MAJOR FACTORS INFLUENCING CUSTOMER DECISION WHILE PURCHASING PRIVATE LABELS

Abstract

Although India represents one of the lesser developed modern retail markets globally, the story of private label retail has been secular, and holds much significant promise for the future. Moreover, this segment is now at the cusp of a revolution. Lessons from other countries where private labels have done really well indicate that private label growth in a country is likely to accelerate when market share enters a 5%-8% range. Indian private label penetration is nicely placed in this range. Growth potential for private labels is synonymous with the growth of modern retailing and these private label brands have become the margin generators for many retailers. Most of the e commerce companies which relies on commission from sellers for their revenue had started producing their own private labels for profitability. This major aim of this project is to understand the factors which influence consumers’ decision to buy private label brands. The major consumer factors which have been considered here in this project are Value Consciousness, Price Consciousness and Quality Consciousness. Spearman’s Correlation test and Multiple regression analysis is performed on data collected from 154 respondents. Based on the literature study, seven hypotheses were formulated and were validated using the test results. To further broaden the scope of this project we have included store image as a variable to better understand the importance of the various situational factors and in particular how crucial are aspects like service by sales person catering to the customers in these retail shops.The dependent factors considered in this project are intention to purchase, attitude to purchase and purchase of private label brands. The results of this project have ramifications for the private labels in understanding the customers in a better way. It would also help to identify major factors among the three (Value Consciousness, Price Consciousness and Quality Consciousness) which are influential in the buying decision of a customer. The private labels are seen as growth vehicle which can drive the sales because of which many retailers have launched their own labels. Many retail stores have launched a common private label brand to capitalize on the huge opportunities using private labels. The regression analysis helps us to understand the extent to which these factors can be attributed to the buying decision of the customer and the correlations test helps us identify the pattern followed by the factors with respect to each other. All the hypothesis were validated using the test results and were on expected lines except the one based on Quality consciousness which shows the earlier held view of label brands of being a cheaper as well as not as good in quality as name brands alternative. But other factors were positively influencing the purchase of the labels.