Master Thesis Marketing
The Influence of Introducing a Generic Private Label on Consumer Choice
Author: André Dietz Student number 1481444 Date: 03-07-2009 Master Thesis Marketing
The Influence of Introducing a Generic Private Label on Consumer Choice
July, 2009
Master Thesis MSc Business Administration Marketing Management Faculty of Economics and Business University of Groningen, the Netherlands ______
Author: André Dietz Student number: 1481444 Address: Leeuwarderstraat 4, 9718 HX Groningen Phone number: 0031 6149 77 465 E-mail: [email protected]
University supervisors: Dr. J.A. Voerman Dr. M.A. Tuk
Company Supervisors: Alexander Hendriks John Dankers
Company: Albert Heijn Provincialeweg 11 1506 MA Zaandam
“The author is responsible for the content of the thesis. The copyright of the thesis rests with the author.”
André Dietz, University of Groningen Page 2 Management Summary
The second most important key motive for consumers to decide their supermarket choice, is valuable. The choice criteria for valuable are low prices, attractive promotions and good offer of low priced products (generics). By having a well balanced assortment of low priced products (generics), full service supermarkets can demonstrate that they have a basket that is price competitive against discounters. However, few research exist of the effect of adding a generic PL to the choice set of a supermarket assortment. Therefore, the purposes of this research were aimed at the effect of adding a generic PL to a current two alternatives choice set (manufacturer brand and copycat PL) resulting in a three alternatives choice set (manufacturer brand, copycat PL and generic PL) on consumer choice and on identifying the factors that influence consumer choice.
An extensive literature study has revealed the role generics play in retail assortment and identified the main factors that are expected to influence consumer choice and/or the relation between introducing a generic PL and consumer choice. These factors are: compromise effect, decision uncertainty, product familiarity, quality perceptions, decision involvement, product risks and brand experience.
To analyze the influence of the above factors, data was obtained by means of an online questionnaire. Albert Heijn customers over 18 years old, who were responsible for the groceries within their household and were reachable by mail were targeted. To allow for comparison on quality perceptions of the copycat PL and consumer choice, two groups of respondents were involved in the research. Group A (n=152) were asked questions concerning the three alternatives choice set and the questionnaire of group B (n=156) contained questions concerning a two alternatives choice set.
After analysing the data, the results of this study show that the expected compromise effect was not applicable. When a third alternative is added to the choice set the market share of the compromise option (i.e. copycat PL) did not increase. Although the market share did not increase of the copycat PL, results in this study also show that quality perceptions of the copycat PL do increase when a generic PL is added to the choice set. Besides testing the compromise effect, another objective of this study was to identify and test the main factors expected to influence consumer choice. Results show that decision involvement, product risk and brand experience influence consumer choice. Consumers high
André Dietz, University of Groningen Page 3 involved are less likely to choose the generic PL. For product groups with high financial or social risk, respondents are less likely to buy the generic PL. For product groups with high financial and functional risk, respondents are more likely to buy the manufacturer brand. And when consumers have high manufacturer brand- or generic PL experience they are more likely to choose the manufacturer, respectively the generic PL in the choice set.
From a manager’s point of view, having insight in the role a generic PL plays in retail assortment and knowing about which factors, to what extent influence consumer choice when a generic PL is added to the choice set, can be very beneficial. Category managers could introduce a generic PL when they want to increase the quality perception of the copycat PL. When increasing the generic PL assortment, it can be expected that consumers who score low on decision involvement and high on generic PL experience will be more likely to choose the new generic PLs. Finally, to decide if a new considered generic PL would be of interest to the consumer, associated risks to the product are a good indication.
André Dietz, University of Groningen Page 4 Preface
By writing this master thesis during an internship at Albert Heijn I was writing an end to my master Marketing Management and my life as a student.
I enjoyed being a student in the lovely city Groningen. From the very beginning I was satisfied with my study choice. I have experienced and learned about a diverse spectrum of business knowledge fields (Economics, Marketing, Accounting, HRM, Operations and IT). During my bachelor I learned I like to entrepreneur and be creative on a fact-based manor. The Master Marketing, in Groningen, one of the best in the Netherlands, was a good match with my capacities and needs.
Besides studying, my student life meant much more to me. From year one, I have lived in Groningen. In my student life I have met and get to know a lot of interesting people. Not only during my study but also by being a member of the student Society Dizkartes.
An other important part of my life as a student was starting my own company in 2006, called Promo Bears. We offer a creative way of doing marketing; we create brand characters and bring them a life by making custom made mascots and plush toys. Promo Bears offered me the perfect opportunity to put knowledge in practice and to learn facets, which I believe can only be learned in the “real world”.
I would like to take this opportunity to thank some persons who supported me during my research. First of all I would like to thank Alexander Hendriks and John Dankers for their support during my internship. I am very grateful for all the knowledge they have shared with me. Next, I would like to thank Petra Janssens for the interesting and funny conversations during lunch breaks in the beautiful city of Zaandam. Furthermore I would like to thank the entire team of Price Management for their support, they were the reason I enjoyed every day of my internship. Finally a special thanks for Joost Poelgeest a fellow intern at Albert Heijn for his help, table soccer qualities and pleasant coffee breaks during my research.
I specially want to thank my supervisor Liane Voerman for here advise and helping me during the various phases of this thesis. With her advice and feedback she made sure I maintained an academic focus during the research.
Last but not least I would like to thank my family and friends for their support and interest in my final Master Thesis and for their support during my entire study in Groningen. I specially want to thank my parents Peter and Petra, sister Jessica, business partner Edwin and my roommates Barend from Haarlem and Johan from Groningen.
André Dietz, Groningen, June 30th 2009
André Dietz, University of Groningen Page 5 Index
1. Introduction & Problem statement...... 8 1.1 Background problem...... 8 1.2 Problem statement and research questions ...... 11 1.3 Theoretical and social relevance ...... 12 2. Theoretical framework...... 13 2.1 Assortment ...... 13 2.1.1 Assortment width...... 14 2.1.2 Assortment depth...... 15 2.2 Brand architecture...... 16 2.2.1 Manufacturer brands ...... 16 2.2.2 Private labels ...... 17 2.3 Factors influencing consumer choice...... 20 2.3.1 Compromise and attractiveness effect...... 21 2.3.2 Private labels versus manufacturer brands ...... 24 3. Research design ...... 27 3.1 The Dutch supermarket industry and company...... 27 3.2 Method ...... 27 3.2.1 Groups of respondents...... 27 3.2.2 Product selection...... 28 3.2.3 Measurement scales ...... 30 3.3 Population and sampling ...... 31 3.4 Reliability, validity and representativeness...... 33 3.4.1 Sample characteristics...... 33 3.4.2 Response statistics...... 34 3.5 Plan of analysis ...... 35 4. Analysis and results ...... 39 4.1 Compromise effect ...... 39 4.1.1 Decision uncertainty ...... 40 4.1.2 Product familiarity...... 42 4.2 Private labels versus manufacturer brands...... 44 4.2.1 Quality perceptions...... 44 4.2.2 Decision involvement...... 45 4.2.3 Product risks ...... 47 4.2.4 Brand experience...... 49 5. Conclusions and recommendations ...... 52 5.1 Conclusions ...... 52 5.1.1 Compromise effect...... 53 5.1.2 Decision uncertainty ...... 54 5.1.3 Product familiarity...... 54 5.1.4 Quality perceptions...... 54 5.1.5 Decision involvement...... 55 5.1.6 Product risks ...... 55 5.1.7 Brand experience ...... 56 5.1.8 Other analysis...... 56 5.2 Managerial implications...... 56 5.3 Research limitations...... 57 5.4 Future research ...... 58 References...... 59
André Dietz, University of Groningen Page 6 Appendix 1 Questionnaire preliminary research ...... 63
Appendix 2 outcome preliminary research product groups ...... 65
Appendix 3 questionnaire main research...... 66
Appendix 4 invitation mail/message...... 76
Appendix 5 sample characteristics...... 77
Appendix 6 outcome independent sample T-tests ...... 79
Appendix 7 switching behaviour ...... 82
André Dietz, University of Groningen Page 7 1. Introduction & Problem statement
1.1 Background problem
In the supermarket industry, price is and likely will remain the predominant basis for cross- formula competition (e.g., Garry 1994; Kahn and McAlister 1997; Mathews 1997). Dutch consumers rank price image “valuable” as the second most important key motive for store choice (see table 1) (EFMI and CBL, 2008).
Table 1.1: consumers key motives for supermarket choice (EFMI, CBL, 2008) Key motive Choice criteria 1. Quality & choice • Good product quality • Good offer of fresh products • Large assortment • Customer friendly staff 2. Valuable • Low prices • Attractive promotions • Good offer low priced product (generics) 3. Location • Supermarket is near by 4. Efficiency • Long opening hours • Speed at the cash out • Parking space 5. Store appearance • Supermarket is looking nice • Shop is looking neatly 6. Extra’s • Good offer extra services • Child friendliness supermarket • Enough shops in the surrounding of the supermarket
The key motive “valuable” is influenced by three criteria: low prices (manufacturer brands), attractive promotions and good offer of low priced products. Accordingly, establishing a positive store-price image is a common priority among grocery firms (e.g., Cox and Cox 1990; Dickson and Urbany 1994). The rapid growth of discounters, such as Aldi and Lidl, in the Netherlands during the 1990s has put pressure on traditional full service supermarkets and their price images. Dutch consumers bought their fresh fruit and vegetables at full service supermarkets and the remaining part of their groceries at the much cheaper discounters. The leading Dutch supermarket chain Albert Heijn suffered from an unfavourable and deteriorating price image, and felt like it had to respond. So, after several years of a declining market share, on October 20 2003, Albert Heijn decided to lower its prices for more than 1000 products; the price war in the Netherlands was initiated. Using the headline “From now on, your daily groceries are much less
André Dietz, University of Groningen Page 8 expensive”, its double-page colour advertisements in all national and local newspapers made clear that the chain was committed to decrease its prices systematically and permanently. First, several price reduction rounds of manufacturer brands where executed. Next on September 20, 2004, Albert Heijn reduced prices of 1000 private labels as well (Van Aalst et al. 2005; Holla and Koreman 2006). Next to the price decreases, Albert Heijn increased the assortment of generics. Generics, also called C-products, are low quality low priced products. Generics can be positioned with private labels and manufacturer brands (fancy labels). The first Dutch supermarkets introduced generics in the 1980s and most full service supermarkets followed in the 1990s. A plain packaging design, limited advertising activities and cuts in quality yield a positioning in the lowest price tier (Yelkur, 2000; Harris and Strang, 1985). Generics are mostly offered next to a manufacturer brand (first price tier) and/or a copycat private label (PL) (second price tier) as a second or third price tier. Manufacturer brands are branded products from manufacturers and reach consumers through distributors and retailers (Kumar and Steenkamp, 2007). Private labels (PLs) are products owned and distributed by organizations whose primary economic commitment is distribution rather than production (Schutte, 1969). A copycat PL is a type of PL that is very close to manufacture brands in terms of packaging (Kumar and Steenkamp, 2007). The combination of manufacturer brands, private labels and generics is called the brand architecture of an assortment of a formula (Esjberg, et al., 2004).
Figure 1.1: advertisement of Unilever against copycat private label Albert Heijn
André Dietz, University of Groningen Page 9 Although full service supermarkets introduced or increased their generic assortment, they wanted to maintain their service image “quality and choice”. With the generic assortment they wanted to offer good value for money “valuable” as well. The price war changed the Dutch supermarket industry drastically. As Van Heerde et al. (2008) state “The price war initiator (Albert Heijn) managed to halt the slide in its market share, and its stock price improved. The losers were the rival mid-level and high-end chains. Unlike the initiator their price image did not improve, and they suffered from increased price image sensitivity.” Konmar (high-end chain) and Edah (mid-level chain) don’t exist any more. Other supermarkets improved their position, such as the upcoming formula Jumbo, offering high service and low price. Consumers respond very positive on this formula; Jumbo won the summer report of Elsevier for the eleventh time this year.1 The Dutch supermarket price war fits the trend that retail price competition has become increasingly vivid in recent years, reducing retailer profitability (Ailawadi, 2001). Discounters such as Wal-Mart, Aldi and Lidl are challenging traditional retail formats on both sides of the Atlantic (BusinessWeek, 2003). In almost all Western markets, grocery discounters have captured market share from traditional supermarkets and now occupy a prominent position (Cleeren et al., 2007). The reaction of traditional retailers has varied from focusing on quality and service, to engaging the challengers with substantial price reductions (Rogers, 2001). However, these price reductions may trigger price wars, which can last for a long time and strongly affect all market players (Rao et al., 2000). An alternative reaction could be to focus on the assortment composition. As stated above, the offer of low priced products (generics), influences price image as well. By having such a lowest price tier, traditional retailers can demonstrate that they have a basket that is price competitive against discounters.
However, few academic research exist on the effect of introducing a generic product or generic PL product to the brand choice set of a product group assortment. When a generic PL alternative is added to the assortment, this choice set changes. The choice set can change from a one alternative choice set (manufacturer brand or copycat private label)
1 http://www.elsevierretail.nl/1066352/Food/Food-nieuwsbericht/JumboWintWederomZomerrapport.htm The winner of the summer report is based on a consumer panel of 6000 consumers of research agency Gfk. After visiting a supermarket consumers judge their supermarket on neatness, fresh assortment, choice, quality, low prices, promotions and friendliness of staff.
André Dietz, University of Groningen Page 10 to a two alternatives choice set (manufacturer brand or copycat PL and generic PL) or from a two alternatives choice set (manufacturer brand and copycat private label) to a three alternatives choice set (manufacturer brand, copycat private label and generic private label). In this study the consumer choice from a two alternatives choice set to a three alternatives choice set will be analysed, see figure 1.2.
Figure 1.2: Consumer choice from a two alternatives choice set to a three alternatives choice set Two alternatives choice set Three alternatives choice set Manufacturer brand Manufacturer brand Copycat private label Copycat private label Generic PL
What is the effect of introducing a generic PL to the choice set? Will consumer’s buy the new generic PL option or will the market share of the copycat PL or manufacturer brand increase? This research will try to gain more insight if and how the consumer choice changes and which main factors influence this change.
1.2 Problem statement and research questions
Based on the above background problem, the problem statement is as follows:
How does adding a generic private label product to the choice set influence consumer choice and consumer quality perceptions of a copycat private label?
To solve the problem statement the following research questions will be analysed:
1. What role does a generic private label play in retail assortment? 2. What is the influence of introducing a generic private label on consumer’s choice between generic private labels, copycat private labels and manufacturer brands? 3. What are the main factors influencing consumer choice and/or the relation between introducing a generic PL and consumer choice, and to what extent? 4. What is the influence of introducing a generic PL on consumers’ quality perceptions of copycat private labels?
André Dietz, University of Groningen Page 11 This study consist of two parts: an academic literature study and a quantitative research. In chapter two, “theoretical framework”, an extensive literature study will discuss the research questions based on academic literature. Based on the literature study research hypotheses will be formulated. Next in chapter three, “Research design”, the research design for the empirical research based on a case study at Albert Heijn, a full service Dutch supermarket, will be discussed. In chapter four the analysis and results of the empirical research will be discussed. Finally, in chapter five the conclusions, managerial recommendations, research limitations and future research suggestions will be addressed.
1.3 Theoretical and social relevance
This study will add to current research in three ways. First, the effect of introducing a new generic PL product on consumer choice will be analysed. Second, the main factors influencing consumer choice and/or the relation between introducing a generic PL to the choice set and consumer choice will be identified and analysed on the extent of influence they perform. And third, insight will be gained in to what extent quality perceptions of copycat PLs change when a generic PL is introduced to the choice set. For supermarkets this research is relevant as well. The study gives a good integrative view in the role a low price assortment (i.e. generics) plays in a full service supermarket assortment. Furthermore the results of this study can support supermarket category managers and others interested in or responsible for making decisions concerning the introduction of a generic PL product in a certain product group.
André Dietz, University of Groningen Page 12 2. Theoretical framework
In this chapter, the role of generic PL products in retail assortment will be addressed (research question one). Next, based on literature the expected effect of introducing a generic PL product on consumers’ choice will be discussed (research question two). Furthermore the main factors expected to influence the relation between introducing a generic PL and consumer choice, will be addressed (research question three). When discussing the main factors, the expected effect of introducing a generic PL on quality perceptions of copycat PL will be discussed as well (research question four).
2.1 Assortment
A key function of retailers is to provide ‘an assortment of products and services’ for consumers (Levy and Weitz, 2004). An early marketing definition views this ‘selling assortment’ as the ‘total number of items which can be sold by a firm in given transactions’ (Balderston, 1956). Hollander (1966) interprets assortment at the aggregate retail level of ‘number of lines’ on offer. Simonson (1999) expands the description to include ‘the total set of items offered by a retailer, reflecting both the breadth and depth of offered product lines’. Furthermore a subsequent level, termed the ‘brand assortment’, also called the brand architecture, suggests a subset of assortment whereby the mix of brands varies independently of the number of categories (Savitt, 1984). So, product lines can be defined either vertically (depth) to capture differential consumer willingness to pay for quality, or horizontally (width) to capture different tastes within the same quality level (Draganska and Jain, 2006), see figure 2.1.
Figure 2.1. Visualisation of assortment width and depth
Assortment width Product lines Price tiers Coke Orange soft Lemon-lime Raspberry soft drink (sinas) soft drink drink (cassis) Coca-Cola, Fanta, Sisi, 7-Up, Sprite Hero, Fanta 1st price tier Pepsi Orangina
AH coke AH orange soft AH lemon- AH cassis 2nd price tier
Assortment depth Assortment drink lime soft drink Euro Shopper Euro Shopper Not available Not available 3rd price tier coke orange soft drink
André Dietz, University of Groningen Page 13 The assortment width are the number of product lines (i.e. coke, sinas and cassis), the assortment depth are the number of price tiers, and the brand assortment is the combination of specific brands Manufacturer brands (Coca-Cola, Pepsi, Fanta, Sisi, 7-Up), copycat PLs (AH) and generic PLs (Euro Shopper).
The assortment width, assortment depth and brand assortment (also called brand architecture) will be discussed in more detail in the following paragraphs.
2.1.1 Assortment width
The width of an assortment is used to describe the number or choice of distinct product classes or categories carried by the store (Savitt, 1984). Width is often used synonymously with variety; for example, Risch (1991) defines it as ‘the number of different classifications carried by the store’. Thus, the selection of different categories or departments denotes the variety of the store assortment (Davies and Brooks, 1989). For example the width of the product category soft drinks can be: coke, orange flavoured soft drinks, lemon-lime flavoured soft drinks and other flavours. A wide assortment has various benefits. First, the greater the width of product assortment, the greater the range of different situations in which the retailer is recalled and considered by the consumer, and therefore the stronger its salience (Ailawadi and Keller, 2004). As noted by Keller (2008), salience is the most basic building block for a brand. Second, the one-stop shopping convenience that a wide product assortment enables, is becoming more important than ever for today’s time-constrained consumer (Messinger & Narasimhan 1997). Third, consumers regularly shop at more than one store, they may purchase a category in the store that they are visiting based on in-store assortment and marketing mix activities whereas they would otherwise have purchased it in another store (Ailawadi and Keller, 2004). Together with the fact that unplanned purchases comprise a significant portion of consumers’ total shopping basket, this gives an advantage to retailers with wider assortments (Ailawadi and Keller, 2004). Research from EFMI business school and CBL (Central Food Agency) validate the importance of assortment width. Dutch consumers (1501 respondents) validate large assortment as the third most important choice motive for supermarket choice, see table 2.1.
Table 2.1: Choice motivation indicator (top 10) (EFMI, CBL, 2008) Average importance of consumer choice motives on supermarket choice Top ten choice criteria 1. Good product quality 8.5
André Dietz, University of Groningen Page 14 2. Good offer of fresh products 8.4 3. Large assortment 8.2 4. Attractive promotions 8.1 5. Low prices 8.1 6. Friendly staff 8.1 7. Supermarket is near by 7.9 8. Speed with the cash desk 7.8 9. Good offer of low priced products (generics) 7.8 10. Neatness of the store 7.8
Choices on assortment width have to be balanced and logic for the customer. As Danneels (2003) states “it is risky to extend too far, but, staying too tightly coupled to the current assortment and image may unnecessarily limit the retailer’s range of experimentation.” Generic products play a minimal role in the width of the total retail assortment. As generics are a copy/substitute of an existing manufacturer or private label brand, they are not adding to the assortment width in general. In the soft drinks example the generics offer a coke, orange soft drink and lemon soft drink substitute, but a cassis substitute is lacking. However, for consumers specifically interested in the lowest price tier, the width of generics can be very important. As a wide assortment can create customer value by offering convenience and ease of shopping.
2.1.2 Assortment depth
Assortment depth is defined by Betancourt and Gautschi (1990) as “the extent to which items in a retail assortment are net substitutes from a household viewpoint”, suggesting a relatedness of items. This view is reinforced with depth interpreted as the variants within a product category, and variants as substitutes for each other in consumption (Kristenson, 1983). For example the depth of the product group coke is: manufacturer brands (for ex. Coca-cola and Pepsi), copycat PL (AH coke) and generic PL (Euro Shopper coke). The consumer can choose among three price tiers. Comparable with assortment width, a deep assortment offers one-stop shopping convenience. When a generic PL assortment of a full service supermarket is a good substitute for the assortment of discounters, consumers don’t have to shop at the discounter, as they can buy all the products they need at one store. Furthermore based on a full service supermarket perspective, consumers will not be tempted to purchase products at the discounters they would otherwise have purchased at the full service supermarket.
André Dietz, University of Groningen Page 15 2.2 Brand architecture
Esjberg, et al. (2004) define a brand architecture as a combination of manufacturer brands, private labels and generic products in a food retailer’s assortment that results from a strategic process constrained by the retailer’s identity, desired image, policies, structures and technologies. The brand architecture has become particularly important in the last decade as a tool for retailers to influence their image and develop their own brand name. (Ailawadi & Keller, 2004) The relative importance of private labels and manufacturer brands differs between retailers (Esbjerg et al., 2004). Some retailers mainly sell private label products (e.g., Marks & Spencer) or exclusive brands, i.e. products that identify neither the manufacturer nor the retailer, but are only sold by a specific retailer (this is the case for discounters such as Aldi and Lidl) (Varley, 2003). Other retailers sell mainly manufacturer brands (e.g. Nettorama), while retailers such as Tesco, Albert Heijn and C1000 sell both manufacturer and retailer brands. Thus, retailers differ with regard to retailer brand penetration. Most retailers carry manufacturer brands, but, increasingly, they also offer private labels. In the next sections manufacturer brands and private labels will be discussed in more depth.
2.2.1 Manufacturer brands
Consumers moved from no-name products of inconsistent quality produced by local factories in the nineteenth century to branded products from global manufactures such as Coca-Cola, Procter & Gamble’s Ivory soap and Nestlé’s infant formula. The manufacturer brands message is focussing on smart shopping (brands are trustworthy, delivering quality, consistency, and innovation at a fair price. Manufacturer brands reach consumers through distributors and retailers. Consumers started buying manufacturer-endorsed brands as symbols of quality, trust and affluence. Manufacturer brands have evolved to brands bought as symbols of aspirations, images, and lifestyles. For most of the 20th century retailers were relatively, small, compared with their largest suppliers, the manufacturer brands. As retailers were highly dependent from manufacturer products, the manufacturer brands had a lot of power. However since the 1970s, retailers started to develop national chains. Some retailers, like Ahold, even began to expand internationally. The bulking up of retailers started to change the balance of power between retailers and manufacturers (Kumar and Steenkamp, 2007). Next to the increased buying power of retailers another development was the upcoming of private labels. Private labels will be discussed in the next section.
André Dietz, University of Groningen Page 16 2.2.2 Private labels
Private labels, often also referred to as own labels, store brands, or distributor-owned brands, are products owned and branded by organizations whose primary economic commitment is distribution rather than production (Schutte, 1969). One motivation for offering PLs is the higher percent margins that they provide to retailers (Hoch & Banerji 1993); another is the negotiating leverage they provide over manufacturers, as discussed above (Narasimhan & Wilcox 1998); and a third is that a private label brand can engender loyalty to the retailer (Ailawadi et al. 2008). In addition, since private labels are exclusively distributed products, the retailer avoids direct price competition, enhances store differentiation, and creates traffic (Davies, 1990). Private labels are growing rapidly. In the U.S., PLs have outperformed manufacturer brands in the last ten years (ACNielsen, 2003). They now account for 20 percent of U.S. sales in supermarkets and mass merchandisers as well as a healthy share of sales in department stores, category killers, specialty stores and convenience stores. The three best-selling PL categories in food and non-food may still be predictable; milk, eggs, and bread in food; food storage and trash bags, cups and plates and toilet tissue in non-food. (Kumar & Steenkamp, 2007) However, today’s large and sophisticated retailers are able to develop credible PL offerings for categories where traditionally customers were more wary of staying from their favourite manufacturer brand names. The PL phenomenon is not restricted to consumer packaged goods (CPG) and grocery retailers. Best-in-class retailers and distributors such as Best Buy, Boots, Decathlon, Federated, Gap, IKEA, HEMA, Lowe’s, Office Depot, Staples, Target, Toys “R” Us, Victoria’s Secret, and Zara carry a large percentage of, or in some cases exclusively, private labels. The number and types of retailers and distributors that fall under the PL spell continue to increase. (Kumar & Steenkamp, 2007)
Therefore Kumar and Steenkamp (2007), describe four types of private labels: generic private labels, copycat private labels, premium private labels and value innovators. The next sections are based on Kumar and Steenkamp (2007) and will discuss the four types of PLs in more detail.
Premium private labels and value innovators This research will focus on generic and copycat PL. However to create a complete view of the types of private labels the premium PLs and value innovators will be briefly discussed as well. Premium private labels have distinctive packaging and differentiate on quality compared
André Dietz, University of Groningen Page 17 to the manufacture brands. There is no attempt to confuse customers and make them think that these are manufacturer brands, as is the case with copycat private labels. Value innovators aim for objective product quality on a par with manufacturer brands at unbeatable prices, with a constant search to lower the prices continually. They achieve lower prices through rigorous system processing cost savings (e.g., low overheads, limited assortment, minimal displays, low staff intensity, efficient logistics) rather than by compromising on product quality. The champions of this type of value innovators have been the hard discount chains like Aldi, Lidl, and Netto in Europe.
Generic private labels PLs started as cheap, inferior products. Historically, they did not even carry the name of the store and were therefore called ‘generics’. Usually, the package with black letters on a white background simply identified the product, like paper towels or dog food. These cheap, shoddy products, however, did offer lower-income and price-sensitive customers a purchase option, and as a result enabled the retailer to expand its customer base. Typically, generics did not account for a large proportion of the retailer’s volume, and as a result they were not strategically important to the retailer. Over time, generics have lost shelf space and importance to copycat store brands, premium store brands and value innovator own labels. However, generics have become more important during the last years. To respond to the intense price pressure from hard discounters like Aldi and Lidl, mainstream retailers have been forced to develop a dedicated private label that identifies the lowest price at which a product is available in the store. By having such a lowest-price private label line, traditional retailers such as Albert Heijn, Carrefour, Delhaize, and Sainsbury demonstrate that they have a basket that is price competitive against the hard discounters. However, it is not entirely clear that these generics generate the required profitability to justify their shelf space. Furthermore, they may end cannibalizing the retailer’s own higher-priced and higher-margin private label range. Yet, the hope for retailers is that such a line attracts price-conscious customers, whose shopping basket ultimately ends up with a mix of low-margin generics as well as some higher-margin non generic products. Thus, while the lowest-price range may not be very profitable in its own right, it may still attract profitable shoppers.
Copycat private labels Copycat private labels are very close to manufacture brands in terms of packaging. The promise of such copycat PLs is that they are about the same quality as the branded leader but at a much lower price. Placing these look-alike PLs adjacent to the leading brand
André Dietz, University of Groningen Page 18 encourages both brand comparison and brand confusion on the part of shoppers. To ensure quality, retailers analyze the contents of a leading manufacturer brand and then re-create the product step by step, a process called reverse engineering. In this sense, they are free riding on the manufacturer’s innovation, research, product development, and image-building efforts for its brand. Since there are few research and development or sales and marketing expenses for the retailer, and the products are aggressively outsourced for low-cost manufacturing, the price on such copycat PL-branded products is considerably lower than the referent manufacturer brand while still delivering high margins to the retailer, at least in percentage terms. The fight between copycat PLs and manufacturer brands can be very intense. In the Netherlands, Unilever placed full colour advertisements in national newspapers where they compare their products with the copycat PL of Albert Heijn. These advertisements were a reaction on the promotion campaign of Albert Heijn, where they stated to offer the same quality as manufacturer brands, for a lower price. For the advertisement see introduction, (figure 1.1).
Evolution of private labels Over time, generics have lost shelf space and importance to copycat PLs, premium PLs, and value innovators. However generics still play an essential role in retail assortments by offering a price substitute for full service supermarkets against the value innovators of the discounters, see figure 2.2.
Figure 2.2: private label evolution (Kumar & Steenkamp, 2007)
André Dietz, University of Groningen Page 19 Next to the PL evolution, the figure gives a good overview of the positioning of the different types of PLs. The types of PLs are compared on price and quality versus manufacturer brands.
Example three alternatives choice set As described in the introduction, in this study the effect of introducing a generic PL to a current two alternatives choice set (manufacturer brand and copycat PL) will be studied. In table 2.2 an overview of the brands in the new three alternatives choice set is presented for the product peanut butter.
Table 2.2: example brand architecture peanut butter at full service supermarket Albert heijn Brand Albert Heijn Example Price Price index Price tier Manufact € 2.12 125.4 First urer brand
Copycat € 1.69 100 Second private label
Generic € 0.94 57.3 Third private label
Note: source www.ah.nl, date: 30-06-2009
Next to the logo and product, the price and price index are presented. For the price index the copycat PL is the reference price and has an index of 100. The manufacturer brand is priced higher (125.4) and the generic PL is priced lower (57.3) compared to the copycat PL. Leading to a first- (manufacturer brand), second- (copycat PL) and third (generic PL) price tier.
2.3 Factors influencing consumer choice
Two main factors are expected to influence consumer choice: the compromise/ attractiveness effect an the decision between manufacturer and copycat PLs. Both factors
André Dietz, University of Groningen Page 20 will be introduced briefly. First the compromise effect. When a generic PL is added to the choice set a consumer’s shopping decision could change. Previous research in decision making and marketing indicates that consumer preferences for options in a choice set are influenced by the decision context, leading to the widely studied attraction and compromise effects (Burton & Zankhan, 1987; Simonson, 1989; Simonson & Tversky, 1992). Context effects imply that, when evaluating a focal option, individuals take into consideration characteristics of other comparative alternatives rather than only the features of that focal alternative, complicating the decision-making process (Sheng, et al., 2005). This means that when a consumer is evaluating the three options (manufacturer brand, copycat PL and generic PL) the respondents take the characteristics of all three options into consideration. When a generic PL is added to the choice set a consumer can choose among two private labels (i.e. copycat PL and generic PL) and one manufacturer brand. Previous research of Zielke and Dobbelstein, 2007 indicates that consumer willingness to buy a new store brand (i.e. generic PL) instead of the manufacturer brand, is influenced by various factors. The main factors who are expected to influence this choice are: quality perceptions, decision involvement, product risks and brand experience. All factors will be discussed in more detail in the following sections.
2.3.1 Compromise and attractiveness effect
The essence of the compromise effect is that “an alternative would tend to gain market share when it becomes a compromise or middle option in the choice set” (Simonson, 1989). That is, a brand in a two-alternative choice set can gain more market share after the addition of an adjacent competitor that makes one brand a compromise choice in the choice set. The new entrant is relatively superior to the pre-existing options on one dimension and inferior on the other, effectively making on of the pre-existing options a compromise. In addition, Simonson and Tversky (1992) explain compromise effects by an individual’s “extremeness aversion,” due to the fact that disadvantages of an alternative are weighted more heavily than the corresponding advantages. Empirical studies have demonstrated that compromise effects are not exceptional, but both common and robust (Simonson, 1989; Simonson & Tversky, 1992). Attraction effect refers to the phenomenon that the addition of a dominated alternative into a choice set can increase the likelihood of an existing alternative being chosen, given that the existing alternative is superior to the new entrant on both attributes examined (Huber et al., 1982; Huber & Puto, 1983).
André Dietz, University of Groningen Page 21 The distinction between the compromise and attractiveness effect is that the compromise effect does not share the dominance relationship of the attractiveness effect. The new alternative in the compromise effect is superior on attribute 1 and inferior on attribute 2, while for the attractiveness effect the new alternative is inferior on both attributes. The distinction between compromise and attractiveness effects is presented in figure 2.3.
Figure 2.3: comparison of attraction and compromise effects (Sheng, et al., 2005)
In the above figure the letters stand for a brand positioning, based on two attributes. The attributes can be interpreted as quality (attribute 1) and good price (attribute 2). For example: A scores high on “quality” and low on “good price”. The essential distinction between the compromise and attractiveness effect is that the decoy brand X is completely dominated by the brand B in the attraction-effect situation, whereas brand C is perceived as equivalent to brand B in the compromise-effect situation. In this research the compromise effect is applicable. A generic PL is superior on the attribute “price” and inferior on the attribute “quality” compared to the copycat PL and manufacturer brand.
As the copycat PL is the middle option in the choice set, based on the compromise effect an increase in share of the copycat PL can be expected, leading to the following hypothesis:
H1: when a generic PL is added tot the choice set the market share of the copycat PL will increase.
André Dietz, University of Groningen Page 22 The results of the study of Sheng et al., (2005) show that the factors decision uncertainty and product familiarity affect the compromise effect. This study will analyse if these factors influence the compromise effect in this study as well. Decision uncertainty and product familiarity will be discussed in more depth in the following sections.
Decision uncertainty A consumer’s shopping decision almost always involves uncertainty. Uncertainty in a shopping decision is a psychological state that results primarily from a lack of adequate information or knowledge concerning the outcome of a purchase situation (Duncan, 1972). Consumers can be uncertain as to which option will give them the greatest value. In the compromise-effect decision context, a consumer makes a decision to maximize the expected gain, equal to minimizing the expected loss (Sheng et al., 2005). Yates (1990) speak of a loss when it results in an outcome that falls short of specified reference point. The expected loss is minimized when choosing for the compromise option (i.e. the copycat PL) instead of the more extreme manufacturer or generic PL options. In conclusion a consumer with higher decision involvement is more likely to avoid risks and choose the compromise option:
H2: the higher an individual’s decision uncertainty, the more likely he or she will choose the compromise option (i.e. copycat PL) in the choice set.
Product familiarity A second factor expected to influence the compromise effect is product familiarity. The terms familiarity, expertise, and experience are often used interchangeably when referring to prior knowledge (Sheng et al., 2005). Alba and Hutchinson (1987) categorized consumer knowledge as two major components: familiarity and expertise. Familiarity is defined as the number of product-related experiences that have been accumulated by the consumer. Expertise is defined as the ability to perform product-related tasks successfully. In this study familiarity will be used to reflect a consumer’s knowledge about the product. As Marks and Olson (1981) suggest, increased familiarity leads to better-developed knowledge structures or schema often include evaluative criteria and rules, which in turn facilitate a consumer’s judgment of superiority of certain products in a choice set and development of preference. In conclusion a consumer well familiar with the product is less likely to simply choose the middle option because it is a compromise:
André Dietz, University of Groningen Page 23 H3: the more familiar an individual with the product, the less likely he or she will choose the compromise option (i.e. copycat PL) in the choice set.
2.3.2 Private labels versus manufacturer brands
When a generic PL is added to the choice set a consumer can choose among two private labels (i.e. copycat PL and generic PL) and one manufacturer brand. In this paragraph the factors that are expected to influence this choice will be discussed.
Quality perceptions Introducing a generic PL to the choice set has already been reported in 1981 to have an effect on consumer quality perceptions of both private labels and manufacturers brands (Wheatley, 1981). Monroe (1979) has suggested that price perceptions of particular products are influenced by the prices of similar products. This is interesting for this study as the effect of adding a generic PL to the choice set of similar products is analysed. The study of Wheatley (1981) demonstrated that a new brand selling at a lower price than that prevailing prior to its introduction seemed to have the effect of altering consumer perceptions of the older brands within the product category. The new low priced product (generic PL) had the effect of lowering the “average” or reference price of the affected product category for consumers. Resulting that the previously low priced copycat PL, lose its “bargain” image and become “moderately” priced. This suggests that, since price is often used as a cue for product quality (Malhotra, 2004), some previous manufacturer brand buyers might switch to copycat PLs because of their enhanced quality image when generic PLs are added to the choice set. In conclusion consumer’s quality perceptions of the copycat PL are expected to increase when a generic PL is added to the choice set:
H4: when a generic PL product is added to the choice set, consumer’s quality perceptions of copycat PLs will increase.
Decision involvement A common strand in prior definitions of involvement is that involvement is the degree of interest of a person in a object. Like motivation, the concept of involvement requires a goal- object. This goal-object can be a product in and of itself (product involvement) or it can be the purchase decision (decision involvement) (Mittal, 1989). Prior research of Zielke and Dobbelstein (2007) suggests that customers who attach great importance to buy the optimal product tend towards choosing manufacturer brands. As the generic PL is concerned to have
André Dietz, University of Groningen Page 24 the lowest quality and thereby the exact opposite of the “optimal manufacturer brand”. Consumers who are highly involved are expected to be less likely to choose the generic PL, leading to the following hypothesis:
H5: the higher a customer’s decision involvement, the more likely he or she will choose the generic PL in the choice set.
Product risks Results from previous studies indicate that risks related to a product group have an influence on consumer willingness to buy new store brands. (Semeijn et al., 2004; Batra and Sinha, 2000). and Semeijn et al., (2004) distinguish financial, functional and social risks. Financial risk is defined as the potential financial loss resulting from a bad purchase. So, the financial risk depends on the process level of the product group. It will be higher for products like laundry detergent or sparkling wine than for butter. Functional risks are defined as the potential loss resulting from an inadequate product quality. These risks are relevant when the function of a product is important. For example, there could be a certain risk that a laundry detergent will not clean the washing or that a shampoo desiccates the hair. Finally, social risks affect a possible loss of image or prestige resulting from the purchase or use of certain products. These risks mainly exist with products that are consumed in public or offered to guests. In conclusion consumer choice is expected to differ between product groups, depending on certain risks which are typical for the respective product group:
H6a: the higher the financial, functional and social risk of a product group, the lower the preference for the generic PL. H6b: the higher the social risk of a product group, the higher the preference for the manufacturer brand.
Brand experience Another factor expected to influence consumer choice is brand experience. Zielke and Dobbelstein (2007) measure brand experience by the share of specific brand purchases in a category. Most experience occur directly when consumers shop, buy and consume products (Brakus, et al., 2009). When a consumer is more experienced with a product option in the choice set it is expected that he or she will be more likely to choose that option:
André Dietz, University of Groningen Page 25 H7: the higher a customer’s manufacturer brand/copycat PL or generic PL experience, the more likely he or she will choose the manufacturer brand/copycat PL or generic PL in the choice set.
André Dietz, University of Groningen Page 26 3. Research design
In this chapter the research design for the descriptive/causal study will be described in which the hypotheses will be tested by using an online survey. First, I will briefly discuss the industry and company, i.e. Albert heijn, where the research is executed. Next, I will discuss the method, population & sampling, reliability, validity & representativeness and plan of analysis.
3.1 The Dutch supermarket industry and company
The hypotheses described above are empirically tested in the Dutch market for the full service supermarket Albert Heijn. Albert Heijn is founded in 1887 by Mr. Albert Heijn. Headquarters of Albert Heijn is established in Zaandam. With more than 750 stores and various formulas (AH wijkwinkel, AH XL, AH to go, AH doorbraak and web shop ah.nl) Albert Heijn is the biggest supermarket chain in the Netherlands. Albert Heijn is part of Royal Ahold. The mission of Albert Heijn is: “the daily affordable, the special within reach”. (het dagelijkse betaalbaar, het bijzondere bereikbaar) The slogan of Albert Heijn is currently: ‘Gewoon bij Albert Heijn’.
3.2 Method
Data for this study was obtained by means of an online questionnaire that consisted of two groups of respondents. Five product groups were used in the study. In this paragraph the two groups, the product selection and measurement scales will be discussed.
3.2.1 Groups of respondents
Two groups were included in the sample. Respondents in group A were asked questions based on a three alternatives choice set consisting of manufacturer brand, copycat PL and a generic PL. Respondents in group B were asked the same questions based on a two alternatives choice set consisting of manufacturer brand and copycat PL. This design can be defined as a multiple cross-sectional design (Malhotra, 2007). There are two samples of respondents, and information of each sample is obtained only once. Based on this design I can analyze if the market share of the compromise option (i.e. copycat PL) increases when a generic PL is added tot the choice set (hypothesis 1). Besides, I can analyze if respondents perceive quality of the copycat PL higher in a three alternatives choice set (including the
André Dietz, University of Groningen Page 27 generic PL option) than in a two alternatives choice set (hypothesis 4). Figure 3.1 gives an overview of the research design for all hypotheses.
Figure 3.1: research design
GA: X1,4 O1
GB: X1,4 O2
GA: X2,3,5,6a,6b,7 O1
The variables compromise effect (X1) and quality perceptions (X4) will be exposed to the three alternatives choice set group (group A, GA) and the two alternatives choice set group
(group B, GB). Leading to two observations (O1 and O2). The variables decision uncertainty, product familiarity, decision involvement and brand experience will be exposed to only the three alternatives choice set group (GA).
Leading to one observation (O1).
3.2.2 Product selection
To select the five product groups a preliminary research has been executed. I selected the products based on a field research and the research of Zielke and Dobbelstein (2007). The field research compared the current generics assortment of Albert Heijn with four major competitors. In total 300 different products were identified that were sold at one or more of the competitors but not sold at Albert Heijn. These products are discussed with management of the price, presentation and choice department. This discussion resulted in a list of 90 potentially interesting products. This list was the starting point of the final product selection. Next, I have used Zielke and Dobbelstein (2007), in their study they identify factors influencing customers’ willingness to purchase new store brands. One of the main factors expected to influence customers’ willingness to buy new store brands is the extent of financial/functional/social product risks. They have made a categorization of five different product groups based on associated financial, functional and social risks. As the level of risk associated with a new generic PL is expected to impact consumer choice, see hypothesis 6a, this categorization helps to select the product groups for testing this hypothesis, see fig. 3.1.
Table 3.1 product groups categorized by risks (Zielke and Dobbelstein, 2007) Product group Financial risk Functional risk Social risk Laundry detergent High High Low
André Dietz, University of Groningen Page 28 Shampoo Low High Low Potato chips Low Low High Sparkling wine High Low High Butter Low Low Low
Unfortunately, not every product group was listed in the 90 potentially interesting products, I could not use the exact same product groups. However my goal was to analyze five product groups which had a similar risk categorization as displayed in table 3.1. Therefore, I have executed a small research into the perceived financial/functional/social risk of the 90 potential product groups. Data was obtained by means of an online questionnaire. Based on a discussion with some retail experts and based on own estimation ten product groups were selected to include in the online questionnaire. I selected the following ten product groups: diapers, shaving foam, roasted peanuts, white wine, paprika powder (spices), laundry detergent, mouth wash, cherry chocolates, “Ossenworst” and bake butter. For every product group, 40 respondents answered questions concerning financial, functional and social risks on a 5- points Likert scale, based on Sridhar (2007), (see table 3.2). (See appendix 1 for the questionnaire.)
Table 3.2 questions, component and scale for preliminary research product groups selection Question Component Scale I do not incur financial loss if my Financial risk Sridhar (2007) choice of product is not going to work properly My family member/friends/relatives Social risk Sridhar (2007) laugh if I purchase wrong product Post purchase, if product does not Functional risk Sridhar (2007) function properly it does not bother me a lot
To categorize the product groups on the three types of risks. I defined a score significantly higher than 3 as high risk and significantly lower than 3 as low risk. In appendix 2 the average score for the ten product groups are presented. For a graphical representation of the outcome, see figure 3.2.
André Dietz, University of Groningen Page 29 Figure 3.2: product groups categorised by risks
5 4,5 4 3,5 Functional 3 Social 2,5 2 Financial 3 line Average risk Average 1,5 1 0,5 0
Diapers Bake butter White wine Mouth wash Ossenworst Shaving foam Paprika powder Roasted peanuts Laundry detergent Cherry chocolates Product groups
Every outcome is tested with a one sample t-test to test if they score significantly higher or lower than 3. Three product groups did not scored significantly higher or lower than 3: laundry detergent financial- (.06) and functional risk (.09), mouth wash financial- (.17) and functional risk (.77) and “ossenworst” social risk (.19). Four suitable product groups could be selected: diapers, shaving foam, wine and bake butter. Only one product group could not be selected, i.e. a product group who scored low on financial and functional risk and high on social risk. “Ossenworst” and “roasted peanuts” did not fit the profile. Therefore, a new product group had to be selected. After another look at the 90 potential products, I selected prawn salad. After discussing the option with experts and by asking 10 respondents to fill in the questionnaire again (fin. risk 2.4 functional risk 2.6 and social risk 3.4), prawn salad was selected as the fifth product.
3.2.3 Measurement scales
After selecting the product groups, scales had to be selected for measuring the constructs decision uncertainty, product familiarity, decision involvement, brand experience and quality perceptions. All constructs were based on scales from previous research. For measuring decision uncertainty and product familiarity I used the research of Sheng et al. (2005). For quality perceptions I used the study of Wheatley et al., (1982). And, for measuring decision involvement and brand experience I used the study of Zielke and Dobbelstein, (2007). In table 3.3 the questions, the component and the academic source of the scale are presented.
André Dietz, University of Groningen Page 30 Table 3.3: questions, component and scale final research Question Component Scale I’m sure that my first choice is Decision uncertainty Sheng et al (2005) more desirable to me than the other two options I am very familiar with
I have made two changes to the constructs. First, I lowered the number of items per construct and second I changed the question for measuring brand experience. I will discuss both changes in more depth. By lowering the number of items per construct for decision uncertainty, product familiarity and decision involvement, I tried to make the questionnaire more accessible to affect the response rate positively. To establish validity of the constructs, I consulted a number of experts in marketing and market research concerning the downsizing of the items. There was a common believe it would not significantly effect the results. Furthermore, I have changed the question to measure brand experience to create more research options. For measuring brand experience I used the question of Zielke and Dobbelstein (2007) as a starting point. Zielke and Dobbelstein (2007) use a ordinal 5 points scale (1= <20 percent and 5 = >80 percent), where I have chosen a sum scale, which is a ratio scale. By using a ratio scale all research options are possible: objects can be classified or identified, objects can be ranked, and intervals or differences can be compared (Malhotra, 2007). The four remaining constructs decision uncertainty, product familiarity, quality perceptions and decision involvement were measured with a 7-item Likert scale, where 1= was “strongly disagree” and 7= “strongly agree”. All questions have been translated to Dutch, as all respondents were Dutch. Possible negative effect could be translation issues. (For the complete Dutch questionnaire see appendix 3.)
3.3 Population and sampling
The target group are Albert Heijn customers over 18 years old, who are responsible for the groceries within their household and were reachable by email. As specific questions were asked concerning products only available at Albert Heijn, the respondents had to have some experience with the supermarket.
André Dietz, University of Groningen Page 31 To determine the sample size I used a statistical approach. Several factors are important to calculate the minimal sample size:
- The confidence level is the probability that a confidence interval will include the population parameter (Malhotra, 2007). In this research a confidence level of 95 percent will be applied, the corresponding z-value is 1.96 - The precision level is the desired size of the estimating interval. This is the maximum permissible difference between the sample statistic and the population parameter (Malhotra, 2007). In this research a minimal precision level of +/- 7,5% will be used. - The population proportion. Reasonable estimates for the population proportions are not available. Therefore I use the maximum possible population variation = 0.5 (Malhotra, 2007). - The population consist of Albert Heijn customers between 18 and 80 years old, who are responsible for the groceries within their household and were reachable by email. As the population is large enough (more than 20.000) a population correction is not applicable (Malhotra, 2007).
Based on the above factors the minimal sample size can be calculated (Malhotra, 2004):
Sampling technique A non-probability sampling technique, called judgmental sampling (Malhotra, 2004) was used in this research. Respondents received an invitation mail or a message on the social network Hyves. I have sent the mail/message to my family, friends and acquaintances. With the request to fill in the questionnaire and to forward the mail with link to their family, friends and acquaintances (see appendix 4 for the invitation e-mail/message). Based on the control characteristics; age (over 18 years old), responsible for groceries within the household and the respondent had to have visited an AH store in the past 6 months a respondent was suited or not. The questionnaire was sent in April 2009. To give respondents some time to fill in the questionnaire and to forward the questionnaire the data collection process lasted for 2.5 weeks.
André Dietz, University of Groningen Page 32 3.4 Reliability, validity and representativeness
To judge the quality of the research various criteria can be used: construct validity, internal validity, external validity, face validity and reliability (Malhotra, 2004). To increase reliability I have executed a pre test. I have sent the first version of the questionnaire to 10 respondents. After the ten respondents filled in the questionnaire, I discussed the questionnaire with them. Based on the pre test some questions were formulated differently and one question was added to the questionnaire. To realize construct validity multiple theoretic sources have been used to specify the theoretical relationships, to make sure each construct will measure what it should measure. Furthermore various experts have been asked their opinion concerning the constructs, hereby taking face validity into consideration.
3.4.1 Sample characteristics
Important for the reliability of the research is that both groups are comparable. By comparing the sample characteristics I gain insight in possible differences between both groups. In appendix 4 an overview is given of all sample characteristics. In figure 3.3 the average score on various characteristics of both groups is displayed.
Figure 3.3: graphical representation of sample characteristics
80
70
60
50
40
30
20 Average score (in percentages) (in score Average
10
0 Man Woman Single Together/married withoutTogether/married children with childrenAH primary supermarketAH secondary supermarketAH tert. or quater. supermarket
Sample characteristics Group A Group B
André Dietz, University of Groningen Page 33 In general the distribution is quite similar. For both groups the majority of respondents were women (respectively 66,9 and 59,6 percent) and most respondents are single. However one difference does appear. Group B contains more primary AH customers than group A (58.3 against 42.9 percent). Group A contains more secondary AH customers than group B (46.7 against 29.7 percent). To test if the difference in secondary and primary customers between the two groups influence results I have compared both groups on the variable brand experience. I have compared both groups with a independent sample T-test, see table 3.4 for the results.
Table 3.4: comparison group A and B on brand experience Variable Choice set Mean Std. Significance Deviation (2-tailed) Experience manufacturer Two alternatives 45.54 28.20 .18 brand Three alternatives 41.63 22.7 Experience copy cat PL Two alternatives 47.66 73.36 .08 Three alternatives 36.63 16.71 Experience generic PL Two alternatives 18.41 26.92 .22 Three alternatives 21.67 26.91
Based on a significance level of .05 the two groups do not significantly differ on brand experience of manufacturer brand, copy cat PL and generic PL. However based on a significance level of .10 the two alternatives choice set group scores significantly higher on copycat PL experience than the three alternatives choice set. This higher level of copycat PL experience will be taken into consideration in chapter 5, “conclusions and recommendations”.
3.4.2 Response statistics
Table 3.5 gives an overview of the response statistics.
Table 3.5: response statistics Group A (incl. Generic) Group B (excl. Generic) Started 174 182 Drop-outs 12 18 Completed 162 164 Control characteristics 10 8 Usable 152 156
In total 356 respondents participated in the research. I received 308 usable responses. In total 30 respondents started the questionnaire but did not completed it, so called drop-outs.
André Dietz, University of Groningen Page 34 The low number of drop-outs can be explained by the short and convenient questionnaire and the relation of the respondents with the researcher. After the control characteristics were applied, another 18 respondents where not usable for analysis. Resulting in 152 usable respondents for Group A and 156 usable respondents for Group B.
The minimal sample size calculated in paragraph 3.3 was 170 respondents. As two groups are compared, each group has to contain 170 respondents. However due to limits of time (the collection process lasted for 2.5 weeks) the sample size used for analysis is for group A 152 respondents and for group B 156 respondents. The consequences of this lower response rate are that the results will be less reliable when applying the results to the entire population.
3.5 Plan of analysis
In this paragraph I will describe for every hypothesis how it will be statistically tested and analysed. In the next chapter the analysis and results will be discussed.
H1: when a generic PL is added tot the choice set the market share of the copycat PL will increase.
The compromise effect suggests that the market share of the compromise option (copycat PL) will increase as a result of the addition of the third brand (generic PL) to the choice set. To test if the compromise effect is applicable, I will make an overview of the market shares for each product for the two groups (the two alternatives choice set group and the three alternative choice set group). When the three alternative choice set has a significantly larger market share for the products the above hypothesis is supported.
H2: the higher an individual’s decision uncertainty, the more likely he or she will choose the compromise option (i.e. a copycat PL) in the choice set.
The hypothesis suggests that respondents with high decision uncertainty are more likely to choose the middle option/compromise option (i.e. copycat PL). To test this, I will perform a independent sample T-test. Before I will execute the independent sample T-test I will compute the scores of decision uncertainty. I formulated the question in the questionnaire in such a manor that a high score on the question meant low decision uncertainty. To create a better interpretable output I computed the variable by subtracting the score of 7. After
André Dietz, University of Groningen Page 35 computing variable I will run the independent samples T-test. First, I recode for every product the choice variable to: copycat PL = 1, manufacturer brand and generic PL = 0. Next, I perform the independent sample T-test analysis for each product. The new variable “choice binary” is the grouping variable and “decision uncertainty” is the test variable. Based on the output I can conclude for every product if consumers scoring higher on decision uncertainty are significantly more likely to choose the compromise option (i.e. copycat PL).
H3: the more familiar an individual with the product, the less likely he or she will choose the compromise option (copycat PL) in the choice set.
The hypothesis suggests that respondents more familiar with an product are more likely to choose the middle option/compromise option (i.e. copycat PL). To test this, I will perform a independent sample T-test. I use the recoded choice variable from hypotheses 2: copycat PL = 1, manufacturer brand and generic PL = 0. Next, I perform the independent sample T-test analysis for each product. The new variable “choice binary” is the grouping variable and “product familiarity” is the test variable. Based on the output I can conclude for every product if consumers more familiar with the product are significantly less likely to choose the compromise option (i.e. copycat PL).
H4: when a generic PL is added to the choice set, consumer’s quality perceptions of copycat PLs will increase.
Tot test if the three alternatives choice set group (including generic PL option) score significantly higher on quality perception of the copycat PL than the two alternatives choice set group, a independent sample T-test is executed for each product group. The grouping variable used in the analysis was “Group” (two alternatives choice set=0, and three alternatives choice set=1. The test variable used was “quality copycat PL
H5: the higher a customer’s decision involvement, the less likely he or she will choose the generic PL option in the choice set.
The hypothesis suggests that respondents who are more involved with a product are less likely to buy the new generic PL. To test this, I will perform a independent sample T-test.
André Dietz, University of Groningen Page 36 First I create a new binary variable by recoding choice: generic PL=1, and manufacturer brand and copycat PL=0. Next I perform the independent sample T-test analysis for each product. The new variable “choice binary” is the grouping variable and “decision involvement” is the test variable. Based on the output I can conclude for every product if consumers higher involved in the decision are significantly less likely to choose the generic PL option.
H6a: The higher the financial, functional or social risk of a product group, the less likely a consumer will choose the generic PL. H6b: The higher the financial, functional or social risk of a product group, the more likely a consumer will choose manufacturer brand.
The above hypotheses suggests that consumer choice between the three alternatives (manufacturer brand, copycat PL and generic PL) is influenced by the associated risk (financial, functional and social) of the product group. To test the hypotheses 6a and 6b, I will calculate the averages of the products that are classified as having high financial/functional/social risk versus low financial/functional/social risk. Next, I perform a Chi-square test, to test if low financial/functional/social risk product groups score significantly different than high financial/functional/social risk groups. Based on the output I can conclude if consumers, for product groups associated with high financial/functional or social risk, are more likely to choose manufacturer brands and less likely to choose generic PL products.
H7: the higher a customer’s manufacturer brand/copycat PL or generic PL experience, the more likely he or she will choose the manufacturer brand/copycat PL or generic PL in the choice set.
The hypothesis suggests that respondents who are more experienced with manufacturer brands/copycat PLs or generic PLs are more likely to choose the manufacturer brand/copycat PL or generic PL in the choice set. To test this, I will calculate the average scores of respondents on manufacturer brand- copycat PL- and generic PL experience related to their choice (manufacturer brand, copycat PL or generic PL). Furthermore I test with an Anova if respondents who choose the manufacturer brand, copycat PL or generic PL also score significantly higher on manufacturer brand- copycat PL- and generic PL experience.
André Dietz, University of Groningen Page 37 Other analysis Next to the above hypotheses I will also analyse consumer switching behaviour based on the study of Wheatley, (1981). In the questionnaire respondents were first asked which product option they would choose (manufacturer brand, copycat PL or generic PL) next the respondents were asked what product they will choose when their first choice was not available. Based on the outcome of these two questions I make a graphical representation per product group to describe consumer switching behaviour.
André Dietz, University of Groningen Page 38 4. Analysis and results
Based on the plan of analysis in chapter three, all hypotheses will be tested in this chapter. First, the hypotheses in relation with the compromise effect will be analysed (h1, h2 and h3). Next, the hypotheses concerning the factors expected to influence the choice between manufacturer brands, copycat PLs and generic PLs private labels will be analysed (h4, h5a, h5b, h6 and h7). Finally consumers’ switching behaviour will be analysed.
4.1 Compromise effect
In this paragraph the hypotheses related to the compromise effect will be analysed. First, the analysis and results for the compromise effect will be discussed. Next, analysis and results for the two factors (i.e. decision uncertainty and product familiarity) expected to influence the compromise effect will be addressed.
The compromise effect suggests that the market share of the compromise option (i.e. copy cat PL) will increase as a result of the addition of the third brand (i.e. generic PL) to the choice set (Simonson, 1989). To test if the compromise effect is applicable for the five product groups the market share for manufacturer brand, copycat PL and generic PL for every product group per choice set is calculated, see table 4.1.
Table 4.1: compromise effect across product groups Product Choice Set Manuf. Brand Copycat PL Generic PL Missing group (share) (share) (share) Values Diapers Two alternatives 46.2 51.9 1.9 Three alternatives 35.5 38.8 23.7 2 Bake butter Two alternatives 26.3 72.4 1.3 Three alternatives 20.4 39.5 38.8 1.3 Prawn salad Two alternatives 27.6 68.6 3.8 Three alternatives 22.4 48 27.6 2 Shaving Two alternatives 45.5 50 4.5 foam Three alternatives 47.4 28.9 22.40 1.3 White wine Two alternatives 48.7 48.1 3.2 Three alternatives 38.2 52.6 5.9 3.3 Average Two alternatives 38.9 58.2 2.9 score Three alternatives 32.8 41.6 23.7 1.9 5 products Note: the bold numbers represent the highest market share on copycat PL between the two choice sets.
For the product group diapers, for the two alternatives choice set group, 46.2 percent
André Dietz, University of Groningen Page 39 choose the manufacturer brand and 51.9 percent the copycat PL. In the three alternatives choice set group, 35.5 percent choose the manufacturer brand, 38.8 percent copycat PL and 23.7 percent the generic PL. For the product group diapers this means that the two alternatives choice set group score higher on copycat PL market share (i.e. the compromise option) than the three alternatives choice set group. Next to diapers the product groups bake butter, prawn salad and shaving foam have a larger market share for the compromise option (i.e. copycat PL), in the two alternatives choice set than in the three alternatives choice set. For these four products the compromise effect is not applicable. The market share for copycat PL white wine does increase when a generic PL is added to the choice set. For the product white wine the compromise effect is applicable. Based on the average score of the five products it seems the market share of the generic PL option (+23.7%) is mainly responsible for the market share decrease of the copy cat PL option of (-16.6%). To test if these differences between the two groups are significant, an independent sample T-test is executed, see appendix 5 for the results. The significance level is tested 1- tailed as a one sided positive relation is expected; the market share of the copycat PL will increase when the generic PL is added to the choice set. All products except white wine were significant based on a significance level of .05 (white wine had a significance level of .213). So, although white wine was the only product with a higher market share in the three alternatives choice set, this higher market share is not significant. Leading to the result that, contrary to expectations, all products do not have a significant higher copycat PL market share in the three alternatives choice set compared to the copycat PL market share in the two alternatives choice set.
Although the compromise effect is not applicable the factors expected to influence the compromise effect (i.e. decision uncertainty and product familiarity) will be studied. As it can provide insights in the factors influencing consumer choice when a generic PL is added to the choice set.
4.1.1 Decision uncertainty
In the three alternatives condition a respondent’s decision uncertainty was expected to influence his/her choice. More specifically hypothesis 2 expected that the higher a respondent’s decision uncertainty, the more likely he or she will choose the compromise option in the three alternatives choice set. To test this hypothesis an independent sample T-
André Dietz, University of Groningen Page 40 test is executed. The average score on decision uncertainty for respondents choosing the manufacturer brand, copycat PL or generic PL per product group, is presented in figure 4.1.
Figure 4.1: score on decision uncertainty per choice, per product group
4,5
4
3,5
3
2,5 Manufacturer Brand Copycat PL 2 Generic PL
1,5 Decision uncertainty
1
0,5
0 Diapers Bake butter Prawn Salad Shaving White wine foam Product groups
Figure 4.1 shows that on average respondents who chose the manufacturer brand score lowest on decision uncertainty, followed by copycat PLs. Respondents who have chosen the generic PL are most uncertain if their choice was the best option for him or her. In table 4.2 the results of the one sample T-test (i.e. the mean, standard deviation and significance) are stated per product group per choice. For the complete output of the independent sample T- test, see appendix 6.
Table 4.2: decision uncertainty affecting consumer choice Product group Choice Mean Std. Deviation Significance (1-tailed) Diapers Copycat PL option 2.54 1.90 0.07 Man. brand or 2.09 1.72 generic PL option Bake butter Copycat PL option 1.76 1.30 0.08 Man. brand or 2.14 1.78 generic PL option Prawn salad Copycat PL option 2.45 1.58 .42 Man. brand or 2.38 2.04 generic PL option Shaving foam Copycat PL option 2.03 1.69 .28 Man. brand or 1.83 1.82
André Dietz, University of Groningen Page 41 generic PL option White wine Copycat PL option 1.86 1.43 .29 Man. brand or 1.72 1.65 generic PL option Note: the bold numbers represent the highest decision involvement between the two choices per product group.
For the product group diapers, respondents who chose the copycat PL scored on average higher (2.54) on decision uncertainty than respondents who chose the manufacturer brand or generic PL option (2.09), although this difference is not significant at the .05 level. The significance level is tested 1-tailed, as hypothesis 2 suggests a one sided positive relation; the higher an individual’s decision uncertainty, the more likely he or she will choose the compromise option (i.e. copycat PL) in the choice set. For four product groups (i.e. diapers, prawn salad, shaving foam and white wine), respondents score higher on decision uncertainty when they have chosen the copycat PL, but this was not significant at the .05 level. For the product group bake butter, respondents score, contrary to expectations, lower on decision uncertainty when they have chosen the copycat PL, nevertheless this is not significant at the .05 level.
4.1.2 Product familiarity
In the three alternatives condition, a respondent’s product familiarity was expected to influence his/her choice. More specifically hypothesis 3 expected the more familiar an individual with the product, the less likely he or she will choose the compromise option (i.e. copycat PL) in the choice set. A consumer familiar with the product is less likely to simply choose the middle option (i.e. copycat PL), because it is a compromise. The average score on product familiarity for respondents who chose the manufacturer brand or copycat PL or generic PL, is presented in figure 4.2 per product group. Figure 4.2: average score on product familiarity per product per choice
6 5
4 Manufacturer Brand 3 Copycat PL 2 Generic PL 1 Product familiarity 0 Diapers Bake Prawn Shaving White butter salad foam wine Product groups
André Dietz, University of Groningen Page 42 Figure 4.2 shows that consumers who were most familiar with the product choose the manufacturer brand. Consumers who scored the lowest on product familiarity seem to choose the generic PL. And finally consumers who choose the copycat PL score in between on product familiarity. One minor exception is the product group diapers. Respondents who chose the copycat PL score a little bit lower on product familiarity than respondents who chose the generic PL. To test if respondents who chose the copycat PL scored significantly lower on product familiarity than respondents who chose the manufacturer brand or generic PL, an independent sample T-test is executed. In table 4.3 the mean, standard deviation and significance are stated per product group per choice. For the complete output of the independent sample T-test, see appendix 6.
Table 4.3: product familiarity affecting consumer choice Product Choice Mean Std. Deviation Significance group (1-tailed) Diapers Copycat PL option 1.59 1.40 .03 Man. brand or generic 2.16 2.04 PL option Bake butter Copycat PL option 5.24 1.30 .08 Man. brand or generic 4.86 1.78 PL option Prawn salad Copycat PL option 2.71 1.79 .06 Man. brand or generic 2.25 1.75 PL option Shaving foam Copycat PL option 3.80 2.29 .36 Man. brand or generic 3.94 2.36 PL option White wine Copycat PL option 4.49 1.92 .49 Man. brand or generic 4.49 1.85 PL option Note: the bold numbers represent the lowest product familiarity between the two choices per product group.
For the product group diapers, respondents who chose the copycat PL scored on average lower (1.59) on product familiarity than respondents who chose the manufacturer brand or generic PL option (2.16), this difference is significant at the .05 level. Hypothesis 3 suggests a one sided negative relation; the higher an individual’s product familiarity, the less likely he or she will choose the compromise option (i.e. copycat PL) in the choice set. As it is a one sided relation the significance level is tested 1-tailed. Only for the product diapers, respondents who chose the copycat PL, scored significantly lower on product familiarity, at the .05 level. For the products shaving foam and white wine
André Dietz, University of Groningen Page 43 respondents who chose the compromise option (i.e. copycat PL) do not differ significantly from the respondents who have chosen the manufacturer brand or generic PL. For the product groups bake butter and prawn salad, respondents who chose the copycat PL, score even significantly higher on product familiarity, based on a significance level of .10.
4.2 Private labels versus manufacturer brands
In this paragraph the factors which are expected to influence the choice between private labels (generic PL and copycat PL) and manufacturer brands will be analysed. These factors are quality perceptions, decision involvement, product risks and brand experience.
4.2.1 Quality perceptions
To test if quality perceptions of the copy cat PL increases when a generic PL is added to the choice set, both groups were asked to estimate the quality of every product alternative. Hypothesis 4 expected that the three alternatives choice set group would score higher on the quality perception of the copycat PL than the two alternative choice set group. To test this hypothesis an independent sample T-test is executed. In figure 4.3 the quality perceptions score on copycat PL are compared between the two alternatives choice set group and the three alternatives choice set group.
Figure 4.3: comparison of score on quality perception copycat PL of the two choice sets
6
5
4
Two alternatives choice set 3 Three alternatives choice set
2
1 Copycat PL perception quality Copycat
0 Diapers Bake Prawn Shaving White wine butter salad foam Product groups
André Dietz, University of Groningen Page 44 Figure 4.3 shows that the three alternatives choice set group perceive the quality of the copycat PL higher than the two alternatives choice set group. In table 4.4 the mean, standard deviation and significance are stated per product per choice. For the complete output of the independent sample T-test, see appendix 6.
Table 4.4: differences on copycat PL quality perception Product group Choice set Mean Std. Deviation Significance Diapers Two alternatives 4.65 1.14 .00 Three alternatives 5.03 1.09 Bake butter Two alternatives 4.82 1.22 .00 Three alternatives 5.40 1.01 Prawn Salad Two alternatives 4.84 1.18 .01 Three alternatives 5.24 1.44 Shaving foam Two alternatives 4.6 1.25 .00 Three alternatives 5.22 1.17 White wine Two alternatives 4.15 1.42 .01 Three alternatives 4.81 1.31 Note: the bold numbers represent the highest perceived quality on copycat PL between the two choice sets.
For the product group diapers, respondents in the three alternatives choice set (5.03) scored significantly higher, at the .05 level, on copycat PL quality perceptions than respondents in the two alternatives choice set (4.65). Hypothesis 4 suggests a one sided positive relation; the consumer’s quality perception of the copycat PL is higher in the three alternatives choice set than in the two alternatives choice set. As it is a one sided relation the significance level is tested 1-tailed. For all product groups, respondents score significantly higher, at the .05 level, on copycat PL quality perception in the three alternatives choice set than in the two alternatives choice set.
4.2.2 Decision involvement
In the three alternatives condition a respondent’s decision involvement was expected to influence his/her choice. More specifically hypothesis 5 expected the lower a customer’s decision involvement, the less likely he or she will choose the generic PL option. In figure 4.4 the averages score on decision involvement per option, per product group are presented.
André Dietz, University of Groningen Page 45 Figure 4.4: average score on decision involvement per product per choice
7 6 5 Manufacturer brand 4 Copycat PL 3 Generic PL 2 1 Decision involvement 0 Diapers Bake butter Prawn salad Shaving foam White wine Product groups
Figure 4.4 shows that respondents who are lowest involved in their decision tend to choose the generic PL alternative in the choice set. Consumers who are most involved choose the manufacturer brand option and consumers who choose the copycat PL score in between on decision involvement. To analyse hypothesis 5 in more depth an independent sample T-test is executed. In table 4.5 the mean, standard deviation and significance are stated per product group per choice. For the complete output of the independent sample T-test, see appendix 6.
Table 4.5: decision involvement affecting consumer choice Product Choice Mean Std. Deviation Significance group (1-tailed) Diapers Generic PL option 4.58 1.25 .02 Man. brand or 5.21 1.70 copycat PL option Bake butter Generic PL option 3.03 1.50 .00 Man. brand or 4.33 1.87 copycat PL option Prawn Salad Generic PL option 3.26 1.65 .00 Man. brand or 4.83 1.89 copycat PL option Shaving foam Generic PL option 2.76 1.69 .00 Man. brand or 5.02 1.87 copycat PL option White wine Generic PL option 4.11 1.69 .01 Man. brand or 5.36 1.44 copycat PL option Note: the bold numbers represent the lowest decision involvement between the two choices per product group.
André Dietz, University of Groningen Page 46 For the product group diapers, respondents who chose the generic PL option scored on average lower (4.58) on decision involvement than respondents who chose the manufacturer brand or copycat PL option (5.21), this difference is significant at the .05 level. The hypothesis suggests a one sided negative relation; the higher an individual’s decision involvement, the less likely he or she will choose the generic PL option in the choice set. As it is a one sided relation the significance level is tested 1-tailed. For all product groups, respondents score significantly lower, at the .05 level, on decision involvement, when they have chosen the generic PL option.
4.2.3 Product risks
Financial, functional and social risks related to the five product groups are expected to influence consumer choice. More specifically hypothesis 6a expected the higher the associated financial/functional or social risk for a product group the less likely a consumer will choose the generic PL option. Furthermore as manufacturer brands communicate a message of trustworthy and delivering quality (Kumar and Steenkamp, 2008), hypothesis 6b expected consumers would be more likely to choose the manufacturer brands for products associated with high financial/functional or social risks. Figure 4.5 gives an overview of the market share per alternative (manufacturer brand, copycat PL or generic PL) for low versus high financial/functional and social risk.
Figure 4.5: share of manufacturer brand, copycat PL and generic PL for three types of product risks for low versus high risk
100 21,05 24,1 29,3 32,47 16,75 80 29,6 Generic PL (share) 60 45,7 33,85 50,3 38,8 46,37 35,73 Copycat PL (share) 40 Manuf. Brand (share) 20 36,85 41,45 30,1 27 34,43 30,3 Percentage share Percentage 0 Low High Low High Low High
Financial risk Functional risk Social risk Type of product risk
In table 4.6. the average market share per alternative (i.e. manufacturer brand, copycat PL or generic PL) for low financial/functional and social risk versus high financial/functional and social risk is presented.
André Dietz, University of Groningen Page 47 Table 4.6: consumer choice based on high or low risk product risk Type of risk High/ Product groups Manuf. Copycat Generic Significa low Brand PL PL nce (share) (share) (share) Financial risk Low Bake butter, prawn 30.1 38.8 29.6 .056 salad and shaving foam High Diapers and white 36.85 45.7 21.05 wine and Functional Low Bake butter, prawn 27 46.37 24.1 .005 risk salad and white wine High Diapers and 41.45 33.85 29.3 shaving foam Social risk Low Bake butter, 34.43 35.73 32.47 .000 diapers and shaving foam High White wine and 30.3 50.3 16.75 prawn salad
For the financial type of risk, for product groups who scored low on financial risk, the market share of manufacturer brands is 30.1% for copycat PL 38.8% and for generic PL 29.6%. Product groups who scored high on financial risk, the share of manufacturer brands is 36.85% for copycat PL 45.7% and for generic PL 21.05%. Every type of risk is checked for significance by a chi-square test in Excel. Based on a significance level of .05, respondents score significantly different on high versus low risk for functional and social risk. Based on a significance level of .06 financial risk also differs between high versus low risks. Based on table 4.6 hypotheses 6a and 6b can be analysed. First the results for the generic PL will be discussed and second the results concerning the manufacturer brand will be addressed. For the generic PL, hypothesis 6a expected that the share of the generic PL would be lower for the products associated with high financial/functional or social risk. For financial risk and social risk the share of the generic PL is significantly lower, at the .06- and .05 level, for high financial and social risk versus low financial and social risk (i.e. 21.05 for high- and 29.6 for low financial risk & 16.75 for high- and 32.47 for low social risk). High functional risk scored, contrary to expectations, significantly higher, at the .05 level, on share of the generic PL versus low functional risk (i.e. 29.3 for high- and 24.1 for low functional risk). For the manufacturer brand, hypothesis 6b expected the share of the manufacturer brand would be higher for product groups associated with high financial/functional or social
André Dietz, University of Groningen Page 48 risk versus low financial/functional or social risk. For financial risk the share of the manufacturer brand is significantly higher, at the .06 level, for high financial risk versus low financial risk (i.e. 36.85 for high- and 30.1 for low financial risk). For functional risk the share of the manufacturer brand is also significantly higher, at the .05 level, for high functional risk versus low functional risk (i.e. 41.45 for high- and 27 for low functional risk). High social risk scored, contrary to expectations, significantly lower, at the .05 level, on manufacturer brand share versus low social risk. (30.3 for high- and 34.43 for low social risk).
4.2.4 Brand experience
Respondents have been asked to divide 100 points among manufacturer brands, copy cat PL and generic PL to represent their average shopping basket size. The average shopping basket contains the distribution of the three options as presented in figure 4.6.
Figure 4.6: average shopping basket
100%
90% 22 % 80% 70%
60% 37 % Generic PL 50% Copycat PL
40% Manufacturer brand
30%
Shopping basket size (%) 20% 41%
10%
0% Consumer shopping basket
When a generic PL is added to the choice set a respondent’s brand experience was expected to influence his/her choice. More specifically, hypothesis 7 expected the higher a customer’s manufacturer brand/copycat PL or generic PL experience, the more likely he or she will choose the manufacturer brand/copycat PL or generic PL in the choice set. To test this hypothesis an independent sample T-test is executed. In table 4.7 the mean, standard deviation and significance are stated per product group per choice. For the complete output of the independent sample T-test, see appendix 6.
André Dietz, University of Groningen Page 49 Table 4.7: brand experience affecting consumer choice Product Choice Brand exp. Brand exp. Brand exp. group man. brands copycat PL generics Diapers Manufacturer brand 52.5*** 34.1*** 15.7*** Copycat PL 39.9*** 41*** 18.7*** Generic PL 26.1*** 33.4*** 36.9*** Bake butter Manufacturer brand 56.7*** 24.4*** 13.2*** Copycat PL 43.7*** 37.1*** 20.4*** Generic PL 30.9*** 42.4*** 27.4*** Prawn Salad Manufacturer brand 52.2*** 33.4 15.5*** Copycat PL 41.2*** 38.5 19.4*** Generic PL 31.6*** 36.8 31*** Shaving foam Manufacturer brand 50.2*** 34.4* 16.4*** Copycat PL 38*** 41.2* 21.1*** Generic PL 29.9*** 34.1* 32.7*** White wine Manufacturer brand 49.5*** 36.28 18*** Copycat PL 37.1*** 38.2 23*** Generic PL 30*** 32.2 37.8*** Note: *= significant at the .10 level **= significant at the .05 level ***= significant at the .01 level. Furthermore the bold number represent the highest score on brand experience per brand between the three choices
For the product group diapers, respondents with the highest manufacturer brand experience, chose the manufacturer brand (52.5). Respondents who score the highest on copycat PL experience, also chose the copycat PL (41). And respondents who scored the highest on generic PL experience, chose the generic PL (36.9) in the choice set. The hypothesis suggests a one sided positive relation; the higher an individual’s manufacturer brand- copycat PL- or generic PL experience, the more likely he or she will choose the manufacturer brand/copycat PL or generic PL option in the choice set. As it is a one sided relation the significance level is tested 1-tailed. Respondents who scored the highest on manufacturer brand experience, scored significantly higher, at the .01 level, on manufacturer brand choice than respondents who chose the copycat PL or generic PL option, for all product groups. For the product groups diapers respondents who scored highest on copycat PL experience, scored significantly higher, at the .01 level, on copycat PL choice than respondents who chose the manufacturer brand or generic PL option. The product group shaving foam scored significantly higher, at the .10 level. For all other product groups, respondents who scored highest on copycat PL experience did not score significantly higher, at the .10 level on copycat PL choice. Respondents who scored higher on generic PL experience, scored significantly higher, at the .01 level, on generic PL choice than respondents who chose the manufacturer brand or copycat PL option in the choice set, for all product groups.
André Dietz, University of Groningen Page 50 Other analysis Respondents in the three alternatives choice set group, were asked which option they would choose if their first choice was not available. Based on the outcome of their first choice and second choice, minor insights can be gained into consumer switching. All product groups are analysed. For every product group a figure is created to visualize when consumers first choice is the manufacturer brand, copycat PL or generic PL, what would be their second choice, when the first choice wasn’t available. In figure 4.7 the results are presented for the product group bake butter. (For the other product groups, see appendix 7)
Figure 4.7: consumer first and second choice bake butter
Manufacturer Brand Copycat PL Generic PL First choice 20.4 % 39.5 % 38.8 % Manufacturer3. Brand Copycat PL Generic PL None16. Manufacturer Brand Copycat PL Generic 36. PL None3. Manufacturer5. Brand Copycat PL Generic 16. PL None 0 % 3 1 % % 6.5 74.2 10 78 Second choice % % % 7 9 % % % 43.3 2 1 % % %
For the product group bake butter most respondents first choice was the copycat PL (39.5%) followed by the Generic PL option (38.8%) and the manufacturer brand has the lowest share of 20.4%. For respondents who chose the manufacturer brand, 74.2 percent would choose the copycat PL when the manufacturer brand was not available. Only 6.5 percent would choose the generic PL and 16.1 percent would choose to not buy the product. As it was an option to choose the manufacturer brand again, 3.2 percent also chose the manufacturer brand, although this shouldn’t be an option. Central tendencies for all product groups are that consumers who chose the manufacturer brand, mainly switch to the copycat PL, hardly switch to the generic PL option and many respondents to choose none of the option when there manufacturer brand was not available. Furthermore consumers who chose the generic PL as a first choice, mainly switch to the copycat PL, hardly switch to the manufacturer brand and can almost always find a substitute within the choice set, as few respondents choose the option “None”.
André Dietz, University of Groningen Page 51 5. Conclusions and recommendations
In this final chapter the overall research findings and conclusions will be discussed. Furthermore the managerial implications, research limitations and directions for future research will be addressed.
5.1 Conclusions
Establishing a positive price image is a common priority among grocery firms (e.g. Cox and Cox, 1990; Dickson and Urbany, 1994; Snyder, 1993 and Wellman 2000). A good offer of low priced products (generics) is one of the instruments a supermarket can use to influence his price image (EFMI and CBL, 2008). When a full service supermarket adds a generic PL to the assortment, in general the choice set will change from a two alternatives choice set (i.e. manufacturer brand and copycat PL) to a three alternatives choice set (i.e. manufacturer brand, copycat PL and generic PL). This consumer choice is central in this study. However few academic research exist on the effect of introducing a generic private label on consumer choice. Therefore the problem statement to be studied is as follows:
How does adding a generic private label product to the choice set influence consumer choice and consumer quality perceptions of a copycat private label?
A literature study gain insight in the role of a generic PL in retail assortment. Furthermore the literature study identified the main factors expected to influence consumer choice and/or the relation between adding a generic PL to the choice set and consumer choice. The main factors expected to influence consumer choice were: compromise effect, decision uncertainty, product familiarity, quality perceptions, decision involvement and brand experience. For each factor one or more hypotheses are formulated. All hypotheses are tested by means of an online questionnaire. In table 5.1 the hypotheses are stated with the conclusion on whether a hypothesis is supported or not supported.
Table 5.1: conclusions hypotheses Hypothesis Supported? H1: when a generic PL is added to the choice set the market share of Not supported the copycat PL will increase. H2: the higher an individual’s decision uncertainty, the more likely he or Not supported
André Dietz, University of Groningen Page 52 she will choose the compromise option (i.e. a copycat PL) in the choice set. H3: the more familiar an individual with the product, the less likely he or Not supported she will choose the compromise option (copycat PL) in the choice set. H4: when a generic PL product is added to the choice set, consumer’s Supported quality perceptions of copycat PLs will increase. H5: the higher a customer’s decision involvement, the less likely he or Supported she will choose the generic PL option in the choice set. H6a: The higher the financial, functional or social risk of a product Partially group, the less likely a consumer will choose the generic PL. supported H6b: The higher the financial, functional or social risk of a product Partially group, the more likely a consumer will choose manufacturer brand. supported H7: the higher a customer’s manufacturer brand/copycat PL or generic Supported PL experience, the more likely he or she will choose the manufacturer brand/copycat PL or generic PL in the choice set.
Every hypothesis will be discussed in more depth below.
5.1.1 Compromise effect
The first hypothesis suggested that the market share of the compromise option (i.e. copy cat PL) will increase as a result of the addition of the third brand (i.e. generic PL) to the choice set. In this study the compromise effect was not significant, at a .05 level, for any of the five studied product groups, leading to the following conclusion:
Conclusion1: when a generic PL is added to the choice set the market share of the compromise option (i.e. copycat PL) does not increase, the compromise effect is not applicable.
Possible reason for this could be the kind of products which were studied. Previous studies on the compromise effect were based on durable goods, for example the study of Sheng, et al., (2005). In this study fast moving consumer goods (FMCG) are studied. FMCG products are inherently different from other types of products, such as durable goods like electronics (Cataluna, et al., 2006).
André Dietz, University of Groningen Page 53 5.1.2 Decision uncertainty
The second hypothesis is related to the compromise effect and suggested that the higher a respondent’s decision uncertainty, the more likely he or she will choose the compromise option in the choice set. Based on an independent sample T-test, the following can be concluded:
Conclusion 2: the extent of an individual’s decision uncertainty, does not influence the likelihood of a respondent choosing the compromise option (i.e. a copycat PL) in the choice set.
5.1.3 Product familiarity
The third hypothesis is related to the compromise effect as well and suggested that the more familiar an individual with the product, the less likely he or she will choose the compromise option (copycat PL) in the choice set. Based on an independent sample T-test, for the product groups: bake butter, prawn salad, shaving foam and white wine, the following can be concluded:
Conclusion 3: the extent of an individual’s product familiarity, does not influence the likelihood of a respondent choosing the compromise option (i.e. a copycat PL) in the choice set.
For the product group diapers, respondents did score significantly lower on product familiarity when they had chosen the compromise option (i.e. copycat PL). Possible explanation could be that respondents scored lowest on product familiarity for the product group diapers from all five product groups. As diapers are a very specific product, you only buy diapers when you are a parent, respondents scored very low on product familiarity. This could mean that when a respondent drops under a certain familiarity with a product group it could lead to choose the save compromise option (i.e. copycat PL).
5.1.4 Quality perceptions
When a generic private label is added to the choice set the position of the current manufacturer brand and copycat PL changes. The change in quality perceptions for the copycat PL is studied. The hypothesis suggested that the quality perceptions of the copycat PL increases when a generic PL is added to the choice set. The executed independent sample T-test showed that for all product groups, respondents score significantly higher, at
André Dietz, University of Groningen Page 54 the level of .05, on copycat PL quality perception in the three alternatives choice set. Therefore the hypothesis is supported and the following can be concluded:
Conclusion 4: the introduction of a generic PL product to the choice set increases consumer’s quality perceptions of copycat PLs.
5.1.5 Decision involvement
The fifth hypothesis stated that the higher a customer’s decision involvement, the lower the willingness to buy a generic PL. All five product groups score significantly lower, at the .05 level, on decision involvement when respondents had chosen the generic PL option. Based on the above findings the following conclusion can be drawn:
Conclusion 5: customers who score high on decision involvement are more likely to choose the generic PL option in the choice set.
5.1.6 Product risks
Hypothesis 6a and 6b are both partially supported. Hypothesis 6a stated that the higher the associated financial/functional or social risk for a product group, the less likely a consumer will choose the generic PL option. For financial and social risk the share of the generic PL is significantly lower, at the .05 level, for the product groups scoring high on financial and social risk versus product groups scoring low financial and social risk. For functional risk this was not the case. Based on the above findings the following conclusion can be drawn:
Conclusion 6a: customers are less likely to choose the generic PL option in the choice set for product groups who score high on financial or social risk
Hypothesis 6b stated that the higher the associated financial/functional or social risk for a product group, the more likely a consumer will choose the manufacturer brand option. For financial and functional risk the share of the generic PL is significantly lower, at the .05 level, for the product groups scoring high on financial an social risk versus product groups scoring low financial and social risk. For social risk this was not the case. Based on the above findings the following conclusion can be drawn:
Conclusion 6b: customers are more likely to choose the manufacturer brand option in the choice set for product groups who score high on financial or functional risk
André Dietz, University of Groningen Page 55 5.1.7 Brand experience
The final hypothesis stated that the higher a customer’s manufacturer brand/copycat PL or generic PL experience, the more likely he or she will choose the manufacturer brand/copycat PL or generic PL in the choice set. For the manufacturer brand and generic PL respondents who scored higher brand- and generic PL experience scored significantly higher, at the .01 level, on manufacturer brand and generic PL choice. This was not the case for copycat PLs. Leading to the following conclusion:
Conclusion 7: customers who are more experienced with manufacturer brand or generic PLs are more likely to choose the manufacture brand or generic PL in the choice set.
5.1.8 Other analysis
Based on other analysis concerning consumer’s switching behaviour. Two indicative conclusions can be drawn. One, consumers who choose the manufacturer brand are less willing to switch to a different brand, when their first choice is not available. And second, consumers who choose the generic PL as their first choice are willing to switch to, and are mainly switching to the copycat PL option.
5.2 Managerial implications
By having a well balanced assortment of low priced products (generics), full service supermarkets can demonstrate that they have a basket that is price competitive against discounters. Additionally, insights in the effect of introducing a generic PL to the choice set are very useful from a managerial point of view because the better the composition of the generic PL assortment the higher the likelihood consumers will choose their supermarket. The several managerial implications of this research, will be discussed below. First, this research has shown that the compromise effect was not applicable in the studied supermarket industry for the selected products. The market share of the compromise option (i.e. copycat PL) did not increase after introducing a third choice (i.e. generic PL) to the choice set. In this research the market share of the manufacturer brand decreased when the generic PL option is added to the choice set, but the market share of the copycat PL decreased as well. This means a supermarket formula should not introduce a generic PL with the goal to increase copycat PL market share.
André Dietz, University of Groningen Page 56 Second, this research has shown that quality perceptions of the copycat PL option increases when a generic PL is added to the choice set. Category managers who want to increase the quality perceptions of a certain copycat PL could achieve this by introducing a generic PL to the choice set. Third, several factors (i.e. decision involvement, product risks and brand experience) have shown to influence consumer choice. Consumers who score low on decision involvement and high on generic PL experience will prefer to buy the generic PL when the generic PL is added to the choice set. Based on associated product risks, category managers can predict the success of a generic PL introduction. Consumers are more willing to buy generic PLs for products associated with low financial and social risks. Finally, as discounters and competing full service supermarkets could increase or change their assortment and generic assortment, it is important to constantly monitor the developments in the competitive market. For example, at the end of June Jumbo is compared prices of their lowest price assortment with Aldi and Lidl. A reaction not only on price but also on assortment composition could be expected from the discounters.
5.3 Research limitations
There are several limitations concerning this research. First, the products were selected from a list of 90 potentially interesting generic PLs to introduce for Albert Heijn. Therefore it was not possible to choose the products who are also studied in previous academic research, which best represent the different risk profiles of financial, functional and social risk. Second, during to time issues the sample size was not as high as I calculated. The calculated minimum sample size per group of respondents was 170, the sample size of the research was in total 308 respondents (n=152 for group A and n= 156 for group B). Third, the research was based on the specific private label assortment of Albert Heijn. The copycat PL and generic PL option are only available at Albert Heijn. Therefore, the results are applicable for Albert Heijn and only indicative for other formulas. Fourth, the study is executed in the Netherlands. As the supermarket industry and private label situation in other countries differ, the results could be different in other countries. Fifth, concerning the question which product the respondent would choose when his/her first choice wasn’t available, it was possible to select the same product as in the first choice. It would have been better that the first choice is not an option to choose from, to get better data. Finally, data was obtained by means of an online questionnaire, asking respondents about a hypothetical shopping decision (which product would you choose?). Instead of presenting the products with pictures on a computer
André Dietz, University of Groningen Page 57 screen the real life decision is made for the shelve in a supermarket. Therefore the actual decision of a consumer in the supermarket could differ from the decision made in the questionnaire.
5.4 Future research
Based on my research, I would suggest the following directions for future research:
- My research was conducted at Albert Heijn in the Dutch supermarket industry. Future research could focus on different formulas and different countries. Full service supermarket formulas differ on private label strategies. Countries such as Germany and the United States differ on supermarket industry and private label penetration & success, compared to the Netherlands. - As mentioned in the limitations it would be best to test the hypotheses in a real life shopping environment. Therefore future research could change the research method by obtaining information in real situations in several test supermarkets. - In previous academic research generics of full services supermarkets are compared with the assortment of discounters as Aldi and Lild. Prices of generics are indeed comparable with the discounters, but what about other product attributes like quality perceptions. It would be very useful to know how consumers perceive generics from full service supermarkets in relation with the assortment of discounters. - When I started writing this thesis, the economical crisis started in the Netherlands. Future research could focus on the effect of an economical crisis on consumer choice in the supermarket. Do consumers switch from a full service supermarket to the discounters or a different full services supermarket. Or do consumers switch within the assortment of their present full service supermarket, e.g. from manufacturer brand to copycat PL or from copycat PL to generic PL. - Finally, most of the academic research concerning private labels is concerning the copycat PL. I would recommend more research on generics. Directions could be to research which product groups should contain a generic option and what is the exact effect of generics on supermarket price image.
André Dietz, University of Groningen Page 58 References
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André Dietz, University of Groningen Page 59 • Davies, G. (1990), Marketing to retailers: a battle for distribution?, Long range planning, Vol. 23 No. 6, pp. 101-8. • Davies, G. J. and Brooks, J. M. (1989) Positioning Strategy in Retailing (London: Paul Chapman Publishing). • Dickson, P. & Urbany, J. (1994), Retailer reactions to competitive price changes, Journal of Retailing, 70, 1-21. • Draganska, M. and Jain, D. (2006), Pricing strategies: an empirical analysis, Marketing Science, Vol. 25 No. 2, pp. 164-174. • Duncan, R. (1972), Characteristics of organizational environments and perceived environmental uncertainty, Adminstrteive Science Quarterly, vol 17, 313-327. • Duncan, r. B. (1972) Characteristics of organizational environments and perceive environmental uncertainty. Administrative Science Quarterly, 17. • Esbjerg, L., Grunert, K.G., Bech-Larsen, T., Juhl, H.J. and Brunsø, K. (2004), Manufacturer and retailer brands in food retail assortments: notes from a shopping trip across Europe, MAPP Working Paper No. 85, Aarhus School of Business, Aarhus. • Garry, M. (1994), Price Busters!, Progressive Grocer, 73. • Harris, B.F. and Strang, R.A. (1985) Marketing strategies in the age of generics, Journal of Marketing, Vol. 49, Fall, pp. 70-81. • Hoch, S.J., Banerji, S. (1993), When do private labels succeed?, Sloan Management Review, Vol 34, 57-67. • Holla, J. & Koreman, A. (2006), Prijzenoorlog en de Postitioneringslag avn Albert Hijn, {available at http://www.gfk.nl/data/publicat/subject/jaargids/2006/jaargids.htm}. • Hollander, S. (1966), Notes on the retail accordion, Journal of Retailing, Vol. 42 29- 40. • Huber, J. & Puto, C. (1983), Market boundaries and produce choice: illustrating attraction and stubstituion effects, Journal of Consumer Research, vol 10, 31-44. • Huber, J. Payne, J. & Puto, C. (1982), Adding asymmetrically dominated alternative: violations of regularity and the similarity hypothesis, Joural ov consumer Research, vol 9, 90-96. • Kahn, B., McAlister, L. (1997), Grocery revolution: The new focus on the consumer, Reading, MA: Addisson-Wesley. • Keller, K. (2008), Strategic brand management: building, measuring, and managing brand equity, Pearson Prentice Hall, Upper Saddle River, NJ, 3th Edition. • Kristenson, L. (1983) Strategic planning in retailing, European Journal of Marketing, 17(2).
André Dietz, University of Groningen Page 60 • Kumar, N. & Steenkamp J. (2007), Private label strategy: how to meet the store brand challenge, Harvard business school press, Boston Massachusets • Laaksonen, H. and Reynolds, J. 1994), Own brands in food retailing across Europe, The Journal of Brand Management, Vol. 2, pp 37-47. • Levy, M. and Weitz, B. A. (2004) Retailing Management (5th edition) (New York: McGraw-Hill). • Malhotra, N.K. (2004), Marketing Research; An Applied Orientation, Pearson Prentice Hall, Upper Saddle River, NJ, 4th Edition. • Marks, L. & Olsen (1981), Towards a cognitive structure conceptualization of product familiarity, Advances in consumer research, Col. 8, 145-150. • Mathews, R. (1997), More than price alone, Progressive Grocer, 76. • Messinger, P., & Narasimhan, C. (1997), A model of retail formats based on consumers’ economizing on shopping time, Marketing Science, vol 16, 1-23. • Mittal, B. (1989), Measuring purchase-decision involvement, Psychology & Marketing, Vol. 6, Issue 2, p147-162, 16p. • Monroe, K. (1976), The influence of price differences and brand familiarity on brand preferences, Journal of Consumer Research, 3, 42-49. • Narasimhan, c., Wilcox, R. (1998), Private labels and the channel relationship: a cross-category anlysis, Journal of Business, 71, 573-600. • Rao, A., Bergen, M. and Davis, S. (2000), How to fight a price war, Harvard business review, vol. 78, 107-117. • Risch, E. H. (1991) Retail Merchandising (New York, Oxford: Macmillan). • Rogers, D. (2001), With Wal-Mart, look don’t listen, Supermarket Business, January 15th, 15-16. • Savitt, R. (1984) The Wheel of Retailing and retail product management, European Journal of Marketing, 18(6/7). • Savitt, R. (1984), The wheel of retailing and retail product management, European Journal of Marketing, vol 18, 43-54. • Schutte, Thomas F. (1969), The Semantics of Branding, Journal of Marketing, 33 (April), 5-11. • Semeijn, J., van Riel, A.C.R. and Ambrosine, A.B. (2004) Consumer evaluations of store brands: effects of store image and and product attributes, Journal of Retailing and Consumer Service, Vol 11 No. 4.
André Dietz, University of Groningen Page 61 • Sheng, S., Parker, A. and Nakamoto, K. (2005), Understanding the mechanism and determinants of compromise effects, Psychology & Marketing, Vol. 22, Issue 7, p591- 609, 19p. • Sheng, S., Parker, M. & Nakamot, K. (2005), Understanding the mechanism and determinants of compromise effects, Psychology & Marketing, vol. 22, 591-609. • Simonson, I. & Tversky, A. (1992), Choice in context: Trade-off contrast and extremeness aversion, Journal of Marketing Research, 29, 281-295. • Simonson, I. (1989), Choice based on reason: the case of attraction and compromise effects, Journal of Consumer Research, 16, 158-176. • Simonson, I. (1999), The effect of product assortment on buyer preferences, Journal of Retailing, vol 75, 347-370 • Sridhar (2007) Consumer Involvement in Product Choice: Role of Perceived Risk, Decision (0304-0941), Vol. 34 Issue 2. • Van Aalst, M. (2006), Prijzenoorlog is over, maar voor hoe lang?, Erasmus Food Management Instituut, {available at http://www.efmi.nl}. • Van Heerde, H., Gijsbrechts, E., Pauwels, K. (2008), Winners and losers in a major price war, Journal of Marketing Research, Vol XLV, 499-515. • Varley, R. (2003), Retail product management: buying and merchandising, Routledge, New York, NY • Wheatley, J. J. (1981), The effect of generic products on consumer perceptions and brand choice, Advances in consumer research, vol 8, 186-191 • Wheatley, J., Chiu, J. & Douglas A. (1982), Generics: their impact on national and private brands, Advances in Consumer Research, Vol 9. Issue 1. • Yates, J. F. (1990), Judgment and decision making, Englewood Cliffs, NJ: Prentice- Hall • Yelkur, R. (2000), Consumer perceptions of generic products: a Mexican study, Journal of Product & Brand Management, Vol. 9 No. 7, pp. 446-56. • Zielke, S. & Dobbelstein, T. (2007), Customers’ willingness to purchase new store brands, Journal of Product & Brand management, vol 16, 112-121.
André Dietz, University of Groningen Page 62 Appendix 1 Questionnaire preliminary research
To identify the five product groups to be used in the final questionnaire, a preliminary research is executed. The following questionnaire concerning product risks is filled in by 40 respondents.
Enquête
Introductie
Voor u ligt een korte vragenlijst. In deze vragenlijst wordt uw mening gevraagd betreft 10 producten.
Deze vragenlijst staat in het teken van mijn afstudeeronderzoek. Ik wil u vragen de gehele vragenlijst in te vullen.
Het invullen van de vragenlijst, duurt ongeveer 5 minuten.
Bij voorbaat dank.
André Dietz
------Vragenlijst ------
Personalia
1. Wat is uw geslacht? man vrouw
2. Wat is uw leeftijd? jaar
Ga door naar de volgende pagina voor het vervolg van deze vragenlijst.
André Dietz, University of Groningen Page 63 Stellingen 3. Hieronder volgen een aantal stellingen. Zou u kunnen aanvinken per product, in welke mate u het eens of oneens bent met de stelling. 1=Zeer mee oneens, 2=Oneens, 3=Niet eens / niet mee oneens, 4=Eens, 5=Zeer mee eens
Stellingen Scheerschuim Luiers Geroosterde Bak en braad Wijn pinda’s boter 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 Ik denk dat ik bij dit product veel risico loop dat het niet werkt/functioneert De mening van mijn vrienden/familie vind ik belangrijk bij dit product Wanneer het product niet werkt, maakt me dat financieel veel uit
Stellingen Wasgel voor de Paprika poeder Mondspoeling Kersen bonbons Ossenworst witte was (kruiden) (bij de borrel) 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 Ik denk dat ik bij dit product veel risico loop dat het niet werkt/functioneert Wanneer het product niet werkt, maakt me dat financieel veel uit De mening van mijn vrienden/familie vind ik belangrijk bij dit product Bedankt voor uw medewerking.
André Dietz, University of Groningen Page 64 Appendix 2 outcome preliminary research product groups
Averages of the 10 tested product groups on financial, functional and social risk. A one sample t-test is executed to test if they score significantly higher or lower than 3.
Product group Financial risk Sig. Functional risk Sig. Social risk Sig. Shaving foam Low (2.5) .767 High (3.05) .00 Low (2.15) .00 Diapers High (3.45) .02 High (3.67) .00 Low (2.5) .02 Roasted peanuts Low (1.98) .00 Low (1.88) .00 Low (2.43) .00 Bake butter Low (1.68) .00 Low (1.8) .00 Low (1.9) .00 White wine High (3.33) .08 Low (2.4) .00 High (3.83) .00 Laundry High (3.38) .06 High (3.33) .09 Low (2.58) .04 detergent Paprika powder Low (1.9) .00 Low (1.7) .00 Low (1.58) .00 Mouth wash Low (2.75) .17 High (3.05) .77 Low (2.35) .00 Cherry Low (2.4) .00 Low (2.28) .00 Low (2.43) .00 chocolates Ossenworst Low (2.43) .00 Low (2.58) .01 High (3.23) .19
André Dietz, University of Groningen Page 65 Appendix 3 questionnaire main research
For the main research I used the following questionnaire. In this appendix the questionnaire for group A (the three alternatives choice set group) is presented. The questionnaire for group B was similar, except the generic PL option is not presented in the choice set. Furthermore questions concerning the generic PL (i.e. quality perceptions) were not used in the questionnaire. The questionnaire is created with the program thesis tools. For the original version (lay out) see the following link: http://www.thesistools.com/so/pro/printversie.php?userID=36483&formID=74313&lninterfa ce=eng&ln=eng&ln=ned&show=preview&showpdf=yes
Keuze binnen de supermarkt
Introductie
In deze vragenlijst wordt uw mening gevraagd betreffende uw keuze voor in totaal vijf artikelen die u kunt vinden in de supermarkt.
Deze vragenlijst is onderdeel van mijn afstudeeronderzoek naar consumenten keuzegedrag in de supermarkt aan de Universiteit van Groningen. U zou mij enorm helpen wanneer u de vragenlijst zou willen invullen.
Het invullen van de vragenlijst duurt ongeveer 5 minuten.
Alvast ontzettend bedankt,
André Dietz
1. Bent u (mede)verantwoordelijk voor de boodschappen in uw huishouden?
Ja
Nee
André Dietz, University of Groningen Page 66 2. Heeft u het afgelopen half jaar boodschappen gedaan bij Albert Heijn?
Ja
Nee
3. In welke supermarkt doet u het merendeel van uw boodschappen?
Albert Heijn C1000 JUMBO
ALDI Lidl Anders
4. In welke supermarkt doet u daarnaast boodschappen? (minimaal 1x per maand)
Albert Heijn C1000 JUMBO
ALDI Lidl Overige
5. Zou u van onderstaande producten willen aangeven hoe regelmatig u deze producten het afgelopen half jaar heeft gekocht?
nooit vaak
Luiers
Bak en braad boter (vaste vorm)
Garnalensalade (voor bij de borrel)
André Dietz, University of Groningen Page 67 Scheerschuim
Witte wijn
verder. . .
Er volgen nu 5 producten, zou u per product willen aangeven welke u zou kiezen en in hoeverre u het eens bent met de stellingen. (mocht u het product niet regelmatig kopen, probeer u dan zo goed mogelijk in te leven)
6. Stel: u bent boodschappen aan het doen in de supermarkt en u heeft luiers nodig. U kunt kiezen uit de volgende opties. Welke zou u kopen?
7. Wanneer het product van uw keuze niet aanwezig is, welk product zou u dan kiezen?
Pampers AH eigen merk Euro Shopper GEEN
André Dietz, University of Groningen Page 68 8. Zou u per stelling kunnen aangeven in hoeverre u het eens bent met de stelling?
zeer mee oneens zeer mee eens
Ik schat de kwaliteit van Pampers hoog in
Ik schat de kwaliteit van AH eigen merk luiers hoog in
Ik schat de kwaliteit van Euro Shopper luiers hoog in
Ik hecht grote waarde aan het maken van de juiste keuze wanneer ik luiers koop
Ik ben erg bekend met het product luiers
Ik ben er van overtuigd dat mijn 1e keuze de beste keuze voor mij is, gezien de 3 opties
9. Stel: u bent boodschappen aan het doen in de supermarkt en u heeft bak en braad boter in vaste vorm nodig. U kunt kiezen uit de volgende opties. Welke zou u kopen?
André Dietz, University of Groningen Page 69 10. Wanneer het product van uw keuze niet aanwezig is, welk product zou u dan kiezen?
Croma AH eigen merk Euro Shopper GEEN
11. Zou u per stelling kunnen aangeven in hoeverre u het eens bent met de stelling?
zeer mee oneens zeer mee eens
Ik schat de kwaliteit van Croma bak en braad hoog in
Ik schat de kwaliteit van AH eigen merk bak en braad hoog in
Ik schat de kwaliteit van Euro Shopper bak en braad hoog in
Ik hecht grote waarde aan het maken van de juiste keuze wanneer ik bak en braad koop
Ik ben erg bekend met het product bak en braad boter
Ik ben er van overtuigd dat mijn 1e keuze de beste keuze voor mij is, gezien de 3 opties
12. Stel: u bent boodschappen aan het doen in de supermarkt en u heeft garnalensalade nodig. U kunt kiezen uit de volgende opties. Welke zou u kopen?
André Dietz, University of Groningen Page 70 13. Wanneer het product van uw keuze niet aanwezig is, welk product zou u dan kiezen?
Johma AH eigen merk Euro Shopper GEEN
14. Zou u per stelling kunnen aangeven in hoeverre u het eens bent met de stelling?
zeer mee oneens zeer mee eens
Ik schat de kwaliteit van Johma garnalensalade hoog in
Ik schat de kwaliteit van AH eigen merk garnalensalade hoog in
Ik schat de kwaliteit van Euro Shopper garnalensalade hoog in
Ik hecht grote waarde aan het maken van de juiste keuze wanneer ik garnalensalade koop
Ik ben erg bekend met het product garnalensalade
Ik ben er van overtuigd dat mijn 1e keuze de beste keuze voor mij is, gezien de 3 opties
U heeft nu 3 producten beoordeeld, op de volgende pagina volgen de laatste 2 producten.
André Dietz, University of Groningen Page 71 verder. . .
15. Stel: u bent boodschappen aan het doen in de supermarkt en u heeft scheerschuim nodig. U kunt kiezen uit de volgende opties. Welke zou u kopen?
16. Wanneer het product van uw keuze niet aanwezig is, welk product zou u dan kiezen?
Gilette AH eigen merk Euro Shopper GEEN
17. Zou u per stelling kunnen aangeven in hoeverre u het eens bent met de stelling?
zeer mee oneens zeer mee eens
Ik schat de kwaliteit van Gilette scheerschuim hoog in
Ik schat de kwaliteit van AH eigen merk scheerschuim hoog in
Ik schat de kwaliteit van Euro Shopper scheerschuim hoog in
Ik hecht grote waarde aan het maken
André Dietz, University of Groningen Page 72 van de juiste keuze wanneer ik scheerschuim koop
Ik ben erg bekend met het product scheerschuim
Ik ben er van overtuigd dat mijn 1e keuze de beste keuze voor mij is, gezien de 3 opties
18. Stel: u bent boodschappen aan het doen in de supermarkt en u heeft witte wijn nodig. U kunt kiezen uit de volgende opties. Welke zou u kopen?
19. Wanneer het product van uw keuze niet aanwezig is, welk product zou u dan kiezen?
Castel Chardonnay AH eigen merk Euro Shopper GEEN
20. Zou u per stelling kunnen aangeven in hoeverre u het eens bent met de stelling?
zeer mee oneens zeer mee eens
Ik schat de kwaliteit van Castel
André Dietz, University of Groningen Page 73 Chardonnay witte wijn hoog in
Ik schat de kwaliteit van AH eigen merk witte wijn hoog in
Ik schat de kwaliteit van Euro Shopper witte wijn hoog in
Ik hecht grote waarde aan het maken van de juiste keuze wanneer ik witte wijn koop
Ik ben erg bekend met het product witte wijn
Ik ben er van overtuigd dat mijn 1e keuze de beste keuze voor mij is, gezien de 3 opties
Op de volgende pagina vindt u de laatste vragen, dit zijn een aantal algemene vragen.
verder. . .
Onderkant formulier
21. Zou u 100 punten willen verdelen over onderderstaande productgroepen, zodat de verdeling aangeeft hoeveel producten u van elke groep gemiddeld koopt bij Albert Heijn (hoe meer punten u toekent, hoe meer producten u in die groep koopt)
A-merken (Bijv: Coca cola, Calvé en Unox)
AH eigen merk
Euro Shopper en Zaanse Hoeve
[ 0 ] [ 0 ]
22. Wat is uw geslacht?
André Dietz, University of Groningen Page 74 Man Vrouw
23. Hoe is uw gezinssamenstelling?
Alleenstaand
Samenwonend/getrouwd zonder (thuiswonende) kinderen
Samenwonend/getrouwd met thuiswonende kinderen
24. Wat is uw leeftijd?
25. Graag hoor ik van u wanneer u vragen heeft over of opmerkingen op deze vragenlijst:
klaar! versturen. . .
André Dietz, University of Groningen Page 75 Appendix 4 invitation mail/message
The following mail was send to family/friends and relatives. A group of about 40 people have received a personal mail. And my remaining contacts (hotmail and hyves network) are mailed with a standardised mail. For examples, see below.
1. Personalised mail
Hey Marielle,
Lang niet gesproken, hoe is ie?
Hier alles prima, druk bezig met mijn afstudeeronderzoek voor Albert Heijn.
Hier mail ik je ook even over. Ik heb een vragenlijst opgesteld en het zou echt super zijn als je die zou willen invullen. Daarnaast kan je me enorm helpen door de vragenlijst (onderstaande link) naar zo veel mogelijk familie/vrienden en kennissen door te sturen. Ik heb namelijk nogal wat respondenten nodig om betrouwbare resultaten te krijgen.
Het kost ongeveer 5 minuten om de vragenlijst in te vullen. Door op de onderstaande link te klikken ga je naar de enquête. Deze kan je vervolgens on line invullen. http://www.thesistools.com/?qid=74313&ln=ned
Alvast super bedankt en spreek je snel!
Groeten,
Andre
2. Standardised mail/message (hotmail/hyves)
Beste vrienden en studiegenoten,
Jullie kunnen me voor de laatste keer in mijn loopbaan als student, enorm helpen :).
Voor mijn afstudeeronderzoek bij Albert Heijn heb ik een enquête opgesteld. Het zou echt super zijn als je die zou willen invullen. Daarnaast kan je me enorm helpen door de vragenlijst (onderstaande link) naar zo veel mogelijk familie/vrienden en kennissen door te sturen. Ik heb namelijk nogal wat respondenten nodig om betrouwbare resultaten te krijgen.
Het kost ongeveer 5 minuten om de vragenlijst in te vullen. Door op de onderstaande link te klikken ga je naar de enquête. Deze kan je vervolgens on line invullen. http://www.thesistools.com/?qid=74313&ln=ned
Alvast super bedankt voor het invullen en doorsturen!
Groeten,
André
André Dietz, University of Groningen Page 76 Appendix 5 sample characteristics
In this appendix the sample characteristics of the research are stated.
Group A Gender Man 33,1 % Woman 66,9 %
Group B Gender Man 40,4 % Woman 59,6 %
Group A Family composition Single 45,2 % Living together/married without children living at home 29,7 % Living together/married with children living at home. 25,2 %
Group B Family composition Single 44,2 % Living together/married without children living at home 34,6 % Living together/married with children living at home. 21,2 %
Group A Primary/secondary supermarket Albert Heijn primary supermarket 42,9 % Albert Heijn secondary supermarket 46,7 % Albert Heijn tertiary, quaternary 10.4 % supermarket
Group B Primary/secondary supermarket Albert Heijn primary supermarket 58,3 % Albert Heijn secondary supermarket 29 % Albert Heijn tertiary or quaternary 12.7 % supermarket
Group A Product experience Product Average Standard Deviation Diapers 1.39 1.42 Bake butter 3.03 2.01 Prawn salad 1.50 1.14 Shaving foam 2.60 1.84 White wine 3.95 1.98
André Dietz, University of Groningen Page 77 Group B Product experience Product Average Standard Deviation Diapers 1.36 1.41 Bake butter 2.81 1.95 Prawn salad 1.64 1.07 Shaving foam 2.77 1.80 White wine 3.61 2.01
André Dietz, University of Groningen Page 78 Appendix 6 outcome independent sample T-tests
For the hypoteheses h1, h2, h3, h4 and h6 an independent sample T=test is executed to test if two groups significantly differed from each other. In this appendix the outcomes are presented:
Compromise effect (hypothesis 1)
Independent Samples T Test 95% Confidence Std. Interval of the Sig.(2 Mean Error Difference Product group Choice F Sig t Df tailed) Diff. Diff. Lower Upper Diapers Equal variances 7.45 .007 -2.32 306 .021 -131 .056 -.242 -.020 assumed Equal variances not -2.32 306 .021 -.13 .056 -.242 -.020 assumed Bake butter Equal variances 18.4 .000 -6.16 306 .000 -.329 .054 -4.35 -.224 assumed Equal variances not -6.51 302 .000 -.330 .054 -4.35 -.224 assumed Prawn salad Equal variances 23.4 .000 -3.73 306 .000 -.206 .055 -.314 -.097 assumed Equal variances not -3.73 303 .000 -.210 .054 -.318 -.103 assumed Shaving foam Equal variances 33.4 .000 -3.86 306 .000 -.211 .055 -.318 -.103 assumed Equal variances not -3.86 304 .000 -.211 .055 -.318 -.103 assumed White wine Equal variances .060 .806 .798 306 .426 .046 .057 -.067 -.158 assumed Equal variances not .798 306 .426 .046 .057 -.067 .158 assumed
Decision uncertainty (hypothesis 2)
Independent Samples T Test 95% Confidence Std. Interval of the Sig.(2 Mean Error Difference Product group Choice F Sig t Df tailed) Diff. Diff. Lower Upper Diapers Equal variances .370 .544 1.52 149 .13 .455 .299 -1.36 1.05 assumed Equal variances not 1.49 115 .14 .455 .306 -.151 1.06 assumed Bake butter Equal variances 7.38 .007 -1.41 149 .16 -.379 .268 -.908 .152 assumed Equal variances not -1.51 146 .13 -.379 .251 -.875 .118 assumed Prawn salad Equal variances 7.54 .007 .213 145 .832 .065 .304 -.536 .664 assumed Equal variances not .213 143 .829 .065 .299 -.526 .656 assumed Shaving foam Equal variances 1.15 .285 .598 149 .551 .191 .320 -.440 .822 assumed Equal variances not .616 86 .539 .191 .310 -.425 .807 assumed White wine Equal variances 2.67 .104 .561 150 .576 .140 .250 -.354 .635 assumed Equal variances not .556 141 .579 .140 .252 -.358 .639 assumed
André Dietz, University of Groningen Page 79 Product familiarity (hypothesis 3)
Independent Samples T Test 95% Confidence Std. Interval of the Sig.(2 Mean Error Difference Product group Choice F Sig t Df tailed) Diff. Diff. Lower Upper Diapers Equal variances 13.8 .000 1.88 149 .062 .570 .303 -.030 1.170 assumed Equal variances not 2.03 148 .044 .567 .280 .0156 1.124 assumed Bake butter Equal variances 1.08 .301 .091 150 .928 .028 .304 -.572 .627 assumed Equal variances not .089 120 .929 .028 .308 -.582 .637 assumed Prawn salad Equal variances .486 .487 -1.60 150 .112 -.460 .287 -1.03 .109 assumed Equal variances not -1.60 148 .113 -.460 .288 -1.027 1.09 assumed Shaving foam Equal variances .047 .828 .355 149 .723 .148 .419 -.679 .976 assumed Equal variances not .359 82 .720 .148 .414 -.674 .971 assumed White wine Equal variances .128 .721 -.005 150 .996 -.001 .307 -.607 .604 assumed Equal variances not -.005 149 .996 -.001 .306 -.606 .603 assumed
Quality perceptions (hypothesis 4) Independent Samples T Test 95% Confidence Std. Interval of the Sig.(2 Mean Error Difference F Sig t Df tailed) Diff. Diff. Lower Upper Quality copycat Equal variances 1.47 .226 3.02 303 .003 .386 .128 .135 .637 PL diapers assumed Equal variances not 3.02 303 .003 .386 .128 .135 .637 assumed Quality copycat Equal variances 3.20 0.08 4.44 303 .000 .570 .128 .317 .822 PL bake butter assumed Equal variances not 4.46 297 .000 .570 .128 .318 .820 assumed Quality copycat Equal variances 3.94 .048 2.63 303 .009 .396 .150 .099 .691 PL prawn salad assumed Equal variances not 2.62 286 .009 .396 .151 .098 .692 assumed Quality copycat Equal variances 2.57 .110 4.46 303 .000 .619 .139 .346 .892 PL shaving foam assumed Equal variances not 4.47 303 .000 .619 .139 .346 .892 assumed Quality copycat Equal variances .622 .431 4.20 303 .000 .658 .157 .350 .967 PL white wine assumed Equal variances not 4.21 303 .000 .658 .156 .350 .967 assumed
Decision involvement (hypothesis 5)
Independent Samples T Test 95% Confidence Std. Interval of the Sig.(2 Mean Error Difference
André Dietz, University of Groningen Page 80 Product group Choice F Sig t Df tailed) Diff. Diff. Lower Upper Diapers Equal variances 4.90 .028 2.04 149 .043 .625 .306 .0120 1.23 assumed Equal variances not 2.39 79 .019 .625 .262 .104 1.15 assumed Bake butter Equal variances 6.42 .012 4.47 149 .000 1.29 .289 .721 1.86 assumed Equal variances not 4.69 142 .000 1.29 .276 .747 1.84 assumed Prawn salad Equal variances 1.00 .318 4.70 149 .000 1.56 .333 .907 2.22 assumed Equal variances not 4.99 85 .000 1.56 .313 .941 2.19 assumed Shaving foam Equal variances .028 .868 6.32 149 .000 2.25 .356 1.55 2.96 assumed Equal variances not 6.68 58 .000 2.25 .337 1.58 2.93 assumed White wine Equal variances 0.05 .823 2.51 150 .013 1.25 .499 .267 2.24 assumed Equal variances not 2.17 9 .059 1.25 .577 -.057 2.56 assumed
Brand experience (hypothesis 7)
Independent Samples T Test 95% Confidence Std. Interval of the Sig.(2 Mean Error Difference Product group Choice F Sig t Df tailed) Diff. Diff. Lower Upper Diapers Equal variances 13.4 .000 -6.67 143 .000 -19.9 2.98 -25.79 -14.02 assumed Equal variances not -5.23 41 .000 -19.9 3.81 -27.6 -12.23 assumed Bake butter Equal variances .186 .667 -3.40 143 .001 -9.62 2.83 -15.21 -4.02 assumed Equal variances not -3.46 132 .001 -9.62 2.78 -15.12 -4.11 assumed Prawn salad Equal variances 5.74 .018 -4.16 143 .000 -12.8 3.08 -18.89 -6.71 assumed Equal variances not -3.52 52 .001 -12.8 3.63 -20.09 -5.51 assumed Shaving foam Equal variances .894 .346 -4.43 143 .000 -14.3 3.23 -20.71 -7.92 assumed Equal variances not -4.19 48 .000 -14.3 3.42 -21.19 -7.44 assumed White wine Equal variances 0.07 .782 -2.95 143 .004 -17.2 5.82 -28.67 -5.68 assumed 7 Equal variances not -3.21 9.33 .010 -17.2 5.35 -29.20 -5.14 assumed
André Dietz, University of Groningen Page 81 Appendix 7 switching behaviour
In this appendix consumer first and corresponding second choice are presented for the product groups diapers, prawn salad, shaving foam and white wine.
Diapers
Manufacturer Brand Copycat PL Generic PL First choice 35.5 % 38.8 % 23.7 % Manufacturer9.3 % Brand Copycat64. PL Generic 3. PL None18.50 % Manufacturer Brand Copycat10. PL Generic 10. PL None13. Manufacturer2. Brand Copycat PL Generic PL None 11.1 6 % % 13.9 72.2
Second choice 7 % 2 8 2 % % % % % 61 8 % %
Prawn Salad
Manufacturer Brand Copycat PL Generic PL First choice 22.4 % 48 % 27.6 % Manufacturer Brand Copycat PL Generic PL None Manufactur Copycat2. PL Generic PL None Manufacturer Brand Copycat64. PL Generic PL None16. 11.8 6.8 % 7 % % er Brander 11.8 16.4 11.9 70.6
Second choice 7 % 3 % % % % % 0 69.9 4.8 % % %
André Dietz, University of Groningen Page 82 Shaving foam
Manufacturer Brand Copycat PL Generic PL First choice 47.4 % 28.9 % 22.4 % Manufacturer Brand Copycat PL Generic PL None Manufacturer Brand Copycat PL Generic PL None Manufacturer Brand Copycat PL Generic PL None 23.6 6.8 5.9 % % % 0 22 0 65.3 9.1 94. % %
Second choice .7 % 1 % % % 6.9 54.5 0 % % %
White wine
Manufacturer Brand Copycat PL Generic PL First choice 38.2 % 52.6 % 5.9 % Manufacturer Brand Copycat PL Generic PL None Manufacturer Brand Copycat PL Generic PL None Manufacturer Brand Copycat PL Generic PL None 32.8 11.3 0 % % % 0 26.3 0 60.3 8.8 100 Second choice % % % % % % 3.4 52.5 0 % % %
André Dietz, University of Groningen Page 83 André Dietz, University of Groningen Page 84