In Partial Fulfilment of Requirements for the Degree Of
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PRIVATE LABELS AND NATIONAL BRANDS: A CASE STUDY OF CANADIAN TIRE A Thesis Presented to The Faculty of Graduate Studies of The University of Guelph by JIA LI In partial fulfilment of requirements for the degree of Master of Science July, 2010 © Jia Li, 2010 Library and Archives Bibliothèque et 1*1 Canada Archives Canada Published Heritage Direction du Branch Patrimoine de l'édition 395 Wellington Street 395, rue Wellington Ottawa ON K1A 0N4 Ottawa ON K1A0N4 Canada Canada Your ??ß Votre référence ISBN: 978-0-494-67450-5 Our file Notre référence ISBN: 978-0-494-67450-5 NOTICE: AVIS: The author has granted a non- L'auteur a accordé une licence non exclusive exclusive license allowing Library and permettant à la Bibliothèque et Archives Archives Canada to reproduce, Canada de reproduire, publier, archiver, publish, archive, preserve, conserve, sauvegarder, conserver, transmettre au public communicate to the public by par télécommunication ou par l'Internet, prêter, telecommunication or on the Internet, distribuer et vendre des thèses partout dans le loan, distribute and sell theses monde, à des fins commerciales ou autres, sur worldwide, for commercial or non- support microforme, papier, électronique et/ou commercial purposes, in microform, autres formats. paper, electronic and/or any other formats. The author retains copyright L'auteur conserve la propriété du droit d'auteur ownership and moral rights in this et des droits moraux qui protège cette thèse. Ni thesis. Neither the thesis nor la thèse ni des extraits substantiels de celle-ci substantial extracts from it may be ne doivent être imprimés ou autrement printed or otherwise reproduced reproduits sans son autorisation. without the author's permission. In compliance with the Canadian Conformément à la loi canadienne sur la Privacy Act some supporting forms protection de la vie privée, quelques may have been removed from this formulaires secondaires ont été enlevés de thesis. cette thèse. While these forms may be included Bien que ces formulaires aient inclus dans in the document page count, their la pagination, il n'y aura aucun contenu removal does not represent any loss manquant. of content from the thesis. 1+1 Canada ABSTRACT PRIVATE LABELS AND NATIONAL BRANDS: A CASE STUDY OF CANADIAN TIRE Jia Li Advisors University of Guelph, 20 1 0 Dr. Brent McKenzie Dr. May Aung This study investigated the similarities and differences between strategies of objective price, objective quality, and advertising elements for private labels and national brands from a retailer's perspective over time. A case study of archival datas (1991 to 2001) examined for Canadian Tire focused on three selected product categories - automobile tires, bicycles, and lawn mowers. Different patterns of retail strategies of objective price, objective quality, and advertising elements for private labels and national brands were found for these three product categories and three specific products within these categories. Retail strategies of these three elements were dependent upon the different nature of each product category and the related specific products. Insights offered from this study indicated the importance of examining retail strategies over time as well as at the micro level and product category and product specific levels. The overall strategies used by Canadian Tire to compete with other retailers are also discussed. Implications and future research recommendations are offered. ACKNOWLEDGEMENTS Writing this thesis has been a tough and adventurous journey to me. I'm grateful to have always been accompanied by the love, care, and support from my family members, my advisors, my committee member, my friends, and many others during the past three years. Through their support, I have been able to successfully complete this thesis. Now, I would like to take this opportunity to express my gratitude for all of them. First of all, I am deeply indebted to my advisor and my external committee member, Dr. Brent McKenzie and Dr. Dale Miller, for their comments, guidance, and patient throughout this thesis work. Without them, I won't be able to get the opportunity to work on this project. Whenever I came across difficulties in research, they helped me to find out the solutions and overcome the problems. Secondly, but most importantly, I would like to express my immense gratitude to my co-advisor, Dr. May Aung. Whenever I lost my confidence in my study, she encouraged and motivated me to move forward. To me, she is not only a dedicated advisor, but also a friend, a mother figure. It is my greatest honor to be her student. Without her belief and constant moral support, I would not be able to successfully complete this thesis. Besides my advisors and committee member, I would also like to express my thanks to the Archives and Research Collections Centre at University of Western Ontario (particularly for the Archivist, Bev Brereton), as well as the Canadian Tire Corporation. Without the successful corporation and the archival materials provided by the collection centre, 1 would not start and finally complete my research project. 1 would also like to thank the rest faculty members of the department, our secretaries, Lisa Cauley and Rita Raso, for their consistent help and assistance in the last three years. Also, 1 would like to thank my friends both in Canada and China, for their help, comfort and supports. Last but not least, I would like to express my utmost gratitude to my parents and my husband—Zhengji Zhuge. I'm thankful for their always being behind me, loving me, supporting me, and caring me in these years. Il Table of Contents CHAPTERhINTRODUCTION ' 1.1 Overview 1 1.2 Research Purpose 2 1.3 Research Method 3 1.4 Research Design 4 1.5 Organization of Thesis 5 CHAPTER 2: LITERATURE REVIEW 6 2.1 Introduction to the Retail Sector 6 2.1.1 Retail Success Factors 7 2.2 The Role of Product and Branding 10 2.2.1 Branding in the Retail Context H 2.3 Crucial Marketing Elements 18 2.3.1 Objective Quality 18 2.3.2 Objective Price 21 2.3.3 Advertising 25 2.3.4 Marketing Elements Summary 28 2.4 Research Gaps, Propositions and Research Model 28 2.4.1 Objective Quality 29 2.4.2 Objective Price 30 2.4.3 Advertising 3^ 2.4.4 Framework of the Study 32 CHAPTER 3: METHODOLOGY 35 3.1 Research Design 3^ iii 3.1.1 An Overview of the Case Study 35 3.1.2 Unit of Analysis -Canadian Tire 36 3.1.3 Archival Study 37 3.2 Data Collection 38 3.2.1 Product Selection 41 3.3 Data Analysis 42 3.4 Qualitative Research Criteria 44 CHAPTER 4: RESEARCH FINDINGS 47 4.1 Overview 47 4.1.1 Preparation for Demanding Consumers, Economic Downturn, and Competition from the U.S. (1991-1995) 47 4.1.2 New and Improved Strategies for Competition (1996-2001) 49 4.2 Descriptive Findings: Objective Quality Over Time 52 4.2.1 Findings for Objective Quality of CTCs Private Label Products Over Time 52 4.2.2 Findings for Objective Quality Differentiation of Private Label and National Brand Products 55 4.3 Descriptive Findings: Objective Price Over Time 58 4.3.1 Findings for Objective Price of CTCs Private Label Products Over Time 58 4.3.2 Index (Average) Price Comparison of CTCs Private Labels and National Brands Over Time 61 4.3.3 Findings for Objective Price Comparison of CTCs Private Labels and National Brands Over Time 65 4.4 Descriptive Findings: Advertising Over Time 69 4.4.1 Findings for CTC Catalogue Advertising of Specific Tire Product P205/70R14 93S and Overall Tire Product Category 70 4.4.2 Findings for CTC Catalogue Advertising of Specific Bicycle Product 18-speed MTB and Overall Bicycle Product Category 72 IV 4.4.3 Findings for CTC Catalogue Advertising of Specific Gas Lawn Mower Product and Overall Lawn Mower Product Category 75 CHAPTER 5: DISCUSSION, RESEARCH CONTRIBUTIONS, LIMITATIONS, AND RECOMMENDATIONS 78 5.1 Discussion: Objective Quality 78 5.1.1 Objective Quality: Proposition 1(a) 78 5.1.2 Objective Quality: Proposition 1(b) 80 5.2 Discussion: Objective Price 81 5.2.1 Objective Price: Proposition 2(a) 81 5.2.2 Objective Price: Proposition 2(b) 82 5.2.3 Objective Price: Proposition 2(c) 83 5.3 Discussion: Advertising 84 5.3.1 Advertising: Proposition 3 84 5.4 Overall Discussion: CTC Strategies Over Time 86 5.5 Research Contributions, Limitations, and Recommendations 90 5.5.1 Research Contributions 91 5.5.2 Research Limitations 92 5.5.3 Recommendations for Future Research 93 REFERENCES 95 REFERENCES RELATED TO CANADIAN TIRE 107 APPENDIX 1 : Canadian Tire's Main Competitors 1 10 APPENDIX 2: CTC Annual Catalogue Cover Page Example 1 1 1 APPENDIX 3: CTC Seasonal Catalogue Cover Page Example 1 12 APPENDIX 4: Tire Product Category: Brands and Objective Quality Element/Terminology Descriptions ' '3 APPENDIX 5: Bicycle Product Category: Brands and Objective Quality Element/Terminology Descriptions ' '7 APPENDIX 6: Gas Lawn Mower Product Category: Brands and Objective Quality Element/Terminology Descriptions '20 APPENDIX 7: Advertising Page Count Examples 122 APPENDIX 8: Canadian Tire Operation Overview During 1991 to 2001 125 APPENDIX 9: Objective Quality Analysis of Private Label Tire Product during 1993 to 2001 ............................................................................................................................................... 127 APPENDIX 10: Objective Quality Analysis of Private Labels Mountain Bicycle Product during 1993 to 2001 13° APPENDIX 1 1 : Objective Quality Analysis of Private Label Lawn Mower Product during 1991 to 2001 132 APPENDIX 12: Objective Quality Analysis between Private Labels and National Brand -Tire