Customers Attitudes Towards Own Labels Multiple Chapters

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Customers' Attitudes Towards Own Labels: An Analysis of the Customers' Brand Loyalty and Attitude towards the Own Labels and in UK's Retail Sector; Case of Tesco

Academic Year 2009-2010

Tesco is the largest employer in the United Kingdom and is a leading retailer of groceries and non-food items throughout the country, as well as Central Europe, Asia and North America. The company achieved this growth due in large part through the judicious use of private brands, as well as the use of the most appropriate store format for the areas it serves. Moreover, Tesco has managed to succeed where many other retailers have failed in its introduction of home-based delivery services of groceries and other non-food items by identifying an optimum branding strategy. These successes are especially significant given the logistical issues involved in the supply chain management requirements for perishable food items and the need to keep costs low in order to compete in this growing but still niche market. Given its well developed and mature infrastructure, this study examines how Tesco is well positioned to continue its growth and success in the future based on a commitment to identifying optimum branding strategies for its different store formats as well as the regions in which it competes.

Table of Contents

Chapter 1: Introduction

Statement of the Problem

Purpose of Study

Importance of Study

Scope of Study

Rationale of Study

Overview of Study

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Chapter 2: Review of Related Literature

Chapter 3: Methodology

Description of the Study Approach

Data-gathering Method and Database of Study

Chapter 4: Data Analysis

Chapter 5: Conclusions

Chapter 6: Recommendations

An Analysis of the Customers' Brand Loyalty and Attitude towards the Own Labels and in UK's Retail Sector: The Case of Tesco

Chapter 1: Introduction

Multiple Chapters on Customers Attitudes Towards Own Labels Assignment

Over the past 3 decades, the concentration of retail grocery stores and the competitive environment have significantly increased throughout Europe and the U.K. (Marsh & Brester 2004). In response to these increasingly competitive conditions, the retail grocery industry has embraced a number of technological innovations to help improve firm performance and profitability, including management information systems which have increased the efficiencies of product invoicing, employee payrolls, logistics, warehouse management technologies, universal product codes, point-of-sale scanning, and improved coordination / integration with food chain suppliers (Marsh & Brester 2004). In addition, the judicious use of private branding strategies has been used to good effect by many grocery retailers, including Tesco with primary operations in the U.K., but which increasingly extend to Asia and North America as well. Tesco has managed to grow from relatively modest beginnings to become the largest employer in the United Kingdom today, and the company's growing presence abroad is clear testament to the effectiveness of its branding strategies. Customers' brand loyalty and attitude toward private brands is based on a wide range of factors that transcend mere pricing considerations, though, making it an interesting and timely area of study today based on the issues that are discussed further below.

Statement of the Problem

In recent years, consumers have generally demanded improved food quality, better food safety, additional food services, as well as more diverse value-added products from their retail grocery stores, while grocery retailers are forced to incur extra costs to satisfy these demands (Marsh & Brester 2004). Because most retail grocery stores operate on very small profit margins, any diminution of these profits must be offset by corresponding cost-saving initiatives. For example, Marsh and Brester note that, "Retail grocery stores have become larger to take advantage of distribution and labor efficiencies, and to compete with national store chains" (2004, p. 47).

While some efficiencies of scale can be realized through the efficient management of a retail grocery chain's logistical requirements and supporting infrastructure, other approaches to improving profitability can include various branding techniques that differentiate a chain from its competitors, but even these require careful analysis of the logistical requirements that are involved. For instance, according to Lynch, Keller and Ozment, "Retail grocery chains are either cost leaders or differentiators. In the retail grocery business, logistics is of paramount importance due to the low margins, numerous inventory turns, and perishable nature of product" (2000, p. 47). In this environment, identifying opportunities to promote increased profitability in a retail grocery store's operations represents a timely and important enterprise, which is the purpose of this study as described further below.

Purpose of Study

The purpose of this study was three-fold as follows:

1. To deliver a comprehensive review of the relevant literature concerning customers' brand loyalty and attitude towards the own labels in general and in the U.K.'s retail grocery sector and at Tesco in particular;

2. To provide an analysis of the quantitative data concerning the effectiveness of Tesco's private branding strategies; and,

3. To provide a synthesis of the qualitative and quantitative data that emerged from the research in order to develop salient conclusions and provide informed Recommendations for areas in need of future study.

Importance of Study

This study is important for several reasons. In the first place, an increasing number of companies have been shown to be willing to expend the resources that are required to build strong brands based on the benefits that accrue to companies and consumers alike because brand names serve to assist customers in identifying products in which they may have an interest (Hu & Chuang 2009). According to Hu and Chuang, "As consumers' lives become more rushed, brand names simplify consumer's decision making and reduce purchasing risk. Second, brands also represent a signal about product quality and functions to the customers. Consumers often learn about brands through past purchase experiences, word of mouth from friends, or from other media, so they can identify which brands satisfy their needs and which ones do not" (2009, p. 129).

Likewise, brands provide a number of benefits for the companies involved as well. For example, Hu and Chuang emphasize that, "Brand names and trademarks are both important intellectual properties for a company, which protect unique product features from being copied by competitors. Next, brand loyalty provides predictability and security of demand for the firm and creates barriers to impede other competitors to enter the market. In general, brand loyal customers are willing to pay a higher price for desired brands" (2009, p. 130). Beyond the foregoing benefits, companies in general and retail grocery store chains in particular can gain competitive advantage through various branding strategies. In this regard, Hu and Chuang conclude that, "Brands are enormously valuable pieces of legal property that can influence consumer behavior, and provide the security of sustaining future revenues to their owner. Thus, building and managing brands awareness and loyalty are perhaps a marketer's most important tasks" (2009, p. 130).

Scope of Study

The review of the literature extends to the global retail grocery industry, but there was a specific focus on the grocery retail sector in the United Kingdom and Tesco's branding practices in particular.

Rationale of Study

Even during periods of economic downturn, some industries are more resistant to recessionary forces because of the relative elasticity of the demand for their products and services. For example, consumers must continue to purchase groceries during recessionary periods, but it is reasonable to suggest that they will purchase fewer high-end items and will become more selective in their choice of retail stores for their grocery needs. In this competitive environment where profits may be razor thin, retail grocery stores that have the most efficient operations will enjoy the competitive advantage needed to weather the economic downturn periods. One such retail grocery store chain is Tesco, whose superstores have become a ubiquitous throughout the United Kingdom in recent years.

Overview of Study

This study used a six-chapter format to achieve the research purpose stated above. Chapter one introduced the issues under consideration, including a statement of the problem, the purpose and importance of the study, as well as its scope and rationale. Chapter two of the study was used to deliver a critical review of the relevant and peer-reviewed literature concerning the retail grocery industry in general and Tesco in particular. Chapter three more fully describes the study's methodology, including a description of the study approach, the data-gathering method and the database of study consulted. Chapter four consists of the analysis of the quantitative data developed during the research process and the penultimate chapter presents the study's conclusions. Finally, salient recommendations are presented in chapter six.

Chapter 2: Review of Related Literature

Background and Overview

The literature is consistent in emphasizing the importance of retailing practices on consumer lifestyles and the larger society in which they live and work. For example, according to Fernie, Fernie and Moore, "Retailing impacts upon our lives. In terms of economic significance, the sector makes a major contribution to the Gross Domestic Product of countries (around 10.5 per cent in the U.K.)" (2003, p. 3). This major impact is due in large part to the fundamental changes that have characterized the retail sector in recent years. In this regard, Fernie et al. note that, "Moreover, retail organizations… [END OF PREVIEW] . . . READ MORE

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