/span and survey design (Burns & Bush 2007). A case studymay focus on an
individual or small group of objects such as firms. It has an advantage of giving insight into
factors that affect an industry or an object and it is less expensive. Ethnographic design is used to
study the culture of a specific social group in regard to their traditions, beliefs, values and
aspirations. While it yields detailed results they are not generalizable and the values of the
researcher and biasness can influence data collection and interpretation (Malhotra, 2007).
Experimental designinvolves random assignment of participants to two or more treatment

conditions. The market researcher then studies the effect of manipulating an independent
variable on a dependent variable.The former is the variable anticipated or hypothesized to cause
a change in the dependent variable in an experiment (Burns & Bush 2007).
Time/span research design is divided into two,longitudinal design and cross sectional design
(Malhotra, 2007). In longitudinal study design, the same participants are studied over several
time periods. The time periods may be months or years. For instance, a marketing researcher
may study how consumers’ tastes and preferences for a product have changed over a period of
time.Because the researcher can track the changes of behavior over time, patterns, individual
differences in the data can be unearthed. It is also possible to examine relationships between
early and later events and behavior. However, longitudinal studies are time consuming and
expensive.Since they take along time, few people agree to participate, and participants’ attrition
20
(drop out) can be a problem.Cross sectional designinvolves study of participants at the same
point in time. The marketing researcher can compare and understand behavior of different types
of consumers and avoid problems of selective attrition and practice effects. Unlike longitudinal
design, the researcher cannot study individual consumer behavior trends or individual differences
(Malhotra, 2007).
Survey design is used when the marketing researcher wants to collect a lot of data from a large
number of firms /individuals within a short period of time. It is used to study the attitude or
opinions of the consumers about the products or services offered by the company (Burns & Bush
2007).
This study focused on the perception of private labels in Kenya. This required a lot of data which
needed to be collected from individual consumers within a short time. The information collected
was on consumers’ opinions in regard to the importance they attached to three selected private
label products characteristics. For these reasons, survey design was adopted for this study.
3.2 Target Population

Analysis of the supermarkets retail business in Kenya indicated that only 20% of the shoppers in
Kenya buy from supermarket (Consumer Insight, 2012), which translates to approximately
3,424,000 adult shoppers. This is the target population for this study.
3.3 Sampling Methods and Procedures
3.3.1 Study Site

Kerugoya town is located approximately 125km north of Nairobi along the Embu-Nyeri road.
It’s the largest urban center in Kirinyaga County and an important commercial center for farmers
ideally for banking services and farm inputs supply. According to the population census that was
carried out in 2009 Kerugoya had a population of about17122 people. Kutus town is located
approximately 11km from Kerugoya town. It’s the headquarters of Kirinyaga County. Majority
of the people are Christians (www.kirinyagacounty.com).
21
3.3.2 Sampling Methods
Various sampling methods can be used to draw sample units (Burns & Bush, 2007; Mugenda &
Abel, 1999). Simple random sampling gives every member of the population equal chance of
being picked. Systematic sampling involves allocating numbers to members of the population,
and then the researcher picks sample units at specific interval. Stratified sampling involves
drawing sample units from different strata of the target population. Volunteer sampling is
another sampling method, where individuals are asked to volunteer to be members of a sample.
It reduces the number of sample members who drop out and data collection is easy because
sample members are readily available and willing to give information. However, a limitation of
this method is that the researcher may leave out crucial target population members. Lastly, there
is purposive sampling also knownas convenience sampling. The marketing researcher selects
sample members to participate in research based on some criteria. For instance, the researcher
chooses respondents who are readily available or those that might be receptive and give required
information.
This study covered 150 consumers of private labels in Kutus and Kerugoya town. Shoppers
doing shopping supermarkets in these supermarkets were interviewed at random. The selection
of the method was in line with other studies on effects of situational factors on consumer buying
behavior (Tan 2002; Anic and Radas, 2006). The selected participants had to comply with
inclusion criteria of the study, which included being a user of products that are available as
private labels in supermarkets in Kutus and kerugoya towns.
3.4 Development of the Questionnaire

This study was based on primary data, and in order to effectively collect this data, appropriate
research instruments needed to be developed. A structured questionnaire was developed through
guidelines provided by relevant marketing theoretical literature. They were also based on
previous empirical research on the impact of situational factors on consumer purchase decisions.
Such studies include Anic & Radas (2006). Packaging characteristics considered in this study
follow the lead by previous studies such as Agniezka & Miroslaw (2008). The survey instrument
was administered on 1230 respondents (supermarket shoppers) in the Nairobi Metropolitan area.
22
Bush & Burns (2007) defined two types of questionnaires; open-ended questionnaire and close-
ended questionnaire. The latter refers to a questionnaire containing questions that do not require
the respondent to give explanations or opinions. The respondent is expected to choose from
alternatives provided or answer yes or no. The former type of questionnaire gives respondents
room to explain and describe their answers.
In this study, close-ended questionnaires were used because they facilitate data analysis and
allow use of Likert scales questions. Such questionnaires also facilitate faster and easier
responses which saves time in the survey type of research. It also increases the reliability and
consistency of close-ended questionnaires compared to open-ended questionnaires. Responses
are also easier to compare since they have been predetermined (Saunders et al, 2007).
The final questionnaire consisted of two sections: Section A mainly dealt with the consumer
profile variables such as gender, age, level of education, income, exposure to advertisement and
other promotions and ownership of a refrigerator. Section B dealt with shopper’s responsiveness
to the importance of private label characteristics mainly; price, quality and availability.
3.5 Methods of Data Collection and Procedures

The choice of data collection is guided by the research problem, the objectives and hypothesis of
the study (Burns & Bush, 2006). Thus, only data related to the problem and objectives of the
study should be collected and the methods selected should be suitable for the type of data
required for the study. Data collection methods should therefore be selected with care since they
determine success of the study. Various methods of collecting data are available (Saunders et al,
2007). The observation method involves recording behavior as it is observed by the researcher. It
can either be naturalistic or participant. Under naturalistic observation, a researcher observes
and records behavior of interest in a person's natural state without interfering with the subjects
(objects or persons). This helps the researcher to observe things as they really happen in the real
life, meaning it is possible to collect accurate data. On the other hand, under participant
observation, the observer becomes part of the group of subjects being observed.
23
Interview is another method for collecting data. In this method, a researcher obtains an account
of the participant thoughts and behavior by questioning. Structured interview is commonly used,
and it involves asking participants similar pre-prepared questions. The questionnaires can be
filled in during a face to face interview between the participant and the researcher or can be
posted for the participant to fill in and send back. The structured questions can also be asked and
responded to in a telephone interview.
The third method of data collection is focus group discussion (FGD). FGD is used to collect data
from a group of people who have similar problems or characteristics. The method is useful in
exploring consumers’ opinions, attitudes, likes and dislikes or aspirations. An advantage of FGD
is that plenty of data is collected within a short time from participants gathered in one place.
Another advantage is that, researcher and the respondent are able to clarify issues making
information collected more accurate. However FGD is more time consuming compared to
individual interviews since respondents are allowed to give and discuss views; sometimes a few
participants tend to dominate the discussion sessions; while some participants may not give a
true picture of their situation because of fear of how others will take them (Burns & Bush, 2006).
In this study,secondary data from books and journals was initially collected in order to identify
the research gap and define the research problem. Since primary data was also required for this
study, interviews were conducted using structured questionnaires on a sample of 150 private
label consumers.
3.6 Methods of Data Analysis

There are two methods of data analysis: qualitative and quantitative. Qualitative method is where
simple statistical tools such as mean, mode, pie-charts, graphs and standard deviations are used
when analyzing the data. Quantitative method is where high level statistical tools are used when
analyzing the data.In this study, qualitative methods mainly mean and pie charts were used.
24
CHAPTER FOUR
DATA ANALYSIS AND PRESENTATION
4.1 Introduction
This chapter will discuss the results obtained from questionnaires that were issued to determine
consumers’ perception towards private label products. The questionnaire was guided by the
objectives of this study which was to find out the consumers’ perception on the price, quality and
availability of private label products and hence conclude on its future. These results will also
seek to explain the findings in comparison with the relevant literature established by other
retailers in the same field. The researcher administered 175 questionnaires but only 150 were
responded to and returned.
4.2: Respondents profile
4.2.1: Gender of the respondents

The respondents consisted of male 54 (36%) and female 96 (64%).
Figure 4.2.2: Gender of the respondents
25
4.2.2: Age of the Respondents
Table 4.2.1: age of the respondents

AGE FREQUENCY PERCENTAGE (%)
20-24 11 11
25-29 59 39
30-34 42 28
35-39 25 17
OVER 40 YEARS 7 5
TOTAL 150 100
From the above research 11 (11%) of the respondents were of age 20-24, 59 (39%) between 24
to 29 years, between 30 to 34 years they were 42 (28%), 35 to 39 years they were25 (17%) and
lastly 7 (5%) were over 40 years.
4.2.3: Income of the Respondents

Income of the respondents was distributed as follows with the highest percentage of the people
57 (38%) earning a monthly income of between sh.10001 to sh20000 followed closely by 45
(30%) of the respondents who earn a salary of between sh20001 to sh30000. They are then
followed by the third group of people 30 (20%) who earn a salary of above sh30000 and salary
the group with the least number of people 18 (12%) who earn a salary of between sh0 to
sh10000.
Table 4.2.2 Income Groups of the Respondents

Income Frequency Percentage (%)
0-10000 18 12
26
10001-20000 57 38
20001-30000 45 30
Above 30000 30 20
Total 150 100
Source: Field data

4.3: Level of Satisfaction Pattern of Purchase for Private Label Brand Products.
It was noted that the frequency of purchase of private label brand products was as follows
whereby 15 (10%) bought them on a daily basis, 51 (34%) made their purchases on a weekly
basis while the largest group of people 84 (56%) made their purchases on a monthly basis.
Table 4.3.1 Frequency of Purchase of Private Label Brands

Frequency of purchase Frequency Percentage (%)
Bought daily 15 10
Weekly 51 34
Monthly 84 56
Total 150 100
Source: Field data

It was also noted that among the three factors under investigation price was the highest
influencer with 78 (52%) of the respondents, quality followed with 55 (36.7%) and lastly
availability with only 17 (11.3%) of the respondents saying that it was their motivator for buying
private label products.
Table 4.3.2 Primary Reason for Purchasing Private Label Brands

Primary reason Frequency Percentage (%)
Price 78 52
Quality 55 36.7
27
Availability 17 11.3
Total 150 100
Source: Field data

When asked on their level of satisfaction with the private label brand products based on the likert
scale 17.3 (26%) of the respondents were very satisfied, 72 (48%), satisfied, 12 (8%) neutral, 10
(6.7%) dissatisfied while zero were very dissatisfied.
Figure 4.3: Level of satisfaction with PLBs
Source: Field data
4.3: Consumers’ Perception towards Prices of Private Label Brands.

According to most researches, price was mostly found to be the primary reason as to why people
bought private label brands. According to this research the data obtained was also similar to
those sentiments. 74% (111) of the respondents said that price is very important when they are
considering tobuy a product, 18% (27) it was important while 8% (12) felt that it was a neutral
factor. Majority of the people with 32% were neutral when asked about the importance of getting
the cheapest price when it comes to buying a product as they also look at other factors such as
28
quality as at times price is inversely related to quality whereby consumers perceive lowly priced
goods to be of poor quality. 38% of the people agreed that it was worth their time and effort to
find the cheapest price possible especially when it comes to expensive products as they can be
able to save money and use it for another need. 16% of the respondents who disagreed with this
statement are those who are loyal to a certain product and hence will buy it no matter the price.
The majority of 42% also agreed that they compared the prices of products before they buy. This
is especially so if the products are similar but from different brands and whether the respondent
is familiar with the brand or not. The respondents will buy the familiar brand at whichever price
but consider the cheaper brand if they are unfamiliar with it. Majority of the respondents also
agreed that it was important for them to get the best prices while most respondents (45%) neither
agreed nor disagreed with the statement that price was the primary reason for purchasing private
label brands whom they were closely followed by 42% of the respondents who agreed to that
statement.
Table 4.4 Statements on Consumers’ Perception on Price.

Statements S/D D N A S/A
It’s important to get the cheapest price when purchasing a 27 36 48 27 12
product
Percentage 18 24 32 18 8
It’s worth the time and effort to find the cheaper prices 6 24 36 57 27
I compare prices before I purchase products 6 12 24 63 45
To me it’s important that I get the best prices 9 15 39 54 33
Price is the primary reason for purchasing private label brands 12 27 45 42 24
29
Percentage
8 18 30 28 16
Source: Field data

Key
S/D= strongly disagree
D= Disagree
N= Neutral
A= Agree
S/A= Strongly Agree
4.4: Consumers’ Perception towards the Quality of Private Label Brands.

When the respondents were asked to rate their level of satisfaction with the quality of private
label brands 56% of the respondents were neither satisfied nor dissatisfied with the quality, 2%
were very dissatisfied, 10% were dissatisfied, 30% satisfied while only 2% of the respondents
were very satisfied. Majority of the respondents with 44% agreed to always buying the best
quality. Some of the respondents (2%) felt that they would not necessarily buy the best quality as
it’s very expensive. They’d rather settle for what they can afford. 72% of the respondents
strongly agreed to not sacrificing quality for cheaper prices. 4% of the respondents would readily
sacrifice quality for cheaper item if the product that they will buy is for temporary use. A
majority of 78% of the respondents were neutral when it came to whether there is some
similarity in quality of both NBs and PLBs. A majority of 48% were also neutral on whether
there is any significant differences in the quality of NBs and PLBs. 22% however agreed that
there is a significant difference especially in terms of price and quality. 48% of the respondents
strongly agreed that quality is very important to them when they make purchases. They however
also look at price as an item may have high quality yet expensive hence they’ll not be able to
purchase it.
Table 4.5 Consumers’ Perception towards Quality of Private Label Brands
30
Statement S/D D N A S/A
I always buy the best quality 3 3 33 66 45
I don’t sacrifice quality for a cheaper price 3 6 6 27 108
PLBs are similar in quality to National brands 3 30 78 30 9
There is significant difference in the quality of PLBs 3 33 72 33 3
and NBs
I buy PLBs for their quality 3 3 15 60 69
Source: Field data
4.5: Consumers’ Perception towards the Availability of Private Label Brands.

On the question of whether availability played a major role on why the respondents purchased
private label brands, 52% of the respondents replied yes while 48% no. a majority of 46%
agreed with the statement of them buying products from stores that are close to their homes as
this save them time and money that would otherwise have been spent on travelling expenses.
56% of the respondents also agreed that PLBs are always available when they need them while
another 54% agreed that the PLB products are always available as compared to NBs as the
retailers are the ones who control shelf space allocation thereby keeping or minimizing the space
given to national brands. 44% of the respondents were neutral on whether they postpone their
shopping when the PLBs are not available. Those who disagreed with this statement said that
they would rather go for the other national brands rather than do without those products.
31
Table 4.5: Statements on consumers’ perception on the availability of PLBs
Statement S/D D N A S/A
I always buy products in stores that are close to home 6 18 27 69 30
PLBs are always available when I need them 3 12 18 84 33
PLBs are readily available than NBs 3 12 24 81 30
I postpone buying products until PLBs are available 12 48 66 21 3
Source: Field data
4.6: The future of private label brands

The future of private label brands is high as among the respondents who were asked if they
would continue to purchase private label brands 99 (66%) of the respondents replied to the
affirmative while only 51 (34%) were negative. This is as a result of PLBs offering a cheaper
price and also that the retailers are trying to come up with premium quality of their product
which means improved quality and hence reverse the perception that people have of the low
quality of PLBs.
32
Figure 4.6: Willingness of continuing to buy PLBs
Source: Field data
4.7 Discussion of the results.

The data collected only proves the concept that price is an important factor when people are
considering tobuy a product. It also showed that most people buy private label brand products as
they are cheaper and hence they enable one to save money hence they appeal to price conscious
consumers. However this also has a disadvantage as the responded also confirmed that they the
cheap price could also mean the quality is low and hence shy away from buying PLBs. This is
because consumers’ usually assume that the cheap price is due to the use of inferior raw
materials or cutting corners in the production process. However consumers’ are also happy on
the availability of private label products as they are almost always available on the shelf. This
may be partly contributed to the fact that the retailers make deals with the manufacturers for
shelf space if they are able to make quick deliveries. The following table summarizes on the
findings of the most important influencer of consumers’ buying private label brands as
established by this study.
Table 4.6.1 The percentage of influence of consumers’ to buy PLBs

Factor Frequency Percentage
33
Price 99 66
Quality 12 8
Availability 39 26
Source: Field data
A graphical presentation of level of consumers influence to buy
Source: field data
34
CHAPTER FIVE
SUMMARY OF THE FINDINGS, CONCLUSIONS AND RECOMMENDATIONS
5.1 Introduction
This chapter represents the summary of the findings, conclusions and recommendations and
hence the areas that need further studies.
5.2 Summary of the study

According to this study most of the respondents were of between the age 25years to 29 years. It
was also noted that there was a great relationship between price, quality and availability of
private labels to consumer preference towards private labels. The study had a total of 150
respondents of which 56% of them bought PLBs on a monthly basis. A majority of them with
48% were satisfied with PLBs product with 66% of them willing to continue purchasing PLBs in
the future.
When it take to the price perception of hem most of the respondents agreed that they only bought
the PLBs because of their cheap prices. This represented the opinion of 66% of the respondents.
Some of the respondents however felt that price was not necessary if they were loyal to a certain
brand as they would still buy it even if it was the expensive option. Hence, this perception of
price mostly works on price conscious consumers’ who would always go for the cheaper
products regardless of the brand in order to save their money.
When it came to the quality perception it was concluded that most of the respondents consider
the PLB products to be of lower quality. This is a result of their lower prices. This finding was
supported by the fact that only 8% of the respondents were happy with the quality of PLBs while
pointing out that it was the main reason as to why the bought the PLBs.
PLBs are almost always available in the stores. 26% of the respondents noted that it was the
primary reason for them buying the PLBs. This is a result of retailers offering shelf space to their
37
own brands rather than to NBs and hence locking the other manufacturers or competition out of
the way.
5.3 Conclusion
From the study its only right to conclude that there is a relationship between price, availablility
and quality variables of the PLBs and consumer preference towards PLBs. It also concluded that
price was the most likely influencer on why consumers’ purchase PLBs and quality the least
influencer.as the findings of this research showed 66% of the respondents are satisfied with the
PLBs and hence would like to continue purchasing it in the future.
5.4 Recommendations of the study

This study recommends that the retailers should improve the quality of the PLBs in order to get
rid of the notion that PLBs are of poor quality. They should start offering premium products and
hence slightly increase the price of their products. The retailers should also continue stocking
PLBs as their demand in the future is likely to increase. New product developers should also be
able to enter into this market and produce PLBs as it has high returns and low costs.
5.5 Suggestions for further research.
Since this study only focused on three variables of consumer preference, other researches should
be done to include more independent variables such as perceived risk and value. The researcher
also suggests that the sample size be increased to see whether the same conclusion will be
reached and also give a better presentation of the supermarket shoppers. The researcher also
suggests that further research be done on the several strategies that the national brand
manufacturers are coming up with in order to compete with the PLBs and the advantages that the
consumers’ are getting out of this competition between the NBs and PLBs.
38
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41
APPENDICES
APPENDIX I: INTRODUCTION LETTER
Dear Respondent,
I am a student at Kirinyaga university pursuing a bachelor of commerce degree in marketing

option. I’m currently undertaking a research on consumers’ preference to private label brands; A
case study of Kerugoya/Kutus town.
Kindly assist me by completing the questionnaire. Any information that will be collected will
only be used for research purposes only and all data shall be kept confidential.
Thank you in advance.
Yours faithfully,
Mugure Sylvia
HR211-0122-2013.
The Researcher
42
APPENDIX II: QUESTIONNAIRE
I am a student at Kirinyaga University conducting a research on consumers’ perception of private
label brands. The information provided will be strictly for academic purposes and will be treated
with utmost confidentiality. You are advised to tick for each question appropriate.
Your answers will help in my research. Thank you for your patience.
PART 1
A: PERSONAL DATA
1. Please indicate your gender
[ ] Male [ ] Female
2. Please choose your age bracket in which you belong
[ ] 18-23 [ ] 24-29 [ ] 30-35
[ ] 40-45 [ ] Over 45 years
3. Indicate your average monthly income or salaries?
[ ] 0- 10000 [ ] 10001- 20000 [ ] 20001- 30000 [ ] 30001 and above
4. Have you ever purchased Private label brand products?
[ ] Yes
[ ] No (Please return the questionnaire)
5. How often do you purchase private label brand products?
[ ] Daily
[ ] Weekly
[ ] Monthly
6. If yes in the above question (6), what did you like in private label brand products?
[ ] Quality
[ ] Price
[ ] Availability
7. Please indicate the level of your satisfaction with private label brand products by ticking
the boxes provided.
[ ] Highly Satisfied [ ] Satisfied [ ] Moderate
43
[ ] Dissatisfied [ ] Highly Dissatisfied
PART 2: Consumers’ Perception Towards
1. PRICE OF PRIVATE LABEL BRANDS
8. How important is price when buying private label brands products?
[ ] Very Important
[ ] Important
[ ] Moderately Important
[ ] Of little Importance
[ ] Unimportant
9. Please read each statement and tick the number that most accurately reflects your
opinion. Ticking ‘1’ means that you strongly disagree with the statement and ticking ‘5’
means that you strongly agree with the statement. Please tick only one number for each
statement.
Statement Strongly Disagree Neutral Agree Strongly
disagree Agree
1 It’s important to get the cheapest
price when purchasing a product
2 It’s usually worth the time and
effort to find cheaper prices
3 I compare the prices of a number
of products before I choose
4 I look at the price even for the
smallest thing
5 To me it’s important that I get
the best price
6 Price is the main reason of
purchasing private label brands
2. QUALITY OF PRIVATE LABEL BRANDS

10. To what extent are you satisfied with the quality of private label brands?
44
[ ] Very Satisfied
[ ] Satisfied
[ ] Neutral
[ ] Dissatisfied
[ ] Very Dissatisfied
Statement Strongly Disagree Neutral Agree Strongly
disagree agree
1 I always buy the best quality
2 I don’t sacrifice quality to get a
low price
3 Private label brands are similar
to quality with national brands
4 I don’t think there is any
significant difference in overall
quality between the private label
brands and national brands
5 For me quality is important
when I shop
3. AVAILABILITY OF PRIVATE LABEL BRANDS

11. Does the availability of a product play a major role in the products or brands that you
buy?
[ ] Yes
[ ] No
45
Statement Strongly Disagree Neutra Agree Strongly
Disagre l agree
e
1 I buy products in
stores that are close
to home
12. Do you have any intentions of continuing to purchase private label
2 Private label brand
brand products?
products are always
[ ] Yes
available when I
[ ] No
need them
3 PLBs are readily
THANK YOU FOR YOUR RESPONSES
available than the
national brands
4 I postpone buying
products until PLBs
are available
46

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CONSUMERS’ PERCEPTION TOWARDS PRIVATE LABEL BRANDS IN KENYA

A Case Study of Consumers in Kirinyaga County

A research Project Submitted to School of Business and Economics in Partial fulfillment of

Dr. Hannah Wambugu

Figure 4.2.1: Gender of the Respondents

Figure 4.3: Level of Satisfaction

Figure 4.6: Willingness of buying PLBs

Table 4.2.1: Age of the respondents

Table 4.2.2 Income Groups of the Respondents

Table 4.3.1 Frequency of Purchase of Private Label Brands

Table 4.3.2 Primary Reason for Purchasing Private Label Brands

Table 4.4 Statements on Consumers’ Perception on Price.

Table 4.5 Consumers’ Perception towards Quality of Private Label Brands

Table 4.5: Statements on consumers’ perception on the availability of PLBs.

Table 4.6.1 The percentage of influence of consumers’ to buy PLBs

APPENDIX II: QUESTIONNAIRE

PLMA: Private Label Manufacturers Association

FCMG’S: Fast Moving Consumer Goods

COFEK: Consumer Federation of Kenya

KAM: Kenya Association of Manufacturers

1.2 Statement of the problem.......................................................................................................5

1.3 Objectives of the study...........................................................................................................6

1.3.1 General Objectives..................................................................................................................6

1.3.2 Specific Research Objectives.................................................................................................6

1.4 Research Questions................................................................................................................6

1.5 Significance of the Study.......................................................................................................6

1.7 Limitations of the study.........................................................................................................7

1.8 Definition of terms.................................................................................................................8

2.2.1 Consumer perception..............................................................................................................9

2.2.2 Private labels.........................................................................................................................10

2.3 Empirical review..................................................................................................................14

2.3.1 Prices of PLB........................................................................................................................14

2.3.2 Quality of PLB......................................................................................................................16

2.3.3 Availability of PLB...............................................................................................................17

2.3 Conceptual framework.........................................................................................................19

3.1 Research Design...................................................................................................................20

3.2 Target Population.................................................................................................................21

3.3 Sampling Methods and Procedures......................................................................................21

3.3.2 Sampling Methods................................................................................................................22

3.4 Development of the Questionnaire......................................................................................22

3.5 Methods of Data Collection and Procedures........................................................................23

3.6 Methods of Data Analysis....................................................................................................24

DATA ANALYSIS AND PRESENTATION.........................................................................................25

4.2: Respondents profile............................................................................................................25

4.2.1: Gender of the respondents...................................................................................................25

4.2.2: Age of the Respondents.......................................................................................................26

4.2.3: Income of the Respondents..................................................................................................26

4.4: Consumers’ Perception towards the Quality of Private Label Brands...............................30

4.5: Consumers’ Perception towards the Availability of Private Label Brands........................32

4.6: The future of private label brands.......................................................................................33

4.7 Discussion of the results......................................................................................................33

SUMMARY OF THE FINDINGS, CONCLUSIONS AND RECOMMENDATIONS......................37

5.2 Summary of the study..........................................................................................................37

5.4 Recommendations of the study............................................................................................38

APPENDIX I: INTRODUCTION LETTER.........................................................................................42

APPENDIX II: QUESTIONNAIRE.......................................................................................................43

1.2 Statement of the problem

1.3.1 General Objectives

1.3.2 Specific Research Objectives

1.4 Research Questions

1.5 Significance of the Study.

1.7 Limitations of the study

1.8 Definition of terms