Monday, July 15, 2013

Why people prefer branded products

over unbranded products? ~ Customer
Relationship Management
Why people prefer branded products over
unbranded products?

Abstract:
Our objective in this research is to evaluate that why some consumers prefer high
priced branded products while nearly same quality products (unbranded) are available
in market even at low price. This study also explores the consequence of age, gender,
income level, social status on consumers buying behaviour.
Keyword(s): Brand preference, Quality, Unbranded products, Consumer behaviour

Introduction:
Branding has traditionally been viewed as an essential tool for marketers to establish
an identity for their products. Branded products make a significant proportion in all type
of synthetic products (may be natural but in processed and packaged form). Though
their proportion is low for low priceitems but high for those products where consumers

are quality conscious specially food items or durable, long life products. Companies that
provide branded products usually cost high prices because they spent a lot on
advertising .May be they are providing the same quality goods as unbranded ones but in
a batter way with a brand name. Usually people perceive that unbranded products that
are usually available at low prices are of low quality so they are ready to pay high prices
for quality assurance. In our research which was conducted on edibles products;
availability, need of use, taste preferences are also important determinants of choice
between branded and unbranded products.
For this research we selected three items (Tea, Burgers, Cold drinks)
from edibles products that are available both in branded and unbranded form. These
are daily consuming products and are mostly used by every kind of individuals of every
age category, from all fields of life.

Literature review:
We distinguish branded and unbranded products on the basis of consumers perception
and feelings about the product attributes and how they perform and about the
company or store associated with brand. Brand purchasing is a behaviour that involves
choice among a number of alternative forms of product category. Branded products
includes a traditional brand name on its label while a generic brand is distributors
brand that does not include a traditional brand name on its label but distinctive colors,
designs, other brand marks may be used e.g. cola ,aspirin etc.
The brand name has become core element of market strategy to develop customers
loyalties, toincrease sales and to achieve optimal position among competitors. Brands
are the major quality that allows consumers to learn from their experience, they stand
for superior quality, reduce consumer uncertainty and encourage consumer to pay
premium. Several studies has shown that consumers perceive national brands to
superior to generic grocery items on attributes such s overall quality ,taste , aroma, and
reliability (Bellizzi et al.,1981;Cunningham et al.,1982;Hawes et al.,1982) Ehrenberg ,in
1988 has shown that comparatively few purchasers of product category are 100% loyal
to particular brand, most choosing within a small repertoire of available brands. Most
consumers are not brand conscious, if they are how much they ready to pay and for
what?
It was astonishing for the marketing community, in 1977, the introduction of so-called
unbranded grocery products. Store brands appeal to more price sensitive consumers.

Significant portion of any market wants to purchase products that offer simple, basic
value .Most consumers prefer no-frills approach without extensive promotion and
complexity. Branding efforts shapes consumers desires and actions .Its important to
note that how the media works to create anxieties and desires. Ailawadi & Harlam
(2001) determined that the primary reason for low market share of private brands is
that private label suppliers have little market power and less centered as compared to
national brands.
Shapiro (1982) proved that positive brand equity(the incremental utility or value added
to a product by its brand name) provides goodwill value in the face of uncertainty .Store
image is important source of brand equity for the store brands .For national
brands, advertising is dominant factor of creating strong brand equity.
Generally, consumers who are quality conscious or uncertain about the choice between
categories, uncertain about performance will pay for brand name assurance. When
consumers pay premiumprices for branded products they are actually for implicit
guarantee superior quality. Consumers also prefer branded products because of
extensive effect of advertisement. , may be its just the perception in consumers mind
that the branded products are good quality products while unbranded are not. From
previous research we have found that brand serves as signal of social status (Coulter et
al., 2003) as reflective of personality (Supphellen & Gronhaug, 2003)
A brand name serves as source of information about the durability and reliability of the
product. Brands are also important factor in determining to whom group of people we
belong because we choose who we want associate with. A particular brand is also
chosen on the basis of values that consumer and company has family or nation
traditions.A key change in the retail stores has been the emergence and growth of low
priced quality-equivalent store brands. Now store brands has same attributes as offered
by national brands such as; overall quality of product, taste, availability, freshness,
guarantee of satisfaction and quality of packaging .Store brands helps retailers in
building store loyalty .Store brands users are more profitable than who uses national
brands However, its not clear with the introduction of store brands prices and market
power of nation brands fall.

Methodology

In order to achieve our research objectives first of all we selected three product
categories for our research including Tea, Burger and cold drink which are normally
consumed by every person. We have planned to conduct our survey only in the
premises of Islamabad and Rawalpindi due to political instability and security issues of
the country. We selected a sample of 250 respondents and we plan to collect data
through non-probability sampling technique due to reasons that it was convenient for us
and time limitation was there to restrict us. Our sampling frame includes all males and
females with minimum of age 18 years. On the basis of 10% no response rate it was
expected that we will have to visit at least 278 respondents in order to make our
required sample of 250.
Then we developed a questionnaire in which the variables which we used to measure
the preference of people among branded and unbranded products were Age, income,
profession, taste, quality, reliability, price, availability and social symbol. To measure
these variables we used different types of rating scales including dichotomous scale,
multiple choice questions and seven semantic scales. The questionnaire was pre-tested
for reliability and validity on a small group of respondents in the premises of university.
After identifying areas we selected Equal respondents from each area. We filled
questionnaire by conducting surveys using personal interviews and self administered in
which we also used E-mails as a tool. Personal interviews were conducted for illiterate
respondents. We used Primary Data as data Source. Response rate of nearly 90 percent
would be achieved. This high response might be best explained by the fact that most of
our respondents were well aware of about characteristics of branded and unbranded
products and we used techniques of facilitator and foot-in-the door to improve the
response rate.
.
The effect of income, age and profession on tea consumption either branded or
unbranded.
Independent variables: income, Profession, Age,
Dependent variables: Tea

Hypothesis:
H0: there is no relationship between the independent and dependent variables
H1: there is a relationship between the independent and dependent variables

Level of significance:
= 0.05
The effect of income, age and profession on Burgers consumption either branded or
unbranded.
Independent variables: income, Profession, Age,
Dependent variables: Burgers

Hypothesis:
H0: there is no relationship between the independent and dependent variables
H1: there is a relationship between the independent and dependent variables
Level of significance:
= 0.05
The effect of income, age and profession on Cold Drinks consumption either branded or
unbranded.
Independent variables: income, Profession, Age,
Dependent variables: Cold drink

Hypothesis:
H0: there is no relationship between the independent and dependent variables
H1: there is a relationship between the independent and dependent variables
Level of significance: = 0.05
Limitations of research
The major limitations of our research are low experience of market research, time
limitation, use of non-probability sampling technique due to shortage of financial
resources, our research is conducted only in the premises of Islamabad and Rawalpindi,
most of the respondents were hesitant in telling their exact income and they were
hiding some of the relevant information

Applications:
Our research will guide the manufacturers of unbranded products about those areas on
which they should work in order to compete with branded products whereas for

manufacturers of branded products our research is helpful in a sense that it will guide
them about their strengths on the basis of which consumers prefer branded products
over the unbranded products and they should make their competitive advantage more
considerable.

Suggestions:
In the case of unbranded products manufacturers should improve their product quality
and taste in order to compete with branded products. For branded products
manufacturers should ensure their quality & taste in order to maintain their goodwill.
For branded burgers manufacturers should not only work on their product price and
availability but try to minimize their cost in order to reduce their product selling price.
They should also take measures to make their products easy to available in the market.

References:
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Posted by Muneeb Ur Rehman at 1:56 PM
Labels: Company, CRM, Customer Relationship Management, New Product
Development,NPD, Organization Development, Pakistan, Research articles