Beyond private label panache: the effect of store image and perceived price on brand prestige

Abstract

Purpose – The purpose of this study is to explore the effect of store image and perceived price on the consumer’s perception of private label brands (PLBs) that have grown in stature in recent decades and are increasingly viewed as a strategic asset of retailers. In particular, the tenets of perceived quality, loyalty and awareness/associations, are argued to underpin the construct of brand prestige, which is used as a vehicle to assess consumers’ affinity toward the brand. Design/methodology/approach – A consumer survey was conducted with a specific focus on purchasers of private label branded breakfast cereal in Cape Town, South Africa. The data from 205 respondents were scrutinized through partial least squares path modeling, which empirically tested the eight hypotheses embedded within the conceptual model. Findings – The results suggest that perceived price is a powerful influencer in this process; however, the role of store image was seen to be less obvious. At a granular level, a relationship between store image and perceived quality was found to exist, but not so for loyalty and awareness/associations. In this respect, store image was seen as subordinate to the perceived price of the merchandise, bringing into question the assumed stature of store image as a key decision influencer in an emerging market context. Research limitations/implications – This study was confined to a single product category, within a particular retail segment, as the study focused on PLB breakfast cereal products sold within mainstream South African supermarket stores. This was desirable so as not to infuse varying merchandise category profiles into the model. Furthermore, as data were collected exclusively in the city of Cape Town, the results cannot necessarily be extrapolated to South Africa as a nation. Finally, it should be noted that the study was conducted in an emerging market setting. Developed markets, where consumers are considerably more au fait with PLBs and have increased purchasing power, may therefore produce a different set of results. Thus, our findings are not necessarily generalizable to all branches of the retail sector, nor are they necessarily applicable throughout, and across, different countries. It is hoped that subsequent studies will probe these areas and provide comparative viewpoints. Practical implications – This study upholds the view that price is a key driver in building PLBs, but interrogates the popular belief that store image automatically adds value in fostering goodwill toward the brand. Originality/value – This study is one of the first to investigate the notion of private label prestige (grounded in that of brand equity theory) in an emerging market context. In doing so, the study postulates that the “halo effect” of store image on the comprehensive evaluation of the brand might not be as prominent as maintained in existing literature. The study, therefore, questions the role of store image and perceived price of the merchandise, finding that – in actual fact – these do not fare equally in consumers’ cognitive assessment of the private label merchandise.