Abstract

This research project investigated how and where brand equity could be built upon in the
own-brand products at UK food retailers, focussing primarily on Tesco. To gain a rich
understanding of this topic area, a detailed literature review was carried out, which provided
an insight into areas of further research required. The objectives of this project started with
identifying the various tiers of own-brand on offer at Tesco and how the branding of those
own-brands compares with the branding of major brands. Consumer behaviour and the
decision-making process and how these impact on brand selection when purchasing goods in
UK food retailers is also an area that has been explored. Using these key objectives to
ultimately investigate how brand equity can be better managed in own-brand products at
Tesco.

Using a sample of 97 respondents, questionnaires were carried out to find out more
information pertaining to the research project objectives. Findings from this showed that
consumers still prefer the quality of major brands over supermarket own-brands and that
major brands still dominate in some food categories. The findings also showed that
supermarket loyalty in the UK is still present and this may lead to increased own-brand
loyalty when consumers are loyal to the same store. Additionally, the economy brands of UK
food retailers have been found to have negative perceptions regarding quality, however
consumers are open to the idea of a branded low-cost alternative.

The research concludes that consumers use packaging as a way of simplifying their decision-
making process to make their shopping experience easier. Consumers also trust the perceived
quality of own-brands lesser than that of major brands, which is likely having a negative
impact on the brand equity of these own-brands. It has been found that differentiation of own-
brands is the best strategy to compete with major brands, especially in categories where
major brands are currently dominant. The current tiered system in place at Tesco is a strategy
that should be maintained, as a consumer’s level of income appears to have little relevance to
their own-brand purchase behaviour. Finally, a mutually beneficial relationship between the
store brand and own-brands has been identified and to enhance this, Tesco should align their
premium ranges closer to the store brand and distance their economy brands, to benefit the
brand equity of the store and own-brands alike.

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 List of Contents

Abstract……………………………………………………………………………………….1
List of Contents…………………………………………………………………………….2-3
List of Tables and Figures………………………………………………………………...3-4
Preliminary Listings………………………………………………………………………....4
Chapter 1: Introduction
1:1 Introduction…………………………………………………………………...…..5
1:2 Aim………………………………………………………………………………..5
1:3 Objectives…………………………………………………………………………5
1:4 Rationale…………………………………………………………………………..6
Chapter 2: Literature Review
2:1 Introduction………………………………………………………………….…….6
2:2 Theoretical Framework………………………………………………………….6-7
2:3 The consumer behaviour factors that affect brand selection…………………..7-11
2:4 Brand equity in own-brand product and major brands……………………….11-13
2:5 The associations consumers have with own-brand products…………………14-15
2:6 How own-brands and major brands position their products………………….15-17
Chapter 3: Methodology
3:1 Introduction………………………………………………………………………17
3:2 Choice of Research Design………………………………………………………17
3:3 Secondary Data……………………………………………………………….17-18
3:4 Primary Data………………………………………………………………….19-20
3:5 Construction of Research Design…………………………………………….20-24
3:6 Sampling……………………………………………………………………...24-25
3:7 Procedure……………………………………………………………………..25-26
3:8 Data Analysis…………………………………………………………………26-27
Chapter 4: Findings and Analysis
4:1 Introduction…………………………………………………………………...27-28
4:2 Findings………………………………………………………………………27-34
4:3 Analysis………………………………………………………………………35-39

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Chapter 5: Conclusions and Recommendations
5:1 Conclusion 1……………………………………………………………………...39
5:2 Conclusion 2………………………………………………………………….39-40
5:3 Conclusion 3……………………………………………………………………..40
5:4 Recommendation 1…………………………………………………………...40-41
5:5 Conclusion 4……………………………………………………………………..41
5:6 Recommendation 2………………………………………………………………41
5:7 Conclusion 5……………………………………………………………………..42
5:8 Recommendation 3…………………………………………………………...42-43
5:9 Recommendations for Further Research…………………………………………43
Reference List……………………………………………………………………………44-47
Appendices
Appendix A – Literature review matrix………………………………….……….48-57
Appendix B – Tesco own-brand tiers examples……………………………………...58

List of Figures and Tables

Figure 1: Theoretical framework………………………………………………………………7
Figure 2: The decision-making process………………………………………………………..8
Figure 3: Factors influencing consumer involvement with products………………………...10
Figure 4: Low involvement choice…………………………………………….……………..10
Figure 5: Flowchart demonstrating how brand awareness, salience and attitude lead to brand
loyalty………………………………………………………………………………………...14
Figure 6: Choosing a primary research method……………………………………………...19
Figure 7: Sampling method selection………………………………………………………...25
Table 1: Inclusion and exclusion criteria for secondary research……………………………18
Table 2: Question 1 findings…………………………………………………………………27
Table 3: Question 2 findings…………………………………………………………………28
Table 4: Question 3 findings…………………………………………………………………28
Table 5: Question 4 findings…………………………………………………………………29
Table 6: Question 5 findings…………………………………………………………………29
Table 7: Question 6 findings…………………………………………………………………30

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Table 8: Question 7 findings…………………………………………………………………30
Table 9: Question 8 findings……………………………………………..…………………..31
Table 10: Question 9 findings………………………………………………………………..32
Table 11: Question 10 findings………………………………………………………………32
Table 12: Question 11 findings………………………………………………………………33
Table 13: Question 12 findings………………………………………………………………33
Table 14 and 15: Question 2 and 3 findings – Links between income and levels of own-label
purchasing……………………………………………………………………………………34

Definitions
Own-brands – Brands that are owned or used by UK food retailers such as Tesco or
Sainsbury’s. Including brands such as; Tesco Everyday Value or Sainsbury’s Taste the
Difference

Major brands – Also known as “National brands” or “Household brands”, are brands that
are not owned by a supermarket and are sold nationwide.

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 Chapter 1: Introduction

The following research topic aims to address the branding of own-brand products on offer
from UK food retailers, primarily focussing on Tesco, the UK’s largest supermarket by sales,
Retail Economics (2017). It begins with identifying the key differences between the branding
of Tesco’s current own label offering and the branding of competing major brands,
identifying the brand elements both tangible and intangible. The information found from this
will then be used to compare the own label product offering of Tesco with major brands, to
identify any areas of strength and weakness in their own label products.

From this, the research will investigate the consumer decision making factors that influence
consumers buying behaviour and their final brand selection. With rising inflation and squeeze
on household budgets, combined with the growth of the discount retailers such as Aldi, the
research will identify if there is scope for retailers to grow the brand equity in their lower cost
own-brand offering to target these households who are looking to make cost savings, Butler
(2017). This information will then be analysed to provide insight into if and how brand equity
in own label products can be matured, to benefit the brand and retailer through increased
customer loyalty and preference to purchasing their products over their major rivals.

1:1 Aim

How can UK food retailers best build brand equity in their own-brand products?
The case of Tesco.

1:2 Objectives

1. To identify the main tiers of own brand product offering in Tesco

2. To identify the differences in the way own-brands and major brands are branded
3. To explore consumer behaviour and the decision-making process and their impact on
brand selection
4. To investigate how brand equity could be better managed in own label products

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1:3 Rationale

During my part time employment at a Tesco retail store, I began to recognise some consumer
behaviour habits, particularly that of the brands that they selected to purchase. This made me
consider why some people only purchased certain brands and why others did not show the
same level of loyalty. From this I considered whether there is any scope for growth in the
brand equity of a supermarkets own label product offering, to then generate their own
customer loyalty to the brand, in turn potentially growing loyalty for that retailer in the
process. Own label products dominated the UK supermarket grocery market in November
2014, where these products accounted for 54% of total sales, approximately 3 times the
global average, (Nielsen, 2014). This research will therefore explore the possibilities of
building brand equity in these product lines today and if there are any benefits to doing so for
the major UK food retailers. The aim of this project is to provide retailers with the
information to make informed decisions for investment in branding and marketing strategies
of their own label products in the future.

Chapter 2: Literature Review

2:1 Introduction

The following section examines previous literature relating to the research topic, which will
then be analysed to give a broad overview of the topic area. Hart (1998, p. 13) states:

“A major benefit of the review is that it ensures the researchability of your topic
before ‘proper’ research commences.”.

This therefore suggests that is important to have a wider understanding of the topic area, to be
able to fully satisfy the requirements of the research project. This research will use reliable
and academic sources, to identify areas of contention or gaps in the current knowledge to then
carry out further research to build upon these areas.

2:2 Theoretical Framework

Upon choosing the initial topic, theories relevant to the topic were required to provide a
comprehensive piece of research. This is essential to a research project, to ensure that a
detailed and accurate answer is formed at the end of the study. A theory is defined as:

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 “A supposition or a system of ideas intended to explain something, especially one
based on general principles independent of the thing to be explained.”, Oxford
Dictionaries (a.i.).

The theoretical framework for this research project can be seen below (Figure 1)

Figure 1

Brand Association Consumer Behaviour

 Brand name  The decision-making process
 Core brand associations  Influences on consumer
 Benefit associations behaviour
 Level of involvement
 Consumer responses –
including purchase behaviour

AIM
How can UK food retailers best
build brand equity in their own-
brand products?
The case of Tesco.

Brand Positioning Brand Equity

 Target markets of the brand(s)  Brand awareness

 Nature of the competition  Brand associations and
 POP and POD associations perceived quality
 Brand architectures  Brand loyalty

Theoretical Framework

2:3 The consumer behaviour factors that affect brand selection

Consumer behaviour has interested researchers for many years and theories surrounding this
topic have evolved over the past 300 years, Bray (2009). Earlier theoretical models focused
on the moment of purchase or exchange of goods or services for money, but this has now

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been shown to be part of a wider ongoing consumption process by the consumer, Solomon et.
al. (2016). A recent definition provided by Solomon et. al. (2016) states that consumer
behaviour is:

“…the study of the processes involved when individuals or groups select, purchase,
use or dispose of products, services, ideas or experiences to satisfy needs or desires.”.

Blythe (2013), supports this by defining a decision-making process which influences

consumers behaviour. This process has 7 key stages that the consumer is involved in, as
showed in figure 1 below:

Figure 2

Post-
Need Information Pre-purchase Product Product
consumption Divestment
Recognition Search Evaluation Purchase Consumption
Evaluation

The Decision-Making Process, Blythe (2013)

However, although there are 7 stages to this process, it appears that not all of these are
undertaken upon every consumer decision. There is agreement by Blythe (2013) and Bray
(2009), that during a sizeable amount of purchases a consumer will spend little time
evaluating their choices or will simply purchase the same brand as they did before. This
suggests that less complex or routine purchases will not require the consumer to fully
undertake the decision-making process and will bypass the information search and the pre-
purchase evaluation stages. This is supported by Bray (2009), who states that the model can
be modified to cover the various stages that are engaged in by the consumer, to explain
situations of both extended and limited problem solving. An example of this in relation to
Tesco is with regards to packaging as a way of simplifying the decision-making process.
According to Vale and Matos (2015) and Wells et. al (2017), product packaging is crucial for
consumers in their decision-making and they will rely on this to help them to make a choice.
This concept is also supported by Gidlof et. al (2017), who describe retail environments as
being complex, as they house a wide range of choice for consumers, this encourages them to
use packaging to simplify their decisions through visual cues. This consensus demonstrates
that consumers actively use packaging design, to simplify their choices when shopping,
removing the information search and pre-purchase evaluation stages from their decision-
making.

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The literature suggests that there are various factors that influence a consumer’s behaviour.
Kotler (2016) states that there are three main factors that have an effect including:

 Cultural factors: Culture, subculture and social class.

 Social factors: Reference groups, role in society, cliques and family
 Personal factors: Age, life-cycle stage, occupation, economic situation, lifestyle and
values, personality and self-concept.

Kotler (2016) also adds to this list, stating that there are key psychological processes that go
deeper than behaviour or attitude, these processes include: motivation, perception, learning,
emotions and memory. Other literature from Gajjar (2013), supports these findings, stating
that there are four key factors that influence consumer behaviour including; cultural,
personal, psychological and social. The evidence provided by this literature shows the
complex nature of consumer behaviour and the variety of factors that need to be addressed to
provide consumers with what they require. An example of a personal influencing factor is a
consumer’s economic situation, as if they have less money available to spend, they are likely
to buy the cheaper brands to save money, Gajjar (2013). However, research by Anchor et. al.
(2009) disagrees with this theory, by suggesting that in the UK, Tesco’s own-brand products
increase in popularity when consumers incomes are higher. The reason for this could be due
to Tesco building their premium product line ‘Tesco Finest’, moving away from just a value
proposition, Huang and Huddleston (2009). Although, this may also suggest that effects from
a consumer’s economic situation, are mitigated by the other factors that influence consumer
behaviour.

The level of involvement a consumer has with a brand can determine the level of motivation
they have to search for information and engage in systematic processing of aspects, including
the decision-making process, Elliot and Percy (2007). A product or brand can be positioned
anywhere on a spectrum between low and high involvement and there are various factors that
influence where it will be placed on this scale, as can be seen in figure 3.

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 Figure 3

Factors influencing consumer involvement with products, Elliot and Percy (2007).

The model presented in figure 3 shows how frequently purchase, inexpensive products will
mostly fall under the low involvement category, these factors are mostly present in fast-
moving-consumer goods (FMCG’s) sold at UK food retailers. Kotler and Keller (2016, p.
202), agree with this finding stating that, “Evidence suggests we have low involvement with
most low-cost, frequently purchased products.”. According to Statista (2015), grocery
shoppers in the UK frequently visit supermarkets, with 56% visiting a store 1-2 times a week
and 41% visiting 3 times or more every week. This high shopping frequency, combined with
the low-cost products that are sold by retailers such as Tesco suggests that consumers will
likely purchase with minimal involvement in their decision-making process.

Figure 4

Repeat
Awareness Trial
Purchase

Low-involvement choice, Elliot and Percy (2007).

It appears that most of the purchases of low involvement products do not undergo the full
consumer decision-making process. Instead, consumers mostly rely on their past purchase

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behaviour and choose brands that have ‘top of mind’ awareness, see figure 4, Elliot and Percy
(2007). However, because there is minimal involvement, the beliefs held by the consumer
about a brand are likely to be weaker and therefore more easily changed, Elliot and Percy
(2007). Kotler and Keller (2016) suggest that brands can increase the level of involvement in
low involvement brands, by using one of four techniques:

 Link the product to an engaging issue.

 Link the product to a personal situation.
 Design advertising to trigger emotions related to personal values or ego.
 Adding an important feature to the product.

This evidence shows that increasing the level of involvement for a low-involvement product
can influence belief changes and perhaps change a consumer’s brand selection.

It appears that even if brands influence consumer behaviour changes, there is an additional
factor of perceived risk that is highly influential to final purchase behaviour, Kotler and
Keller (2016). This perceived risk can take shape as one of six risks including; functional,
physical, financial, social, psychological and time related, Kotler and Keller (2016). Castilho
et. al. (2015), identifies functional and social risks as being concerns for consumers when it
comes to own-brands. Levels of trust, familiarity and strong quality perceptions are all
important factors in brands, Daniela et. al. (2014). These findings show that there are
additional hurdles of perception for own-brands to overcome, before they can encourage
consumers to make a purchase, which may be where major brands have strengths. Supporting
this theory is Kotler and Keller (2016), who say consumers develop routines to avoid these
perceived risks including preference towards major brands. There may be an opportunity for
further research to identify if increasing the level of involvement in own-brands would
encourage consumer change and adoption of them and if so, which technique for this works
best.

2:4 Brand equity in own-brand products and major brands

Brand equity has various definitions, one of these by Aaker (2010, p. 8) states that:

11
 “Brand equity is a set of assets (and liabilities) linked to a brands name and symbol
that adds to (or subtracts from) the value provided by a product or service to a firm
and/or that firm’s customers”.

There are four major asset categories covered by brand equity including; brand name
awareness, brand loyalty, perceived quality and brand associations, Aaker (2010).

It is well known that consumers place a substantial amount of trust in established major
brands. Evidence shows that the trust in the quality of major brands far exceeds that of store
own-brands, which are trusted the least in terms of quality, Martenson (2007). This would
suggest that the lack of trust in the perceived quality of own-brands is potentially damaging
to their brand equity, according to Aaker’s (2010) definition of brand equity assets. Daniela
et. al. (2014) supports this, finding that trust and perceived quality are the most important
factors in a brand for consumers.

Although major brands and store own brands may sell near identical products, there is clear
evidence to suggest that they are managed in very different ways. Ultimately the
manufacturers of these brands just sell a product and nothing more, whereas the own-brands
are included under the retailer’s brand, so therefore needs to be managed differently, Wulf et.
al. (2005). Major brands are suggested to be of great importance to grocery retailers, such as
Tesco, as they help to generate consumer interest, patronage and loyalty in the stores image
and therefore adds to the retailer’s brand equity, Martenson (2007). Although major brands
have their own importance, it is also true of own-brands, as they enable the retailer to stock
products that are exclusive to them, Vale and Matos (2015). Additionally, there is an
agreement in the literature, Choi and Huddleston (2014) and Wells et. al. (2017), that own-
brands which utilize the stores name as part of the packaging design will increase consumer
loyalty and awareness towards the retailer’s brand. This clearly shows how important it is for
retailers to maintain a balance between the use of major brands and own-brands as part of
their ranges. Increased loyalty in a store has been shown to have the added benefit of building
own-brand product equity, which would suggest that there is a strong mutual relationship
between the store as a brand and the own-brands that it is linked to, Wulf et. al (2005). Own-
brands also have a far higher probability of success when customers are loyal to the retailer,
further supporting the theory of a mutual relationship between store and own-brand, Castilho

12
et. al (2015). There appears to be an overarching benefit to the retailers from this additional
loyalty, as when customers are loyal to these brands, they are willing to pay more, will likely
buy more and help to generate positive word-of-mouth, Allaway et. al. (2011). Own-brands
appear to be making an impact on the major brands already, as brand loyalty has decreased in
developed countries such as the UK, which may have been caused by the development of
own brands, Anchor et.al. (2009).

Whilst the likelihood of purchasing an own-brand product appears to increase with customer
loyalty, there are suggestions in the literature that if these brands wish to be effective, they
need to provide a good substitute to the established major brands, Martenson (2007). As
shown by Huang and Huddleston (2009), in most cases own-brands appear to only possess a
price advantage over the major brands, with their research showing that quality,
innovativeness and unique features will give consumers better choice. Supporting this theory,
Cuneo et. al. (2012), states that products with high differentiation levels are a strong
opportunity to build brand equity. The literature therefore suggests that it is important for UK
food retailers to develop their product lines where possible and beneficial to do so, to provide
a different and unique offering to consumers. It has been suggested that second tier (middle
tier) own brands offer the best opportunities for development, Cuneo et. al. (2012). Although,
this theory was formed based on a study of the Spanish market, so therefore may not be
suitable to apply to the UK grocery market. This appears to be true as Huang and Huddleston
(2009), suggest that premium ranges provide competitive advantage and therefore they would
recommend these for own-brand development. There is additional evidence to suggest that
this is already happening, as retailers appear to be actively innovating in premium categories,
Anchor et. al. (2009). However, more recent research by Castilho et. al. (2015), states that
perceived risk by the consumer will be reduced if retailers closely align their brands to their
major brand counterparts. Although this may be true in some instances, this is possibly not
the case for own-brands across the board, as the literature, Huang and Huddleston (2009),
Cuneo et. al. (2012) and Anchor et. al. (2009), has primarily shown that it is more beneficial
for own brands to differentiate from major brands to build their own brand equity.

13
2:5 The associations consumers have with own-brand products

It has been found that there are a variety of elements that create the associations that
consumers have with brands including; packaging, traditional advertising, promotions, word-
of-mouth, previous experiences and any other communications about the brand, Elliot and
Percy (2007). As shown in figure 5, associations are built through creating initial brand
awareness, strengthening brand salience and defining the brand attitude, to generate brand
loyalty.

Figure 5

Flowchart demonstrating how brand awareness, salience and attitude lead to brand
loyalty, Elliot and Percy (2007).

One factor that has been suggested for building brand associations is through the use of
packaging. Vale and Matos (2015) shows evidence that similarities in the packaging design
of own brands and national brands leads to a higher perception in quality for the own-brand.
This may suggest that this mimicking of the packaging by own-brands allows them to borrow
some of the associations that consumers place in the major brands. Although Tesco’s range of
own-brands appear to reflect the image of the store, rather than copying the major brands,
Martenson (2007). However, more recent research by Cuneo et. al. (2012), identified that
own-brands were moving away from a low-price and low-quality offering, to creating
products that compete directly with major brands. During this period there may have been a
shift back to creating associations between own-brands and major brands at UK food
retailers, including Tesco, but further research to obtain an accurate up-to-date view of these
changes is required.

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There is evidence to suggest that associations also come from the core brand, that being of
the retailer that the own-brand belongs to. Own-brands appear to be used by consumers to
make an evaluation of the quality of the retailer, Choi and Huddleston (2014). This also
appears to apply the opposite way around, as consumers will link an own-brand to the core
brands strengths, when the retailers name is used, Choi and Huddleston (2014). Strengths that
are important to the brand equity of a retailer include the service and product quality
provided, Allaway et, al. (2011). Hence according to this literature, if the core brand
possesses strengths in its stores, associations of those strengths should be passed on to an
own-brand bearing the retailers name. Additionally, this research suggests that there is a
mutually beneficial relationship in the associations shared between a retailer (core brand) and
the own-brands that use its name.

However, an area that is missing from the current literature is in relation to relatively new
introductions to Tesco’s own-brands. The brands in questions are the ‘farm brands’ as Tesco
refers to them, which cover a range of fresh fruit, vegetables, meats and fish and appear to
have replaced their everyday value line of own-brands in these areas, Tesco Groceries (a. i.
a). Additionally, a more recent update to their own-brands applies to the same area of
economy lines but covers their ready meal segment and three non-chilled grocery lines, this
range being labelled as ‘The Hearty Food Co.’, Tesco Groceries (a. i. b). These lines suggest
that Tesco may be distancing the core retail brand from their economy lines and are quietly
phasing out their everyday value brand. This area requires further research to fully understand
the changes and why Tesco may be doing this and whether it will be beneficial to extend this
method to other product lines and/or tiers.

2:6 How own-brands and major brands position their products

There is a consensus amongst the literature that brands should clearly position themselves to
ensure that consumers will consider them when making a purchase decision. Positioning
enables a brand to define how they are different or better than a competitor in a meaningful
way and ensures that the brand is remembered by the consumer, Kotler (2003). Supporting
this theory Keller et. al. (2011, p. 100) says:

15
 “Positioning, as the name implies, involves finding the proper ‘location’ in the minds
of a group of consumers or market segment, so that they think about a product or
service in the ‘right’ or desired way.”.

Keller et. al. (2011), also states that it is important to consider the following four factors to
maximise the benefits of positioning for a brand:

 Target market
 Competitors
 Points of parity (POP)
 Points of difference (POD)

Large retailers appear to hold complex brand architectures in their stores, however a three-
tiered approach is frequently adopted for most own-brands in traditional retailers; economy,
standard and premium tiers, Cuneo et. al. (2012) and Hokelekli et. al (2017). The own-brands
at Tesco uses the following three-tiered structure for their key own-brands:

 Economy tier – Tesco Everyday Value

 Standard tier – Tesco
 Premium tier – Tesco Finest

Examples of these own-brand tiers at Tesco have been provided in Appendix B, showing
tinned tomato soup and mature cheddar cheese across all three tiers.

The positioning of these own-brands seems to be determined by the national brands. Highly
differentiated national brands mean retailers will try to mimic them, whilst undifferentiated
national brands will lead retailers to differentiate their own-brand offering, Choi and
Coughlan (2006). Furthermore, retailer own-brands appear to only possess a price advantage
over the major brands, Huang and Huddleston (2009). However, more recent research
suggests this may no longer be the case, as own-brands have an opportunity to differentiate
their products and therefore their positioning can be adapted to suit the retailers target
markets, Wells et. al. (2017). This could therefore lead own-brands to position themselves in
a unique area of the market, instead of being closely aligned to their major brand
counterparts. There is evidence to suggest this may already be happening, as UK retailers
have managed to create brands that are viewed as equal to, or better than the major brands,
Anchor et. al. (2009). Additionally, the Tesco Finest range (a premium tier own-brand) is
further evidence that retailers are moving some of their own-brands away from just a price

16
advantage and are using innovation to differentiate their product offering, Huang and
Huddleston (2009). This may provide an opportunity for further research into whether it
would beneficial for own-brands to differentiate from the major brands to offer better choices
for consumers or whether consumers would prefer own-brands to maintain a price advantage
over the major brands.

Chapter 3: Methodology

3:1 Introduction

The aim of this section is to detail and justify the research methods selected for this study.
This is of great importance to this research project, as it will examine the way the research is
carried out and what important factors have determined the methods chosen. It highlights the
key research methods undertaken to collect the relevant primary and secondary data.

3:2 Choice of Research Design

In this project, primary and secondary research methods have been employed. Secondary
research has some distinct advantages, as the information is already available and the
research has been carried out by someone knowledgeable in the subject area. However, there
are limitations to this in some circumstances, such as in this research project, where there are
some gaps in the existing research that require further primary research to determine the data.
For these reasons, a combination of primary and secondary research methods have been
employed, to provide the most effective overview of the topic area.

3:3 Secondary Data

A starting point for data collection was carrying out a range of secondary research, to collect
and summarise data that has already been published. A list if inclusion/exclusion criteria has
been listed in the table below to ensure that refined and reliable findings will be made.

17
 Table 1

Inclusion
Academic journals (2012 onwards)
Academic text books (2007 onwards)
Online databases including; USearch,
Emerald and Mintel
Trade publications and magazines
including; The Grocer and Retail Week
English language
European and North American countries
(also including Australia and New Zealand)
Inclusion and Exclusion Criteria for Secondary Research
Exclusion
Any journals pre-dating 2012, apart from
when there is no current literature
Any academic text books pre-dating 2007
Any non-academic databases or databases
not accessible through UCB Online
Any non-reputable trade publications and
magazines
Any non-English language
Any country that does not fall under the
inclusion criteria

As there are a large range of secondary data sources, it is important to ensure the information
is reliable and unbiased. This is supported by Walliman (2011), who says that it can be a
challenge for a researcher to establish the authenticity and credibility of their secondary data
sources and whether the information is truly representative of the topic area. To ensure that
the information collected meets the requirements of being reliable, unbiased and
representative, the following questions by Stewart and Kamins (1993, p. 17) will be utilized:

 “What was the purpose of the study?”

 “Who collected the information?”
 “What information was actually collected?”
 “When was the information collected?”
 “How was the information obtained?”
 “How consistent is the information with other sources?”

By using these questions as guidance when carrying out secondary research for this project,
the information obtained can be confidently used to provide a detailed analysis and reliable
findings for the research aim and objectives.

18
3:4 Primary Data

Primary research has been used in this research project to identify new information not
previously established and to support or challenge secondary research findings. This is useful
in relation to the chosen topic area of the UK food retail industry which is continuously
evolving and changing, so therefore will provide the most relevant research possible. Upon
deciding a primary research method, it is vital to consider a variety of different methods and
the potential results each method could yield. In this case the model provided by Perner
(2010) was used to help select a research method.

Figure 6

Choosing a Primary Research Method, Perner (2010)

After utilizing the model, this research project used self-administered questionnaires to gather
primary research data. A definition of a questionnaire is:

“A questionnaire is a research instrument consisting of a series of questions for the

purpose of gathering information from respondents.”, McLeod (2018).

This research method was selected as it was able to provide both qualitative and quantitative
data on many people, whilst using minimal time and financial resources to do so, McLeod
(2018). Additionally, there are no geographic limitations to collecting the data and responses

19
can be made anonymous to ensure that responses are true to the beliefs of the sample,
Walliman (2011). The questionnaires will also be carefully constructed to ensure that the
desired information is received from the sample’s responses. This will also be done to ensure
that there is no bias in the wording of the questions, as this can lead to results that are not
representative of the general population, Perner (2010). The ability to carefully control the
levels of bias through the use of anonymity and careful construction will help provide this
project with truly representative research. Although there are many benefits to carrying out a
questionnaire, it can be time consuming to analyse the data, especially when qualitative data
is involved as it can be difficult to codify various responses, McLeod (2018). This was taken
into consideration before the research commenced and although it required more time to
analyse, the detail in the responses will be essential to providing answers that are useful to
answer the aim and objectives of this research project.

3:5 Construction of Research Design

Initial research carried our earlier in the project was used to generate a variety of quantitative
and qualitative questions for the questionnaire. These questions have been designed to
produce research that provides answers to gaps in the existing knowledge pool and support or
challenge previous research findings. Walliman (2011), states that a questionnaire must
contain clear language, simple questions, be kept as short as possible and remain clear and
professional throughout, to encourage good rates of response. Therefore, these factors have
been adhered to in the construction of the questionnaire, to be able to achieve the highest
response rate possible, so that a rich variety of information can be obtained for this research.
Additionally, the order of the questions should progress logically, starting with the
generalised questions at the start and more specific questions towards the end, McLeod
(2018). For this reason, the questionnaire was designed in this format to further maximise the
completion rates from potential participants. The questionnaire was created using a mixture
of open-ended and closed questions to gain quantitative data and valuable qualitative
responses. Closed questions have limited pre-determined responses, whereas open-ended
questions allow a respondent to provide their own response, without being potentially
influenced by the choice of responses, Perner (2010). These open-ended questions will
therefore consume more of the respondent’s time to answer and so will be placed towards the
end of the questionnaire.

20
The questionnaire has been broken down into its constituent questions below, with
justifications for why each question was created:

The first two questions have been created to obtain some background knowledge about the
respondents. This will be useful when analysing the research, allowing the data to be
categorised into various groups. There is also further research required to understand whether
own-brand purchasing increases or decreases with higher levels of income, therefore question
two has been generated to help provide an answer to this.

21
Questions three, four and five have been created to identify the respondents attitude towards
supermarket own-brands. This has been done by finding out how often they buy own-brands
and what are the key categories in which they purchase own-brands. This will be useful in
analysing objectives two and four, by identifying where national brands and own-brands
perform better and where they may be opporunities for brand growth or improvements.
Question five will hopefully provide some useful insights into why certain categories of own-
brands may perform better than others and where poorer performing categories could be
improved.

The question above will help show define the respondent’s perception of quality of own-
brands and national brands. It will also help provide answers to objective two, by identifying
whether there are any differences in the perceptions between national brands and own-brands.

This question relates to objective three, by attempting to find answers to whether increasing
consumers level of involvement will impact on brand selection, ultimately identifying if it
can increase the selection of own-brands over national brands. It has been suggested in the
literature review that increasing levels of involvement can increase the chances in belief
changes about a product or brand, so this question will aim to answer this. Options have been
provided as this may not be something that a respondent will often consider in their purchase
decisions.

22
In questions eight and nine, the research is attempting to identify links between store brand
loyalty and the loyalty that customers show to that store’s own-brand products. This will help
to support previous research that has identified links and find out if there have been any
changes in regard to store and own-brand loyalty.

Questions ten and eleven are trying to understand consumers thoughts and perceptions about
economy tier own-brand products. The aim of these questions is to find out if rebranding
economy own-brands to move them away from the store brands would be more appealing to
consumers.

23
This final question seeks to identify what consumers might want to see in terms of the
physical aspects of own-brand products. This will provide some qualitative information of
what consumers might like to see offered by UK food retailers. These findings may help to
build brand equity if desired by consumers and will help to provide answers for objective
four.

3:6 Sampling

Sampling is required for primary research because it is unlikely to be cost-effective or

practical to collect all the data that is available for the research area, National Audit Office
(2001). This therefore means that a sample for any research project will need to be carefully
decided to ensure that the research is practical. So, by administering the correct sample, the
information can be obtained without needing to examine an entire population, National Audit
Office (2001).

The information required for this research project does not require any specific groups of
respondents and covers a variety of elements within the topic area. Although age and income
have been required in two questions in the questionnaire, these questions are only required to
help group responses when analysing the data and identify any potential trends. This sample
should therefore ideally include a variety of respondents who are of different ages and live in
different areas. The only exclusion factors that have been made necessary for this research
are; that respondents are aged eighteen and over and that they regularly do shopping for their
household. These exclusion factors therefore do not have an impact on the sampling method
selected. This means that the researcher has the potential to obtain data from a larger sample.
The sample size for this questionnaire has been determined using the National Audit Office
(NAO) flow diagram on sample method selection (Figure 7). According to this flow-chart,
this research should aim to have between 50 and 100 responses in total. Additionally, due to
the variety of responses required and as suggested in the flow-chart, the sample style is

24
simple random. The simple random sampling method can be useful when there is a similar
population and/or they possess similar characteristics, which this study does, Walliman
(2011).

Figure 7

Sampling method selection, National Audit Office (2001)

3:7 Procedure

The questionnaire was created using an online survey tool, thus allowing all the questions to
be formatted in way that made it as easy as possible for the respondents to provide answers.
Another reason for selection of an online method, is because of the high level of internet
usage in the UK, with 89% of adults aged 16-54 regularly using the internet and also 78% of
adults in the 65-74 age group, ONS (2017). To gain responses, the questionnaire will be
shared through social media channels including Facebook and Twitter to reach a wide range
of audiences to achieve a representative sample of the population. To increase the response

25
rate the questionnaire will be shared multiple times over a two-week period to ensure the
number of responses required will be achieved. Although internet usage in the UK is high,
social media usage by the 65-74 age group is only 37% and the 75+ group is only 26%, in
comparison to the 71% average for the UK, Age UK (2016). This means that social media
may fail to reach these age groups and will lead to an unrepresentative sample, therefore the
author chose to share the questionnaire via email to these age groups to ensure a greater
variety of respondents. Upon reaching the end of this two-week period or the maximum
number of responses required, the questionnaire will be closed to new responses to allow the
results to be analysed.

3:8 Data Analysis

To analyse the data from the questionnaire, the questions will be tackled based on whether
they are qualitative or quantitative. The responses from the two qualitative questions will be
analysed first, as they will need to be addressed in a different way to the quantitative data. As
there is a wealth of information that can be provided in this type of question, it needs to be
categorised to make it comprehensible to the author and reader. For this research, the
qualitative information retrieved will be coded, using a label to allocate units of meaning to
the data, allowing the information to be summarised, whilst not distorting it, Walliman
(2011). Once this has been carried out, groups of data will be formed allowing it then to be
interpreted.

For the remaining quantitative question responses, the raw data will be organised into tables
to make it understandable. This will be done by tallying the frequencies of the data, which
will then allow for groups to be formed for further analysis. Once the raw data has been
grouped by frequencies, it can then be presented using charts. The nominal questions that
identify personal circumstances will be presented using pie charts, for their visual strengths
and ability to convey the information simply, Denscombe (2010). For ordinal questions, bar
charts will be utilised, as they are an effective method of displaying frequencies and have
shown strengths in small-scale research projects, Denscombe (2010). The use of these charts
will help to identify trends in the data set and determine if it supports or challenges the
findings of other researchers, as identified in the secondary research.

26
There is also the need to identify whether there is a link between own-label purchasing and
levels of income. To find this information in the data, questions two and three will be
highlighted from each individual response and then tallied by frequencies to show any
correlations. This will then be presented in the form of a bar chart, using the visual element to
make the information easily interpretable.

Chapter 4: Findings and Analysis

4:1 Introduction

This dissertation has a range of secondary and primary research findings that have been
obtained through a questionnaire and a collation of research in the literature review section.
This section will evaluate and analyse the data to identify similarities and differences
between them. This will ensure that the reader is able to better understand the research
findings when they reach the conclusions and recommendations section.

4:2 Findings

Question 1: What is your age? (Select one that applies)

Table 2

Age Group 65+

55-64 1%
2%

25-44 45-54
6% 8%

25-34
16%

18-24
67%

27
Question 2: What is your annual income? (Select one that applies)

Table 3

Annual Income
£40001 to £60000
9%
£25001 to £40000
10%

£10001 to £25000
23% £0 to £10000
58%

Question 3: How often do you purchase supermarket own-brand food products?

(Select one that applies)

Table 4

Own-brand purchase frequency

Rarely
9%

Occasionally
16% Frequently
46%

Often
29%

28
Question 4: In which food categories do you purchase supermarket own-brand
products (Select all that apply)

Table 5

Own-brand Category Purchasing

None
Alcoholic Drinks
Hot Drinks
Soft Drinks
Bread and Baked Goods
Confectionary
Crisps and Snacks
Breakfast Cereals
Cooking and Sauces
Tinned Products
Frozen Foods
Cooked Meats
Meat and Fish
Ready Meals
Dairy Products
Fruit and Vegetables

0 10 20 30 40 50 60 70 80

Responses

Question 5: If you would not buy supermarket own-brand products in any of these
categories, why is that? (Please explain)

Table 6

Would buy in any category / N/A 24

Prefer other branded equivalents 19
Own-brands unappealing 4
Promotions on branded products 1
Quality 24
Prefer to buy outside of a supermarket 4
Limited/no supermarket own-brand alternatives 3
Do not buy products in certain categories 5
Dislike of product attributes 4
Routine/Habit 1

Seven responses to this question have been void due to no response and due to some
responses being irrelevant to the question being asked.

29
Question 6: Do you think that the quality of well-known household brands (e.g.
Kellogg's or Heinz) is better than quality of supermarket own-brands? (Select one
that applies)

Table 7

Quality Perception of Own-Brands vs Major Brands

Lower Quality

Slightly Lower Quality

Similar Quality

Slightly Higher Quality

Higher Quality

0 5 10 15 20 25 30 35 40 45

Responses

Question 7: Is there anything that would make you consider switching to a

supermarket own-brand? (Select all that apply)

Table 8

Factors that may influence buying behavioural change

None of the above

If the products had a new important feature

If the brands advertising made me emotional

If the brand connected with my lifestyle/personal

situation

If the brand addressed a real world issue

0 5 10 15 20 25 30 35 40 45 50

Responses

30
Question 8: Do you consider yourself to be loyal to a supermarket? (Select one that
applies)

Table 9

Supermarket Loyalty

Tesco

Asda

Sainsburys

Morrisons

Aldi

Lidl

Waitrose

Not loyal to any supermarket

0 5 10 15 20 25 30 35 40

Responses

Other:

1. Tesco and Lidl

2. Globus
3. Tesco and Sainsbury’s
4. Eko Plaza and Marqt

31
Question 9: If you are loyal to a supermarket, do you regularly buy that supermarkets
own-brand products? (Select one that applies)

Table 10

Connections between store loyalty and own-brand loyalty

Frequently

Often

Occasionally

Rarely

Never

0 5 10 15 20 25 30

Responses

Question 10: How would you describe supermarkets' economy ranges using five
words? (e.g. Sainsbury's Basics, Tesco Everyday Value, Asda Smart Price)

Table 11

Consumer Perceptions of Own-Brands

Unappealing
Appealing
Unattractive
Attractive
Boring
Exciting
Plain
Innovative
Inferior
Quality
Value
Expensive
Cheap

0 10 20 30 40 50 60 70 80 90 100

Responses

32
Question 11: Would you consider buying a new food brand that offered a low-cost
alternative to economy supermarket own-brands? (Select one that applies)

Table 12

Number of respondents willing to consider the purchase of

an low-cost alternative to existing economy own-brands

No
11%

Yes
89%

Question 12: Is there anything that you would like to be changed about supermarket
own-brand products?

Table 13

Nothing 30
More ethical/environmentally friendly 8
Improved packaging 25
More/improved promotions 3
Increased size 1
Improved nutrition/ingredients 6
Increased product variation/range 8
Information on sourcing 2
Less complex product range 1
Improved product quality 14
Improve brand image/remove stigma 6
More own-brand advertising 1
Improved taste 2
More locally sourced products/ingredients 1
Reduced price 1

Three responses to question 12 have been void due to no response.

33
Questions 2 and 3: Links between income and levels of own-label purchasing
Table 14
Frequently Often Occasionally Rarely Never
£0-10000 22 20 8 3 0
£10001 to 16 5 2 6 0
£25000
£25001 to 5 3 3 0 0
£40000
£40001 to 2 0 2 0 0
£60000
£60001+ 0 0 0 0 0

There were no respondents who had an income of £60001+, so this portion of the responses
are not applicable.

Table 15

Links between income and own-brand purchasing

25

20

15

10

0
Frequently Often Occasionally Rarely Never

£0 - £10000 £10001 to £25000 £25001 to £40000 £40001 to £60000

34
4:3 Analysis
This section will provide an analysis of the primary research findings obtained for this
research project and will do so under the objectives set. The findings will be analysed
alongside the secondary data found as part of the literature review and from any additional
findings from further reading, to provide a comprehensive understanding of the data.

The results obtained from the questionnaire indicate that consumers are willing to purchase
own-brands in certain categories over others. Question 4 demonstrates that consumers are
willing to purchase own-brands, however, in some categories including; alcoholic drinks, hot
drinks, soft drinks, confectionary, crisps and snacks and breakfast cereals, own-brands are
less popular, with less than 50% of respondents saying they would purchase them. Linking
this to the qualitative data from question 5, issues have been raised with quality (24
responses) and a general preference towards the branded equivalents in those poorer
performing categories (19 responses). This supports previous research that has shown that
perceived risks, including quality, can cause consumers concern about purchasing some
brands, but brand familiarity will likely reduce those risks, Castilho et. al (2015). Therefore,
explaining why major brands show strengths in certain categories, as they reduce consumers
concerns surrounding quality through brand familiarity. This also supports previous evidence,
that trust in the major brands far exceeds that of generic own brands, Martenson (2007).
Although, 24 respondents stated they would purchase own-brands in any category and a
majority of respondents (greater than 50%) said they would purchase own-brands in 9 out of
15 of the categories shown in question 4. Therefore, there seems to be a shift towards trusting
own-brands more when compared with the previous research.

The perception of quality in supermarket own-brands continues to be an issue for consumers,

with a majority of respondents to question 6 (55 out of 97) stating that they believe the
quality of major brands is higher than that of own-brands. This finding further demonstrates
how major brands have gained consumer confidence. As defined by Aaker (2010), perceived
quality is a cornerstone of brand equity and supermarket own-brands will find it difficult to
build brand equity if they do not possess strengths in these areas. However, the remaining
respondents to question 6 stated that own-brands were of similar quality (40 responses) or
major brands were of lesser quality (2 responses), clearly showing a large segment that have

35
gained trust in the quality of own-brands. Although there is a segment that appears to trust
own-brands, there are still improvements that need to be made to build that trust in Tesco’s
own-brands for the remaining sceptical consumers.

In the secondary research the general consensus of the literature by; Huang and Huddleston
(2009), Cuneo et. al. (2012) and Anchor et. al. (2009), is that own-brands should differentiate
their product offering to build brand equity. This opposes the theory by Castilho et. al (2015),
that closely aligning own-brands to the major brands reduces perceived risk, which in turn
will build brand equity. In this research project, the qualitative data from question 12 has
identified that consumers are most concerned about own-brand product quality (14 responses)
and the improvement of own-brand packaging (25 responses). This conflicts with the
consensus in the literature and suggests that consumers are not concerned with having a
different product offering from UK food retailers such as Tesco. However, some areas for
possible differentiation in own brands were identified including:

 More ethical/environmentally friendly (8 responses)

 Increased product variation/range (6 responses)
 Improved nutrition/ingredients (6 responses)

However, these responses only represent a small proportion of the total responses (20 out of
97), so therefore cannot be truly representative. Although differentiation is not an area being
raised by consumers, it may still be an effective strategy for own-brands. This is due to the
dominance these own brands show in some product categories as shown in the responses to
question 4. Research has shown that quality, innovation and unique features in own-brands
will give consumers better choice, instead of just a price advantage, Huang and Huddleston
(2009). By differentiating the own-brand product range through innovation and unique
features, whilst improving quality, will likely give own-brands an opportunity to increase
brand equity and market share in categories where major brands are currently dominant.

Gajjar (2013) proposed that a personal influencing factor on consumer behaviour is a

consumer’s economic situation and that fundamentally, if they have less to spend they are
more likely to purchase the cheaper brands. The lower cost brands are almost always
supermarket own-brands who’s unique selling point is a price advantage. However,

36
alternative research by Anchor et. al (2009) suggested that higher income groups were more
likely to purchase own-brands, therefore directly at odds with Gajjar (2013). The primary
research aimed to clarify whether there was a link between a consumer’s level of income and
their purchasing of own-brand products from retailers such as Tesco. The findings have
shown that there is little correlation between income and own-brand purchasing as there is a
mixture of attitudes towards own-brand purchasing across each income group as seen in the
comparison of responses to questions 2 and 3. This spread of own-brand purchasing across all
income groups shows that the current tiered model of own-brand products; economy (Tesco
Everyday Value), standard (Tesco) and premium (Tesco Finest), provides Tesco with
excellent opportunities to reach and adapt each own-brand to suit each income groups
requirements and effectively build brand equity.

The food products that are available at Tesco are viewed as low-cost and therefore means
consumers exert a low level of involvement when making purchase decisions in store. Percy
(2007), has stated that this low involvement means a consumer’s behaviour can be changed
more easily, as their existing beliefs are weaker due to lower involvement. Question 7 was
created to identify whether consumers are likely to consider changing their purchase
behaviour. Using the Kotler and Keller (2016) theory that using one or more of four
techniques (listed in the literature review), will increase a consumer’s level of involvement in
low involvement brands and in turn encourage behavioural change. From this, the primary
research has shown that consumers appear to be averse to having their behaviour changed, as
48% of responses showed that many respondents would not consider changing their
behaviour for any of the reasons listed. However, three of the four options have been areas
consumers appear to be open to considering behavioural change. If the brand addressed a
real-world issue (27% response), if the brand connected with my lifestyle/personal situation
(27% response) and if the products had a new important feature (22% response). The
secondary research shows that behavioural change is possible and is somewhat more
achievable with low involvement brands. Therefore, using the techniques that consumers are
open to consider changing their behaviour, will prove beneficial to Tesco as they may be able
to encourage an increase the purchasing of their own-brands.

37
Secondary research from the literature review has shown the presence of a mutually
beneficial relationship between the store brands of UK food retailers and the own-brands that
they stock. Own brands are likely to be more successful when consumers are loyal to the
retailer, Castilho et. al (2015) and additionally it helps to grow the stores own-brand equity,
Wulf et. al (2005). The benefits of this loyalty to the store and own-brands at Tesco leads to
consumers being willing to pay more, buy more and they are more likely to generate positive
word-of-mouth communication, Allaway et. al (2011). The primary research findings from
questions 8 and 9 have shown that 64% of respondents believe that they are loyal to a
supermarket and 70% of those that are loyal say that they frequently or often buy that
supermarkets own brands. This clearly demonstrates that a mutually beneficial relationship
between store loyalty and own-brand loyalty is still present with consumers.

Further reading has shown that consumers use retailer own-brands to judge the quality of a
retailer. Research by Mintel (2017) has shown that 50% of consumers see store own-brands
as a key difference between the major UK food retailers and that the quality of a retailer has
always been determined by the quality of their own-brands. Perceived quality is a cornerstone
of brand equity under the definition by Aaker (2010) and is one of the most important factors
in a brand for consumers, Daniela et. al. (2014). This appears to present an issue, as the
primary research identified issues regarding the perception of quality towards economy own-
brands such as Tesco’s Everyday Value range. Question 10 found that respondents
highlighted words that are associated as being negative in terms of quality. The words that
highlighted the most included; cheap, value, plain, unattractive, boring and unappealing, all
of which point towards negative quality connotations. However, question 11 found that 88%
of respondents would consider purchasing a new food brand that offered a low-cost
alternative to the current economy own-brands. This therefore may require Tesco to pursue a
different strategy with their economy own-brands, rebranding them in a way that is different
from the store brand.

This strategy of changing the economy tier own brands has already started taking place across
some product ranges at Tesco, including; fruit and vegetables, meat and fish, fresh ready
meals, bread and some grocery lines, Tesco Groceries (a.i. a) and Tesco Groceries (a.i.b). The
primary and secondary research has shown that this is highly likely to be beneficial to the

38
own-brand and will help to improve the perception of store quality, by distancing the lower
perceived quality lines from the store brand. Tesco will likely benefit from rebranding the
everyday value range across all product lines, to enhance the mutually beneficial relationship
between own-brand quality and the perceived quality of the store. Additionally, premium
own-brands are becoming increasingly popular as consumers appear to be moving away from
major brands for financial reasons, Mintel (2017). This combined with the ability of premium
own-brands to offer a higher quality product offering gives Tesco further opportunity to
increase the quality perception of the store. Huang and Huddleston (2009), further supports
this, by recommending growth in premium own-brand ranges to create competitive
advantage, as they are able to innovate as a method of differentiation from other brands.
Therefore, these findings show that premium own brands should be developed and aligned
closely to the store brand, to ensure that the perceived quality is transferred to the store brand
and provides the mutually beneficial relationship of store and own-brand loyalty.

Chapter 5: Conclusions and Recommendations

5:1 Conclusion 1: Consumers actively use packaging design to simplify their

decision-making process.

The literature review identified that less complex and routine purchases, such as those done at
Tesco, will not require the consumer to undergo the full decision-making process. The
consumer decision-making model (Figure 2) by Blythe (2013), showed that there are seven
key stages in the process. But consumers are highly likely to avoid the information search and
pre-purchase evaluation stages in this type of decision. Instead, it has been found that
consumers rely on previous information and behaviour to influence their decision. In the
complex retail environments seen at UK food retailers including Tesco, product packaging is
crucial tool in helping consumers make a purchase and it provides them with a way of
simplifying their choice, using visual clues in the packaging design.

5:2 Conclusion 2: Consumer trust in the perceived quality of own-brands is

lesser than that of major brands.

Previous research showed that the perceived quality of own-brands is trusted less than that of
major brands, having a negative impact on the brand equity, as trust and perceived quality are

39
the most important factor for consumers. Although the primary research has shown that
consumers appear to be more trusting in own-brands through higher rates of own-brand
purchasing across many categories, perceived quality is still an issue. This was shown by the
majority of respondents stating that they believed that major brands are of better quality than
own-brands.

5:3 Conclusion 3: Differentiation of Tesco’s own-brands is the most effective

way to compete with major brands.

The literature review identified a majority consensus; Huang and Huddleston (2009), Cuneo
et. al. (2012) and Anchor et. al. (2009), surrounding the theory of differentiation as a
preferential strategy for own-brands to compete with the major brands. This research
project’s qualitative data has shown that this does not appear to be a widespread concern for
the majority of consumers. Two key areas for change in own-brands that were identified
included packaging and quality. However, although it has not been raised by many
consumers in the primary research, it appears that it is still the strongest strategy to compete
with major brands, as shown by the consensus in the literature. The primary research also
showed that major brands still display dominance in some categories including; drinks,
confectionary and breakfast cereals and own-brand product differentiation may provide the
best solution to compete with them.

5:4 Recommendation 1: Tesco’s own-brands should be differentiated to

compete in categories where major brands are most dominant.

It has been found that some categories are more popular for own-brands than others with
consumers. The categories that are less favourable for selection of own-brands (less than half
of respondents said they would purchase an own-brand) includes:

 Alcoholic drinks
 Hot drinks
 Soft drinks
 Confectionary
 Crisps and snacks
 Breakfast cereals

40
As own-brands are less popular in these areas, other major brands are likely to have a far
stronger presence. This strong presence will be challenging to compete with directly,
especially if the brands are well established, so therefore this provides an opportunity for
Tesco to differentiate and offer something unique to their target market(s), Wells et. al
(2017). For this reason, it is strongly recommended that Tesco begin to differentiate their
own-brand product offering in the categories identified above, to enable them to compete in
these areas against major brands.

5:5 Conclusion 4: A consumer’s income does not have a direct impact on their
attitudes towards own-brand product purchasing.

Research by Anchor et. al (2009) showed that higher income groups were more likely to
purchase supermarket own-brands. This conflicted with the theory that low-cost brands,
generally considered to be own-brands, would be more likely to be popular with low-income
consumers due to their price advantage, Gajjar (2013). However, the primary research carried
out for this project has shown that there is no direct correlation between a consumer’s income
and their decision to purchase own-brands. It was discovered that across all income groups
there were a mixture of attitudes towards own-brands. However, the majority of respondents
said they would frequently or often purchase own-brands, therefore demonstrating that own-
brands appear to be equally important to consumers across all income groups.

5:6 Recommendation 2: Retain tiered own-brand structure in Tesco, to ensure

that there is availability of these brands for all income groups.

There are consumers from all income groups that purchase own-brand food products from
UK food retailers. As shown by the research, there is no definitive link between a consumer’s
level of income and the likelihood of them purchasing own-brand food products. Therefore, it
is recommended that Tesco retain their current three-tiered strategy for their own brands
going forward, to be able to continue to attract consumers from all income groups.

41
5:7 Conclusion 5: Own-brands and the store brand have a mutually beneficial
relationship, when the perception of quality is high.

This research project has found that a strong mutually beneficial relationship exists between a
retailer’s store brand and their own-brands. Primary research has found that store loyalty will
increase the likelihood of a consumer being loyal to the retailers own-brands. Additionally,
own-brands a more likely to be successful when consumers are loyal to the retailer, Castilho
et. al (2015) and in turn this loyalty helps to build brand equity in own-brands, Wulf et. al
(2005). Further findings have also show that consumers appear to use the perceived quality of
own-brands as a method of determining the quality of the retailer and these own brands are
seen as one of the key differences between UK food retailers, Mintel (2017).

Some issues have been discovered in this research, due to these strong connections between
the Tesco store brand and the own-brands under the same umbrella. The economy own-
brands of retailers, in Tesco’s case ‘Everyday Value’, have been found to be poorly perceived
in regard to their levels of quality. Therefore, as the store brand and own-brands are closely
linked and the quality of each is judged based on the other, these negative associations appear
to be having negative implications for the Tesco store brand. However, this research project
has identified changes that are being made to the economy range at Tesco, distancing the
range from the Tesco store brand. Therefore, this strategy is likely to have a beneficial effect
to the consumers perceived quality of Tesco as a retailer. Furthermore, the secondary
research has shown that premium own brands, in this case ‘Tesco Finest’, are viewed as
being of higher quality than the lower priced own-brand tiers and offer opportunities to
develop product offering. As the Tesco Finest range is linked to the store brand through the
use of the Tesco brand name, it is highly likely that the consumers perception of quality
towards the store brand is also likely to be higher.

5:8 Recommendation 3: Tesco should align their mid-range (Tesco) and

premium (Tesco Finest) own-brands closely to the store brand and continue to
distance their economy own-brand (Tesco Everyday Value) from the store
brand.

42
By closely aligning the mid-range and premium Tesco own-brands with the store brand, it
will increase the consumers perception of quality of the store, as it has been shown that
consumers judge store quality based on their own brands. Additionally, Tesco should seek the
continuance of the removal of the Tesco Everyday Value brand, in favour of alternative brand
names that are not suggestive that it is a Tesco product. This will further help to increase the
quality perception of the store brand, as it distances the economy products that have been
shown to have a negative quality perception associated with them. This increased quality
perception of the store brand will be highly beneficial to Tesco’s brand equity, as perceived
quality is one important area of brand equity under Aaker’s (2010) model. This increase in
brand equity for the store will enhance the mutually beneficial relationship between store and
own-brands and will help to increase loyalty and overall purchasing of own-brands at Tesco.

5:9 Recommendations for Further Research

After research had been carried out as part of the literature review section, it was evident that
there was a need for further research in some areas. Using the data obtained from the primary
and secondary research, the objectives have been addressed as clearly as possible using
relevant up to date information. However, the UK food retail sector is continuously adapting
and changing and therefore further research is an ongoing process that needs to be carried out
to provide the industry with the most relevant information possible.

This research project found that consumer behaviour may possibly be changed by influencing
the level of involvement they exert when making a decision, ultimately making them consider
a change to own-brands at Tesco. But this only covered 4 broad categories, so this area
requires further research to understand more specifically what retailers such as Tesco can do
with their own brands to influence a change in consumer behaviour. Another new area of
research is also required to fully understand the impact of the introduction of replacement
economy brands at Tesco, including but not limited to ‘Farm Brands’. This is needed as they
are a relatively new introduction and their effect on consumers quality perceptions and
product purchasing need to be studied further to assess the effectiveness of these brands.

43
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47
Appendices

Appendix A – Literature Review Matrix

Author Date Type of The consumer Brand equity in own- The associations How own-brands and
Publication behaviour factors that brand products and consumers have with major brands position
affect brand selection major brands own-brand products their products
Castilho et. 2015 Journal -Perceived risks about -The greater the equality -Loyalty to a store
al own-brand including; in perception between results in a greater
quality, performance own-brands and national probability of success of
and social disapproval brands, the lower own-brands
are concerns for perceived risk between
consumers. – Brand them.
familiarity can reduce
these risks
Wulf et. al 2005 Journal -National brands enjoy a -Store loyalty leads to
favourable level of own-brand product
brand equity. loyalty and vice versa
-Own-brand equity is
present when consumers
are loyal to a store
-The way national
brands and own brands
build brand equity is
fundamentally different.
Manufacturers sell a
product and stores sell a
service, which the own-
brand is part of.

48
Author Date Type of The consumer Brand equity in own- The associations How own-brands and
Publication behaviour factors that brand products and consumers have with major brands position
affect brand selection major brands own-brand products their products
Hokelekli 2017 Journal -Higher rate of category -Traditional retailers use
et. al purchasing corresponds a three-tiered approach;
to greater cross- economy, standard and
shopping. Premium premium own-brands
own-brands a possible
way of differentiating to
combat this
Choi and 2006 Journal -Own-brand positioning
Coughlan is determined by the
national brands
-Differentiated national
brands mean stores
should ‘mimic’ them
-Undifferentiated
national brands mean
stores should maximise
differentiation with their
own brand products
-High quality own brand
equal to strong national
brand and low quality
private label equal to
weaker national brand

49
Author Date Type of The consumer Brand equity in own- The associations How own-brands and
Publication behaviour factors that brand products and consumers have with major brands position
affect brand selection major brands own-brand products their products
Daniela et. 2014 Journal -Tangible elements of -Trust and perceived
al brand eg price engages quality is important in a
consumers initially brand
-Intangible elements e.g.
trust and familiarity
continue to link
consumers to the brand
-Consumers loyal to a
brand are unlikely to
substitute if the product
is unavailable
Allaway et. 2011 Journal -Consumers that are -Service and product
al loyal to a particular quality are important to
brand buy more, are consumer-based brand
willing to pay higher equity across the board
prices and generate
positive WOM
Choi and 2014 Journal -Own-brands generate -Own-brands are used
Huddleston increased retailer loyalty by consumers to
with retailer’s name evaluate the quality of
the retailer
-Own-brands with core
brand name linked to the
core brand strengths
-Evaluation of core
brand extends to its
brand extensions

50
Author Date Type of The consumer Brand equity in own- The associations How own-brands and
Publication behaviour factors that brand products and consumers have with major brands position
affect brand selection major brands own-brand products their products
Wells et. al. 2017 Journal -Most consumers rely on -Own-brand packaging -Own-brands have
product packaging can build retailer loyalty opportunity to fine tune
during the decision- and awareness when their products and
making process retailer name used positioning to target
their consumer base
Gidlof et. al 2017 Journal -Consumer visual
behaviour is affected by
internal factors (price,
brand, product origin)
and external factors
(product facings and
placement)
-Decision—making can
be challenging with too
much choice – so
consumers simplify this
with visual cues
Codelho do 2015 Journal -Packaging is a crucial -Packaging influences -Similarity in packaging
Vale et. al. tool in the consumers perceptions of a product design between own-
decision-making process -Own-brands exclusive brand and national brand
to a retailer leads to higher quality
perception in own-brand

51
Author Date Type of The consumer Brand equity in own- The associations How own-brands and
Publication behaviour factors that brand products and consumers have with major brands position
affect brand selection major brands own-brand products their products
Huang and 2009 Journal -Retailers with high -Own-brands normally
Huddleston customer participation, only possess a price
innovation and brand advantage over national
orientation are likely to brands
have a stronger own- -Tesco Finest – Move
brand product advantage away from price
-Quality, innovativeness advantage, instead using
and unique features give innovation to
consumers better differentiate
choices in own-brands
-Premium ranges create
competitive advantage
and are recommended
for own-label use
Anchor 2009 Journal -Brand loyalty has -Retailers actively -British retailers have
et.al. decreased in developed innovating in premium created brands that are
countries – this may be categories viewed as the equivalent
caused by the of or better than national
development of own- brands
brands
-Tesco own label
popularity increases
with income

52
Author Date Type of The consumer Brand equity in own- The associations How own-brands and
Publication behaviour factors that brand products and consumers have with major brands position
affect brand selection major brands own-brand products their products
Cuneo et. 2012 Journal -Brand equity needs to -Own-brands moving -Large retailers have
al. be actively managed away from low complex brand
across multiple own- price/quality and architectures
brand tiers – own brands offering products to
need to be treated compete with national
individually brands
-Second tier own-brands
offer fertile ground for
development
-Product lines with high
differentiation are an
opportunity to build
brand equity
Martenson 2007 Journal -Identical products -National brands are -Tesco’s own-brands
under different brand able to generate reflect the store image,
names will be perceived consumer interest, rather than mimicking
differently patronage and loyalty – other brands
-Consumers trust they build the store
national brands the most image and brand equity
-For own-brands to be
effective, they need to
be a good substitute

53
Author Date Type of The consumer Brand equity in own- The associations How own-brands and
Publication behaviour factors that brand products and consumers have with major brands position
affect brand selection major brands own-brand products their products
Gajjar. N 2013 Journal -Factors that influence
consumer behaviour
include; personal,
psychological, social
and cultural
-If a consumer has less
money to spend, they
are likely to buy cheaper
brands
Aaker, D 2010 Book -Brand equity – set of
assets (and liabilities)
that adds to the value of
product or service to a
firm and/or it’s
customers. Assets
include: Brand name
awareness, Brand
Loyalty, Perceived
quality and Brand
associations

54
Author Date Type of The consumer Brand equity in own- The associations How own-brands and
Publication behaviour factors that brand products and consumers have with major brands position
affect brand selection major brands own-brand products their products
Bray 2009 Discussion -A sizeable amount of
Paper purchases will require
little effort from the
consumer – they just
buy the same brand as
before
-Decision making model
can be modified to suit
the needs of the
purchase
Solomon et. 2016 Book -Consumer behaviour
al. definition
-Consumer behaviour
development from
moment of purchase, to
wider consumption
process

Blythe 2013 Book -A model of the

decision-making process
-Consumers spend little
time evaluating a
purchase in most cases
will skip some stages

55
Author Date Type of The consumer Brand equity in own- The associations How own-brands and
Publication behaviour factors that brand products and consumers have with major brands position
affect brand selection major brands own-brand products their products
Kotler and 2016 Book -Factors influencing
Keller consumer behaviour;
Cultural, personal,
social and psychological
-Low involvement
mostly associated with
low-cost, frequently
purchased products
-Methods of increasing
involvement levels in
low involvement brands
-Perceived risk is highly
influential to final
purchase behaviour –
consumers develop
routines to avoid these –
including preference to
brand names
Tesco a.i. a Company -Farm brands replacing
Groceries Website everyday value
economy tier in fruit,
vegetables, meat & fish.
- ‘The Hearty Food
Company’ replaced
everyday value
economy tier fresh ready
meals and three other
grocery lines

56
Author Date Type of The consumer Brand equity in own- The associations How own-brands and
Publication behaviour factors that brand products and consumers have with major brands position
affect brand selection major brands own-brand products their products
Elliot and 2007 Book -Level of involvement -Various elements that
Percy definition and model create brand
-Determines levels of associations, ultimately
motivation and it is all communications
engagement with about a brand
systematic processing
-Low-involvement
choice model;
Awareness, trial, repeat
purchase
-Low-involvement with
products leads to weaker
beliefs that can be more
easily changed
Kotler 2003 Book -Brand positioning
definition – defines how
a brand is different or
better than competitors
Keller et. al. 2011 Book -Positioning involves
finding the proper
location in consumers,
so they think of a brand
in a desired way
-Four areas to enhance
positioning; target
market, competitors,
POP and POD

57
Appendix B – Tesco Own-Brand Tiers Examples
Tesco Everyday Value tomato soup (left), Tesco cream of tomato soup (centre) and Tesco Finest tomato and mascarpone soup (right)

Tesco Everyday Value mature cheddar (left), Tesco mature cheddar (centre) and Tesco Finest Somerset mature cheddar (right)

58