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This study will investigate, discuss and analyse the reasons behind consumer purchases of supermarket own-brand labels relative to manufacturer brands, in order, to gain a deeper understanding of consumer motivations in relation to this.

Extracts from this document...

Introduction

Chapter 1 INTRODUCTION CONTEXT The economic basis of the study is the umbrella branding theory used in supermarkets, where a firm seeks to transfer a consumer's quality perception from one product to another through the use of the same brand name. Market Size The food retail market is the largest sector in the UK retailing industry. In 1999 it accounted for 48% of all retail sales in the retail market, representing a market growth of 40% from the period 1992 to 1999. In 2001, UK grocery market was valued at an estimated �103.4bn. (Source: Institute of Grocery Distribution.) Market Structure The food retail industry in the UK is an oligopoly that is a select few supermarkets dominate a highly competitive and dynamic market. It is estimated that the leading four supermarket chains - Tesco, J.Sainsbury's, Safeway and Asda account for 60% of all grocery sales in the UK. In 2000, food sales through supermarkets reached �76.78bn - a growth of 4.5% over 1999. The retail sale of food through supermarkets is estimated to increase by 16% between 2001 and 2005. The food industry structure can be broken up into four main areas: the major multiples, convenience stores, co-operatives and other retailing outlets (such as dis-counters), representing 60%, 20%, 5% and 15% of the market share consecutively. (Source: Institute of Grocery Distribution.) RATIONALE Branding is a key strategic tool, which is used by all types of business organisation's to build a strong, positive and powerful brand personality for a product or service in the minds of the consumers. (Rooney 1995.) Current research into branding acknowledges that British retailer's are at the forefront of own brand development, particularly within the food retail industry. The report author will attempt to identify the reasons behind customer motivation and interest in supermarket own brands. PURPOSE The main purpose of this study is to investigate, discuss and analyse the reasons behind consumer purchases of supermarket own-brand labels relative to manufacturer brands, in order, to gain a deeper understanding of consumer motivations in relation to this. ...read more.

Middle

The results also indicate a very strong brand awareness for both the exclusive brands at J.Sainsbury's, that is the Taste the Difference Range and the Be Good to Yourself Range with 100% brand awareness. The results indicate that 5 out of 25 (20%) of the customers surveyed at J.Sainsbury's were unaware of their Economy Range and the Standard Range. Figure 5 relates to 'The 'Regular' Frequency of Own Brand Products across A Range of Categories.' The clustered bar graph below illustrates the results obtained at both stores with regard to the popularity of own brand products across a wide range of supermarket product categories. Figure 5 The results clearly indicate the popularity of ready meals with 39 out of 50 (78%) of shoppers purchasing food products from this category on a regular basis. This was closely followed by the frozen foods sector with 35 out of 50 (70%) of shoppers purchasing food products from this category on a regular basis. These results are congruent with recent research, which emphasis the changing lifestyle of consumers who have little time to prepare cooked meals and therefore the increased demand for what is termed 'convenience foods', such as ready meals and frozen foods. The results indicate that own brand soft drinks is the next most popular own brand category with 31 out of 50 (62%) of shoppers regularly buying from this category. The leading supermarket chains are now moving into what used to be considered the exclusive domain of branded manufacturer areas. For example, J.Sainsbury's Classic Cola is an attempt by J.Sainsbury's to launch itself into the highly competitive soft drinks market. The results indicate that the next most frequented product category for own brands was household goods with 28 out of 50 (56%) of shoppers regularly purchasing from it. Again, J.Sainsbury's have attempted to secure a large share of the detergents market by launching its highly successful 'Novon Range' of detergents. ...read more.

Conclusion

These results suggest that consumers are motivated and encouraged to be involved in such (reward) loyalty schemes. The implication for supermarket retailers will be focused on how to differentiate their reward offers from their competitors as most of these loyalty cards offer similar benefits to the shopper, such as money off the final shopping bill, coupons and discount links to other organisation's, such as leisure complexes and hotel breaks. The central aim of loyalty cards is to obtain valuable customer shopping profile information. Some may argue that a stores interest in their customer is purely one-dimensional. That is to secure a greater share of their spending with not much else. (Dawson 2000.) The results indicate that over half of the shoppers surveyed were concerned with the level of perceived intrusion that such loyalty cards obtained about consumer shopping profiles. The implication of this for the retailers is to obtain this information without causing anxiety or negative feelings of hostility towards such potentially powerful incentive schemes. E-COMMERCE and FOOD RETAILING One of the most innovative concepts in retailing has been the explosion of e-commerce. This will become an important concept within the food retail industry as the Tesco.com venture has illustrated. Although, the majority of the shoppers surveyed have not experienced on-line shopping, the results indicate a generally positive attitude towards on-line shopping by those who have experienced it. These results suggest that on-line shopping will be explored further by both customers and retailers alike in the future and no doubt, on-line shopping will become commonplace. Dawson (2000) notes that senior retail executives must consider several key questions in their enthusiasm to implement e-retail into their operations: what are the product and service areas in which e-commerce will grow first? Then they must identify likely consumer groups and likely access points to the shopping sites, as well as logistic support needed for this new channel link. Other factors which managers will have to consider is the possibility of inter-firm competition. The key factors in securing customer loyalty will be an emphasis on price, delivery, security, and brand integrity. ...read more.

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