Retailing Mix Effects on Consumer Evaluationof a Garment: Strategies for Private Label

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Retailing Mix Effects on Consumer Evaluationof a Garment: Strategies for Private Label and National Brands

Abstract

Purpose – The purpose of the current study was to measure the impact of some select retailing mix factors like brand name, pricing, class of store, and intended usage on the purchase intention of a shirt in the emerging economy of India.

Design/Methodology/approach – A causal research design was used with the four fixed factors mentioned above as the cause and purchase intention as the effect. Some covariates like brand awareness, store awareness, shopping involvement, fashion consciousness and some demographic variables like age, gender, income etc. were also included in the model. Data cleaning resulted in 959 final responses which were analysed.

Findings – Usage as the fixed factor and income and education as demographics affected the evaluation of garment. Brand consciousness also affected the evaluation significantly. The findings suggest a narrowing gap between the private labels and national brands with consumer evaluations of both almost similar.

Research limitations/implications – The use of vignettes makes the experiment contrived and natural settings are preferred. Since the data was collected from only certain more developed parts of India, the finding can be generalized only with caution.

Practical implications – The findings mean that national brands have to promote finesse of their brands in their communications. The usage coming out to be significant has a major implication.

Originality/value – There is no causal study using comprehensive retailing mix factors in the Indian context in our knowledge. The strategy of most retailing managers was based on the assumption that national brands are better evaluated as compared to private labels but our study found no such evidence.

Keywords: Retailing, brand, consumer behaviour, private label, national brands, shopping, fashion, merchandise, shirts.

1. Introduction

The value of India’s retail segment is expected to grow from an estimated INR 24.11 trn (US $ 573.95 bn) in 2013 to INR 36.15 trn( US $ 939.06 bn) by 2017, a rise of 50% (India Retail Report, Q1, 2013). India’s organized retail with a share of 7% now is expected to be 21% and cross US $ 260 million of business over the next decade (Boston Consulting Group, 2011). In organized Indian retail industry, clothing and fashion accessories is the largest category with 33 % share of the market. (Deloitte, 2013).

In India’s US $ 3.5 billion of clothing market, there is low penetration of brands (20% of the overall apparel market). However, demand for branded apparels is growing at a rate of 12 -15per cent per annum. This includes demand for national brands as well as private labels. The growth of private label brands in India in overall organized retail has been 30 per cent in 2009 and has outpaced the growth in organized retail market which has been 25 per cent, clearly pointing towards increase in share of private labels at the cost of national brands (Kaushik, 2004; Forbesindia, 2015). Private labels account for 10 per cent to 12 per cent of organized retail product mix in India against 17 per cent to 18 per cent globally (KPMG Report, 2009).

Leading national brands in India are Arrow, Allen Solly, Van Heusen, Louis Phillippe, Park Avenue, Zodiac, Lee etc. (Indiastat.com). The retailers like Shoppers’ Stop, Pantaloons, Westside, Central, Big Bazaar etc. sell private label brands like Stop, Kashisk, Life, Westside, Ascot, Premium Harvest, E-Kids, Knighthood (Kumar and Benedict, 2007). Within the branded apparel markets, private labels seem to be growing faster than the national brands. Although studies on consumer purchase evaluations and process are abundant (Esch et. al., 2006; Fishbein and Ajzen, 1972; Fitzsimons and Morwitz, 1996) but very few utilize causal designs (d’Astous & Saint-Louis, 2005; Barclay et. al., 1995) and almost none in developing country like India. The main objective of this research was to examine how consumer evaluations of a garment depend on the type of brand it carries. Apart from brand name, other attributes such as discounts, type of store and store image may also effect the evaluation. In addition, consumers’ demographic characteristics, shopping involvement, brand consciousness as well as the context of buying (regular usage or special occasion) may shape the buying process. The current research explored these ideas by looking at the effects of brand name (national versus private label), price (regular versus discounted), store image (upper class versus middle class) etc. on consumer evaluation of a shirt.

1. Background Discussion

The question of how extrinsic product attributes like brand name, price and store image etc. affect consumer perceptions has been studied extensively and documented by Rao and Monroe (1989). The following section will focus on, apart from these extrinsic cues, intrinsic consumer characteristics like involvement in shopping, brand consciousness, knowledge about national and private labels etc. that have an effect on consumer evaluation of a garment.

Brand name

Brand name significantly increases perceived quality and willingness to buy as compared to using no brand (Bristow et. al., 2002; Forsythe, 1991; Dodds & Monroe, 1985). Many studies have shown that consumers usually perceive private brands as being inferior to national brands (Ward and Loken, 1986). In early nineties, an experimental study on grocery items was conducted to know the reasons of store brands being considered inferior to national brands in evaluation. It indicated that consumers’ unfavorable reactions to store brand grocery items were largely the result of consumers’ propensity to rely on extrinsic cues like brand name, price etc. while assessing product quality (Richardson et. al., 1994). In apparel segment, a distinction needs to be made between private labels that adopt the name of the store, i.e. store name brands (e.g. STOP), and private brands that belong to a specific store but have their own name, i.e. store brands (e.g. Lifestyle’s Melange Brand). Whereas store name brands used to be associated with lower value, today’s store brands are aggressively competing against national brands in terms of quality (Liu and Wang, 2008; d’Astous& Saint-Louis, 2005; Burton et. al., 1998). The stores have concentrated both on improving the quality and image of store brands. Recent studies indicate that the difference in perception between national brands and store brands still remains but the gap has vastly reduced (Anselmssonet. al., 2008; Deleersnyder et al., 2007; Juhl et al., 2006; Labeaga et. al., 2007; Mendez et. al., 2008).

Price

Perceptions of price among store, national and designer brands of apparels are found to influence consumers’ decision-making styles (Grewal et. al., 1998; Forsythe, 1991). Previous research indicates lesser impact of price increase as compared to price decrease. Price preference is also a weak differentiator (Monroe, 1976) but there is evidence of the opposite also.

The consumer going for private label is prone to deals in private labels but may not be very sensitive to the price gap with the national brand or to the absolute level of the price of the store brand (Kumar & Benedict, 2007). To ascertain a positive relationship between price and product quality, buyers are likely to compare the price of the product against another price (price in memory or price of an alternative option). The higher priced option may be perceived as of higher quality if the actual price is perceived as significantly different from this reference price. A re-enforcement effect is probable when the cues of brand name and store name are consistent with price-perceived quality effect (Rao& Monroe, 1989). This notion is often used by marketers and in particular by stores for offering discounted prices on select brands. The quality of a product perceived to be possessed is dependent on a combination of controllable marketing attributes: Price, brand name (brand image) and outlet (store image). However all classes of products are not subjected to the same type of degree of interaction (Render & O’Connor, 1976). Discounts add to purchase intention only upto the price threshold, beyond which, discounts are perceived in a negative manner by consumers (Marshall &Leng, 2002).

Store Image

Store Image has often been used as an extrinsic cue to establish product quality and reduce perceived risks while buying store brands. National brands on the other hand need to demonstrate clear product differentiation as a rationale for higher prices (Delgado-Ballester et. al., 2014). Consumers are affected by the store’s attributes and consider image associations in order to assess perceived benefits and attitudes. Consumers’ willingness to pay a higher price is positively influenced by store image (Žemgulienė, 2013). Store image has strong positive correlation with store loyalty (Imran et. al., 2013).Perceived quality appears to be associated consistently with high prestige stores, high prices, and physical attributes of products such as color (Pappu & Quester, 2008; Wheatley & Chiu, 1977). If store image is seen as high, merchandise quality will more likely be seen as positive, and this will lead to an increased willingness to buy from the retailer (Champion et. al., 2010; Wu et. al., 2004).Store’sown brands can provide important opportunities for retail differentiation if they are considered by consumers to be uniquely associated withstoreimage. There is positive relationships between consumers’ perceptions of individual store own brands and their associated store's image dimensions (Collins-Dodd & Lindley, 2003).

Intended Usage Situation

Earlier studies have reported significant effects of the intended usage situation on product evaluation and choice. For instance, the purchase process for a shirt to be worn in an important job interview is likely to be more involving than if the shirt is intended to be worn as casual clothing every day (Lutz and Kakkar, 1975).Some studies, however, report contrary findings. For example, Miller (1975) and Srivastava et. al. (1978) observes that anticipated usage situations appear not to affect preferences at the brand level.A recent study has empirically validated that the usage situation is an explanatory variable of consumer behavior. According to Romero de la Fuente et. al. (2008), the usage situation influences, firstly, the formation of the consideration set and subsequently, the evaluation of alternatives.

Demographic Characteristics

Most studies examining the characteristics of the store brand buyer have attempted to discover whether the propensities to buy own labels are associated with demographic or socio-economic characteristics of consumers. However, the tendencies discovered were weak (Baltas, 1997). In grocery products, only age and education are reported to affect perceptions of product quality with only a small portion of variance accounted for by these (Rosen, 1984). The studies by French et. al. (1972) and Gabor and Granger (1966) both suggest that income level influences decisions to purchase and apparently assessment of quality. Additionally, Shapiro (1973) observed that persons with lower educational levels tend to rely on price as a cue to quality more than better educated persons. Tull et. al. (1964) also found that educational level seemed to affect quality perceptions. None of the studies quoted earlier reported any effect of gender or age in apparel buying situations.

Miscellaneous Other Covariates affecting product evaluation

Product familiarity or expertise is often suggested as being an important predictor of product perception and evaluation (Jacoby et. al., 1977; Shapiro, 1973). Olson et. al. (1982) suggests that the cognitive structures of experts may be different from that of non-experts and hence, expertise may significantly influence product evaluation. In a two experiment study, product familiarity was related to the degree of confidence in brand selection in a purchase situation. In brand crisis situations, brand familiarity moderates the relationship between crisis relevance and brand evaluations (Dawar and Lei, 2009).

Familiarity with the retailer and familiarity with the brand are important predictors of retailer trustworthiness. Both familiarities reduce the perceived risk and result into positive perception of the familiar products (Edwards et. al., 2009). When consumers know the retailer, they use their past experience to evaluate the current product. Thus, an aggregation of past behaviour offers a reliable indicator of future behaviour in various situations (Esch et. al., 2006; Fishbein and Ajzen, 1972; Fitzsimons and Morwitz, 1996).

The intended usage situation of a garment often decides the level of involvement for a consumer. A number of recent studies establish the moderating role of involvement in purchase evaluations (Jung-Gyo & Jaejin, 2014; Cilingir & Basfirinci, 2014; O'Cass & Choy, 2008). Involvement construct is further classified as situational involvement and enduring involvement. Extrinsic cues become more important in evaluation during low involvement situations as compared to high involvement situations (Lee et. al., 2005; Petty and Cacioppo, 1981).

Brand and fashion consciousness are related concepts. Motivation for buying fashion products may stem from both brand and fashion consciousness. There is a positive relationship between fashion consciousness and pleasure, status and uniqueness seeking motives of individuals (Maden et. al., 2015). Fashion consciousness, thus, can affect the evaluations of a garment. In a longitudinal study, Sherman and Arthur (2012) establish that the change in fashion consciousness has a significant positive effect on brand appeal. The study established that the cultivation of fashion consciousness increased the desire for brands that are implicitly endorsed in programs. Brand consciousness is defined as a concept in which brand names are important in the psychological pre purchase process (Nelson and McLeod, 2005). According to them, highly brand conscious adolescents were most aware of and most favourable towards product placements in entertainment media. Fan and Xiao (1998) found that young adult consumers in Korea, US and China, all possessed brand conscious decision-making styles.

1. Research Hypothesis

Five basic hypotheses were put forward on the basis of the literature review.

H1. A garment carrying a national brand name is better evaluated than a garment carrying a store name.

H2. A garment that is offered at a discounted price is evaluated better than a garment at a regular price.

H3: A garment in a high class store is better evaluated than a garment in a middle class store.

H4: A garment for a special occasion is better evaluated than a garment intended to be used for a regular usage.

H5: Covariates such as familiarity with the brand, familiarity with the store, involvement in shopping, brand consciousness and shopping consciousness have a positive relationship with the evaluation of the garment.

Apart from these, another hypothesis of demographic variables (H6) moderating the effect of above independents on the evaluation of a garment was included. As per the literature, income, education and age were having significant effect on the product evaluation whereas gender was not found to have any effect.

1. Method

4.1 Overview

Nine hundred and fifty nine Indian Adult consumers participated in the survey in which four factors were manipulated in a 24 factorial design. In the design, brand name (national brand and private label), type of store image (upper class and middle class), were within-subjects factors whereas price (regular and discounted) and intended usage situation(special occasion and regular use) were between-subject factors. The experimental manipulations wereoperationalized by means of short vignettes presenting a shirt, to be evaluated. The following vignette is offered as an example:

Assume you are looking for a 100% cotton white shirt to wear every day at home. You visit a Big Bazaar store where you find a shirt whose style, cut, fit and materials please you. This 100% cotton white shirt is sold at a discounted price. It is a shirt carrying the Zodiac brand.

The specific words which distinguished the vignettes and defined the experimental conditions were italicized to highlight the manipulations. Sixteen vignettes identical to this one, except for the italicized words, was prepared to accommodate the four factors manipulated in the design.

In addition to providing their evaluation of the garments, the respondents answered questions related to their involvement in shopping in general, their interest in fashion, the importance they placed on brand information when shopping, their level of knowledge about various private and national brands, and familiarity with various stores etc. The participants provided demographic details including gender, age, education and income. The scales of evaluation of the shirt brand, fashion consciousness, brand consciousness, shopping involvement, brand familiarity and store familiarity were taken from previous studies done by d’Astous and Louis (2005).

4.2 Content Validation of Scales

The pilot testing of the scale was conducted in a series of steps. The preliminary survey questionnaire was distributed to some consumers and experts in Delhi and NCR region. Feedback from experts regarding the content, layout, wording and ease of understanding the measurement items were compared with the results achieved from consumers. They experts offered suggestions for improving the proposed scale. The questionnaire was then revised and again the procedure was repeated. Based on the discussions and consumer survey results, minor changes were proposed in the wording of the second item of fashion consciousness scale. The process was iterated three times before all constructs scored well on reliability parameters. The Cronbach’s alpha measure of internal consistency reliability ranged between 0.68 - 0.98 indicating sufficient reliability of scales used.

4.3 Data Collection

Data was collected by systematic sampling using a mall intercept method. In order to control for variability arising out of days of the week effect and time of the day, the responses were collected on different days and at different hours of the day. The process of qualification of a respondent was also defined to exclude window-shoppers. Each respondent was given only one vignette randomly. There were some screening questions asked in the beginning to ascertain the suitability of the respondent for the interview. These questions were open ended and asked respondents to name a few national brands and a few private labels.The respondents giving correct answers were screened in for further questioning. A screening question also enquired about the respondents’ knowledge of the difference between a national brand and private label.

The demographic profile of respondents is given below in Table I.

Table I: Demographic Description of Respondents

Variable / Frequency / Percentage (%)
Gender
Male / 721 / 75.3
Female / 237 / 24.7
Age
Mean / 28.14
Minimum / 18
Maximum / 58
Standard Deviation / 7
Education
Undergraduate / 116 / 12.1
Graduate / 483 / 50.5
Post Graduate / 233 / 24.3
Professional / 125 / 13.1
Household Income (yearly)
Below INR 1.6 lacs (below $2870.4) / 111 / 11.6
INR 1.6 – 3 lacs ($2870.4 - 5382) / 386 / 40.3
INR 3 – 5 ($5382 - 8970) / 363 / 37.9
Above INR 5 lacs ($8970) / 75 / 7.8
Missing Values / 24 / 2.5
Living in Delhi\National Capital Region
More than one year / 493 / 51.4
Less than one year / 366 / 38.2
Missing Values / 100 / 10.4

5. Data analysis and results