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The role of customer insights within the German retail context. How can grocery discounters' performance be improved in the German retailer industry?

Bachelor Thesis 2015 75 Pages

Business economics - Offline Marketing and Online Marketing

Excerpt

Table of content

Abstract
Key Concepts

Introduction.
Retail Marketing
Private Label as a Retail Marketing instrument
Defining Private Label.
History of private label in retailing
Advantages of private labels
General problem and goal
Motivation
Approach
Limitation
Contribution

Literature review
Types of private labels
Market share of private labels among countries and several sectors
Supermarkets’ price positioning matrix in Germany and market share
Private label shopper segment
Decision-making process / Shopper insights
Price
Product
Placement.
Promotion
Store atmosphere
Category management.
External analysis (PESTLE) of the German context
Analysing the macro-environment
Demographic/ Sociocultural analysis
Economic analysis
Environmental & Ethics analysis
Technological analysis
Political and Legal analysis
SWOT analysis of the industry.

Primary data analysis / Survey.
Survey Methodology.
Research hypothesis.
Confirmation of secondary data
Umfrage / Survey
Survey analysis.

Conclusions & questions for further research
Conclusion.
Further topics for research

Bibliography

APPENDIXES

TABLE 1

APPENDIX 2.

APPENDIX 3.

APPENDIX 4.

APPENDIX 5.

APPENDIX 6.

APPENDIX 7.

APPENDIX 8.

APPENDIX 9.

APPENDIX 10

APPENDIX 11

APPENDIX 12

APPENDIX 13

APPENDIX 14

APPENDIX 15

APPENDIX 16

APPENDIX 17

APPENDIX 18

APPENDIX 19

APPENDIX 20

Abstract

The grocery retail sector is in overall terms a highly competitive sector throughout the world and the complexity of numerous agents driving shoppers toward an election or another has been extensively researched.

As a result of such fierce competition, discounters arose to provide value conscious shoppers with good quality products at a lower price. However, private label penetration depends on an array of factors depending largely on the country, the retailer and the product category.

This study provides the reader with a detailed literature review on how do customers insights affect purchasing patterns and furthermore examines the tools available to carry out suitable strategies within the German context from a discounter’s viewpoint focusing especially on private labels since it is considered the foremost differentiation strength although a review on the four P’s of Marketing-Mix besides determinants as product categorisation, breadth and depth of assortment, brand name and store atmosphere are analysed thoroughly.

Subsequently to the revision of the specific literature, a PESTEL analysis, a price positioning-matrix and a SWOT analysis have been carried out for the purpose of better comprehending the German retail context.

Lastly, an empirical research has been conducted to confirm the findings through abductive reasoning since the sample survey is limited to one hundred and twenty respondents.

The research concludes that the main drivers to attract shoppers to the store were distance, price, quality and breadth of assortment. Moreover, in-store other variables may entice the shopper to increase its per capita expenditure as a lower music tempo, or less crowded atmosphere as the shopper notices more promotions although given the extensive amount of variables playing a role the abstract section provides only a partial understanding of how branding and store image should be managed.

Key Concepts

Private label, shopper insights, category management, marketing-mix (price, promotion, product and placement), branding, store image, PESTEL analysis, SWOT analysis, price-positioning matrix.

Introduction

Retail Marketing

The grocery retail industry is a mature and highly-competitive sector. In the last decades, it has been broadly researched how retailers can increase profitability and customer loyalty, yet there have been found numerous factors which influence shoppers in- and outside the store confirming the complexity of purchasing patterns.

The concept comprising all these strategic decisions has been quite ambiguous since it analyses a multitude of elements such as; shopper specific preferences, placement, merchandising, breadth and depth of assortment, product categories, promotion, pricing strategies, branding, design, product, customer loyalty, store atmosphere, national and private labels besides all the decisions regarding public relations and social corporate responsibility. However, this set of determinants has been comprised into a single concept called: customer insights which will be the core topic of the dissertation.

The above mentioned factors will be analysed in a lesser or broader extent depending on the exerted influence to customers´ perception.

Private Label as a Retail Marketing instrument

An extensively studied instrument of Retail Marketing especially for discounters due to its strength has been private labelling which has gained a sizeable market share and allows retailers to gain a certain degree of product uniqueness aside from increasing profitability.

Hereunder, the private label concept as much as its advantages will be fully clarified.

Defining Private Label

The concept of private label according to the oxford dictionary1 is used to describe goods that are sold using the name of a store that sells them, rather than the name of the manufacturer, but retailers could and de facto, also produce private label products or bypass using their brand name. In the same way, N. Kumar J. Benedict and M. Steenkamp have come up with a similar definition" if a retailer, wholesaler, intermediary launch a product with another name than the one of their manufacturer, it is a private label. “ (Kumar, Jan-Benedict, & Steenkamp, 2007)

History of private label in retailing

However, the very first mention about the concept private label within the retail industry goes back to the 1970s when discounters began offering cheaper products under the premise " same quality but cheaper due to savings in advertising".

At that time there was a large perceived quality gap which it has been shrinking steadily over the last decades. On top of that, the financial crisis has led to an increase in the usage of private label products. (Mckinsey, 2012) (Nielsen, 2013)

The term is generally used for mass produced generic products and copycats although private label products are gaining certain relevance in the premium segment (Collins & Bone, November 2008).

Before deepening into the topic, it is convenient to understand the multiple incentives that a retailer encounters by offering a range of private label products amongst its product portfolio.

Advantages of private labels

Amongst the numerous reasons why retailers choose to offer private label products are the increase in bargaining power against national brands (Sudhir, 2010) or in a broader meaning increasing negotiating leverage they provide over manufacturers (Ailawadi & Keller, 2004) (Narasimhan & Wilcox, 1998)

Secondly, the retailer does not have to be concerned about the inner costs of the production process and therefore the retailer is able to monitor the pricing strategy easier subsequently, the retailer is more flexible to switch the offered range of products since shoppers are not attached to the brand itself, besides theoretically a new trend can appear unexpectedly and swiftly change customers´ preferences over a given product although in praxis retailers order larger purchases to bring costs down. (European Commission report, 2011 24-26)

A good fourth reason to outsource the production to private label manufacturers is according to the CEO of Safeway (Steven A. Burd) is profitability as private label brands are in average 10% more profitable than national brands (35% vs. 25% markup) (Nielsen, 2013), additional studies also confirm the higher margins (Ailawadi & Keller, 2004) (Hoch & Banerji, 1993)

Another advantage occurs if private label retailers decide to use a single brand strategy where in turn they benefit from reduced costs by promoting a single brand instead of an extensive promotional campaign for numerous products across product categories since marketing costs per product are lower (Baltas, Determinants of store brand choice, 1997) (Nielsen, 2013). This is due to the fact that store image and brand image are interdependent and are thereupon affect individually products sharing the brand name.

But nevertheless, one must not forget customer loyalty as there are products which are exclusively offered in a given store and thereby attracts customers to that specific retail store (Ailawadi & Keller, 2004) (Steenkamp & Dekimpe, 1997). Besides, some goods once acquired, force customers to buy accessories at the same retailer once these are used up through a cross-selling strategy, as a good example could be air fresheners. These traits entail also greater customer loyalty and an exclusivity appeal. (Mckinsey, 2012)

Also, private label manufacturers gain in exchange certain stability in their income due longer-term contracts since retailers buy bulk amounts and the elimination of in-store promotional costs in which they would not incur. A study has proven the better capacity to bring overheads down and increment profitability by the cooperation between retailers and manufacturers (Mckinsey, 2012). As it is a requirement to work manufacturer and retailer together to better meet customers’ needs.

Additionally, shoppers gain considerable cost saving benefits from private labels as they save up to a 35% more. SEE TABLE 1 which contributes to a more positive image while further researches ascertain national brand promotions typically deliver discounts of 20 to 30% leading shoppers to identify always private labels as a price market leader (Garretson, Fisher & Burton, 2002) (Ailawadi & Gedenk, 2001).

Below a survey from Statista 2 confirms the average price in percentage of national brands for the European market divided by country and varying from 78.6% until 59.1%). Remarkably in this comparison Germany has the biggest price gap among the compared countries.

Abbildung in dieser Leseprobe nicht enthalten

General problem and goal

The six steps to take decisions in Marketing Management refer to first of all, the need to precisely define the problem and its research objectives, the second step is the development of a research plan. A third requirement is to collect specific information in order to have a complete understanding of the topic involved, thereupon follows an analysis of the given information, after which takes place a presentation of the findings to the board of directors and finally is the right moment to act and decide which decision suits more the undertaking according to the findings. (Keller & Kotler, 2011)

The general problem of this study stands in the intense competition in the retail sector since manufacturers and retailers are continuously exercising a great effort to boost up their sales and striving for a greater market share. Yet, retailers have come up with a strong marketing instrument to highlight from other retailers and to better bargain with national brands besides from incurring in a higher profitability. This instrument is private labelling.

The goal of this study is to see how it is possible to further increase the share of private label products and the retailer’s branding concept among customers in Germany on behalf of discounters which are the main sellers of private labels. Thus, marketers must have a good insight of consumers´ insights.

Motivation

This paper presents a review on the determinants of the successful business model adopted by private label retailers in Germany through primary (survey) and secondary data collection (literature research, analysis of consultancy surveys and academic journals)

A reason to choose the previously mentioned topic is due to the overall continuous increase in inequality within the developed economies giving rise to two foremost market segments; one for higher-end commodities and another for value conscious shoppers (IMF & Florence Jaumotte, 2008).

The purpose of this work is to get a better understanding of the mass- market in Germany with a special focus on the features that motivate shoppers to purchase private label within a context of diverse marketing tools and finally, the approval or rejection of some hypothesis that arose from the reviewed literature.

My personal interest on this business field is because I have always had a passion for psychology and behavioural patterns. Besides the current significant market size of private labels in Europe has drawn my attention to the retail market since its approach on customer satisfaction can enable discounters to achieve better results at lower costs.

Because in the end, for me it is important to learn how under a tight-budget program, a company is able to add value to a brand.

I believe this is a key question for marketing to understand which marketing instruments have to be rejected and which to implement and thereby by doing so, cutting unnecessary expenses in order to increase profitability or competitiveness.

As a last but not least motivation, I have a strong interest in consulting which at this point of my life I believe it is going to be the specialisation that I will study in a midterm future and I consider this study a good opportunity to blend with my future goals to gain some knowledge of the matter.

Approach

The aim of the experiment is to attain a better understanding of how customers think and what do they value within the retail segment. To get such results, an array of surveys from leading consulting groups alongside academic journals and reports will be reviewed and analysed. The corresponding approach of the study will comprise and analyse several product categories and the corresponding private label performance, an analysis on the effects of a positive store atmosphere, an analysis of the 4p’s (price, product, promotion and placement) as well as an overview of the relevance of assortment and private label branding. Subsequently, a review of the peculiarities of the German context in order to adapt strategies will be considered (PESTEL analysis).

Some of the reviewed surveys contain global researches wherein comparisons among countries with similar income, consumption indexes, product lifecycle and shopping habits as well as age and number of family members per household take place although some of the answers of those studies remain inconclusive due to general profile of private label shoppers due to its size.

The desired results have been collected through an extrapolation from studies involving numerous countries where the product life cycle is mature and where some common traits are shared. However, to assure the veracity of the studies, an own survey would be carried out to prove if there are specific differences in Bremen.

A potential problem in question to focus on is the avoidance to raise biased questionnaires. For an easier and independent data collection, the collection process would be carried out outside a Penny store and a Netto store in Neustadt.

Limitation

The on-going study is restrained due to the sample size of the primary research (120 interviewees) since is not a uniform normal distribution but a t-distribution.

Another restriction is found in the methodology since the analysed results are based on claimed behaviour instead of purchasing behaviour.

Contribution

The biggest challenge for the private- label industry will be how to shrink the perceived differentiation for longer lasting products like the hair care case (Nielsen, 2013) and for hedonic products where branding is the major differentiator.

On top of this, private label companies will cope against another problem in the future since the easiest sectors to penetrate in are also the ones where innovation is lower and there is no alleged growth due to market saturation, therefore in terms of potential market growth, private label retailers are pursuing to place their products under a greater variety of product categories.

Subsequently those questions are going to be answered throughout the ongoing research:

- How can private labels retailers shrink brand differentiation on their behalf?
- Are there any marketing instruments to increase consumption of products which are in a saturated market where no or few innovations take place? (e.g. edible goods).
- How do shoppers respond to different price, product, promotion and placement policies?
- How will the technological advancement affect the sector?
- What role does store atmosphere play in decision-making?
- How does breadth and depth of assortment affect customer insights?
- What fundamental differences are to be found amongst product categories?

Literature review

Types of private labels

(Kumar, Jan-Benedict, & Steenkamp, 2007) There are basically four different tiers of private label brands; the classical generic private label is perceived as a poor quality product with no brand name and is basically a cheap mass market alternative.

Secondly appears to be the copycat which is also seen to some extent as a cheaper alternative but with a higher quality than the generic tier; thirdly retailers aim to spread their offer to the premium segment market with products comparable in quality and price with a value added like for instance Rewe’s organic food offer.

Fourth, this tier comprises high value products and it is more likely to be found in industries with high prices and wherein retailers offer innovative products without any significant price difference. Examples may be found more often in the UK scenario especially in Tesco or Mark and Spencer (Ailawadi & Gedenk, 2001) (Laaksonen & Reynolds, 1994).

However, private labels have been persistently attempting to spread their product portfolio in product categories that span the premium tiers as well as across new product categories. Increasingly, retailers pursue to extend their presence into the last two tiers where an undercutting-cost strategy is not the main strategy component to succeed, however despite the incessant attempts to flood the premium market with private labels, retailers still have not managed to strengthen their position closer to the market leader since it is hard to alter shoppers’ insight about brand image once it is built and shift it toward the top right corner of the price/quality matrix (Baltas, A combined segmentation and demand model for store brands, 2003) (Collins & Bone, November 2008) SEE APPENDIX 8.

In general terms so far, the strategy implemented by discounters for private labels has been to offer a lower price and to be perceived as an adequate option for value conscious shoppers, although lately the term branding has played a major role in private labels and therefore a great emphasis has been put on quality in order to reduce utilitarian differences.

Market share of private labels among countries and several sectors

Currently the most significant markets in terms of market share where the trend seems to be in a more advanced phase are the United States, Canada, Australia and Europe (Nielsen, 2013). Contradictory to these countries are the developing economies in which private labels are still in an introductory phase that comprise less than 10% in BRIC economies. This is the reason why comparisons will be carried out only among developed countries which are comparable to the lifecycle found in Germany.

As already the study called “The state of private labels around the world” proved, (Nielsen, 2013) over the last years private labels´ turnover has continued to increase gaining market share at the expense of small and medium sized companies whereas market leaders have kept themselves relatively safe. In those cases involving SME3, shoppers do not seem them as differentiated products and thus products offered by SME are being replaced by private labels more significantly.

Not surprisingly the share per dollar spent exhibits and affirms the largest acceptance in Europe and in the Anglosphere. SEE APPENDIX 4. (Nielsen, 2013)

APPENDIX 5 shows how despite the global consolidation tendency, private labels´ turnover variation grows very unevenly, varying strongly among European markets and product categories. (Nielsen, 2013) The comparison breaks down this way private label products into regions and into product categories like beverages, baby care products and confectionary and snacks and gives the reader a brief understanding of the extent that private labels’ penetration fluctuates among different product categories. In the German market in categories as snacks and beverages private label’s presence has been upward although confectionary category has been the other way around.

APPENDIX 20 provides the reader with an insightful classification of product categories by private label penetration rate confirming the oscillation across categories. (Agriculture and Agri-food, 2010 April)

In appendix 6 can be seen some examples within the personal care category wherein private label manufacturers still struggle to penetrate the market and in turn, to reaffirm their position as a product for the mass. SEE APPENDIX 64 & 75. Further examples are provided by (Agriculture and Agri-food, 2010 April) (Collins & Bone, November 2008) where in the case of hair care industry national brands amount up to 98% of total sales in the Canadian market.

The justification given by the NIELSEN consulting group is due to its longer service life in comparison to usual daily/edible commodities so thus, shoppers act less price-sensitive and are more inclined toward quality and hence are willing to pay a higher price. (Nielsen, 2013) In this way, through a remarkable brand differentiation achieved by continuous branding focused on the consumption pleasures of the product; national brands still manage to have stronger brand equities and a more positive brand image in some categories.

Underneath is the private label market share among different product categories in Europe6.

As previously stated, IRI’s research confirms that private label products are purchased more often when commodities have shorter service lives with easy comparisons in quality. As a result, brand differentiation has a smaller role between national brands’ market share and private labels’. The frozen food category is where brand differentiation is smaller followed by chilled & fresh food, whereas regarding longer lasting products like Personal Care commodities are less likely to be sold under a private label.

Abbildung in dieser Leseprobe nicht enthalten

Source IRI7

IRI has researched also the annual variation of these industries by product category (IRI, Private label in Europe 2012. Is there a limit growth?) where private labels clearly outperform in the alimentation categories whereas national brands stand out in soft drinks, personal care and confectionary.

Additionally another study reiterates that in hedonic products categories with a greater importance in consumption pleasure (e.g. soft drinks, personal care) than categories where the quality of the product is easily comparable, national brands tend to perform better due to a major branding influence (Sethuraman & Cole, 1999) .

Supermarkets’ price positioning matrix in Germany and market share

Two rankings about the cheapest retailers and the best price/service providers were carried out by the BILD newspaper8 through a selection of a basket with daily basic commodities. Due to difficulties in finding costless quality rankings of German supermarket chains, the price-quality positioning matrix has been changed to PricePrice/Service positioning matrix where the Price /Service relationship was taken as the best alternative available. Below is shown the resulting matrix.

Abbildung in dieser Leseprobe nicht enthalten

The newspaper ranked as the cheapest retailer Aldi-Nord but in terms of performance for the amount of money spent the best performing retailers were Netto Marken Discount, Kaufland and Penny Markt. Before considering the horizontal axis one must see that it ranks from 25.64€ to 27.70€ which is indeed not a significant difference.

In terms of sales, the German retail market is dominated by five large groups and discounters amount up to the most significant segment. Discounters achieve growth through differentiation with a similar quality at a lower cost, albeit recently hypermarkets have constrained this growth through their respective introduction of private labels.9

Abbildung in dieser Leseprobe nicht enthalten

All of the largest retailing groups offer low-priced commodities alongside with premium brands, either through discounters or through private labels in their more expensive stores (JA in Rewe). German shoppers are price-sensitive and quality-oriented and retailers therefore offer an extensive variety of affordable options to shoppers.10

Private label shopper segment

Every business must identify its customers’ unique needs and characteristics. (Keller & Kotler, 2011) But however, despite the amount of researches there are few empirical generalisations about the private label shoppers although it can be asserted that they are price-sensitive but not image-sensitive, they are well educated and they pertain to the middle class according to (Ailawadi & Keller, 2004).

Also gender does not play a significant role when it comes to brand choice. However, women by a slight difference on average, tend to emphasise more on the brand than men (Adams, December 2005).

Moreover, Baltas demonstrated the lack of relevance for variables such as family size and working shifts in order to explain private label purchases. (Baltas, A combined segmentation and demand model for store brands, 2003) The same study also revises the statement on the importance of consumer attitudes and behaviours toward private label rather than socio-economic factors. Such behaviours are risk perception, information and experience about private labels.

Private label users span a wide set of demographic and psychographic characteristics, so using a strong private strategy will target and comprise a wide market segment. (Ailawadi & Keller, 2004)

In general terms, quality is a number one priority alongside with price for private label purchasers and thus, the reduction in perceived quality difference between national brands and private labels has favoured private labels to keep increasing overall turnover, this is understood because shoppers are risk averse when it comes to purchases. Another positive aspect is private label shoppers feel like smart shoppers when they purchase private labels. (Nielsen, 2013) SEE APPENDIX 2 AND 3.

A key demographic factor is Germany’s aging population since its significance will grow in importance in the future. Demand for health, personal care and wellness will be on the rise. Therefore, it is vital for discounters to penetrate in those markets where they lack significant presence.

Decision-making process / Shopper insights

The classical approach to the decision making process applied to individuals was firstly researched by John von Neumann and Oskar Morgestern with their expected utility theory approach in 1944 and it explains how rational people perceive money worth as a concave function on the premise consumers who have money to pay for a standard commodity would not be prone to spend an extra monetary unit except if the marginal increase in utility is bigger than the additional monetary unit paid SEE APPENDIX 9.

However, subsequent to this study follows an array of studies which have complemented our knowledge about the human decision-making process and contributed to this theme.

Current studies proved shoppers are not fully rational and in many product categories the main driver is the hedonic utility rather than the utilitarian as for instance is the case of Coca Cola. Emotions lead shoppers to different decisions and outer environment can therefore exert a great influence on a person’s purchasing habits being the most representative parents, media and friends (McLeod, 2005)..

On the other hand, they say11 over 70% of purchasing decisions are made in store and Shopper Insights embraces more specifically the study of decision making instore although it does not overlook out-of-store marketing. It is defined as “that which is necessary to properly understand the role of the shopping experience with regard to purchase behaviour (in specific) as well as brand loyalty (in general)” by (The Hartman Group, 2004). The same research also emphasises on the close ties in retailing between customer experience and cultural occasions governing domestic life rather than brand loyalty driving buying-decisions.

A common myth valued by retailers for a long period was the place where brand loyalty took place. This study supports the statement that brand loyalty happens in households through use and memory of use instead of retail stores. Interesting to this point is that Nobel Prize winner (Kahneman, 2011) declared on the importance of the intensity and end of the experience (Peak-end rule). A supportive argument for such declaration is when customers are not yet shoppers during pre-adolescence ages and yet, they already have a reference point (Framing) in quality and tastes shaped at home.

Because of the complexity of describing human behaviour and the recent state of the study, shopper insights comprise a wide array of determinants however; cultural occasions are certainly a driver to shopper behaviour instead of uniquely brand loyalty.

Cultural occasions could be referred as “occasions in which the motivations for the shopping, the intended beneficiaries of the shopping and the push/pull forces shaping the shopping journey connect to shared orientations, preferences and, to some extent, value systems that transcend crude demographic categories.” (The Hartman Group, 2004)

The Association of Food, Beverage and Consumer Products Companies conclude on the definition as Shopper-centric namely the shopper is the centre of the process. The following assumption involves In-store and out-of-store activities amongst which are branding activities, trade promotion activities and product adaptation among others. It requires the collaboration of manufacturer and retailer as well as a proper monitoring of customer satisfaction and in turn, if needs the implementation of corrective measures to handle complaint management.12

There are several marketing stimuli designed to build brand equity which enables eventually to catch the shoppers’ attention more easily, they may be segmented in the four P’s in addition to them, brands, staff service and store atmosphere having a leading role as well.

Other studies ascertain the complexity of factors determining purchasing patterns due to its numerous factors among which are found “variety and quality of products, services, brands sold, physical store appearance (music, crowding, and colours), behaviour and service quality of employees, alongside to price levels and to finally depth and frequency of promotions.” (Ailawadi & Keller, 2004) (Lindquist, 1974) (Mazursky & Jacoby, 1986).

And so, all these variables will be revised to some extent with a special focus on private labels

Price

Price of specific goods and overall store prices affect directly to customers’ cost perception of the retailer. Low pricing policies may be attributed to some problematic in the product and in turn to lower quality (Richardson, Dick & Jain, 1997) (Garretson, Fisher & Burton, 2002) and thus contemporary private label brands focus on price and quality (Lichtenstein, Netemeyer, & Burton, 1990) (Chintaguanta, 2002). A study conducted by (Garretson, Fisher & Burton, 2002) defends that a positive value perception leads to a Halo effect towards other products in the store.

There is empirical support that value conscious buyers have more favourable attitudes toward deals and do not perceive a reduction in price as an inferior quality but as a bargain thereby they are expected to be less loyal to brands and more prone to switch to more convenient offers as in this case private labels (Garretson, Fisher & Burton, 2002). A balanced ratio between price and quality is likely to lead to a more favourable attitude towards private labels (Garretson, Fisher & Burton, 2002).

Moreover, concerning the economic cycles, consumption of private labels is increased throughout economic downturns and decreases during periods of economic prosperity although attitudes show customers’ willingness to continue purchasing after the end of the economic crisis (SEE APPENDIX 13). However, empirical studies have confirmed a divergence between customers’ attitudes and actions throughout economic cycles. (Chaniotakis & Soureli, 2010) (Lamey, Deeleersnyder, Dekimpe, & Steenkamp, 2007).

Also, shoppers who see a linkage between price of a brand and its quality or see themselves as smart-shoppers, are more likely to seek price savings in promotions of national brands (Garretson, Fisher & Burton, 2002).

Teen shoppers and early grown-ups are controversially more price-oriented whereas at the same time more influenced by brand advertising (Collins & Bone, November 2008). SEE APPENDIX 11. Some posterior studies confirm that high- income shoppers tend to care less about price whereas middle-income shoppers give a greater importance to price comparisons among products (Sethuraman & Cole, 1999).

Regarding overall store price image (Ailawadi & Keller, 2004) (Desai & Talukdar, 2003) developed a product-price saliency framework to examine how are formed overall price perceptions, such studies showed that products with high unit price and high purchase frequency contribute more to form an overall store price perception dominating the frequency rate over unit price.

Price formats also affect shoppers’ behaviour and store choice. They are differentiated between “Every Day Low Price” and “High-Low Promotional Pricing”. (Ailawadi & Keller, 2004) (Bell & Lattin, 1998)A study has proven that large basket shoppers rather go shopping to Every Day Low Price stores whereas small basket shoppers prefer High-Low Promotional Pricing stores.

Meanwhile (Ailawadi & Keller, 2004) (Bell, Ho & Tang, 1998) explain why these two pricing policies co-exist. In average, prices are higher in High-Low Promotional Pricing and also in average purchases quantities are lower whereas Every Day Low Price offer in average lower prices and purchased quantities per customer are higher.

Each one appeal to a different shopper preference where HILO are designed for shoppers who decide to carry out more frequent store visits whereas EDLP are meant for shoppers who buy greater quantities. EDLP stores generate higher revenue per unit time although decreases shopping frequency.

[...]


1 http://www.oxforddictionaries.com/definition/english/private-label

2 http://www.statista.com/statistics/383455/private-label-price-level-by-european-countries/

3 Small and Medium Enterprises

4 http://www.statista.com/statistics/376028/personal-care-private-label-value-share-europe-by- category/

5 http://www.statista.com/statistics/331888/annual-sales-value-of-personal-care-products- europe/

6 http://www.iriworldwide.eu/Portals/0/articlepdfs/PrivateLabel2014/PrivateLabel_report_final_7Ja n15.pdf

7 http://www.iriworldwide.eu/Portals/0/articlepdfs/PrivateLabel/PrivateLabel_2012_FullReport_Fin al.pdf

8 http://www.bild.de/ratgeber/verbrauchertipps/lebensmittel-discounter/preise-vergleich- guenstig-test-24081032.bild.html

9 http://gain.fas.usda.gov/Recent%20GAIN%20Publications/Retail%20Foods_Berlin_Germany_7- 31-2012.pdf

10 http://gain.fas.usda.gov/Recent%20GAIN%20Publications/Retail%20Foods_Berlin_Germany_7- 31-2012.pdf

11 http://www.gmaonline.org/downloads/research-and-reports/shoppermarketing.pdf

12 http://www.gmaonline.org/downloads/research-and-reports/shoppermarketing.pdf

Details

Pages
75
Year
2015
ISBN (eBook)
9783668309371
ISBN (Book)
9783668309388
File size
2.5 MB
Language
English
Catalog Number
v340659
Institution / College
University of Bremen
Grade
1.8
Tags
german

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Title: The role of customer insights within the German retail context. How can grocery discounters' performance be improved in the German retailer industry?