Effect of socio-economic, personal and perceptual variables on Taiwanese consumers’ private brands purchase behaviour: an integrated framework

Abstract

Private branding strategy plays an important role for international retailers entering Asian grocery markets since there is a consensus that it helps retailers not only improve the store profitability but also differentiate themselves from other competitors. However, our present understanding of consumer responses to private brand (PB) is mainly based on studies of Western markets that have long PB development history. Generally speaking, European and American consumers have sophomore purchase experience and well familiarity with local retailers and their own brand products. Little scholarly research has examined factors influencing consumers’ selection of private brands offered by international retailers in Asian countries such as Taiwan. The purpose of this thesis is to identify how individual characteristics can be used in predicting Taiwanese consumers’ preferences for private brands since a successful marketing strategy is always based on well understanding how preferences vary with consumer factors. This thesis first reviews previous studies of PB and presents the results of six focus groups in Taiwan. These results identify six key consumer characteristic variables (i.e. price consciousness, perceived PB quality, perceived PB risk, store reputation reliance, innovativeness and familiarity with PB) influencing consumers’ PB attitude and purchase intention. This thesis then proposes a model that integrates these six consumer characteristic variables. In view of the potential store difference, data were collected from two international retailers, Carrefour and 7-11, in Taiwan. A total of 409 useable questionnaires (222 from the on-line surveys and 187 from face-to-face interviewing) were collected and analyzed. The findings revealed that Taiwanese consumers are more concerned about the quality than the price of these international retailers’ PB products. The results also demonstrate that when consumers are more familiar with international retailers’ PB, they have more confidence in evaluating product quality, reducing perceived PB risk and enhancing price consciousness of PB in the same time. Similarly, when consumers perceived better store reputation, they will perceive better quality of the PB and have better PB attitude and higher purchase intention toward the retailer’s PB. More importantly, this paper verified that innovative private brand can increase consumers’ perception of private brand quality and ultimately increase their intention to buy it. Also, this thesis finds that some consumer characteristics variables have more correlation with PB purchase intention and the contribution of the variables varies from Carrefour to 7-11. In general, however, perceptual variables have stronger prediction power than personal and socio-economic variables. These findings highlight the importance of consumers’ familiarity with PB and perceived quality of PB and suggest that managers should increase various promotional activities to facilitate consumers’ familiarity with their PB. For example, they can offer free samples or tasting at the point of sale, to increase consumers’ familiarity with their PB products in the future. More academic and managerial implications and suggestions for future research are discussed in the conclusion chapter.