House Brands

Published Date: 02 Nov 2017

CHAPTER ONE: INTRODUCTION

1.1 Introduction

House brands, also known as private labels or store brands, are generally brands owned, controlled, and sold exclusively by retailer under its own brand name (Sethuraman & Cole, 1999); whereas national brands, also known as are defined as products that produced, widely distributed under the name of the manufacturer (American Marketing Association, 2009).

In recent years, the market share of house brands has been growing rapidly since house brands were first introduced over 100 years ago in few product categories and there is a growing concern for the manufacturer of national brands to view house brands as their strong competitors (Abhishek and Koshy, 2008).

Nowadays, house brands are considered to be comparable to national brands in many ways; as a result, the manufacturers of national brands have started to take appropriate actions to compete with house brands. (Parker and Kim, 1995, as cited in Hultman, Opoku, Salehi-Sangari, Oghazi, and Quang, 2008). This development is called "a battle between manufacturers' brands and house brands" by Kotler (1997, as cited in Hultman et al., 2008).

Understanding the factors influencing consumers' brand preference helps marketer to better understand the reasons why some of the consumers prefer to buy national brands whereas some of them are prone to purchase house brands. It is important for marketers to understand consumers' preference as this may help them to decide on their marketing strategies, so that they can hold a competitive position in the market, and also increase their sales.

Therefore, this study focuses on examining the factors influencing consumers' choice of brand. It begins with a background to current research, followed by sections which describe the research problems, objectives, justification of the study. Research questions of this study are also provided, followed by the significance of study and the structure of the research. In the last section, scope of study is described.

1.2 Background of study

The demand for house brand products has increased in recent years. In U.S, house brands now account for one of every five items sold in the retail outlets; they represent more than $83 billion of current retail business (Private Labels Manufacturers Association, 2009).

In Europe, house brands hold a strong competitive position, especially in the United Kingdom and Switzerland, house brands now account for one of every two products sold (PLMA, 2009). According to the PLMA 2009 International Private Label Yearbook, house brands have achieved at least a 30% market share in 10 countries (See figure 1.1). In the five major markets: UK, Germany, France, Spain and Italy, house brands are widely accepted by consumers and hold a 25- 33% of value sales from February 2008 to 2009, whereas Switzerland holds the highest market share in Europe, standing at 54% (Nielson, 2008).

However, house brand is still in its infancy stage in Asian countries such as Malaysia. Awareness and acceptance of house brands in Asia and other developing markets are still low. In some of these markets, house brand is still a new concept for the consumers. In addition, the appeal of house brands is limited by the attraction of major well-known multinational and local brands with strong brand equity supported by heavy advertising and promotions (Nielson, 2008).

According to a survey did by Nielsen (2005) which polled over 21,100 respondents in 38 markets from North America, Latin America, Europe, Asia Pacific, and South Africa, eight of the bottom 10 hailed from Asia, with Japanese and Malaysian consumers (35%) in least agreement that house brands were a good alternative to national brands. This result skewed heavily with other regions such as the Netherlands (91%), Portugal (89%) and Germany (88%), where most of the consumers agreed that house brands were a good alternative to other brands.

Unlike the developed house brand markets in Europe and the US where the acceptance of retailer house brands and product penetration is very high, in Malaysia, many locals still perceive house brands as "copycat", an imitation of national brands (Tan, 2009). According to Nielsen (2008), more than two thirds of consumers in Malaysia believe that house brands are for those that couldn't afford national brands. This perception could be resulted from the lack of understanding about house brands. The consumers know less about house brands, and therefore assume that they have inferior quality based on their packaging and price, and target on consumers who can't afford national brands which are more expensive in term of price (Nielsen, 2009).

In Malaysia, the sales of house brands only contributed 4.4% to the total retailer sales between April 2008 and March 2009 (Kam, 2008). According to a survey conducted by the Nielsen Co. (2008), the sales of house brand goods from February to September 2008 in Malaysia grew 32%, which was far ahead of the 15% of growth in national brands, compared with the same period in 2007. The house-brand market in Malaysia was worth RM240mil as at September 2008. There is still a long way for Malaysian house brand market to go to reach the status of developed house brand markets such as the Switzerland, where the house brands capture more than half of the market shares. Figure 1.2 shows the sales value of house brands and national brands in Malaysia's modern trade channels, which include hypermarkets, supermarkets, convenience stores and pharmacies.

House brand thrives in "low-involvement" categories where the products meet consumers' more basic and functional needs. In modern trade channels, the top three product categories with the highest penetration of house brands in terms of value share are bottled water (51%), sweetener (42%) and cooking oil (24%). In terms of growth in value share, bottled water has increased by 12 percent, sweetener by 21 percent and cooking oil by a 78 percent. Figure 1.3 shows the top three penetrated house brands in modern trade channels.

In order to boost up the development of house brands and national brands, some associations are formed such as Private Labels Manufacturers Association (PLMA), European Brands Association (AIM) and etc. The former is one of the most well-known associations in house brand industry whereas the latter is actively involved in national brand industry.

PLMA is an international association headquartered in Amsterdam and New York. It was founded in 1979 with the mission of boosting up the development of house brands in the market place. It connects with more than 3,200 manufacturers and suppliers worldwide, ranging from companies that specialize in house brand to those that produce house brand products in addition to their own manufacturer brands. PLMA offers trade shows, seminars, workshops, education programs, and services which helps its members to build their house brand programs (PLMA, 2009).

AIM was founded in 1967. It represents the vast majority of European manufacturers of national brand goods on the key issues which influence the ability of manufacturers to design, to market, to distribute and to sell their brands. Today, AIM has a wide network which is formed by 1800 corporate members and national associations in 22 countries. Some of the examples for AIM's corporate members are Coca-cola, Nestle, L'Oreal, Unilever and etc. Its mission is to create a fair and vigorous environment for manufacturers of national brand goods, which fosters innovation and guarantees maximum value to consumers (AIM, 2009).

1.3 Problem Statement

This research focuses on an area of increasing interest to marketers and academic researchers, namely house brands, as the market share of house brands has been growing rapidly in recent years (Batra and Sinha, 2000). The recent economic recession in Malaysia has influenced people in many aspects, especially their buying behavior. In order to survive in such a difficult period, people tend to become penny pinching, do their grocery shopping in a prudent and thrifty manner. As a result, house brand has become their alternative other than national brand as it is offered at a cheaper price (Kam, 2008).

The growth of house brands has increased the competition with national brands to such an extent that most national brand goods manufacturer, as well as the brand leaders, cannot afford to ignore it (Abhishek and Koshy, 2008). Manufactures should regard house brands as strong competitors and take them seriously in order to retain their market shares.

The topic of house brands has gained interest and attention from researchers and marketers. In literature, researchers have attempted to identify the influential factors which lead to the success of house brands (e.g. Richardson, Jain, and Dick, 1996) and the strategies that manufacturers implemented to compete with house brand retailers (e.g. Burt, 2000). Retailers and manufacturers have sought effective tactics to better position and promote their own brands in an attempt to retain their market shares.

1.4 Objectives

In response to the problems stated above, the objectives of this research are as follows:

• To study the household consumers' perception on private brands and national brands respectively;


• To identify factors that influence household consumers to purchase house brands or national brands; and


• To examine whether demographic characteristics of consumers influence consumers' brand preference.

1.5 Justification

Some areas have been neglected although there is an increasing interest in house brand by academics. There are three primary justifications provide for this study. First, most of the studies are focus on the house brands in foreign countries such as the United States, the United Kingdom, and so on. Such studies may not be applicable to Malaysia as the political, social, economic, demographic situations and trends are different. Their findings may not be able to explain the preference of consumers toward national brands or house brands. In addition, most of the studies are focus on discussing factors leading to the success of house brands; less attention has been paid to study the factors that influence consumers' choice of brand. Therefore, there is a need to conduct more studies about these.

As mentioned in the background of study previously, house brand is still in its early stage of development in Malaysia. Compared to other countries such as Switzerland and the United Kingdom, where house brands made up of more than 50% of the market share, house brands in Malaysia only have 4.4% the of market share. It is evident that the growth of house brand has not kept pace with other markets. Therefore, it is critical for future researchers to conduct more studies about house brands in Malaysia.

Since the sales of house brands in Malaysia are growing, and the manufacturers of national brands are facing threats, more research regarding the comparison between house brands and national brands should be done, so that the manufacturers of national brands can come up with solutions to remain dominant position in the competition.

1.6 Significance of study

This paper seeks to make a contribution to manufacturers of national brands who are developing effective strategies to overcome the threats brought by house brands and trying to remain the competitive position in the market.

In addition, for house brand retailers who are trying to gain more market share, this paper will be helpful to them in understanding more about consumers' perception towards their own brands and national brands and coming up with effective strategies, so that they can better position their own brands in the market place.

Last but not least, this paper also contributes to inspire future researchers to do further study about the topic and increase public acceptance towards house brand products. In addition, this research may help consumers to purchase in a wiser manner.

1.7 Organization of the study

This research is presented in five chapters. Chapter two of this research provides some definitions to the key terms used in the research. A review of literature is also presented.

Chapter three presents the research methodology and estimated procedures that will be used for data collection and analysis. In addition, the hypotheses, independent and dependent variables of this study are also discussed.

Chapter four will present the results of the data analysis and the findings will be discussed. In the final chapter, conclusions will be drawn. Limitations of the study will be identified and areas for further research will be suggested.

1.8 Research questions

The main purpose of this study is to determine the factors that influence the preference of consumers towards national brands and house brands. In response, the research questions for this study will be:

1. Do demographic factors such as age, gender, education background, household income level and household size affecting the consumers' choice of brand?


2. Does price consciousness affecting consumers' choice of brand?


3. Does the quality variability between national brands and house brands affecting consumers' choice of brands?


4. Does the "search" versus "experience" nature of product features affecting consumers' choice of brands?


5. Do prior buying experiences affecting consumers' choice of brands?

1.9 Scope of Study

The respondents for this study will be household-consumers who have the experience of purchasing either national brand products or house brand products in Malaysia's modern trade channels such as hypermarkets, supermarkets, convenience stores and pharmacies.

CHAPTER TWO: LITERATURE REVIEW

2.1 Introduction

This chapter begins with the definition of some key terms used in this research, followed by an overview of studies that have examined the influential factors on choice of brands. After that, five important factors which chosen as independent variables in this study will be discussed in detail.

2.2 Definition of terms

This section provides clear definition for the terms "house brands" and "national brand", which will be used throughout this study.

2.2.1 House Brands

In general, house brands are defined as products sold under a retailer's own brand name or trade mark through its own outlets. Sethuraman.R & Cole.C (1999) has defined house brands as "brands owned, controlled, and sold exclusively by retailer under its own brand name". That brand can be the retailer's own name or a specific name created by the retailer (Fraser, 2009). For instance, in Malaysia, the Jusco hypermarket chain carries the "Jusco Selection" brand for its house brand products.

According to PLMA, the manufacturers of house brand products are divided into three general classifications, which include large manufacturers who produce both their own brands and house brand products; small and medium size manufacturers that specialize in particular product lines and concentrate on producing house brands almost exclusively; and major retailers or wholesalers that operate their own manufacturing plants and provide house brand products for their own stores.

Nowadays major supermarkets, hypermarkets, drug stores and discounters provide a wide range of products under their own brand which include fresh, canned, frozen, and dry foods; snacks, drugs, cosmetics, household and laundry products, etc, (PLMA, 2009)

In the literature, there is a variety of terms used for house brands and there is no universally agreed term for house brands (Fraser, 2009). Store products meeting the definition of house brand are also known as store brands, private labels, private brands, retail brands, retail own brands, own labels or controlled labels (Chen, 2005). In order to avoid confusion, the term house brands will be used throughout the study.

2.2.2 National Brands

National brands, also known as manufacturer's brands, are defined as brands marketed throughout a national market and are owned and promoted usually by large manufacturers. As opposed to local brands (products that distributed only in some areas of the country) and house brands, national brands are products that produced, nationally distributed under the name of the manufacturer (American Marketing Association, 2009). For example, the leading brands today such as Coca-Cola, Marlboro, Disney, etc are considered as national brands (Hultman et al., 2008).

Past researchers have provided different definitions to the term "national brands". According to De Chernatony and McWilliam (1988, as cited in Hultman et al., 2008), a manufacturer brand is "an added value entity conceived and primarily developed by a manufacturer for a specific group of customers and consumers, which portrays a unique relevant and distinctive personality through the support of product development, promotional activity and an appropriate pricing and distribution strategy". Throughout this study, the term "national brands" is used to avoid confusion.

2.3 Comparison between house brand and national brand

House brands have been growing rapidly in the marketplace in recent years and have achieved at least a 30% market share in 10 countries (PLMA, 2009). In order to compete with national brand, house brand retailers have tried to boost their own brands' image and gain their own identity in the market place by improving their product quality (Mieres, Martin and Gutierrez, 2006).

However, several studies have found that the idea that house brands are a second-rate alternative still persists among a large number of consumers who perceive house brands as inferior to national brands in terms of quality, taste, aroma and reliability (e.g.; Cunningham, Hardy and Imperia, 1982; Richardson, Dick and Jain, 1994).

As stated in a study by Sethuraman (2000), national brands offer hedonic utility and quality; whereas house brands are generally offered with poor packaging at lower price. However, Private Label Manufacturer Association (2009) indicates that most of the house brand products are made of the same or comparable ingredients as the national brands; therefore consumer can be assured with the quality of house brand products. According to a survey conducted by Nielsen (2005), a global average of 62 percent of consumers agrees that the quality of house brand products is as good as the national brands.

In most cases, house brand products are 10 to 30 percent lower in price compared to national brands as the retailer can optimize the production based on consumer demand and reduce advertising costs (Baltas, 1997). Figure 2.1 shows the price gap between house brands and national brands in 10 product categories.

House brands are lack strong brand recognition and rarely advertised at the national level (Cunningham et al., 1982) whereas national brands are advertised more heavily and enjoy a level of equity and image (Ailawadi, 2001). Extensive advertising, strict quality controls and superior extrinsic cue effects have led to strong national brand images signaling to many consumers a quality reassurance (Richardson et al., 1994).

Table 2.1: Price Gap between House Brand and National Brand Products

House Brand Price Vs. National Brand Price
Bottled Water	-27%
Sweetener	-17%
Cooking Oil	-18%
Makeup Remover	-33%
Sweetened Condensed Milk	-18%
Toilet Tissue	-21%
Facial Tissue	-37%
Chlorine Bleach	-47%
Dry Pasta	-13%
Batteries	-73%
Average	-30%

Adapted From: Nielsen (2008)

2.4 Influential factors

In the literature, house brands have been studied by researchers and marketing scholars for more than four decades (Narasimhan and Wilcox, 1998). As the market share of house brands has been growing rapidly since house brands were first introduced over 100 years ago (Abhishek and Koshy, 2008), previous researchers have examined different influential factors in order to find out the reasons lead to the success of house brands (Chen, 2005).

In extension to these studies, researches from a later time, 1990s to the present have studied more on the influencing factors on house brand purchase (e.g. Richardson, Jain and Dick, 1996; Baltas, 1997). Richardson et al. (1996) has identified that familiarity with house brands, intolerance for ambiguity, perceived quality variability between national and house brand products, perceived risk, perceived value for money, household income and household size are factors that influence house brand proneness.

In the study of Batra and Sinha (2000), four consumer-level factors that influence the purchase of house brands are examined, which include price consciousness, consequences of making a mistake in a purchase, "search" versus "experience" nature of product features, perceived quality variability between national brands and house brands.

The demographic factors are controversial to have a strong influence on the choice of brands. In the studies of Frank and Boyd (1965) and Burger and Schott, (1972), demographics variables are concluded as "poor predictors" of the consumers' brand choice; whereas in some of the studies, demographic factors are found to be influential to consumers' choice of brands (e.g. Richardson et al., 1996; Glynn and Chen, 2009).

As an extension of previous studies, in this study, factors such as demographic characteristics (i.e. age, gender, household size, household income and education background), price consciousness, perceived quality variability, "search" versus "experience" nature of product features, and also prior buying experience will be used as independent variables and be discussed in the following section of this chapter.

2.4.1 Demographic characteristics

There have been many research studies that have attempted to examine whether there is a relation between the proneness to purchase house brands and the demographic or socio-economic characteristics of consumers (Baltas, 1997). However, the results of those studies varied wildly and the findings were mixed.

Earlier studies showed that there was no difference between house brand and national brand buy in terms of demographic characteristics. For instance, Frank and Boyd (1965) conclude that house brand and national brand consumers are basically indistinguishable in terms of demographic and socioeconomic characteristics. In addition, Myers (1967) finds that demographic characteristics have little predictive power for demographic and socioeconomic variables in attempting to predict the proportion of a household's house brand purchase. He also concludes that consumers are best classified by their perceptions toward house brands rather than their individual characteristics. Similarly, Burger and Scott (1972) find that house brands buyers are spread across all socioeconomic groups; whereby the demographic variables fail to distinguish house brand buyers and national brand buyers. They also find that attitudinal variables have some degree of discrimination.

However, later studies find that house brand buyers can be distinguished through certain personal characteristics. For example, in the study of Richardson et al. (1996), familiarity with store brands, extrinsic cues usage in product evaluation, perceived quality variation, perceived risk, perceived value for money, income and family size are identified as factors influencing choice of brand. In addition, Omar (1996) finds that personal characteristics are useful in identifying segments of national and house brand buyers.

Five demographic characteristics, which include age, gender, education background, annual household income and household size, will be discussed in the following subsections.

2.4.1.1 Age

Age is a common factor to be examined frequently in the studies of consumers' brand preference. However, some studies indicated that age was not an important factor influencing the choice of brand. For example, Baltas and Argouslidis (2007) find that age has no significant effect on house brand purchases. Similarly, Glynn and Chen (2009) conclude that age is not important in identifying buyers who are prone to purchase house brand.

In contrast, some researchers argue that age is a good indicator in identifying house brand purchasers from national brand buyers. Richardson, Jain and Dick (1995) find that older shoppers, who aged 65 or above, are more prone to purchase national brand while younger shoppers, who aged 22 or below, are more prone to buy house brand. Omar (1996) identifies that younger shoppers are more likely to accept house brands than older shoppers, who tend to avoid house brands.

2.4.1.2 Household size

In literature, household size has been studied and argued to have strong influence on consumers' brand proneness. Some studies conclude that the larger the size of household, the greater the house brand proneness. For example, Richardson et al. (1995) propose that households of a larger size may face financial pressure and resulted to be house brand-prone; Similarly, in a study by Baltas and Argouslidis (2007), it is indicated that larger households, whose budget has to be divided among a larger number of people, are more prone to purchase more house brands to reduce cost of grocery shopping.

The significant relationship between household size and choice of brands is also seen in other studies which show that smaller households are more likely to confine their purchase to national brand. A study by Omar (1996) reveals that smaller households are more likely to purchase national brand.

2.4.1.3 Household income

Household income determines the product price that the consumers are likely to pay for. During economic recession, the rising cost of living has switched consumers into cost-saving mode to stretch their household budgets; as a result, the consumers become more price-conscious and likely to purchase house brands, which are cheaper than national brands in price (ACNielsen, 2009). Marketing surveys and feedback have shown that consumers with higher-income levels are more receptive towards house brands (Lim, 2009).

Many research studies have identified that household income has a significant relationship with choice of brand. For example, Richardson et al. (1995) find that households with lower income and with higher income are prone to purchase national brands whereas middle income families are more likely to purchase house brands. Richardson et al. (1995) propose that at a higher income level, households could afford to buy national brands; as for the households with lower income, the aversion to house brands may reflect limited expertise in the process of selecting brand or a lack of need to stretch their shopping budget. Consistently, in the study of Glynn and Chen (2009), households with higher incomes are found to be less likely to purchase house brand products as they have fewer financial constraints and therefore show less price concern in making purchase decision.

Baltas and Argouslidis (2007) state that households with greater income are more prone to purchase house brands. Their findings contradict the long-held stereotypes of the house brand buyer and reflected the changing image of house brands in current market.

2.4.1.4 Education

The impact of education on consumer's brand preference is widely discussed. Some studies suggest that well-educated consumers are less likely to buy house brands. Glynn and Chen (2009) indicate that high-educated consumers, who are more likely to earn higher income, tend to buy national brand rather than house brand as they have fewer financial constraints and are more concern about quality. Omar (1996) finds that house brand buyers have lower education than national brand buyers.

On the other hand, some studies argue that well-educated consumers may purchase more house brands. Richardson et al. (1996) propose that better educated consumers may be better able to process information about intrinsic product attributes. In addition, nowadays house brands are offered with good quality at reasonable price which lead to a "smart buy" impression that stimulate high- educated consumers to buy house brands (Baltas and Argouslidis, 2007).

2.4.1.5 Gender

Gender is examined frequently in the studies of consumers' brand preference. However, some studies argue that the effect of gender on consumers' choice preference is not significant (e.g. Burton, Lichtenstein, Netemeyer, and Garretson, 1998; Baltas and Argouslidis, 2007; Glynn and Chen, 2009).

Female consumers are often chosen as samples in early studies to examine consumers' brand proneness. These studies do not indicate whether male consumers have the same purchase behavior as females (e.g. Myers, 1967; Burger and Schott, 1972; Livesey and Lennon, 1978). Later studies indicate that females are more likely to purchase house brands than males (Omar, 1996; Ailawadi, 2001).

2.4.2 Price consciousness

Many research studies propose that consumers' perceptions of price are important in influencing consumers' choice of brand (e.g. Sinha and Batra, 1999; Glynn and Chen, 2009). In a study by Lichtenstein, Bloch and Black (1993), price consciousness is defined as "the degree to which the consumer focuses exclusively on paying a low price", which means the price is used by consumers as a decision making criterion.

In general, the price of house brand products is usually 10 to 30 percent lower than national brand products as the retailer can optimize the production based on consumer demand and reduce advertising costs (Baltas, 1997). Since house brands are usually lower in price compared to national brand products, price consciousness is often used as one of the attitudinal characteristics to describe house brand buyers in research studies (Glynn and Chen, 2009).

Price conscious consumers focus on paying low prices and therefore tend to purchase more house brands (Ailawadi et al., 2001). They obtain joy and enjoyment from shopping for lower prices (Palazon and Delgado, 2009). Batra and Sinha (2000) propose that price consciousness varies among consumers; some consumers may concern more about the prices they pay than other people. Therefore, base on consumers' price consciousness, different consumer segments can be identified. According to Lichtenstein et al. (1988), consumers who are less price conscious pay less attention to the price aspects of the purchase and less involve in price search. As opposed, consumers with high price conscious are actively involved in higher levels of price search (Lichtenstein et al., 1988).

Studies have examined that price consciousness is significantly influence consumers' choice of brand. For example, the findings of Burton et al. (1998) show that, consumers who tend to pay low prices have a more favorable attitude towards purchasing house brands. This statement is also supported by Ailawadi et al. (2001). Omar (1996) indicates that consumers who buy house brands have more price consciousness than those who buy national brands.

2.4.3 Quality variability between house brand and national brand

The market share of house brands has been growing rapidly. This is in part due to the constant evolution they have undergone since house brands were first introduced over 100 years ago in few product categories (Abhishek and Koshy, 2008). Retailers have tried to turn their own brands into an alternative other than national brands to consumers by continuously improving the quality of their brands, repositioning their products, as well as changing the image of their own brands (Mieres, et al., 2006).

However, research studies show that a large number of consumers still perceive house brands as inferior in product quality compared to national brand (e.g. Cunningham et al., 1982; Richardson et al., 1994). In fact, previous studies have suggested that significant differences exist between house brands and national brands in quality (e.g. Cunningham et al., 1982; Richardson et al., 1994), the risk associated with buying a house brand product is significantly higher than that of buying a national brand alternative (e.g. Livesey and Lennon, 1978; Richardson et al., 1996).

Quality perception is defined as the consumer's judgment about a product's overall excellence or superiority and it is found to be a critical element in consumer purchase decision (Mieres et al., 2006). Some studies have shown that the difference in quality had a positive and significant influence on consumers' brand preference. For example, Batra and Sinha (2000) observe that the perceived quality variation between national and house brand products is also likely to directly influence the perceived risk associated with buying these products. Consistently, in the study of Glynn and Chen (2009), house brand purchasing is found to be higher where consumer perceptions of quality variability between national brands and house brands are lower. Their findings suggest that the greater the perceived equality is between house brands and national brands in terms of quality, the less the difference will be in perceived risk between the two types of brands.

2.4.4 "Search" versus "experience" nature of product features

Products can be classified into two distinctive types - search versus experience on the basis of related attributes or benefits (Erdem and Swait, 1998). Search-type attributes refer to the touchable features that can be verified by consumers through direct inspection or information which are readily accessible before purchasing the product, for instance, color, quality standards, or other written description on product packaging; whereas experience-type attributes refer to the intangible features that can be verified only through using the product, for example, aroma, reliability, or endurance (Batra and Sinha, 2000).

According to Erdem and Swait (1998), consumers may have lower uncertainty and perceive risk when the products possess more search attributes than experience attributes. In their study, a comparison between two products, jeans and juices were made. They found that juices are perceived as having lower risk compared to jeans. This is because juices possess more search attributes that consumers can obtain through careful reading of product labels at relatively low information cost whereas jeans have long term experience attributes such as abrasion resistance. Their study suggests that a well-known brand can help consumers to save more information cost, reduce perceived risk and thus become more likely to purchase products which experience attributes are more important then search attributes.

Some studies propose that the search versus experience nature of the product attributes should be included as one of the factors that influence the consumers' brand preference. Erdem & Swait (1998) and Batra & Sinha (2000) found that consumers prefer to purchase national brands than house brands in product categories where they cannot rely on the written information provided by the product packaging to evaluate the product quality accurately. In contrast, consumers tend to buy house brands when they can easily compare products based on written or quantifiable descriptions in product packaging, advertising, promotional campaigns, and other sources of information (Glemet and Mira, 1993; Omar, 1996). Consistently, Lee, K.N. Kwon, and Y.J. Kwon (2008) indicate that search attributes, as opposed to experiential attributes, are likely to increase consumers' house brand proneness.

Lee et al. (2008) suggest that marketers can increase the search attributes of a product even if it is transitionally perceived as an experience good. By providing extensive third-party reviews and relevant information, marketers can assist consumers in assessing a product's quality, which may increase consumers' probability of choosing house brands.

2.4.5 Prior buying experience

Some studies argue that prior buying experience may influence consumers' brand preference. Prior experience with the use and consumption of a product reduces the risk associated with buying it and increases the probability that consumers buy those brands that have met their quality standards in the past (Nelson, 1970, as cited in Mieres et al.,2006). The experience of buying a specific product results in a kind of learning process that provides knowledge to consumers on how to evaluate the product as well as making good purchase choice (Seth and Venkatesan, 1968).

Mieres et al. (2006) propose that greater experience with the product increases the possibility that the consumer will try house brands, and increase familiarity with this type of brand. For example, consumers may have tried house brands and, if the house brand product meets their quality standards, it is very likely that they will start purchasing those brands frequently in future. On the other hand, the prior great buying experience also allows consumers to discover that house brands are not inferior in terms of quality compared to national brands (Mieres et al., 2006).

2.5 Conclusion

This chapter provides a review of a number of studies that had examined factors influencing consumer proneness to purchase house brands or national brands. In particular, this chapter discusses the independent variables that will be used in this study, which include consumers' demographic characteristics, price consciousness, quality variability, the search versus experience nature of product features, as well as the prior buying experience. Findings of current studies have shown that these important factors have different degrees of influence on consumers' brand preference. The conceptual framework and hypotheses developed based on these variables are discussed in detail in the following chapter.

CHAPTER THREE: RESEARCH METHODOLOGY

3.1 Introduction

The purposes of this chapter are to discuss the hypotheses developed based on the literature review; and describe the research methodology and procedures that will be used to examine the hypotheses. As reviewed in chapter two, five independent variables are identified. This research seeks to examine the factors that influence consumer's choice of brand.

This chapter is presented in five sections. It begins with the illustration of conceptual framework, followed by the discussion of hypotheses proposed for this study. The following sections discuss the research methods to be used, which include the research design, sources of data, data collection method, sources of data, sampling method, target respondents, sample size, study area, questionnaire design, scaling techniques, and data analysis technique. In the last section, a conclusion is drawn to summarize the whole chapter.

3.2 Conceptual Framework

This study focus on identifying factors that influence consumers' choice of brand. Figure 3.1 is the conceptual framework developed based on the literature review to illustrate the variables to be used in this study. As the framework shown, the dependent variable of consumers' house brand purchase is influenced by five independent variables, which include demographic characteristics, price consciousness, quality variability, "search" versus "experience" nature of product features and former buying experience. A positive relationship is assumed to be existed between consumers' demographic characteristics, price consciousness, quality variability, and "search" versus "experience" nature towards consumers' choice of brand.

3.3 Hypothesis Development

A hypothesis is as a logically conjectured relationship between two or more variables expressed in the form of a testable statement (Sekaran, 2002). In this study, hypotheses relating to consumers' demographic characteristics, price consciousness, quality variability, former buying experience, and "search" versus "experience" nature of product features, have been developed.

3.3.1 Demographic Factors

Many researchers have attempted to examine whether demographic characteristics influence consumers' brand preference. However, many of the findings are mixed, confusing and outdated. Some studies indicate there is no relationship between demographic characteristics and choice of brand (e.g. Frank and Boyd, 1965; Myers, 1967; Burger and Scott, 1972) whereas some argue that such relationship does exist (e.g. Richardson et al., 1996; Omar, 1996). To answer the review questions, five demographic characteristics which include age, gender, education background, household income, and household size will be examine in this study.

Contradictory findings in the literature exist as to the influence of age on the brand preference. Older shoppers prefer national brand while younger shoppers favor house brand Richardson et al. (1995). Omar (1996) identifies that younger shoppers are more likely to accept house brands than older shoppers, who tend to avoid house brands. The influence of demographic characteristics will be examined through the hypothesis developed as follows:

H1: Age influences consumers' choice of brand.

Some studies argue that the effect of gender on consumers' choice preference is not significant (e.g. Burton et al., 1998; Baltas and Argouslidis, 2007) while some studies indicate that the effect is significant (e.g. Omar, 1996; Ailawadi, 2001). Research studies indicate that females are more likely to purchase house brands than males (Omar, 1996). Hence, a hypothesis is developed to examine this phenomenon:

H2: Gender influences consumers' choice of brand.

Individuals with higher education background possess greater income and thereby enjoy more liberty in brand choice. As a result, they may tend to purchase national brands (Glynn and Chen, 2009). On the other hand, more highly educated individuals may be better able to distinguish between national and house brand products through related cues than less highly educated individuals (Richardson et al., 1996). In the absence of strong theoretical support for the effect of education on choice of brand, a hypothesis is developed:

H3: Education background influences consumers' choice of brand.

Some research studies propose that consumers' brand preference is influenced by household incomes (e.g. Richardson et al., 1995; Glynn and Chen, 2009). Lower income households are prone to purchase house brands because of financial pressure (Frank and Boyd, 1965) whereas higher income households tend to buy national brands as they have fewer financial constraints (Glynn and Chen, 2009). Hence, it is hypothesized that:

H4: Household incomes influence consumers' choice of brand.

Regardless of income or education, the greater the size of the household, the fewer the resources that are available to make ends meet Consequently, it is reasonable to expect that the greater the size of the household, the higher the chance to purchase house brands rather than national brands to reduce cost of grocery shopping (Richardson et al., 1996). Smaller households are found to be more likely to purchase national brand (Omar, 1996). Therefore, it is hypothesize that:

H5: Household size influences consumers' choice of brand.

3.3.2 Price Consciousness

Studies have examined that price consciousness is significantly influence consumers' choice of brand (e.g. Sinha and Batra, 1999; Glynn and Chen, 2009). Consumers who are less price conscious pay less attention to the price aspects of the purchase and less involve in price search whereas those who are more price conscious are actively involved in higher levels of price search (Lichtenstein et al., 1988). Consumers who tend to pay low prices prefer to buy house brands (Burton et al., 1998). Hence, it is hypothesized that:

H6: Price consciousness influences consumers' choice of brand.

3.3.3 Quality variability

Quality perception is found to be a critical element in consumer purchase decision (Mieres et al., 2006). House brands are generally considered as inferior to national brands in terms taste, texture, aroma, reliability of ingredients, nutritional value, and overall quality (Cunningham et al., 1982). Some studies have shown that the difference in quality had a positive and significant influence on consumers' brand preference (e.g. Batra and Sinha (2000; Glynn and Chen, 2009). House brand purchasing is found to be higher where consumer perceptions of quality variability between national brands and house brands are lower (Glynn and Chen, 2009). Therefore, it is hypothesized that:

H7: Quality variability influences consumers' choice of brand.

3.3.4 "Search" versus "experience" nature of product features

Some studies find that consumers tend to buy national brands than house brands when they cannot rely on the written information provided by the product packaging to evaluate the product quality accurately (e.g. Erdem & Swait, 1998; Batra & Sinha, 2000).

In contrast, when consumers can easily compare products based on written or quantifiable descriptions in product packaging, advertising, promotional campaigns, and other sources of information, they will tend to purchase house brands (Glemet and Mira, 1993; Omar, 1996). The hypothesis is developed as follows:

H8: "Search" versus "experience" nature of product features influences consumers' choice of brand.

3.3.5 Prior buying experience

Some studies argue that prior buying experience may influence consumers' brand preference (e.g. Mieres et al., 2006). The experience of buying a specific product results in a kind of learning process that provides knowledge to consumers on how to evaluate the product as well as making good purchase choice (Seth and Venkatesan, 1968). The greater experience with the product, the higher the chance that the consumer will try that product (Mieres et al., 2006). Hence, in this study, it is hypothesize that:

H9: Former buying experience influences consumers' choice of brand.

3.4 Data Collection Methods

In this study, questionnaires are used to collect primary data. A questionnaire is a preformulated written set of questions to which respondents record their answers, usually within rather closely defined options (Sekaran, 2002). It is one of the most popular methods used by researchers to collect data.

Questionnaire is the best approach for this study as there are a large number of respondents needed. Administrating questionnaires to large number of individuals at the same time is less expensive and consumes less time than interviewing. This method helps to save time especially when data is needed to be collected from a large pool of respondent in a short period of time and ensure almost 100% response rate. It is also very cost effective compared to other methods such as face-to-face interview, which takes longer time and involves in higher cost. In addition, it does not require as much skills to administer the questionnaire as to conduct interview.

Furthermore, almost everyone is familiar with questionnaires; therefore it is easy for respondents to give their opinion. Other than that, by using questionnaires to gather data, bias will be reduced as the respondents will not be influenced by researchers' body language or manners in answering questions.

3.5 Sources of data

The data in this study is obtained from two sources which include primary data and secondary data sources. Primary data refer to information obtained firsthand by the researcher on the variables of interest for the specific purpose of the study (Sekaran, 2002). In this study, the main source of primary data is questionnaires.

Secondary data refer to information gathered from sources already existing (Sekaran, 2002). For example, in this study, the secondary data are journals, newspapers, books, company records or archives, government publications, industry analyses offered by the media, website, the internet, and so on. Online databases such as Emerald, Proquest, Ebsco, ScienceDirect and etc are also used to look for online published journals and articles.

3.6 Sampling Method

Sampling is the process of selecting a sufficient number of elements from the population, so that a study of the sample and an understanding of its properties or characteristics would make it possible to generalize such properties or characteristics to the population elements (Sekaran, 2002). The sampling method used in this study is the convenience sampling, which means the collection of information is from members of the population who are conveniently available to provide it.

This method is used because it can get basic information quickly and efficiently, without incurring the cost and time required to select a random sample. In this study, the author will get her respondents mainly from Melaka, Johor and Perak due to her convenience and her social network.

3.7 Target Respondent, Sampling Size and Study Area

In this study, sampling method is adopted instead of testing the whole population due to limited budget and time constraints. 150 sets of questionnaires will be distributed to 150 household consumers around Johor, Melaka and Perak. The study area for this research is around Johor, Melaka and Perak. All 150 sets of questionnaires will be distributed in areas such as hypermarkets, supermarkets and residential areas.

3.8 Questionnaires Development

The questionnaire comprised two sections, provided with instructions to guide the participants to complete the questions. The first part mainly focuses on the demographic background of the respondents which include their age, education level, household income, household size and so on. The second part of the questionnaire consists of Likert-scaled questions which examine the variables of this study. An example of the questionnaire is shown in Appendix A.

3.9 Scaling Techniques

In this study, nominal, ordinal, and interval scaling techniques will be used.

A nominal scale is used by researchers to assign subjects to certain categories or groups. For example, in this study, nominal scale is used to group the consumers into different categories based on their demographic characteristics such as household income level, education level, age and so on.

An ordinal scale categorizes the variables and also rank-orders the categories in some meaningful ways. In this research, it is used to rank the aspects that consumers think it is the most important to influence their buying preference.

An interval scale is used to measure the distance between any two points on the scale. For example, in this study, consumers' brand preference is measured by using five point Likert scale anchored by Strongly Disagree (1) and Strongly Agree (2).

3.10 Data Analysis

After collecting data from the respondents, several steps are needed to go through in order to ensure that the data are reasonably good and of assured quality for the later analysis. These steps include data editing, coding and categorizing (Sekaran, 2002). There are three objectives in data analysis: getting a feel for the data; testing the goodness of data and testing the hypotheses developed for the research.

The collected data will be examined in two different ways which are descriptive statistics and inferential statistics. Descriptive statistics will be used to obtain maximum, minimum, mean, standard deviation and the variance of the respondents in order to measure central tendencies and dispersion. On the other hand, inferential statistics will be conducted to test the hypothesis. Hypothesis testing will be used in this study. From hypothesis testing, the correlation test will be used to test whether the relationship is positive or negative; multiple regression analysis will be used to test the strength of the relationship between dependent and independent variables.

Statistical Package for the Social Sciences (SPSS) and Excel software will be used in this study to analyze the data.

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