Chapter 1: Introduction

FACTORS AFFECTING STORE BRAND PURCHASE IN THE GREEK GROCERY MARKET Submitted by: Paraskevi Sarantidis Department of Marketing Submitted in Fulfillment of the Degree of Doctor of Philosophy August 2012 ABSTRACT This study is an in-depth investigation of the factors that affect store brand purchases. It aims to help both retailers and manufacturers predict store brand purchases through an improved understanding of the effects of three latent variables: customer satisfaction and loyalty with the store; which is expressed through word-of-mouth; and trust in store brands. An additional aim is to explore variations in the level of store brand adoption and the inter-relationships between the selected constructs. Data was collected through a telephone survey of those responsible for household grocery shopping, and who shop at the nine leading grocery retailers in Greece. A total of 904 respondents completed the questionnaire based upon a quota of 100 respondents for each of the nine retailers. Data were analyzed through chi-square, analysis of variance and partial least square. The proposed model was tested by partial least square path modeling, which related the latent variables to the dependent manifest variable: store brand purchases. The findings provide empirical support that store brand purchases are positively influenced by the consumers’ perceived level of trust in store brands. The consumer decision-making process for store brands is complex and establishing customer satisfaction and loyalty with the store does not appear to influence store brand purchases or the level of trust in the retailer’s store brands in the specific context under study. Consequently the most appropriate way to ii influence store brand purchases in the Greek market is through increasing in the level of trust in the retailer’s store brands. It is suggested that retailers should therefore invest in trust building strategies for their own store brands and try to capitalize on their brand equity by using a family brand policy. Theoretical and managerial implications of the findings are discussed and opportunities for further research are suggested. iii To my mother Stratoula To my sister Alexandra In memory of my father Polychronis Στην μητέρα μου Στρατούλα Στην αδελφή μου Αλεξάνδρα Στην μνήμη του πατέρα μου Πολυχρόνη iv ACKNOWLEDGMENTS I would like to take the opportunity to express my gratitude to the people that have helped me throughout the PhD process, as I juggled teaching, administrative duties and my dissertation. First and foremost, I would like to express my sincere gratitude to my supervisor, Prof. Steve Burt, for his continuous support, understanding and motivation. He gave me the appropriate guidance and support while at the same time he offered me the flexibility to pursue my research ideas. My thanks also to Sharon Deery for helping me with all the administrative issues and making my stay comfortable at Stirling. I also wish to thank The American College of Greece for encouraging its teaching staff to pursue academic growth and for offering their financial support. Also, many thank to the librarians of The American College of Greece and of Stirling University for their assistance throughout my research and the IRM of The American College of Greece for their support. I would like to thank my friend, Dr Cleopatra Veloutsou, for the stimulating discussions and for her valuable tips through the course of the process. My sincere thanks to the Global Link, S.A. and specifically to Mr. Sigalos for the assistance in data collection. Also many thanks to Dr Sotiris Panagopoulos and Mr Rafael Soustiel for their suggestions in the statistical analysis. To all my friends, thank you for your understanding, moral support and encouragement in my moments of crisis. I would also like to thank my family for their love and support throughout my life. Without them I wouldn’t be the same person. Thank you for giving me strength to go after my dreams. Thank you for believing in me. v TABLE OF CONTENTS Page ABSTRACT ii ACKNOWLEDGMENTS v LIST OF TABLES xi LIST OF FIGURES xiii CHAPTER 1: INTRODUCTION 1.0 Preface 1 1.1 Introduction to the Field 1 1.2 Justification for the Study 4 1.3 Research aim and Objectives 5 1.4 Research Methodology 6 1.5 Structure of the Thesis 8 CHAPTER 2: THE RETAIL BRAND AND THE STORE BRANDS 2.0 Introduction 11 2.1 Defining a Brand 11 2.2 Categories of Brands 15 2.2.1 Manufacturer Brands 16 2.2.2 Generic Brands 17 2.2.3 Private Distributor or Store Brands 18 2.3 The Value of the Brand 21 2.3.1 Value to Consumers 22 2.3.2 Value to Brand Owners 23 2.3.3 Value to Distributors 25 2.3.4 Value to Economy and Society 26 2.4 The “Retail Brand” Concept 27 2.4.1 The “Retail Brand” vs. the “Product Brand” 27 2.4.2 Drivers of “Retail Brand” Growth 31 2.4.3 Considerations in “Retail Brand” Development 33 vi 2.5 “Retail Brand” Image 36 2.5.1 Definitions and Determinants of “Retail Brand” Image 36 2.5.2 Outcomes of “Retail Brand” Image 38 2.6 Evolution of Store Brands 39 2.7 The Driving Forces behind Store Brand Growth 44 2.7.1 Store Brand Growth due to Market Factors 46 2.7.2 Store Brand Growth due to Consumer & Situation Characteristics 50 2.7.3 Store Brand Growth due to Consumer Perceptions 52 2.8 Differences in the Rate of Store Brand Adoption 54 2.8.1 Reasons for the Differences in the Rate of Adoption 55 2.8.2 Reasons for the Differences across Countries 55 2.8.3 Reasons for the Differences across Product Categories 57 2.8.4 Reasons for the Differences across Retailers 58 2.9 Overview of Chapter 2 59 CHAPTER 3: CONCEPTUAL MODEL AND DEVELOPMENT OF RESEARCH HYPOTHESES 3.0 Introduction 60 3.1 Relevant Studies in the SB Literature Indicating Research Gaps 60 3.2 The Conceptual Model 67 3.3 The Construct of Customer Satisfaction 69 3.3.1 Defining Customer Satisfaction 71 3.3.2 The Definition of Customer Satisfaction in this Study 73 3.3.3 Determinants of Customer Satisfaction 74 3.3.4 Measuring Customer Satisfaction in this Study 79 3.4 The Construct of Store Loyalty 84 3.4.1 Defining and Measuring Loyalty 85 3.4.2 Determinants of Store Loyalty 89 3.5 The Construct of Word-of-mouth 90 3.5.1 Defining and Measuring Word-of-Mouth 91 3.5.2 Determinants of Word-of-Mouth 93 3.6 The Construct of Brand Trust 95 vii 3.6.1 Defining and Measuring Brand Trust 96 3.6.2 Determinants of Brand Trust 99 3.7 Hypotheses 100 3.7.1 Relationship between Customer Satisfaction, SB Trust and SB Purchases 100 3.7.2 Relationship between Trust in Store Brands and Store Brand Purchases 102 3.7.3 Relationship of Word-of-Mouth and Store Brand Purchases 103 3.7.4 Store Brand Adoption and Penetration in Different Retailers 103 3.8 Overview of Chapter 3 106 CHAPTER 4: RESEARCH DESIGN & METHODOLOGY 4.0 Introduction 107 4.1 The Philosophical Standpoint of the Researcher 108 4.2 Research Strategy and Tactics 111 4.2.1 Experiments 112 4.2.2 Surveys 114 4.2.3 Justification of the Chosen Strategy 118 4.3 Data Collection Method 119 4.3.1 Observation 119 4.3.2 Data Collection Method for this Study: Interviewing 121 4.4 Data Collection Instrument 126 4.4.1 Measurements and Questionnaire Design Process 126 4.4.2 Composition of the Questionnaire 130 4.5 Sample Design 134 4.5.1 Target Population and Sampling Frame 134 4.5.2 Sample Selection 136 4.5.3 Sample Size 139 4.5.4 Sources of Sampling Error and Nonsampling Error 139 4.6 Survey Procedure 141 4.7 Method of Data Analysis 143 4.7.1 Univariate Analysis 145 4.7.2 Bivariate Analysis 146 viii 4.7.3 Multivariate Analysis 150 4.7.4 PLS: The Outer Model 153 4.7.5 Procedures for Assessing the Outer Model 160 4.7.6 PLS: The Inner Model 161 4.7.7 Procedures for Assessing the Inner Model 162 4.8 Overview of Chapter 4 163 CHAPTER 5: ANALYSIS OF DATA & FINDINGS 5.0 Introduction 164 5.1 Characteristics of the Sample 165 5.2 PLS Results: Evaluation of the Outer Model 168 5.2.1 Indicator Collinearity 169 5.2.2 The Number of Indicators and their Significance 173 5.3 PLS Inner Model Results: Testing H1, H3, H4, H5, H7 177 5.4 Chi-square for independence: Testing H2 182 5.5 Friedman’s ANOVA: Testing H6 186 5.6 Analysis of Variance: Testing H8 and H9 188 5.6.1 One-Way ANOVA: Testing H8 188 5.6.2 One-Way ANOVA: Testing H9 192 5.7 Overview of Chapter 5 193 CHAPTER 6: DISCUSSION, IMPLICATIONS & CONCLUDING REMARKS 6.0 Introduction 195 6.1 Contribution and Summary of the Thesis 195 6.2 Theoretical Implications of the Research 200 6.2.1 Prediction of Store Brand Purchases 200 6.2.2 Factors Influencing Customer Satisfaction 206 6.3 Discussion of Descriptive Findings 208 6.4 Managerial Implications of the Research 213 6.4.1 Implications for the Retailer 214 6.4.2 Implications for the Manufacturer 217 6.5 Limitations of the Study and Recommendations for Future Research 218 ix REFERENCES 223 APPENDICES 245 Appendix A: Research environment 246 Appendix B: Survey Questionnaire in English 251 Appendix C: Descriptive Statistics 259 Appendix D: Multicollinearity Tests 262 Appendix E: Measurement Model Results 265 Appendix F: PLS Images by Retailer 268 x LIST OF TABLES Table Page 2.1 Terms used for Manufacturer - oriented Brands 16 2.2 Summary of terms used for Store Brands 19 2.3 Examples of Retail Brands and Product Brands 32 2.4 Definitions of Brand Image 37 2.5 Sales and Growth rate of Worlds’ Largest Food Retailers 42 2.6 International Expansion of Top Retailers 43 2.7 Reasons for Store Brand Growth – Market Factors 49 2.8 Reasons for Store Brand Growth – Consumer and Situation Characteristics 51 2.9 Reasons for Store Brand Growth – Consumer Perceptions 53 3.1 Customer

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