Does Brand Matters in Grocery Retailing?

Transcription

1 Feb., 2012 Marketing management Does Brand Matters in Grocery Retailing? Sujay Madhukar Khadilkar. Asst. Professor, KIT s IMER, Kolhapur (MAH) Abstract In the period after 1991, several changes were effected in the economic situation in India, as a result of liberalization, privatization and globalization. Prior to this, the passage of consumer protection act in 1986 had brought about a period of awakening amongst the customers. These two changes, coupled together have led to a situation where a variety of products are to be shown to the customers and the customers became more conscious about the price, taste and brand of the product. This paper deals with the role of price, taste and brand on the selected grocery products in changing customer s buying behavior in the city of Kolhapur with the following objectives To study the various aspects of brand in grocery retailing To study the impact of price and taste on brand in grocery retailers Test the hypothesis related with the brand Introduction In the fast changing socio-economic situation, retail trade has assume special significance because the customer s buying behavior is undergoing a change for the better and different formats of retail trade are trying themselves to adjust with the changing scenario. In this context, it becomes important to study different aspects of grocery retailing with special reference to a fast changing and developing city like Kolhapur. An attempt has been made in the present study to analyze the importance, formats, problems and future course of development of grocery retail trade. The following is the synopsis of the present study to a have a bird s eye view of the entire structure of the grocery retail trade in the city of Kolhapur. Definition of Brand and principles of Branding in grocery retailing A name, term, design, symbol, or any other feature that identifies one seller's good or service as distinct from those of other sellers. The legal term for brand is trademark. A brand may identify one item, a family of items, or all items of that seller. If used for the firm as a whole, the preferred term is trade name. This chapter discusses recent theoretical developments which attempt to explain the role of brand awareness brand loyalty and relationship between brand, price and taste. Branding can be especially important in the retailing industry. In book with title Retail power plays, author Andrew wileman and Mithel Jary, mentions various ISSN Chronicle Of The Neville Wadia Institute Of Management Studies And Research 225

2 Marketing management Feb., 2012 strategies of brand building principles of creating successful brands. These principles are Keep It Simple: one big idea is best. Mass-produced word of mouth (PR) builds brands. Focused brands are more powerful than diffused brands. Somehow, some way, you have to be different. The first brand in a category has a huge advantage. Avoid sub-brands at all cost. Quality is important, but not as important as the perception of quality. Be consistent and patient. Building a strong brand takes time. Put your brand definition in writing, otherwise you'll get off course. Author further state that apart from conventional brands in grocery,private brands are emerging and operating seriously.lastly author describes that brand awareness, brand integrity are important in grocery retailing. Role of Brand in customer s buying decision In book title Brand Management Author Harish Varma pp (80 90) writes that there are three components of brand i.e. firstly, structure secondly conduct and thirdly performance. Brands are linked with uniformity. Branding is important aspect of marketing. The identity of the product lies with its salient feature and it is brand. The real boost to branding came in the middle of the twentieth century. A product is anything that can be offered to market to satisfy a want or need of customer. A brand is name, symbol, design or a combination. There of, the brands are viewed myopically. Brand must make the product meaningful for the target costumer. Customer s choice behavior is influenced by five steps of values which they tend to satisfy. The first functional value is physical or functional performance of product or service. Second value is social value which means the satisfaction that the consumer seeks by association with certain social groups of society. Thirdly emotional value which means the ability of the product or service to satisfy the customers by creating feeling like Joy, love, respect etc. Fourth is epistemic value which means the need to know or learn something new. Finally, Situational value which refers to the ability of the product to satisfy situational needs. Brands are valued for their equity. Brands add value. Brand equity can be thought of as additional case flow achieved by associating brand with underlying product or service Brand equity consists of differential attributes underpinning brand which gives increased value to the firm s balance sheet. Brand equity is defined in terms of marketing effects uniquely attributable to the brands. The key concept between the brand and its equity is the brand image. The perception of brand can adjust brand value upwards or downwards. Brand awareness is second brand equity asset.it includes brand recognition and brand recall. Brand loyalty is not dichotomous construct. It may operate at different levels. Author further describes PP (38-61) about the economical value of the product and consumers perception about it. Economical perception associated with advantages and disadvantages and consequently they are able to identity the best possible alternative. Author further mentions passive perspective that the costumer generates from psychological angle. He further states that consumers are emotionally driven i.e. the role of brand was critical and emotions of customers play dominant role in selecting particular brand. Author further states that the cognitive perspective i.e. customer are capable of thinking and play an active role in locating and buying solutions to their problems. Cognitive perspective falls in between economic perspective and passive perspective. The consumers employ their cognitive processes to solve problems. Author further states about the Brand selection (66) and its relation with attribute association. The product related attributes are necessary for 226 Chronicle Of The Neville Wadia Institute Of Management Studies And Research ISSN

3 Feb., 2012 Marketing management its performance. Author further speaks about assets and liabilities of the brands. Brand equity is based upon Brand loyalty, brand awareness, perceived quality and brand association. In Paper with title Customer perceived value W.S.R.: Brand Choice by Dinesh Sharma presented at IIMA Conference 2007 on Marketing paradigms for emerging economics and published in conference proceedings describes the reasons of shopping in terms of marketing, consumer behavior and relational issues. The research article secondly mentions choice decision and its relationship with different brands. The author develops the model based on perceived value. Article describes that the future scope of branding is related to brand personality. Process of Brand Building Brand loyalty can be observed at five different levels which can be distinguished from committed buyer at one extreme to the switcher or indifferent buyer at the other extreme. In different buyers does not provide the importance for the brand. The third category of buyer is the customers who are satisfied with the brand and they have switching costs in terms of time, money and risk. In the book with title Strategic Brand Management published by Jean-Noe Kapferer. Author states that brand is invisible contract through persistency and repetition. This contract can be extended by creating the satisfaction and loyalty. The brand is to be judged over the long terms.the brand identity refers to the six different facts, they are physique, personality, culture, self image, reflection and relationship. Author Dr. S.L. Gupta in the book titled Brand Management, published by Himalaya publishing house states that distinctiveness is the parameter which separates the one product from the other and subsequently one brand from another. Author describes two basic models of the business and models are about product management and brand management models. Author further describes the sense of satisfaction and dissatisfaction associated with brand which includes overall effectiveness, strategic skills, innovation, risk profile and speed. Brand development goes through different stages which includes understanding of brand, which brand names can be stretched, which are the new brands and what would be the brand development plan. Author further describes the Brand equity which consists of awareness, brand loyalty, brand association and perceived quality if brands are the ingredient of the brand equity. The paper describes about the brand and consumers and different Brand building tools and consumers. Author describes about the brand loyalty which include the involvement of the customer in the particular brand. Further author describes about the process of creating and building the brands. In paper with title The diffusion of new service combining service consideration and brand choice by Vardit Landsman and Moshe Givon published in open access of Springer link. Com states that s the potential customer may undergo various pre adoption states such as awareness before adapting final product or service. Secondly paper describes about active choice process before selecting from available alternatives in the category. The author further describes that adoption behavior needs to be studied separately. Further author describes the meaning of the prediction and prediction behavior about the customers. The author states that segmentation analysis needs to be done of the customers so as to understand their future behavior.at the same time the CRM initiatives need to be taken by the organizations. Branding and Marketing Mix In paper title Acceptance of brand extensions, Author colleen Collins- Dodd and Jordan J. Louviers in the magazine 1997(1-13), author describes about brand equity and its significance.author states that well known brands need to spent lower expenses on advertising, trade deals, price promotions and slotting allowances to generate awareness and obtain distribution than incase of new brands. Author further mentions that brand equity Provides leverage of trade level that not only increase ISSN Chronicle Of The Neville Wadia Institute Of Management Studies And Research 227

4 Marketing management Feb., 2012 product acceptance but also reduces the cost of introduction. Author further gives the reference of the relationship between brand and its relationship with brand names and other mix variables such as trade promotion and consumer advertising would lead to more effective and efficient strategies. Author further states that merchandising and advertising count for newly launched product or brands. Author describes that brands are directly related with marketing mix strategies. According to the author, retailer needs to spend time and money for the acceptance of the brands. Newness and uniqueness are some of the parameters of brand. Author further states that there is no literature available on retailers branding strategies. Author described about the importance of Wholesale price because retailer can have the flexibility in formulating the pricing strategy only when the wholesale price is fixed. Author described another important parameter for promotion and branding i.e. consumer advertising Author further describes the category of the brand as strong brand and weak brand. Author lastly suggests that there is scope for future research in understanding the relationship between the brand and price. In paper title Do brand personality sales really author Jean Noelkadfrer from the journal of branding June-2003, Author states that brand personality is certainly a key factor of brand identity. Author further describes that Use of roll models and famous people have the impact on the minds of the shoppers. Author further mentions that consciousness, orderliness, Positive emotions are some of the elements which are important in making brand personalize.in research paper, author further describes about five factor model of the brands. Author further states that brands are the partners of the business. Author states that future research needs to be done in case of various aspects of the branding like brand extension and branding potential. In guest editorial,professor of Marketing Randal D. Raggio writes the research article with title Drivers of brand value, estimation 2009 in journal of branding management 2009, about the two levels of brand values., they are current and appropriate which are based on the company owning the brand. Author further states that firm s ability to leverage the brand equity could be reached to the customers, if all existing brand equity were optimally leveraged. Author states that there are primary uses for brand valuation. Author lastly concludes that a brand can encourage costumers to alter their options. Data Presentation, Analysis and Interpretation Data Presentation In order to test the significance of brand in grocery retailing, the role of branding is analyzed and assessed.the two segments of the customers, one who shops from both type of retailers and second segment is the customers shopping only from small grocery shop keepers. The literature review and pilot study are considered for selecting variables which will test the role of brand in grocery retailing. These variables are brand awareness, brand preference, impact of price and taste on brand and brand loyalty. Table Opinion of customers shopping from both organized and unorganized retail trade Particulars Total 1. I purchase only branded grocery products I check price before selecting a particular grocery product & its brand Price of grocery is more important than brand for me Taste is more important for me than its brand I used to purchase the grocery product without knowing its brand I purchase particular brand because I have trust in it Chronicle Of The Neville Wadia Institute Of Management Studies And Research ISSN

5 Feb., 2012 Marketing management Table Opinion of customers shopping only from unorganized retail trade Particulars Total 1. I purchase only branded grocery products I check price before selecting a particular grocery product and its brand Price of grocery is more important than brand for me Taste is more important for me than its brand I used to purchase the grocery product without knowing its brand I purchase particular brand because I have trust in it Graph 6.1 Graph showing level of agree ness of customers (about price, taste and brand) shopping from both types of retail trade Level of Agreeness of Customers(about Price, Taste and Brand) shopping from both types of Retail Trade Trustworthyness of Brand Price, Taste & Brand Attributes Purchase the grocery product without knowing its brand Prefer Taste is than brand Prefer Price is than brand Check Price before Brand Purchase only branded grocery products Agree Disagree Neutral ISSN Chronicle Of The Neville Wadia Institute Of Management Studies And Research 229

6 Marketing management Feb., 2012 Graph 6.2 Graph showing level of disagree ness of customers (about price, taste and brand) shopping from both types of retail trade Level of Agreeness of Customers(about Price, Taste and Brand) shopping only from Unorganized Retail Trade Trustworthyness of Brand Purchase the grocery product without knowing its brand Price, Taste & Brand Attributes Prefer Taste is than brand Prefer Price is than brand Check Price before Brand Purchase only branded grocery products Agree Disagree Neutral 230 Chronicle Of The Neville Wadia Institute Of Management Studies And Research ISSN

7 Feb., 2012 Marketing management Table Calculations of opinion of customers shopping from both Organized & Unorganized Retail Trades Total Samples Total 1. I purchase only branded grocery products I check price before selecting a particular grocery product and its brand Price of grocery is more important than brand for me Taste is more important for me than its brand I used to purchase the grocery product without knowing its brand 6. I purchase particular brand because I have trust in it ISSN Chronicle Of The Neville Wadia Institute Of Management Studies And Research 231

8 Marketing management Feb., 2012 Table Calculations of opinion of customers shopping only from Unorganized Retail Trades Total Samples Total 1. I purchase only branded grocery products I check price before selecting a particular grocery product and its brand Price of grocery is more important than brand for me Taste is more important for me than its brand I used to purchase the grocery product without knowing its brand I purchase particular brand because I have trust in it Chronicle Of The Neville Wadia Institute Of Management Studies And Research ISSN

9 Feb., 2012 Marketing management Analysis and Interpretation: Opinion of customers shopping from both organized and unorganized retail trade and customer s shopping only from SGS Preference about the branded grocery products From the percentage of the responses and probability (3.79) it can be observed that customers shopping from both trades agree towards the fact that they prefer to purchase branded grocery in the selected grocery products. 26 of the respondents disagree that they are aware about various brands of the respondents state that they are aware about various brands of grocery and purchase branded products only. 8.6 of the respondents remain neutral. From the percentage of the responses and probability (3.06.) it can be observed that customers shopping only from small grocery shop keepers are neutral towards the issue of preferring branded products.11 of the respondents from category of Customers shopping from small grocery shop keepers, agree towards the fact that they prefer to purchase branded products in the selected grocery products. 8.5 of the respondents disagree that they are aware about various brands of the respondents are neutral. Interpretation From the analysis, it can be seen that Customer s shopping only from small grocery shop keepers response is inclined towards neutrality.customers give importance to brand.customers shopping from small retailers are aware about the brands but many times because of price pressures they can not afford to purchase the branded products which are costlier.in such cases customers purchase either cheap product or unbranded product. Customers shopping from both segments of retail trade give importance to brand. Checking price of products before selecting product From the percentage of the responses and probability (3.384) it can be observed that customers shopping from both trades agree towards the fact that they prefer to observe price of branded products in grocery in the selected product category. 26 of the respondents disagree that they observe price of branded products of the respondents state that they observe price of branded products in grocery.13.4 of the respondents remain neutel on the issue. From the percentage of the responses and probability (3.895) it can be observed that customers shopping only from small grocery shop keepers are agree towards the issue of observing the price before purchasing grocery products.86.5 of the respondents from category of customers, agree towards the fact that they prefer to check price before purchasing the branded products in the selected grocery products of the respondents disagree on the issue. 2 of the respondents are neutral. Interpretation From the analysis, it can be observed that customers shopping from both type of retailer s are inclined towards disagreement about the fact that they check price before brands.customers give importance to brand. Customers shopping only from SGS agree towards the fact that they prefer to observe price of branded products in grocery in the selected product category. ISSN Chronicle Of The Neville Wadia Institute Of Management Studies And Research 233

10 Marketing management Feb., 2012 Price is more influential than brand From the percentage of the responses and probability (3.624) it can be observed that customers shopping from both trades, agree towards the fact that they prefer to give priority to price of branded grocery while purchasing in the selected grocery products of the respondents disagree that they prefer to give importance to price than brand of the respondents state that they prefer to give priority to price of branded grocery while purchasing than brand. 5.8 of the respondents remain neutral. Customers shopping from both type of retailers response is inclined towards disagree ness about the fact that they check taste before brands.customers give importance to price than brand.majority of the customers shopping from both trades give priority to price than brand. From the percentage of the responses and probability (4.295) it can be observed that 86.5 of the respondents from the customers shopping only from small grocery shop keepers category, agree towards the fact that they prefer to give priority to price of branded grocery while purchasing in the selected grocery products of the respondents disagree that they prefer to give importance to price than brand. Interpretation From the analysis, it can be observed that customers shopping only from SGS, agree towards the fact that they prefer to give priority to price of branded grocery while purchasing in the selected grocery products. Taste is more influential than brand From the percentage of the responses and probability (2.52) it can be observed that customers shopping from both trades disagree towards the fact that they prefer to give priority to taste of branded grocery while purchasing in the selected grocery products of the respondents disagree that they prefer to give importance to taste than brand of the respondents state that they prefer to give priority to taste of branded grocery while purchasing than brand. 3.8 of the respondents remain neutral. Customers shopping from both type of retail trades response are inclined towards disagreement about the fact of checking taste before brands.customers give importance to taste than brand. From the percentage of the responses and probability (3.885) it can be observed that 90 of the respondents from the customers shopping only from small grocery shop keepers category, agree towards the fact that they prefer to give priority to taste of branded grocery while purchasing in the selected grocery products. 10 of the respondents disagree that they prefer to give importance to taste than brand. No respondents remain neutral. Small income group of customers use to compare taste of products which are in their budget. Thus, for them brand become secondary issue. Taste matters a lot for these customers. Awareness about the brands From the percentage of the responses and probability (3.78) it can be observed that customers shopping from both trades agree towards the fact that they prefer to purchase branded grocery in the selected grocery products. 26 of the respondents disagree that they are aware about various brands of the respondents state that they are aware about various brands of grocery and purchase branded products only. 8.6 of the respondents remain neutral.are aware about various brands of grocery and purchase branded products only. 8.6 of the respondents remain neutral. 234 Chronicle Of The Neville Wadia Institute Of Management Studies And Research ISSN

11 Feb., 2012 Marketing management Interpretation Majority of the customers shopping from both trades are aware about various brands of grocery and purchase branded products only. From the percentage of the responses and probability (2.28) it can be observed that 91 of the respondents from the customers shopping only from small grocery shop keepers category, agree towards the fact that they prefer to purchase grocery products without giving priority to brand of the grocery products while purchasing in the selected grocery products. 9 of the respondents disagree that they prefer to purchase grocery without giving importance to brand of the products. Majority of the customers shopping only from SGS don t give preference to the brand of grocery and purchase branded products only. Hypothesis Testing Buying behavior of the customers is influenced by price than brand. H 0 :- Buying behavior of the customer is not influenced by price than brand. H 1 :- Buying behavior of the customer is influenced by price than brand. Table 6.5 Table for hypothesis testing Responses Extremely disagree Disagree Neutral Agree Strongly agree Price of grocery is more important than brand Total Shopping from both Shopping from only SGS Total Table 6.6 Table for hypothesis testing Obs. Freq Exp. Freq. Sr. {(OBS)- (OBS) (EXP) (OBS)-(EXP) no. (EXP)}^2 {(OBS)-(EXP)}^2/EXP ISSN Chronicle Of The Neville Wadia Institute Of Management Studies And Research 235

12 Marketing management Feb., 2012 total = α = 0.05 Degree of Freedom = 4 {(OBS)- χ2 = (EXP)}^2/ (EXP) χ2 = Tabled value of χ 2 = 9.49 As calculated chi-square value is greater than tabled value, there is an evidence to reject the null hypothesis. Analysis For testing of the hypothesis, the records and data gathers by two segments of the customers are considered. The frequency distribution table clearly shows that customers shopping only from small grocery shop keepers are more price sensitive than the customers shopping from both types of retail trade. The frequency distribution table gives the percentage analysis for the parameters designed and developed by the researcher. The six parameters are set by the researcher based on the responses of the customers. The difference between the two shopping patterns is tested. The difference between observed and expected frequency using contingency table is calculated. The differences between these frequencies are taken into consideration. The square of the difference is calculated. The Chi-square coefficient is calculated using the formula, אּ 2 = (OBS-EXP) 2 / EXP אּ 2 = Tabled value of אּ 2 = As calculated Chi-square value is greater than table value, there is a evidence to reject the null hypothesis. Thus it is proved that price of the grocery product is more influenced than its brand. The Chi-square value clearly indicate that price matters more in grocery retailing for the customers shopping only from small grocery shop keepers. In case of customers with higher incomes brand is important. The two segments of the customers view the price of the grocery in different way. Interpretation The customer s behavior in purchasing grocery products is directly related to the price of the goods. The price charges by the retailer should be such that the customer is able to purchase as much quantity as he or she likes. Otherwise customer will be forced to reduce his purchase and there by to restrict his consumption level. It is therefore natural on the part of the customer to give preference to price rather than the brand. The researcher has found that the brand awareness amongst the customers is less. This is so because sometimes customers consider brand and variety as the same. Again, most of the customers are unaware 236 Chronicle Of The Neville Wadia Institute Of Management Studies And Research ISSN

13 Feb., 2012 Marketing management about the different brands available in the market. It is necessary at this stage to analyze the customer s preference for price. Almost all the customers contacted by the researcher belong to middle class or lower middle class. As such, their income is limited and with the help of this limited income, they have to purchase sufficient quantity of grocery. This will be possible only when customers buying decisions are closely related to the price. Thus it can be seen that the customers in the city of Kolhapur prefer price than any other factor. One of the important features of customer behavior is his or her price sensitivity. This is so because every customer always tries to maximize his or her satisfaction. According to law of equi-marginal utility the satisfaction will be at the maximum level when the marginal utility of the commodity equals its price. Thus the price sensitivity of the customer in this way related to the maximum satisfaction that the customer desires to have. Hypothesis : Buying behavior of the customers is influenced by taste than brand. H 0 :- Buying behavior of the customer is not influenced by taste than brand. H 1 :- Buying behavior of the customer is influenced by taste than brand. Table 6.7 Table for hypothesis testing Responses Extremely disagree Disagree Neutral Agree Strongly agree Taste is more important for me than its brand Total shopping from both shopping from only sgso Total Table 6.8 Table for hypothesis testing Obs. Exp. Freq. Freq. Sr. {(OBS)- {(OBS)- (OBS) (EXP) (OBS)-(EXP) no. (EXP)}^2 (EXP)}^2/EXP ISSN Chronicle Of The Neville Wadia Institute Of Management Studies And Research 237

14 Marketing management Feb., 2012 total = α = 0.05 Degree of Freedom = 4 χ2 = χ2 = {(OBS)-(EXP)}^2/ (EXP) Tabled value of χ 2 = 9.49 Analysis As calculated chi-square value is greater than tabled value, there is a evidence to reject the null hypothesis and as actual frequency response is more in favor of taste, we can say that taste is more important than brand. Interpretation The researcher has found that the customers prefer tastes to brand. This is so because grocery products are eatables and in the case of eatables taste assumes an important place. Every consumer may have different choices of commodities depending upon the tastes that he or she likes. Grocery products are basic necessities. Thus every customer has to buy these products in some way or the other. So it can be stated that the purchasing of these grocery products in no way related to the status of the customer. It may be that the customers belonging higher income group may prefer costlier varieties but that doesn t mean that the general customer gives preference to costlier commodities. This is so because average customer s income is limited and hence he or she can not go in for purchasing highly priced commodities. Role of Brand Purchasing of grocery is the daily need of the customers. So the branding strategies for the groceries from hypermarket s point of view are entirely different than in case of other goods. The brand, price and taste are the parameters interrelated with each other. The various factors related with the brand are studied in order to inter relate the role of brand and its impact on customers buying behavior. The factors such as brand awareness, trustworthiness, brand loyalty, taste, and price of brand, flavors, appearance and better packaging are considered. All these factors are important in understanding customer s views towards role of brand in grocery retailing. The factors such as price, taste, trustworthiness appearance are affects the customer s buying decision. For hypermarket customers price and taste are important than brand. Conclusion From the above, it is clear that there is a greater awakening amongst the customers as regards the brand of grocery product. However, price and taste are still dominant factors affecting the customer s buying behavior. 238 Chronicle Of The Neville Wadia Institute Of Management Studies And Research ISSN