Academic journal article IUP Journal of Brand Management

Theory Building on Private Label Brands: A Literature Review

Academic journal article IUP Journal of Brand Management

Theory Building on Private Label Brands: A Literature Review

Article excerpt

Retail stores get higher margin from private label brands. Many organized retail stores in India have private label branded products on their shelves along with the established national brands. But not all the product categories are patronized in a similar way by the consumers. The purchase of private label brands varies with the categories of products. Sometimes the mean quality of the product category affects the sales of private label brands. Some studies have shown that the economic conditions have an effect on the private label purchase. The sales of private label brands are also influenced by the price consciousness of the consumers and risk perception of the product category. The perceived risk is the expected negative utility that is associated with the product and is represented by inherent risk and handled risk dimensions. Sales of private label brands are also affected by the promotional strategy of national brands.

Introduction

Philip Kotier defines retailing, "Retailing includes all the activities involved in selling goods or services to the final customers for personal, non-business use". Though the traditional form of retailing in India has evolved into modern form, it is still popular in many parts of India in the form of Haats, Mandis and Melas.

The Indian retailing industry is driven by factors like socioeconomic development, changing income of people and age of population. Today's Indian women have multiple roles and have a significant say in their family decisions, comapared to the past.

The organized retailing in India accounts for just 6% of the total retailing. The retail business in India is worth ?15,40,000 cr as of 2007, and the McKinsey report states that it is estimated to go to ^60,80,000 cr by 2025, and organized retailing by that time is expected to be around 20% of the total retailing. The retail industry contributes 10% of India's GDE Many global retailers are showing keen interest to enter into the Indian retail market. Companies like the Wal-Mart have already formed a joint venture with their Indian counterparts like Bharti Enterprises, and is supporting their back end operations. Reliance Retail similarly formed a joint venture with Marks & Spencer of England to sell its products in India

The leading retailers like Future Group, Reliance Retail, Aditya Birla Retail, etc., are betting big on private Label brands across food and non food items. Food constitutes the major share of shopping basket for Indian consumers. According to the report by National Council of Applied Economic Research (NCAER) data for the year 2005, food constituted 49% of total expenses for the Indian consumers. To tap this vast spending, the consumer retail players are introducing private label brands in these categories that offer better margin. Future Group, India's leading retailer has the following brands in its private brand portfolio like Tasty Treat as private label in food and snacks; Premium Harvest in categories of pulses and rice; Fresh & Pure in categories of food and staples; Clean Mate in home care category; and Care Mate in personal care products. Private label brands of Future Group contribute around 25% to the overall revenue generated from Fast Moving Consumer Goods (FMCG) business. Similarly, Reliance Retail also launched various private label brands in its stores. Brands like Reliance Select, Reliance Value, Healthy life, Good Life and Dairy Pure contribute over 25% of the total food sales.

Indian Retail Industry

Retailing involves a direct interface with the customers and the coordination of business activities right from the conception or design stage of the product to its delivery and post- delivery service to the customers.

Brand

American Marketing Association defines brand as "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. …

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