REVIEW OF LITERATURE 2.

1 Category Dynamics of Private Labels

Various researches have focused on the variation in market share of private label products across categories (Sethuraman 1992; Hoch and Banerji 1993; Dhar and Hoch, 1997). Category variations are also seen in other studies (Batra and Sinha, 2000; Dunn et al., 1986; Hoch and Banerji, 1993; Prendergast and Marr, 1997). Sayman and Raju (2004) investigated that category characteristics affect the number of store brands offered by the retailer. According to researchers retailer may introduce one or two store brands depending on which maximizes category profits. Analysis suggested that the retailer is likely to carry two store brands in categories where the national brands are similar in strength; and in categories where price sensitivity between the national brands is low. Research showed that categories with higher market share of store brands do not need high price differentials to motivate purchase as it is possible that the consumer is conscious of the slight quality differences and of the comparative advantage of store brands in regard to price in these categories. Higher concentration implies a single store brand as one store brand is more likely to be observed in categories where the share of the leading national brand is higher than the share of the second national brand. Research indicated that in terms of the cross-category effects, number of store brands in other categories increases the store brand share in the target category also share of the leading national brand in the target category is negatively affected by the number of store brands in other categories. Overall, study has shown that a stronger presence of store brands in the retail store does have a significant impact on the sales of store brands and national brands in a particular product category. Raju, Sethuraman and Dhar (1995) proposed an analytical model to understand what makes a product category more conducive for store brand introduction. Model given by them helps in understanding cross category differences in market share of store brands. The introduction of a store brand is likely to increase retailer's profits in a product category if the cross-price
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sensitivity among national brands is low and the cross-price sensitivity between the national brands and the store brand is high. Categories having higher price competition among national brands are less attractive for introduction of private labels so decreases the share of store brands. On the other hand, higher price competition between national brands and the store brand favors private label introduction and increases store brand share. It was found that the introduction of a store brand is more likely to increase category profits if the category consists of a larger number of national brands. Glynn and Chen (2009) examined the category-level differences of both risk perception and brand loyalty effects on consumer proneness towards buying private label brands (PLBs). The results indicated that quality variability, price consciousness, price-quality association and brand loyalty influence consumer proneness to buy private label brands. In addition, income, education and household size are moderators of private label brands purchasing. Research showed that the category that has the highest price consciousness also has highest likelihood of a private label purchase. Private label brands market share does not moderate the antecedents of consumer private label brands proneness. These findings showed that brand loyalty, quality variability and price quality are not important in categories where consumers are buying private label brands anyway. Brand loyalty, price quality and quality variability are very relevant to shoppers in categories where private label brands have less market share. It was found that price consciousness strongly affects private label brands buying in most categories such as canned fruit and milk, but not in others like potato chips, biscuits and toilet tissue. In potato chips and biscuits, wide price variations exist, whereas less variation exists in canned fruit and fresh milk in terms of price. The results suggested that price consciousness may be related to price variation of all brands within the category. It suggested that private label brands purchasing also is higher in categories where consumer perceptions of quality variability between national brands and private label brands are lower. Quality variability influences private label brands purchase in functional categories such as toilet tissue, but was less relevant in the other categories. The negative relationship between
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price-quality association and private label brands purchasing was only strongly evident in the biscuit category which has a range of price points and quality levels. This study showed that price-quality association and brand loyalty are important only in categories with a low- private label brands share. Ailawadi and Keller (2004) found that store brands success is more category driven than consumer driven. They observed that store brands seem to enjoy a higher share in large, lesspromoted categories with high market concentration when price gaps between national brands and store brands are large. It was refuted that promotion not only causes temporal and crosssectional shifts in demand, but it also increases primary demand, especially in product categories that are perishable, switchable, or convenient to consume. Steenkamp and Dekimpe (1997) found that the power of store brands vary dramatically across product categories in the Dutch market. In categories where there is a base of loyal store brands consumers or a base of switching consumers or both, store brands do well in terms of market share. Retail chains have to improve their quality to raise the image of the chain and to encourage consumer loyalty. Sethuraman (1992) showed that retail promotion on national brands reduces private label share and that share of private labels is smaller in categories with greater price competition among national brands. He identified 12 marketplace factors as potential determinants of private label success. Some of these factors include retail sales volume, average retail price, price differential between the private label and national brands, retail private label price promotion, and brand promotion. Hoch and Banerji (1993) in an oft-cited study of 185 grocery categories found that 70% of the variance in store brand market shares could be explained by the following six variables leading to higher market shares: These six variables reflect that consumers, retailers and manufacturers play an important role for the relative success of store brands across categories. Quality relative to the national brands was high,
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 Perceived quality variability of store brands was low, so they are considered to be quite similar, The product category was large in absolute terms ($ sales), Percent gross margins were high, There were fewer national manufacturers operating in that category, National advertising expenditures were low. Study revealed that store brands tend to perform better in larger categories, with high gross margins, and where quality levels of the private labels are high. Private labels have higher shares in large categories, and where they compete against fewer national manufacturers who spend less on national advertising. Results showed that the gap between national brands and private labels in the level of quality also depends on the technology requirements in manufacturing that varies across categories. They indicated that some categories have a low level of technological elaboration. In these categories, store brands achieve a quality similar to that of the manufacturer brands. In other categories, the elaboration is more sophisticated, and manufacturers compete actively through continued and expensive investments in technological innovation. This makes it more likely that store brand quality will be lower in these categories. Narasimhan and Wilcox (1998) found an inverse relationship between category margin and category penetration. Private-label penetration is negatively related to the number of brands operating in a category. Study showed that higher private label penetration need not to be associated with higher category margin especially in categories with low perceived risk and high availability of a quality private label. Study showed that whatever share the retailer is able to gain with his private label will have a larger effect on the category margin since the increase in overall margin due to the private label's higher margin will not be offset by a loss in price concessions from the national brand manufacturers.

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Anselmsson (2009) found that there is a strong correlation between perceived value of private label products in specific categories and the stores' overall product variety image. Results showed that manufacturer brand products in the ketchup and cooking fat categories are perceived to be of much higher quality than private label products in the same categories. In the rice category, the tendency is for manufacturer brand products to be perceived as of higher quality than private label products. It was observed that depending on the category consumers expect a discount of between 14 and 24 percent on third generation private label products. Quality of retailers private label products perceived to be of relatively high quality in some categories but of lower quality in other categories. Research indicated that in general, private label products may be perceived to be of lower quality, but if consider perceived quality in specific categories and compare a specific private label product with a specific manufacturer brand product the results will vary. Gomez (2005) studied the 40 product categories in a sample of superstores in Spain. The variables taken are; shelf space occupied by private labels, private labels market share, number of promotions, assortment (number of brands and number of varieties) and prices gap between private labels and national brands. A neural network analysis is then applied to the data. A positive and significant relationship is observed between the price differentials of the manufacturer and store brands and the store brand market share at an intra-category level. Study revealed that with regards space, there are nine categories in which store brands occupy a percentage of space that is far above the average space and five categories in which they are far below. In 17 out of the 40 categories observed, the space occupied by store brands was higher than their market share. Research showed that retailers are not disproportionately supporting all their brands. They supported some categories, which are not necessarily the most profitable. As regards the rest of the variables, there are seven categories that are very profitable and four that are less profitable, three categories with the greatest variety of brands, six with the widest assortment and four with the narrowest assortment. Zielke and Dobbelstein (2007) investigated the impact of price and quality positioning on the willingness to purchase new store brands in five product groups. They found that customers'
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willingness to buy new store brands differs between different product groups. Premium store brands were preferred over classic and generic private label products in high social risk categories. Respondents perceived the store brand for butter as superior to all other products in terms of each of the five factors covering the dimensions value for money, quality comparable to national brands, harmlessness of ingredients, social acceptance and expected satisfaction. It was found that butter, characterized by the lowest financial, functional and social risk, exhibited the highest purchase willingness. In contrast, the sparkling wine store brands are perceived worst in terms of value for money, comparable quality, social acceptance and expected satisfaction, showed the smallest willingness to buy. It revealed that value for money and comparable quality are least important for potato chips and sparkling wine, while the importance of social acceptance is substantially higher compared to the other product groups. As potato chips are low decision involvement product spontaneous purchasing behavior was observed. Research indicates that the drivers influencing customers' attitude towards specific store brands depend on the respective product group. Tan and Cadeaux (2005) suggested that competitive intensity has a significant negative effect on private label share in a category. Analysis showed that categories with high competitive intensity reflect close shares amongst branded competitors and also high inter-brand competition. Categories with higher sales growth have lower private label shares; it supported the idea that retailers would more successfully develop private labels in more mature categories than in those undergoing more rapid development. Nenycz-Thiel and Romaniuk (2009) compared how brand users and non-brand users currently position private labels and national brands in three packaged goods categories. The data was taken from three categories namely toilet paper, salad dressing and sliced cheese in the Australian grocery sector. In all three categories the attribute low price was the strongest discriminator between private labels and national brands. In the models value also contributed positively to private labels categorization for salad dressing and sliced cheese, but not for toilet paper. Study suggested that low quality was the
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strongest driver of categorization and positively associated with being a private label in categories toilet paper and salad dressing. For sliced cheese, low quality was the second highest driver. Risk was also found to be a significant predictor of categorization in the toilet paper and sliced cheese categories. Therefore, perceptions of low quality and risk were the strongest negative attribute drivers of categorization. Sethuraman and Cole (1999) identified some managerially relevant factors that influence the size of the price premium that consumers will pay for national brands over store brands in grocery products. Consumers will pay higher premiums for national brands in categories in which they purchase less frequently than in categories in which they purchase more frequently, in categories which provide high consumption pleasure, and if their price-quality inference is strong. Research suggested that consumer would pay a higher premium for national brands in categories where consumers believe that there is a strong price-quality inference and consumers will pay a higher premium for national brands in categories that provide high amounts of consumption pleasure. Therefore, national brand managers can maintain a premium pricing strategy in product categories consumed for hedonistic reasons. Among behavioral variables, it was found that consumers pay lower premiums in categories which they purchase more frequently than in categories which they purchase less frequently. Jin, Suh and Gu (2005) examined the significant relationship and relative importance of the factors influencing private labels attitude and purchase intention in two product categories food and household appliance. It revealed that, depending on the product category, contribution of the factors like price consciousness, value consciousness, perceived quality and consumer innovativeness varies in terms of private labels attitude and private labels purchase intention. It was found that private labels purchase intention is positively influenced by price consciousness for food, but not for home appliance. While value consciousness positively affects both private labels attitude and private labels purchase intention on home appliance, it only positively affects private labels attitude on food. In the home appliance category, perceived quality variation only impacts on private labels purchase intention, not on private labels attitude.
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However, perceived quality variation did not provide any association with private labels attitude or private labels purchase intention in the food category. Research showed that consumer innovativeness positively impacts on both attitude and purchase intention in food private labels, however, it only influences private labels attitude in the home appliance category. Dhar and Hoch (1997) found that brand competition is a much more important determinant of private label share than retail competition. They also found that private label share would be higher in a category where there are fewer national brands and less intense inter-brand competition. They analyzed that by far the largest source of variation in private label share across markets, retailers, and categories (40%) is due to the differences among product categories. In categories of high variance, store brand share could increase dramatically if the poor performing retailers imitate best practices. Study indicated that overall chain strategy in terms of commitment to quality, breadth of private label offerings, use of own name for private label, a premium brand offering, and number of stores consistently enhance the retailer's store brand performance in all categories. The everyday low price (EDLP) positioning benefits the store brand but only in lower quality advantage of the store brand. It revealed that private labels threaten national brands most in categories when there is high variance in share across categories.

2.2 Perceived Risk in Private Labels

Dick, Jain and Richardson (1995) documented perceived risk as an important factor in store brand purchasing behavior. Findings showed that there is a significant difference between store brand prone and non-store brand prone shoppers with respect to the perceived risk associated with buying store brands. Low store brand prone shoppers are more fearful that store brands are of inferior quality and tend to believe that store brand purchase may result in financial loss. Mieres, Martin and Gutierrez (2006) analyzed the effect of perceived risk on store brands proneness. Results has shown that store brands perceived as riskier purchase alternatives than national brands though the retailers put their efforts in improving the positioning of their own
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brands. This higher perceived risk in store brands inhibits their purchase. Study showed that store brands consumption intensity is significantly influenced by differences perceived by consumers with regard to functional, financial, psychological and time dimensions. Financial risk is lower than in the case of store brands, in spite of the higher prices of national brands. It was found that the physical risk difference is the only one that has not a significant effect on store brands proneness. In the case of social risk, the difference influences positively the consumption intensity of this type of brands. This result can be related with the association that many consumers make between price and quality since the lower prices of store brands could make the consumers fear of a possible monetary loss to decrease. Richardson, Jain and Dick (1996) tested a comprehensive framework in which quality, risk, external cues and demographic factors are antecedents of private label brands purchasing. They examined perceived risk factors for private label brands purchasing and extrinsic measures such as price consciousness, brand loyalty and price-quality. It was found that extrinsic cues influenced perceived quality variation between national and store brands and increases perceptions of risk associated with using these products. Acceptance of private label brands by consumers is increased by the improvements in extrinsic cues associated with store brands. Familiarity with private label products influence the consumers view. It showed that consumers who are more familiar with private labels perceive low risk and high quality in private labels so overall considered them as product providing value for money. On the other hand consumers who are not much familiar with them perceive risk in purchasing them and do not consider lower perceived value for money in these products. Kwon, Lee and Kwon (2008) suggested that consumer acceptance of private brands depends on perceived product characteristics involvement, switching cost, and product type. As product involvement decreased, the intent to buy a private brand increased. Results have shown that as the switching cost for a product decreased, private brand purchase intent increased. Consumers are more likely to buy private brands in product categories where involvement and perceived switching cost are low. Consumers who were highly value conscious were likely to purchase private brands regardless of the product type.
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Omar (1994) investigated consumer perceptions of national and own-label grocery products. In the blind test almost 67 per cent of the shoppers preferred own-label but in a revealed test of the 67 per cent in the blind test, only 15 per cent preferred own-label brands. Study revealed that consumers perceive many differences among the own-label and national brands. As when own-label is identified and seen it is perceived to be inferior to the national brand. It indicated that own-label preference is based on price and value for money rather than quality. Zeithaml (1988) defined perceived quality as the consumer's evaluation of a product's overall excellence. This evaluation is based on the information provided by the product's attributes (intrinsic and extrinsic). The importance of attributes as informative inputs in the evaluation process lies in their combination with situational and personal factors. Because of this combination, a product is not perceived in the same way by all consumers. Dunn, Murphy and Skelly (1986) found that consumers regard private label brands as most risky on performance measures compared to national brands. Researchers suggested that private label brands are least risky on financial measures; however, social risk is less important for supermarket products generally. Narasimhan and Wilcox (1998) argued that the degree of perceived risk increases with the degree of perceived quality variation across brands in that category. More equal the perception of quality between store brands and national brands; the more the difference in perceived risk is reduced between the two types of brands. Mieres, Martin and Gutierrez (2006) analyzed the effects that a set of variables related to purchasing behavior has on the difference in perceived risk between store brands and national brands. They tested a model that integrates a series of variables relating to purchasing behaviour, in which the difference in the risk that consumers perceive between store brands and national brands is explained. It was found that perceived quality is the variable of great importance for perceived risk as other variables which were taken in study influence the perceived risk through perceived quality. It has been verified that the more equal the perception
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of quality between store brands and national brands, the more the difference in perceived risk is reduced between the two types of brands. Research showed that in case of consumers excessive reliance on the extrinsic attributes of a product in evaluating quality leads to greater difference in terms of risk between store brands and national brands. Difference between store brands and national brands is less in terms of perceived risk, when familiarity with store brands is high, independent of the product category considered. It was found that familiarity with store brands has an indirect and negative effect on the difference in risk, both through reliance on extrinsic attributes of the product to evaluate its quality and through the perceived quality of store brands as opposed to national brands. Dick, Jain and Richardson (1997) observed that there is a significant difference between store brand prone and non-store brand prone shoppers with respect to the perceived risk associated with buying store brands. Low store brand prone shoppers believe that buying a store brand as financial loss because they are fearful about the quality of store brands and considered as inferior quality products. They found, in their analysis of aggregate acrosscategory data, that perceived quality variation led to reduced perceived value-for-money of private label brands both directly and via perceived risk. This eventually led to reduced privatebrand proneness. Study revealed that risk perception and attitude are important explanatory constructs. Perceived risk has been recognized as a multidimensional phenomenon.

2.3 Promotional Activity for Private Labels

Halstead and Ward (1995) suggested that the changes in private label brands advertising, packaging, sales promotion and product improvement strategies indicate that private label brands are moving closer than ever to manufacturer brand status. Promotion increases is visible as the second most commonly cited strategy area changed by private label firms after productrelated strategies. The results showed that the promotions-share effects are asymmetric. Proper display and feature of national brand increases national brand share and decrease private label share. Private label feature and display have the same expected effect for private labels. But it is
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observed that national brand promotions have a greater effect on national brand share than that of private label promotions on private label share due to asymmetric nature of promotionsshare effects. In the national brand price reaction equation, national brand feature and display have a strong negative estimated coefficient. Private label display and feature have an opposite effect in the national brand price equation. Feature advertising and point of sale (POS) displays occur to advertise price cuts. Retailers promote private labels when national brand prices are high. Feature and display promotion appear to be much more effective ways of gaining share in such categories. Garretson, Fisher and Burton (2002) investigated similarities and differences between the antecedents of national brand promotion attitude and private label attitude. Findings in study showed that value-consciousness is positively related to attitudes towards both private labels and national brand promotions. Consumers who are value-conscious may be predisposed both to national brand promotions, private label brands, or a combination of both. Consumers who linked price of a brand and its quality or perceive of themselves as smart-shoppers, are more likely to seek price savings in promotions of national brands. On the other hand it was observed that the consumers who show the tendency of brand loyalty appear not to have negative attitudes toward promotions of these private label brands. The relationship between brand loyalty and private label attitude is significant and negative. d'Astous and Saint-Louis (2005) suggested that the store-branded clothes are not perceived to be second-class products; they are marketed and positioned like national brand items. Thus, like national brands, they use advertising, celebrity endorsements, designer names, and other promotional retail techniques in order to create a distinct personality. Their exclusive character provides them with an aura of uniqueness which encourages store loyalty and allows retailers to distinguish themselves from competitors. Amrouche, Herran and Zaccour (2008) suggested that, the higher the brand equity of the store brand, the more the retailer invests in advertising. According to them the advertisings
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option for the store brand instead of other usual strategies is important as investing in building up some equity for each brand reduces the price competition between them and enhances their differentiation which allows more market power for both. It was found that when there is no cross-effect the higher the brand equity of the store brand, the more the retailer invests in advertising. Whenever the goodwill of retailers own brand increases they increase the advertising. Researchers pointed that if considering that the price of each brand does not have any impact on the demand of the competing brand, investing in brand equity for any brand enhances their differentiation and reduces the price competition between them, which leads to increase each brand market power. The retailers advertising strategy depends positively on the goodwill level of its own brand. It was observed that own goodwill has a higher impact on own price than competing brand goodwill. Underwood, Klein and Burke (2001) analyzed the empirical results from a virtual reality simulation which showed that package pictures increase shoppers attention to the brand. However this effect is contingent, occurring only for low familiarity brands (private-label brands) within product categories that offer a relatively high level of experiential benefits. Their study empirically supported the dependence of private label brands on extrinsic cues and revealed that package pictures can function as one of those extrinsic cues. These results suggested that package pictures may be especially useful for private label brands and/or lesser tier national brands whose strategic objectives are to improve consumers perceptions of the brand and enter the consideration set. Narasimhan and Wilcox (1998) suggested that private labels, not supported by consumer advertising by the manufacturers of these products can be supported by in-store merchandising by the retailers. Manzur et al. (2010) presented and tested a model of the effects of shoppers characteristics (price and non-price-related) on attitudes toward store brand and national brand promotions. Researchers investigated whether or not store brands and national brand promotions attract the same segment of shoppers.
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It was found that loyal consumers showed a weaker attitude toward store brands as well as toward promotions of other national brands, which lower the risk of competition from either strategy. Stronger store loyalty on the part of the shoppers leads to a greater probability of success for both store and national brands. Results revealed that value consciousness has a stronger impact on attitudes towards national brand promotions in comparison with attitudes towards store brands. Consumers with a higher smart shopper self-perception tend to like national brand promotions more than store brands. Dhar and Hoch (1997) suggested that the retailer promotional support can significantly enhance private label share performance. Analysis showed that the pull and push tactics of the national brands exert an important influence on store brand performance. Retailers often use national brands to draw customers to their stores. So they carry more national brands, broader assortments, and offer better everyday (lower price gap) and promotional prices on national brands. According to researchers these actions are harmful for own store brands of retailer's. This showed that there is a need to perform and profitably manage the sales revenue and margin mix in each category. Ailawadi (2001) stated that promotions are just as beneficial for manufacturers as for retailers, if not more so. Store brands do provide leverage to retailers and allow them to improve margins, but a competitive national brand assortment is still necessary for retail profitability. This explained why manufacturer profitability has not worsened relative to retailers even as trade and consumer promotion spending have grown and store brands have become strong in many product categories. Bronnenberg and Wathieu (1996) investigated the role of brand positioning in explaining cross promotion effects using panel data from the chilled orange juice and peanut butter categories and measured promotion effectiveness by estimating choice share changes in response to a price discount, using a choice model.

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Model predicted that cross promotion effects depend on two components of brand positioning in the price/quality quadrant. First, variable taken was "positioning advantage" which indicated whether, relative to the standards achieved by another brand, a given brand is under-priced (positive advantage) or overpriced (negative advantage). Promotion effectiveness is increasing in this variable. Second, cross promotion effects between two brands depend on their distance in the price/quality quadrant. It showed that lower tier brands may promote more effectively than one national brand but less effectively than another. According to researchers such cases occur because the lower tier brand offers a favorable trade-off of price and quality differences compared with one national brand and a less favorable tradeoff compared with the other. Sprott and Shimp (2004) tested the ability of in-store sampling to enhance a store brands perceived quality and whether such an outcome is contingent on quality level. Consumers quality perception of store brands is enhanced by in-store sampling. It was observed that store brands benefited significantly when participants tried two distinct grocery products prior to judging their quality. This study thus established a limiting condition for the role of instore sampling. As the Study revealed that sampling enhanced quality perceptions of a store brand only when the brand was of high quality. It showed that sampling of a high quality store brand increases the consumers quality perception significantly whereas sampling of low-quality store brand will not result into enhanced quality perception. According to researchers all sampling is not equally advisable, only sampling of high-quality products is advisable as when the sampling experience is with a low-quality offering, perceived-quality evaluations suffer rather than improve. It showed that sampling a store brand will serve to substantially augment evaluations of that brand only if the sample brand is of high quality. Putsis and Dhar (2001) suggested that promotions can indeed increase category expenditure, although the impact of any promotion on expenditure will depend heavily upon the specific category, market and type of promotion. It was observed that there is a difference in price promotion and non price promotion in terms of category expenditure. Non-price promotion like feature and display were estimated to have a positive and significant impact on category
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expenditure. According to researchers this type of promotion expands category expenditure for virtually every market and category. For a number of categories, private label non-price promotion expanded the category more than the equivalent promotional intensity on the part of national brands. On the other hand it was found that the effectiveness of price promotion on category expenditure varies by market and category, as well as between private labels and national brands. Permanent price reductions increase total category expenditure for both national brands and private labels as predicted, but only (temporary) price promotion by national brands increase category revenue. Results showed that there is not a statistically significant relationship between private label price promotion and total category expenditure.

2.4 Pricing Strategy for Private Labels

Sheinin and Wagner (2003) examined the effect of price on how consumers judge store brands, and explore the moderating effects of category risk and retail image on these judgments. It was found that consumers decision is influenced by pricing of store brands. Consumers perceive higher store brand quality at the expected price, than at the discount price. The first context was that of a low image retailer offering a store brand in a high-risk category. Results showed that consumers perceive higher store brand quality at the expected price, than at the discount price. It was found that consumer perceive no gain in quality at the premium price and uncertainty increased in premium price. Uncertainty is high in high risk category. The consumer perceives financial loss in premium price as they feel more than expected. The second context was that of a low image retailer marketing a store brand in a low-risk category. Results indicated that as consumers do not make price-based evaluative inferences, in low-risk categories price had no effect on either quality or attitude. However, as price increased, purchase intention declined because of the price-based heuristic consumers use in evaluating low-risk categories.

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In the third context, which was that of high retail image and high category risk, found a positive relationship between price and perceived store brand quality. A high retail image delivers intangible benefits that enhance perceptions of quality. It showed that consumers believe a high image retailer can deliver a high quality store brand at a premium price point. In the last context, which was that of high retail image and low category risk, results showed a positive relationship between price and perceived quality. Retailer with high retail image generates price-based quality inferences, even in low-risk categories. The results also showed that both attitude and purchase intention were lower at the expected and premium prices than at the discount price. Davies and Brito (2004) revealed that the superstore retailer's own brand sells at a much lower price than manufacturer brand. This is because of differences in added value at the manufacturing stage. The main reason of this cost disadvantage against own brands is internal costs of brand manufactures as brand manufacturers incur higher transportation and warehousing costs than the own brand supplier. Raw material and packaging costs differ only slightly. Study found that gross margins varied across product categories and between individual lines within any category. But the differences between these costs could not explain much of the difference in final selling price. Pauwels and Srinivasan (2004) used data from 96 retail stores in US for the period, from year 1991 to year 1996, in order to analyze four specific categories. The results showed that in three out of the four categories, consumer prices fell as a result of retailers brands introduction in the category. It showed that store brand entry is beneficial for consumers as it may lower overall prices. Store brand entry is beneficial for premium-price national brands manufacturers. Premium brands accommodate store brand entry in the price variable; both retail and wholesale prices increase. Revenues improve because this price increase is not offset by volume loss. On the other hand, it was found that second-tier brands retaliate against store brand entry with lower prices and/or increased promotional activity. As price competition intensifies in the lower end of the market, other national brands differentiate themselves by raising prices.
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Results suggested that new product introductions at higher prices have a positive impact on manufacturer performance. Rubio and Yague (2009) found that distributors can increase their private brand market share in the category by increasing the price differential between the manufacturer and store brands, either by increasing the prices of the manufacturer brands or by decreasing the prices of their private brands. As price variations in the manufacturer brands are more effective in altering the store brand market share than price variations in the store brands, which shows that there is a certain asymmetry in the competition between both brands. In other words, a decrease of the same magnitude in the prices of the manufacturer and store brands causes a reduction in the store brand market share, even though the price differential remains stable. Bonfrer and Chintagunta (2004) found that when a store brand is introduced, the national brands prices tend to rise also. However, this result did not show through by category level analysis. From a category level analysis when a store brand enters it was found that, in approximately half of the categories tested, national brands prices increase but in the other half their prices decrease. It was found that retailers profit margins, as a percentage of retail prices are often greater for the store brands than the national brands. The retailer can increase the gap between national brands and store brands by raising prices of the former and can make more money from the store loyal customers due to the store brands higher margins coupled with higher purchase probability. It also indicated that higher market concentration tends to imply higher margins, and often results in higher retail prices. The entry of a national brand is likely to augment the negative price change, on average, if there is a store brand in the category. Researcher suggested that category prices are likely to increase less if there is greater market power when the store brand enters, than if there is less market power. The level of price dispersion tends to have a negative effect on the price increase following a store brand entry. That is, higher price dispersion will dampen the increase in category prices stemming from a store brand entry.

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Hoch and Banerji (1993) contested the common perception that a private labels primary attraction was the substantial price discount relative to the national brands, at which they were sold. They emphasized the role of quality in the private label purchase decision. They found evidence to support the notion that perceived quality was much more important than the level of price discount in determining the private-label category share. Sivakumar and Raj (1997) suggested that consumers are often buying private labels because they are cheaper and because they cannot afford national brands. On the contrary, private label non-users use low price as an indicator of low product quality. It indicated that retailers must put more efforts in indicating that store brands are of improved quality if they want to keep the prices of private labels lower than national brands. Researcher suggested that this could be done by extrinsic attributes that customers considered in terms of judging the perceived quality before going for trial for the product. Sinha and Batra (1999) discovered that consumers are more price-conscious in a product category where they perceive greater risk and price unfairness by national brands. They found that perceived category risk and perceived price unfairness of national brands in that category are significant antecedents of consumer price consciousness. It is also suggested that the variation in such price consciousness across categories is a significant reason why consumers buy private label brands more in some categories than in others. Results showed that perceived pricequality association has a significant effect on private label purchase in risky categories. Dick, Jain and Richardson (1997) indicated that store brand prone consumers exhibit significantly less reliance on extrinsic cues in quality assessment. It was found that price plays a major role in consumers perceptions of store brand quality especially for those who are suspicious of store brand ingredients. Researchers suggested that managements strategy of discounting their store brands to target the most price-elastic shoppers, may result in turn off shoppers who might otherwise try private label brands. As some consumers may view low store brand prices as a signal that store brands are of inferior quality.

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Burton, Lichtenstein, Netemeyer and Garretson (1998) pointed out that increases in the store brand market share have generally been linked to the price. Consumers with a positive attitude towards private labels are extremely price-conscious and tend to focus on paying low prices, thereby minimizing other brand evaluation factors. Anselmsson (2008) examined the relationship between retailer brand market shares and consumer prices. Results showed a weak but significant negative relation between retailer brand market share size, and the consumer prices in terms of household expenditures. It indicated that change in prices of the market leader and changes in customer purchase patterns leads to changes in price level. Average prices decrease or are held back as the retailer brand market share increases within a category. Categories in which there is a high average retailer brand market share the average prices have decreased or been held back more than in categories with low average retailer brand market share. It was observed that over a longer period of time, high retailer brand market shares lead to lower prices, regardless of changes in the retailer brand market share. Analysis of the direct relationship between retailer brand market share and price changes of different brand categories showed that neither retailer brands nor national brands have cut their prices as a direct result of the gaining market shares of retailer brands. It was found that the negative relation between retailer brand market share and price level in terms of household expenditures per category is thus merely a consequence of consumers own choice to switch from the more expensive national brands to the lower priced retailer brands. Cotterill and Putsis (2000) focused on the nature of demand and competitive response in the market for private label and national branded grocery products. As national brands increased their share of category sales, both national brand and private label prices increased. Prices of both national brand and private label increases with the increase in retail concentration. It was also found that concentration has a greater positive impact on private label prices. Cross price elasticities are asymmetric as impact of national brand price is more on private label sales whereas impact of private label price is very little on national brand sales.

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On the basis of direction and significance levels of the expenditure it was indicated that national brands are viewed as luxuries and private labels as necessities. As expenditures on a category increase, more goes to national brands than to private labels categories dominated by national brands have both higher national brand and private label prices. Researchers suggested that private label display and feature have an interesting and opposite effect in the national brand price equation. National brand prices are higher when private label display and feature ads are active. Dhar and Hoch (1997) observed that the price differential between manufacturer and store brands varies as a function of the market share of the latter. They found that the price differential is smaller in categories where the private label has a higher share of the market. Specifically, this applies to price-elastic categories. It was found that when store brand quality is high, competition at the retail and brand level is more important, in contrast, demographics associated with consumer price sensitivity and EDLP pricing matter more in low quality categories. This within-category across-retailer analysis showed that the national brand versus private label price differential exerts an important positive influence on store brand performance.

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2.5 Store Image versus Private Labels

Store image refers to a consumer's global impression of a retail store It is one of the constituents of store equity. Several studies demonstrated that corporate image affects consumer product judgments and responses in a positive manner. Store image offers recognition, familiarity, confidence, and other associations that make it easier for consumers to make the decision to try the product. Collins-Dodd and Lindley (2003) stated that the store brands are seen as extensions of the store image and can, therefore, contribute to store differentiation in the minds of consumers. Results showed that store brands were rated most highly by those who shopped most at each store which may be explained by greater experience or familiarity. It was found that store brands may also contribute to store loyalty or, alternatively, provide an important source of higher margin sales with more loyal customers. While store image and product signatureness are store-specific cues, quality variation is an intangible cue specific to a product category in the marketplace. Bao et al. (2010) focused on the role of intangible extrinsic cues, including store image, product signatureness, and quality variation in a product category. Study suggested that private brands of different stores are differentiated on store images and exhibit differential quality perception and purchase intention. This study showed that the congruency between the product category of a private brand and product signatureness of a store is a strong predictor of private brand success it means favorable quality perception and purchase intention. Richardson, Dick and Jain (1994) demonstrated the role of store aesthetics in the formation of perceptions of store brand quality. Results showed that store aesthetics can increase the evaluation of the quality of store brands. It was observed that an investment in the aesthetics of the store that is upgrading the quality of fixtures, making the aisles easy to navigate, making the store bright and cheerful, keeping the store clean, and making immediate repairs when needed, can help in enhancing the overall quality perceptions of store brands.

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Martenson (2007) showed that the Store as a Brand, that is how retailers perform their job, is more important than that the store offers store brands for customer satisfaction. It was found that customers are satisfied when the store is neat and pleasant and when they feel that the store understands their needs. Consumers do not seem to have any expectations that retailers launch store brands. Results of the study showed that the highest loading for Corporate Image was the Store as a Brand. The first most important dimension for the Store as a Brand was the quality of the relations that the store had to its customers. The second most important dimension was that it was a neat store and it was a pleasure to shop in. The third most important dimension was that the store understood its customers and offered a good assortment. The fourth dimension of the Store as a Brand was the price dimension, that is, that the store had low prices and offered value for money. It was observed that it is less important to have store brands than to being a good retailer. The least important for the Corporate Image was the Manufacturer Brands which indicates that these brands are found in most stores and do not differentiate one store from another. Researchers observed that manufacturer brands are very important to most consumers, although some customer segments are very favorable to more store brands. Vahie and Paswan (2006) focused on the relationship between perceived private label brand (PLB) image, and perceived store image (SI) and feeling associated with the presence of national brand (NB). Two factors, SI-quality and NBSI national brand and store image (NBSI)congruence influence both the quality and affective dimensions of consumer perception of private label brand. The results indicated that the store atmosphere and store quality positively influence the perception of private label brand's quality, whereas, the congruence between national brand and store image (NBSI) has a negative influence on private label brand's quality. The second dimension, perceived congruence between national brand and store image however, has a negative influence on both quality and affective dimensions of private label brand image. This means that even if consumers perceive the presence of national brand to be in harmony with the store image, it is not likely to help the private label brand. It was observed
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that as regards consumer attitude associated with the presence of national brand is concerned, apart from the NBSI-congruence which has a significant negative influence on both private label brand quality and affective dimensions, the perceived national brand private label brand congruence influences private label brand affective in a positive manner. d'Astous and Saint-Louis (2005) stated that consumer evaluations of store brands and national brands were influenced by the joint effects of store image and intended usage situation. It was found that consumer preferences for branded garments result from the interplay of store image and purchase motivation. National brands were preferred over store brands when the purchase of an everyday shirt was to be made in an upper-class store or when the purchase of a special occasion shirt was to be made in a lower-class store. It was observed that in other buying situations, store brands were preferred over national brands. Porter and Claycomb (1997) investigated the relationship between brand characteristics awareness level and image and their influence on consumers perceptions of retail image. They proposed a model of relationships between the number of recognizable brands carried by a retail establishment, the presence or absence of an anchor brand, and perceptions of retail image. Findings indicated that brand image did significantly influence overall retail store image. Researchers suggested that the combined effect of the presence of an anchor brand and a relatively large number of recognizable brands carried by a store positively related to customers perceptions of retail store image. Results showed that in terms of brand image, the presence of an anchor brand has a positive effect on the retail stores image, while the number of recognizable brands does not influence perceptions of a retail stores image. This study found that brand image influences perceptions of retail store image. Brand image influences customers perceptions of fashion, but not of service and atmosphere. Researcher suggested that a retailer must have a merchandise mix composed of a relatively high number of recognizable brands, one of which should have strong brand awareness an anchor brand for favorable retail image. Of the two brand strategies high image versus number, it is more important to feature an anchor brand than it is to carry a large number of recognizable brands when trying to enhance retail store image.
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Binninger (2008) analyzed that the improvement of consumer satisfaction with some particular retailer brands has an impact on building loyalty to those brands. The results showed that the increase in retailer brands satisfaction and loyalty influences store loyalty, and that attitude toward retailer brands products has a moderating effect on the relationships between retailer brands satisfaction and loyalty. Findings showed that retailer brands attitude is a significant moderating component of the relationship between customers, their main store and its own products. Consumers who are favourably pre-dispositioned to retailer brands in general will be more loyal to those of their main store if they are also satisfied with them. Study analyzed that consumers loyalty and satisfaction with a retailer brands are correlated with their loyalty to the store. There is a direct impact on store loyalty if loyalty to retailer brands is improved. De Wulf, Odekerken-Schroder, Goedertier and Van Ossel (2005) found that for three out of four store brands, brand equity is present when consumers are loyal to the store carrying the store brand. It was observed that retailers engage much more in experience marketing in comparison to manufacturers who rely on traditional mass media. Study indicated that private label is part of the total store experience and helps to build the store brand. The resulting synergies in brand image will in turn help to drive the sales, brand equity and hence the gross margin of the product retailer brands. Study revealed that a reverse relationship also exists, since store loyal consumers are prone to purchase grocery items of the store brand. The way consumers perceive and judge manufacturer and retailer brands can be very similar. The store brand lives of the credibility and image of the store rather than owning a specific brand value in and of itself. Liljander et al. (2009) suggested that store image, mitigate the perceived psychosocial risk. Both dimensions of store image, atmosphere and quality negatively affect consumers perceived risk. It was found that each dimension of the store image affected different dimensions of risk. The reputation of the store regarding merchandise and service quality
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reflected in the store image quality dimension negatively affects the perceived risk of financial losses. The personality of the store reflected in the store image atmosphere dimension influenced the perceived social risk. Study revealed that consumers positive perceptions of the store image have a positive effect on the perceived quality of store-branded apparel. Stores with a good image can use their reputation to brand their private labels, thus giving the product a quality stamp. However, it was found that the dimension of store image quality had no effect on store brand quality, whereas store image atmosphere increased store brand quality and reduced social risk.

2.6 Retailers Strategic Motives for Private Labels

Pauwels and Srinivasan (2004) stated that store brand entry has change the performance of and the interactions among all market players. The two beneficial effects of store brand entry for retailer are high unit margins on the store brand itself and higher unit margins on the national brands. It was found that this increase in unit margins implies that the retailer strengthens its bargaining position vis-a-vis national brand manufacturers. Second, consumers do not obtain lower prices on all national brands, only on some second-tier brands. However, they get benefit from enlarged product assortment and intensified promotional activity that lowers average price paid for two out of four categories. Ailawadi (2001) cited higher margins as the most important reason why retailers carry store brands. Study showed that store loyalty has a positive relationship with store brand use. Store brands do improve percentage category margins for retailers. It was found that both gross and net retail margins are significantly higher for store brands than for national brands and retailers obtain higher margins on national brands in categories with a high store brand share. Retailers can build store loyalty through strong store brands, and store brand users are more profitable than consumers who do not buy store brands at all. Study revealed that strong store brands benefit retailers through higher margins on store brands, the ability to negotiate lower wholesale prices on national brands, and higher store loyalty.
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Scott-Morton and Zettelmeyer (2004) formalized the bargaining benefit with an analytical model. They argued that retailers are able to get bargaining power with store brands because they can imitate the leading national brand in a category. This strategic positioning gives the retailer the greatest disagreement payoff in negotiations with manufacturers, leading to better terms in negotiations. Study showed that retailers value control over store brand positioning because they could never source a national brand with their desired product positioning. Researcher showed in a model that the value to retailers of controlling the positioning of their store brands arises when retailers negotiate supply terms for national brands that they stock. Jonas and Roosen (2005) observed that due to buying power, retailers are able to exert pressure on their manufacturers to ensure that they receive products of the required quality and at the lowest possible price. Retailers use premium private label products for image building and for customer binding. The results of a survey among organic food manufacturers and general food retailers in Germany showed that nearly half the processors produce organic private labels. Retailers obtain higher margins and rates of return. It was found that competition among retailers in Germany is very high so, private organic labels help retailers to distinguish themselves from their competitors. Horowitz (2000) analyzed that private labels are commonly sold for lower price than manufacturer's brands and they generally cost less to produce. Study showed that as the store brand of particular retail chain and store is available to only that particular retail chain and store, customers who become loyal to the private label may well become loyal to the store as well. Researcher suggested that this loyalty results into customer inertia that may lead them to shift their purchases in other product categories from other retailers to the only one offering their brand of choice and allow that retailer increased margins in those other product categories, at a minimal risk of lost sales. It also results in enhanced bargaining power that the retailer derives
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from being able to offer its customers the private label, and the retailer's control over its shelves. DU, Lee and Staelin (2005) found that the store brand entry is most beneficial to the retailer when the national brands are moderately differentiated. It was found that introducing a store brand not only allows the retailer to garner a higher share of the channel profits through higher retail margins, but also often provides the retailer the benefit of increases in national brand unit sales as well as incremental sales from the store brand. Study revealed a major benefit of introducing a store brand is increased retail margins on the national brands. However, it showed that the retailer can also benefit from increases in national brand unit sales caused by a lower retail price and profits generated from the store brand sales. Hultman et al. (2008) stated that the perceived advantages of private labels are connected to their overall control of the market in which they operate, whereas the advantages of branded goods manufacturers are seen to be linked to product development and superior brand reputation. A review of the advantages that the companies have over private labels revealed that all managers agreed that the reputation manufacturer brand names enjoy vis--vis private labels is the strongest advantage across the board. Branded goods manufacturers respond to private labels by taking them seriously and striving to increase the perceived distance of their brands from private labels in the eyes of the consumers. Researchers suggested that the overall benefit of these strategies is perceived to be preparedness for increased private label competition, while the drawbacks vary between companies. Sayman, Hoch and Raju (2002) showed that the optimal strategy for the retailer is to position the store brand as close as possible to the leading national brand, which means reducing the consumers perceptual distance between the store brand and the national brand. Researchers suggested that in this way, the retailer can decrease the monopoly power of the leading national brand and increase their own relative bargaining power as lower transfer prices are achieved and the double marginalization problem is mitigated.
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Chintagunta, Bonfrer and Song (2002) assessed the effect of store brand introduction on the retailer in terms of national brand margins and category sales, on the manufacturer of the dominant brands in terms of wholesale prices and competitive intensity, and on the consumer in terms of (short-term) price elasticities and equilibrium prices. They found that store brand introduction increases national brand margins for the retailer and increases consumer price sensitivity for the dominant brands. Herstein and D. Jaffe (2007) identified five key factors that explain successful management approaches to introducing store brands in developed as compared to emerging markets. These include the number of store brand categories available, the quality of store brands, type of products, the manufacturers of the products and the number of product lines sold by retailers. According to researcher in emerging markets, store brands are marketed in fewer product categories because of the fear that customers who are not familiar with these brands will not buy them readily. In emerging markets, store brands tend to be of average quality, which limits their attractiveness to customers who are not defined as price-sensitive. It was observed that in emerging markets, store brands compete only against the weaker national brands, as customers in these markets do not perceive store brands as offering quality equal to that of the leading national brand. A total of 75 to 80 percent of store brands in emerging markets are manufactured mainly by local factories, with only a quarter or fewer of these products those for which the country of origin is a critical component in marketing made by international firms. Products sold through store brands in emerging markets are characterized as lowinvolvement, in both the food and non-food categories. Huang and Huddleston (2009) proposed a theoretical model which investigated antecedents, consequences, and contingency factors of retailer own-brand product advantage. Number of retailer characteristics that position some retailers to better develop an own-brand strategy proposed in the model. First, it was suggested that retailers with a high level of customer participation orientation are more likely to develop own-brands with product advantage.

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Second, this model indicated that retailers who possess a high level of innovation orientation are likely to develop own-brands with product advantage. Model specified that retailers who possess a brand orientation are likely to develop own-brands with new product advantage. Researcher suggested that they need to follow all new product development activities with the view of creating own-brands with distinct advantages that attract consumers so that they can differentiate their own brands from competitors. Model proposed two consequences of retailer own-brand product advantage: customer loyalty and brand performance. Results revealed that retailers who have higher degree of customer participation, innovation, and brand orientations are likely to have a stronger own-brand product advantage. In turn, those retailers are more likely to have loyal customers and superior own-brand financial performance. Study showed that these relationships will be influenced by retailer image, market power, number of national brands and category size, technology complexity, and competitive intensity.

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2.7 National Brands versus Private Labels

Verhoef, Nijssen and Sloot (2002) suggested that competition due to private labels is increasing as the market share of private labels has grown. In case of private labels competition is less direct and subtle in comparison to competition between national brands. It was observed that companies mainly focus on increasing the distance from private labels thereby using advertising or product innovations, rather than directly attack private labels using price reductions and introductions of value flankers. According to researchers there are two groups of companies that focus on increasing the distance from private labels. The first group focuses on technological innovations and brand strength, while the second group focuses on brand strength only. Similarly other strategy is to go for production of private labels. It was further divided into two groups. The first group is made a strategic choice for private label production in order to improve relationships. The other group appears to have chosen private label production, because competitors did. Study suggested that companies choosing to produce private labels because of relational motives have a somewhat better brand performance than companies choosing to produce because of competitive pressure. Olbrich and Grewe (2009) analyzed the impact of competition between national brands and private labels on product variety, prices and turnover product group from the ready-meals category based on scanner data from different German outlet formats. It was observed that there has been a considerable reduction of the variety of different products in the product group as number of listed national brands declined considerably in the investigation period in all three outlet formats, whereas the number of listed private labels has increased but the sharp decline in listed national brands has not been balanced out by the addition of new private labels. Study indicated that in all three outlet formats, some significant increases in the average prices per kilogram both in national brands as well as private labels took place. The average prices per kilogram of the private labels were kept below those of the national brands by the retailers in all outlet formats. The perception of well-priced private labels retained by many consumers
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persists because national brands are frequently used by retailers as reference products when setting prices. Results showed that prices per kilogram of private labels are constantly kept below those of the national brands, although at an increasingly high level in all three outlet formats the turnover of private labels rose over time, while the turnover of national brands, especially in the supermarkets and hypermarkets, decreased over time. Total turnover is merely rising in discount stores in the period of the study. Thus, study revealed that only the priceaggressive outlet format (represented by discount stores) seems to be in profit by the increasing number of listed private labels. De Wulf, Odekerken-Schroder, Goedertier and Van Ossel (2005) used taste tests to assess how four store brands that are differently positioned compare to one national brand in terms of perceived brand equity. Results indicated that the national brand (Minute Maid in study) is still quite powerful compared to the store brands despite all the efforts made by these store brands. The test of the main effects of store versus national brands suggested that only for the national brand the non-blind (branded) taste score was significantly higher than the blind (unbranded) taste score. Study indicated that private labels create no perceived positive difference, lacking significant brand equity. Vaidyanathan and Aggarwal (2000) empirically shown that the association of brand name ingredients with private-brand products can have a positive impact on consumer evaluations of an unfamiliar product. Results showed that respondents quality perception and attitude toward a private-brand raisin bran cereal was significantly more positive when a brand name ingredient was used in it and highlighted on the products packaging. It indicated that there are significant benefits to private label brands in seeking out alliances with national brands for ingredients. It was also shown that the use of a brand name product as an ingredient in a private-brand cereal will not negatively affect consumer evaluations of the branded product. The results showed that respondents quality perception and attitude toward the product did not change after the brand name product was associated as an ingredient in the private-brand product. In

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fact, among value conscious consumers, the association with a private label product actually enhanced value perceptions of the nationally branded product. Cotterill, Putsis and Dhar (2000) found that in some product categories an increase in private label distribution has the effect of increasing the prices of national brands, while the opposite is true in other product categories. It was observed that national brand demand is more sensitive to changes in private label price in high private label share categories; private label demand is less sensitive to national brand price. Study indicated that the cross-price elasticities are decidedly asymmetric with national brand price having a major impact on private label sales, whereas private label price has a considerably smaller impact on branded sales. It was observed that national brand-private label price differential is lower when local retail concentration is high; it suggested that local retail concentration can afford retailers some degree of market power. According to researchers this may enable retailers with a dominant position in the local market to offset some of the horizontal power afforded by national brands. Sachon and Albeniz (2009) suggested that the introduction of a private label product into a product category forces the incumbent national brand to a strategic price reduction, due to the price elasticity and cross-elasticities of the demand curves. This reduces the rents realized by the national brand. It was found that the rate of price reduction of the national brand will be more pronounced when there is little substitution between the national brand and private label product. Results indicated that the retailer has a very strong incentive to introduce a private label into a product category with high price elasticity. As product substitutability increases, the national brand manufacturer will lower his wholesale prices at a decreasing rate. Nenycz-Thiel and Romaniuk (2009) examined the drivers of categorization of national brands versus private labels. Study showed that private labels form a sub-category in consumers memory. It suggested that when a consumer learns that one private label has a particular quality, the consumer generalizes that quality to other private label. Low quality was the strongest negative driver for private labels and national brands categorization, with risk a close second. The attribute low price was the strongest discriminator between private labels and national brands in all three categories.
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DU, Lee and Staelin (2005) investigated a monopolist retailers category management strategy where the main strategic decisions are how to horizontally position a store brand relative to the incumbent national brands and how to price the store and national brands for retail category profit maximization. They analyzed a market composed of two consumer segments with differing tastes and heterogeneity with respect to willingness to pay and a product category consisting of two competing national brands and one store brand. Results showed that targeting the stronger national brands results in lower total national brands demand than targeting the weaker national brands. It was also found that targeting the stronger national brands results in a lower average wholesale price. These two effects combined result in lower total manufacturer profits on national brands when the store brands targets strong national brands as opposed to weaker national brands. Researchers studied store brand-national brand competitive relationships from secondary data model and predicted that under certain conditions, it is optimal for the store brands to choose a position closer to strong national brands which results in greater competition between strong national brands and the store brands than between weak national brands and the store brands or strong national brands and weak national brands. It was found that in categories with higherquality store brands, store brands and strong national brands compete with each other to a greater extent than they do with weaker national brands. Such is not the case for the lowquality store brands categories when elasticity is used as the measure of price effects. Ward, Shimshack, Perloff and Harris (2002) studied the impact of the development of private label in US. They used monthly data on prices, market shares, and advertising expenses for 34 product categories. For each category, they analyzed how national brands react to the development of private labels. They showed that an increase in the private label market share is consistent with an increase in the price of national brands or no impact, a decrease in the price of private labels or no impact, a negative impact or no impact on average prices, a decrease in advertising activity for national brands.

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Tarzijan (2007) shed some light as to why some national brand manufacturer may want to produce private labels and others not. Two important reasons emerged are idle capacity and the consumers' perceived quality of the private label. Researcher suggested that by producing a private label of better quality, a leading national brand manufacturer may avoid the threat posed by private labels produced by other manufacturers and by secondary national brand competitors. It was suggested that the production of private labels may be a way to increase efficiencies, mainly if there is space to take advantage of economies of scale by producing both goods. It also showed that the national brand manufacturer's incentives to produce private labels are increasing with the concentration of the retail market when the national brand manufacturer sells its private label to one retailer, while the opposite result is true when the national brand manufacturer sells its private label simultaneously to different retailers. Choi and Coughlan (2006) investigated the retailers problem of positioning their private label against two national brands in terms of both product quality and product features. Study indicated that it is never optimal for the retailer to position private label between two national brands that are themselves significantly feature-differentiated. Instead, given national brand feature differentiation, it is optimal for the private label to minimally differentiate from one of the two national brands. Researchers suggested that higher-quality private label is better off positioning closer to the stronger national brand, while a lower quality private label is better off positioning closer to the weaker national brand. Results has shown that it is optimal for the retailer to position the private label (a) with minimum quality differentiation from the national brands, and (b) with minimum feature differentiation from one of the two national brands, with the targeted national brand depending on the private labels given quality level. It was observed that when the two national brands are undifferentiated in the feature dimension, it is optimal for the private label to feature-differentiate from the national brands. The higher the private labels quality, the more it can differentiate.

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Scott-Morton and Zettelmeyer (2004) analyzed the issue of store brand positioning and suggested that, in general, a store brand should be positioned as close to the leading national brand as possible. Study showed that store brand introduction under this positioning strategy has an asymmetric impact on the incumbent national brands, causing a greater decrease in wholesale price and a greater increase in retail margin for the leading national brand than for the secondary national brand. Sayman, Hoch and Raju (2002) examined the retailer's store brand positioning problem. According to researchers game-theoretic model helps in identifying a set of conditions under which the optimal strategy for the retailer is to position the store brand as close as possible to the stronger national brand. Study found that store brands are more likely to target stronger national brands. It was also found that only in categories with high-quality store brands, store brand and the leading national brand compete more intensely with each other than with the secondary national brand. Study revealed that although explicit targeting by store brands influenced consumer perceptions of physical similarity, it had no influence on consumers' perceptions of overall or product quality similarity. Steiner (2004) found that the private labels of large retail chains possess unique competitive weapons to constrain the market power of powerful national brands that are not available to rival manufacturers brands. Consumer welfare is maximized when private labels and national brands compete vigorously rather than when either one is too dominant. Collins-Dodd and Zaichkowsky (1999) observed that manufacturers of major national brands who have confronted against retailers expect little or no retaliation from retailers in the distribution of their brands. Retailers who copy the look of national brands for their own inhouse brands should be treated no different from independent manufacturers carrying out the same activity. Differentiation is the key to keeping imitators at bay. Constant product and package improvements can leave the imitators scrambling to catch up. Juhl et al. (2006) observed that store brands are in a weak competitive position compared to national brands independent of category and retail chain brand assortment strategy. According
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to researchers the competitive position of store brands compared to national brands may depend on the product category and a retail chain's overall brand assortment strategy. Results showed that store brands are not the favourite brands in any of the studied categories and that the consumers do not even have store brands as typical top of mind products. It was observed that compared to the more established national brands there are in general big differences with respect to recall. Beldona and Wysong (2007) showed that store brand personality play a role in consumer perceptions towards store brands and how such personalities vary when consumers are allowed to experience the product. Results showed that brand personality differs between store brands and national brands. Significant differences were found between the store brand and national brand of cookies for the brand personality facets. Significant differences were also found between the store brand and national brand of colas for the brand personality, in the name-only condition. In each case, the national brand of cola (Coca-Cola) was rated significantly higher than the store brand of cola (Safeway Select) on brand personality facets. It was found that, there were significant differences between the store brand and national brand of cookies for the brand personality facets, in the experiential condition Also in the experiential condition, there were significant differences between the store brand and national brand of colas for the brand personality facets. It was found that in both the name-only and experiential conditions, the national brands (cookie and cola) were rated significantly higher on a number of brand personality dimensions than their store brand counterparts The results also revealed that quality perceptions of both Safeway Select products (cookies and cola) and Pepperidge Farm cookies increased when respondents were able to experience the brand. Results indicated that some of the brands' personality ratings and quality ratings were correlated. Researcher suggested that, consumers must feel that if the brand has some sort of identity (personality), the brand has a higher level of quality. Sung- Cheng et al. (2007) investigated the differences of consumer perceptions on product quality, price, brand leadership and brand personality among national brands, international private labels and local private labels. In this research, private labels were further distinguished
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into international private labels and local private labels. It was observed that national brands were perceived as significantly superior to international private labels, while international private labels were perceived as being superior to local private labels in terms of all perceptions except price perception. For three of the four factors (perceived quality, brand leadership and brand personality), there were significant differences across the three types of brands. The price perception and brand personality in the classes of convenient goods and shopping goods were different, final result of convenience goods and shopping goods were the same as the overall level. The findings also revealed that product categories moderated price perception and brand personality perception across national brands, international private labels and local private labels. Bontemps, Orozco and Requillart (2008) analyzed the relationships between national brand prices and private label market shares on a large number of products. A significant and positive correlation is found between private label development and the prices of national brands. Thus, the change in the national brand product characteristics is not the only reason for the increase in the national brand prices. It was found that leading national brand prices are affected in different ways by private label development. The development of private labels has less effect on the prices of second-tier brands than on the prices of the leading brand. Result showed that the mere threat of private labels and not necessarily their actual introduction may be sufficient to reduce wholesale and retail prices of national brands.

2.8 Private Label Buyers

Baltas, Doyle and Dyson (1997) provided an analytical framework and worked on a behavioral approach for understanding what makes consumers more responsive to store products. Study identified many important determinants of store brand proneness. The nested model suggested that individual consumers respond differently to changes in a brand's attributes depending upon whether it is branded or private label. It was found that if the regular brand's price is raised, regular consumers of a branded product are much more likely to switch to another brand rather than to a private label. It was observed that there is an existence of two market segments, one primarily interested in national brands named 'quality seekers' and the
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other in private label, named 'economy seekers', based on differing brand attributes and consumer heterogeneity. Research showed that consumers brand decision for store and to try new products did not have a significant influence on purchase probability of store brands. According to researchers store brands have become mature and both national and store brand prone consumers can be targeted by in-store promotions. On the other hand consumer who choose cheapest alternative had a positive effect for store brand as the store brands usually are of lower priced. Mehrotra and Agrawal (2009) stated that though, customers on the whole prefer national label brands over private label brands, the preference pattern is significantly affected by the age and profession of respondents. Age and profession were found to affect the preference pattern and satisfaction level of respondents in respect of private label brands in different categories of products. Moore and Carpenter (2010) profiled the private label apparel consumer using demographic and behavioral predictors. They also examined cross-shopping behaviors among purchasers of private label apparel across the five top US private label apparel retailers. Study predicted that demographic indicators were more prominent than behavioral characteristics. Household size and income represented the primary predictor for private label purchasing in formats that are positioned on price. Target private label patrons indicated low levels of bargain shopping while Macy's patrons were frequent mall shoppers. The cross-shopping trees indicated that Wal-Mart and JC Penney private label consumers engage in purchasing comparable private labels in both chains. Wal-Mart and Kohl's also share private label consumers for comparable private label brands. Dick, Jain and Richardson (1995) profiled heavy buyers of store brand products and compared them with light buyers in terms of demographics, socio-economic, and attitudinal variables. Results showed that store brand prone shoppers show significant difference for perceived risk than non store brand prone shoppers. It was observed that low store brand

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shoppers considered store brand as of inferior quality while store brand shoppers perceive greater value for money than non store brand shoppers. Researcher suggested that store brand prone consumers shows significantly greater familiarity and usage experience with store brands than non store brand prone shoppers.. Store brand buyers tend to have lower middle to middle income levels, be younger, married, and have larger families. Non-store brand prone consumers, show less familiarity with store brands, and feel greater risk in purchasing them. Veloutsou, Gioulistanis and Moutinho (2004) compared the importance of choice criteria when purchasing own label and national brands and the perceived characteristics of the products carrying store and manufacturer brands in two regions of the European Union where the development of own label brands is at a different stage, Greece and Scotland. It was revealed that the experience of Greeks and Scottish consumers with own label brands, the choice criteria they use and their views towards own label products are different. It was found that in general, Greeks are less familiar with own labels, consider more the communication and impulse factors when buying own labels and are less willing to buy than are the Scots. Study revealed that the expected satisfaction derived from the own labels, the importance of price and quality as choice criteria when buying own labels, the perceived quality of own labels and the purchase frequency are all good predictors for the loyalty to a supermarket. Researchers suggested that the customers who are satisfied with the own label products tend to be more loyal to a certain supermarket. Whelan and Davies (2006) investigated the effects of consumer self-perceptions of their own personalities on own brand purchase behavior. They focused on the potential of human personality as a method of identifying different customer segments. Two types of own brands are considered, those labeled with the retailer's corporate name and those labeled with a name independent of the retailer. It was observed that own brands were purchased regularly by fewer shoppers and the low-involvement products more frequently than the high involvement.

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The purchase of corporately labeled own brands, independently labeled own brands and national brands are made by people with distinctly different human personality profiles. Study showed that individuals who are more open to experience report higher purchases of corporately named products, while individuals who are more extrovert report higher purchases of national brands due to their need for social affiliation with other similar people. According to researchers individuals may also depend heavily on the symbolism associated with such brands, rather than with the traditional imagery associated with clearly named retailer own brands. Dick, Jain and Richardson (1997) tested the degree to which extrinsic cue reliance differs between store brand versus non-store brand prone consumers by comparing extrinsic cue utilization of heavy versus light buyers of private label brands. In the first study, respondents indicated that three intrinsic attributes matter in brand choice: the overall quality of the brand, the reliability and fineness of brand ingredients and taste. Significant differences were found between the store brand prone and the nonstore brand prone groups with respect to the utilization of each of the four extrinsic cues regardless of the intrinsic attribute under consideration. They found that consumers who believe that brand name is a good indicator of taste are especially less likely to buy store brands. Brand name reliance discriminated best between the store brands versus non store brand prone groups in judging the taste. However, it was observed that when it came to judging overall quality or ingredient quality, differences in price reliance best predicted the level of store brand proneness. In the second study, it was observed that store brand prone consumers are especially less likely to believe that brand name is an indicator of taste. Study revealed that with respect to the other two intrinsic attributes overall quality of the brand and the reliability and fineness of brand ingredients the store brand prone consumer is especially less inclined to believe that paying higher prices results in receiving higher quality. Results showed that the store brand prone consumer relies significantly less on extrinsic cues when assessing product quality. According
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to researcher brand name is a primary cue consumers utilize in quality assessment. Study showed that price plays a major role in consumers perceptions of store brand quality with those more price reliant. Richardson (1997) employed an experimental design using 350 subjects, and collected survey data from 923 respondents regarding store patronage behavior and brand choice, responses were gathered across the 28 products. Results showed that respondents are most store brand prone for eggs, frozen vegetables, frozen orange juice, canned vegetables, pop, cheese, canned fruits, spaghetti, and paper towels. It was also found that respondents are least store brand prone for cereal, spaghetti sauce, laundry detergent, chip dip, canned soups, canned tuna, pancake syrup, crackers and ketchup. Tifferet and Herstein (2010) found that individualistic consumers are less inclined to purchase private brands. Findings indicated that the effect of individualism on the importance attributed to the manufacturer's identity is dependent on the consumer's culture. Study showed that psychological variables such as individualism may predict consumer behavior such as the inclination to purchase store brands. It was observed that consumers from three of the cultures (Hebrew, Arabic and Amharic speakers) showed a positive link between individualism and the importance of manufacturer brand name reputation. Findings showed that native Hebrew speakers, who tend to be more European in outlook and culture, were significantly less individualistic than those whose mother tongue was Arabic, Amharic or Russian. Furthermore, it was found that the effect of individualism was stronger than that of demographic variables such as age, sex and income. Culture affected the importance of country of origin, and moderated the effect of individualism on the importance of manufacturer identity. Wang et al. (2007) developed a multivariate count model to predict the pattern of crosscategory store brand purchasing behavior using customer purchase records across five product categories from a national warehouse club. Results showed that price spread between the store brand and national brands and the frequency of store visits are positively associated with
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consumers propensity to purchase the store brand. it was found that the propensity to purchase the store brand increases with the price discount offered by the store brand relative to the leading national brand. Study showed that store visit frequency is positively associated with store brand purchase propensity in four of the five categories, which may reflect greater awareness of the store brand among more frequent shoppers at the warehouse club. This indicated that consumers propensity to purchase the store brand is not driven by category-specific factors alone but also by consumer-specific characteristics. Researcher suggested that some consumers who are price sensitive may seek out a store brand across categories; other consumers who are willing to trade off quality for a price discount may be willing to purchase a premium quality store brand in different product categories. Miquel et al. (2002) stated that people with a high level of involvement with a product may be more inclined to buy the store brand than those people who show a lower level of involvement with the product and who prefer a brand name. According to researcher level of involvement depends on the consumer. The factors which may be derived from the level of involvement shown by the individual significantly affect the decision to acquire the store brand in a specific product category. It was found that people with a high level of involvement with a product, from which they derive a high degree of knowledge of the category, may be more inclined to buy the store brand than those people who show a lower level of involvement with the product. He observed that greater the knowledge the consumer possesses of the product category being evaluated, the greater the possibility that the store brand will be preferred. It indicated that the knowledge the consumer has of the product category and the perception of differences between the different alternatives are ultimately influence the consumer towards one brand or another brand. Baltas (2000) considered two-stage model of store brand consumption, in which purchase and expenditure allocation decisions like whether to buy store brands and how to allocate category

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expenditure between retail and manufacturer brands are interrelated and affected by common factors. The positive parameter of the discrete probit model indicated that people who spend a lot on the category are more likely to buy at least occasionally store brand products. According to researchers consumer behaviour is as a two-stage process, which provides a quite comprehensive framework. The consumer decides whether to buy store brands, as well as how much to consume. It was observed that the first decision is a discrete choice, which determines the level of the market penetration of store brands. The second decision is a continuous choice, which determines the level of market demand for store brands. Results showed that social status, purchase frequency, store patronage, category spending and product cost are identified as important characteristics of store brand clientele and as significant determinants of consumption levels among the store brand customers. It indicated that store brand loyal customer is profiled as a consumer with higher social status, who shops more frequently the category, exhibits store loyalty, and tends to spend less on the category. Researcher suggested that age, family size, full-time employment and promotion sensitivity are not significant correlates of store brand proneness. These variables cannot assist customer targeting. Moreover, promotional price cuts targeted to store brand loyal customers may be ineffective. It is found that age, family size, full-time employment and promotion sensitivity are not significant correlates of store brand proneness so these variables cannot assist customer targeting. Study revealed that consumers who are more familiar with the store and the product category tend to be more store brand prone. The results also suggested a significant demand relationship between consumption and price, which highlights the importance of attractive pricing for the store brands. Labeaga, Lado and Martos (2007) observed that bigger households have higher probability of choosing store brands than do smaller households. It was found that increase in store brands market share is generated by repetitive choice behaviour. The shopping behaviour variable has
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a negative coefficient; households with above-average expenditures are less likely to purchase store brands. On the other hand, households with working housewives have a greater probability of buying store brands. Results suggested that store brands are getting behavioural loyalty. It was observed that loyalty is a consumer behaviour that varies across categories and across store brands experiences. Study indicated that financial risk does not seem to be the only determinant for choosing store brands in some categories as consumer uses loyalty to reduce the risk of making a mistake in the purchase of store brands. Martnez and Montaner (2008) suggested that psychographic rather than the sociodemographic profile of the consumer better explains store brand proneness. It was found that the store brand prone consumers are price-sensitive, attach little importance to quality, and are loyal to stores. In addition, these consumers are variety seekers, market mavens, have little free time and also little space for stockpiling extra products. Results showed that quality-concerned consumers are less prone to a store brand purchase. In spite of better image of store brands in the market, quality conscious consumer still have negative attitudes toward these brands. It was observed that time-pressured consumers are more prone to store brands. According to researchers store brands may help to make purchase decisions, since they have a good price-quality relation and are available in a wide range of product categories. Study also indicated that the perception of available storing space is also related to the store brand purchase.

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