MASTERS

DISSERTATION
Rahman

SUBMISSION

FORM

Students family name: First names: Student ID No: Course: Tutor: Dissertation Title:

Mohammed Fazlur 0163GGGG1106 M.B.A Prof. Dennis Adcock

A study of buying behaviour in the detergent market of UK. Why some consumers purchase Manufacturers Brands when similar quality and low price Retailers Own Brands exist.

Declaration I certify that this dissertation is my own work. I have read the University regulations concerning plagiarism.

I am willing to allow Coventry Business School to use my dissertation as a sample for future students.

Signed (Mohammed Fazlur Rahman)

Date: 23-11-2007

Acknowledgement
Author would like to express his sincere gratitude,

appreciation and a message of thanks to the Dissertation Supervisor Prof. Dennis Adcock for providing valuable guidance, supervision, mentoring as well as encouragement for carrying out research for the topic A study of buying behaviour in the detergent market of UK. Why some consumers exist. Author wishes to thank Dr. Rajendra Kumar and Dr. Peter McGee for providing valuable comments, support and guidance through out the course and research. Special thanks to the staff and management of London School of Commerce for providing an opportunity to enhance my career with MBA and establishing this research. A message of thanks is also conveyed to Coventry University for the opportunity provided, to conduct research, by accepting the research proposal and providing Athens login, a data base of literature which played a significant part in gathering secondary data for the research. Author conveys sincere thanks to his family and friends for their life-long support. Author specially owes his life to purchase Manufacturers Brand (MB) when similar quality and low price Retailers Own Brand (ROB)

Allah

(swt),

parents

and

wife,

for

the

strength

and

motivation through out his life. The contributions of all the above have been very crucial in carrying out this research.

Contents List of Tables and Figures Executive Summary Chapter 1: Background and Objectives Topic of Research, Research Objectives, Problem Statement: Chapter 2: Literature Review Introduction, Brand, Brand loyalty, Brand Equity, Advertising, Consumer Buying Behaviour, Environmental Influences, Culture, Social Class, Groups/Family, Situational factors, Marketing efforts, Individual Influences, Psychological factors, Demographics, Life style and Economic situation, Decision Making Process, Problem or Need recognition, Information Search, Evaluation of Alternatives, Purchase decision, Post purchase behaviour, Marketing Mix: 7 Ps, 1) Product, 2) Price, 3) Place, 4) Promotion, 5) People, 6) Physical evidence, 7) Process. Chapter 3: An overview of detergent market. Detergents, Retailers Own Brand (R.O.B), Why retailers display MB(s), ROB Growth in UK, Tesco, Sainsburys, Asda, Five Forces model of ROB, Competitive Rivalry within a market, Barriers to entry, Threat of substitutes, Bargaining power of Suppliers and Bargaining power of Buyers.

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SWOT Analysis of ROB(s) Strengths, Weakness, Opportunities, Threats Manufactured Brand (MB) Procter and Gamble (P&G), Unilever, Brand share. Five Forces model of Manufactured Brands Competitive Rivalry within a market, Barriers to entry, Threat of substitutes, Bargaining power of Suppliers, Bargaining power of Buyers. SWOT Analysis of ROB(s) Strengths, Global Expertise, Financial Resources, Weakness, Price, Research on Animals, Opportunities, Brand Leverage, Sponsorship and Co-branding , Threats. Chapter 4: Research Plan Introduction, Research Design, Data collection methods, Secondary data, Sampling, Primary data, Questionnaire, Validity, Reliability, Pilot study, Research Ethics, Limitations of Research, Research Time Table. Research GANTT Chart. Chapter 5: Data Analysis. Questionnaire Analysis: Frequency of detergent purchases, pack size, Reason for purchase, Choice of product (Brand), feelings about the product, experience of switch, sources of information, Factors influencing consumer behaviour: brand, Price, Quantity, Quality, Packaging, Promotion offers, Price discounts, Coupons. Influence of media advertising: Television, Radio, Newspaper, Magazine, Internet, Sign Boards, In store promotions. Importance of store environment: Location, Design, Atmosphere, Cleanliness, Shelf Display, Searchable in store. Demography: Gender, Age group, Education, Work, Family status.

30 31 32 35 38 38 39 40 40 41 42 43 44 45 48 49 50

50 51 53 54 55 57 58 59 61 62 63 65 66

Chapter 6: Conclusions Recommendations, and Personal Reflection

68 69

Chapter 7: References: Appendix 1: Questionnaire

72 (1-3)

i List of Tables and Figures. Fig. 1.2.1 Price comparisons of Detergents in U.K. Table 1.22 UK House hold detergent expenses. Fig.2.2.1 Diffusion of Innovation model. Fig.2.2.2 A frame work of Consumer Buyer Behaviour Figure 2.2.51 Maslows hierarchy of needs Fig 2.2.52 Buyer Decision Process Table 2.2.5.21 Ariel product benefits Fig 2.31 The 7 Ps of Marketing Mix Figure 3.2.21 Segmented market share of clothes washing detergents in UK Fig. 3.2.22 ROB growth in UK. Fig. 3.2.23: Source of Own Label Growth Fig. 3.2.24: Retailer concentration of the most developed ROB Markets Fig 3.2.25 UK Differentiation % Sales in ROB. Fig. 3.2.41 Porters Five forces model. Fig 3.30 Washing up liquids Figure 3.31 Market size of Detergents in UK Figure 3.32 Market shares of Clothes washing detergents in UK Figure 3.41 P&G share of Clothes washing detergents in UK Figure 3.51 Unilever shares of Clothes washing detergents in UK Figure 3.61 Brand shares of Clothes washing detergents in UK Fig. 3.70 Porters Five forces model (MB). Fig 4.1 The Research Process Page 2 2 9 10 14 14 15 17 23 23 24 24 25 27 33 34 34 35 36 37 38 43

Table 4.2 Survey Route. Research GANTT Chart Fig 5.1 Frequency of detergent purchase Fig 5.2 Pack size purchased. Fig 5.3 Reason for purchase. Fig. 5.4.1 Choice of the product or brand. Fig 5.4.2 Consumers choice between MB and ROB. Fig.5.5 Consumer response about the product in use. Fig. 5.6 Switch between brands and the experience of the same. Fig. 5.7 Sources of Information Fig 5.8 (a) Importance of Brand.

45 49 50 50 51 51 52 52 53 53 54

ii Fig: 5.8 (b) Importance of Price. Fig: 5.8 (c) Importance of Quantity. Fig: 5.8 (d) Importance of Quality. Fig: 5.8 (e) Importance of Packaging. Fig: 5.8 (f) Importance of Promotion offers. Fig: 5.8 (g) Importance of Price Discount. Fig: 5.8 (h) Importance of Coupons. Fig 5.9 (a) Influence of Television advertising. Fig 5.9 (b) Influence of Radio advertising. Fig 5.9 (c) Influence of News paper advertising. Fig 5.9 (4) Influence of Magazine advertising. Fig 5.9 (e) Influence of Internet advertising. Fig 5.9 (f) Influence of Internet sign boards. Fig 5.9 (g) Influence of In-store promotions. Fig 5.10 (a) Store Location. Fig 5.10 (b) Store Design. Fig 5.10 (c) Store Atmosphere. Fig 5.10 (d) Store Cleanliness. Fig 5.10 (e) Shelf displays. Fig 5.10 (f) Searchable in store. Fig 5.11 Gender. Fig 5.12 Age. Fig 5.13 Education. Fig 5.14 Work pattern. 54 55 55 56 56 57 57 58 58 59 59 60 61 61 62 63 63 64 64 65 66 66 66 67

Fig 5.15 Family status.

67

iii

Executive Summary
The report is about consumer buying behaviour, factors that influence consumers towards MB(s) when less price and similar quality ROB(s) exist. The author has used two specific terminologies during the report, Retailers Own Brand (ROB) the private brand or own label of a retailer, usually not manufactured by retailer, for example Tesco washing powder is sourced, not manufactured by Tesco. Manufactured Brand (MB) refers to brands which are supplied by manufacturers directly, for example Ariel detergent is manufactured, owned as well as supplied by Procter and Gamble (P&G). The report starts with background and objectives where author explains the reasons for topic selection and objectives of the research. The topic reflects an assumption that consumers choose MB(s) against ROB(s), whether it is correct or otherwise requires research, further what factors influence consumers towards such decisions also need investigation. Hence through literature review author presents arguments based on different authors, academics and researchers on the relevance of these focus questions. Consumers perceptions influencing purchase of MB(s) against ROB(s) like high price_ high quality and low price-low quality, market share statistics were used to highlight the

domination of the market by MB(s), importance of brand and brand loyalty, creation of brand equity through advertising and other promotional tools have been discussed. Consumer buying behaviour model is described to explain key factors like Individual(personal) factors and External factors (family, friends and society) as well as their significance in influencing decision making process. Maslows hierarchy of needs and buyer decision process model presents a better understanding of consumer influences. The importance of 7 Ps of marketing and how significantly it is used to influence consumer perceptions and decisions, helps in further understanding the area of study.

iv The overview of detergent market in UK empowers the reader about relevant information regarding the total market share, brand share, market growth and strategies of some of the major ROB(s) (Tesco) and MB(s) (P&G and Unilever). The study of ROB market share and growth reflects the current standing (Market share) as well as the indicative growth trends. The ROB(s) market share against MB(s) present the statistics required to understand the current consumer preferences, while the growth trends reflect the future prospects and hence future consumer preferences. It is quiet possible that consumers change their preferences between MB(s) and ROB(s) in the future leading a change in market share structure, the previous growth of both of these segments can give a likely indication about the same. In order to grow what strategies are applied by ROB(s), the reasons why they display MB(s) instead of only ROB(s). The analyses of ROB market is further highlighted through 5 forces model, i.e. the forces influencing ROB market. SWOT analyses present the internal capabilities of ROB(s) against external influences. market share. The study of MB(s) with respect to market share, market growth explains the current market situation regarding MB(s). The report presents relevant areas of interest about prominent MB(s) like P&G and Unilever, the strategies they have adopted to offset threats of low price ROB(s), why consumer preference is high for MB(s) against ROB(s) are the key areas discussed in this topic. These notes present a crucial understanding of consumers perceptions about ROB(s), areas ROB(s) are lacking behind MB(s) and how ROB(s) are increasing their

The analysis of MB market is further highlighted through 5 forces model, i.e. the forces influencing MB market. SWOT analyses present the internal capabilities of MB(s) against external influences. This chapter highlights the utilization of factors like global expertise, financial resources, sponsorship and co-branding strategies by MB(s) to influence consumer perceptions and behaviour towards MB(s). The topic on research methodology presents the methods utilized for conducting the research as well as research design. Sampling explains in detail about the methods used to select the sample for survey, why it was done so as well as the hurdles faced during the surveys.

v Questionnaire design presents the key focus areas like, what factors were considered during questionnaire design, pilot test, the precautions taken about accuracy, reliability and research ethics. In the end of this chapter the limitations of this research were also discussed. Data analyses presents the questionnaire analyses of all the 15 main as well as other sub questions. With the aid of pie diagrams, tables and conclusions about each factor, focus was drawn towards the significance of each question on consumer influences. The conclusions and recommendations chapter presents the final conclusions about the research. The main factors that influence consumers towards MB(s) against ROB(s) were concluded in detail. Apart from that conclusion also presents the likely future trends based on previous years growth, and the indicative future trends about the competition between MB(s) and ROB(s). The recommendations focus on how ROB(s) can increase their market share, penetration and growth. How ROB(s) can over come their weakness to compete with MB(s) and some of the strategies that ROB(s) can adopt are also discussed. The personal reflections chapter is based on authors personal reflections observed through out the research, the lessons learnt and how this information will be applied by author for his future endeavors. In the end there is a list of references in alphabetical order and appendix contains the questionnaire format used for survey.

Chapter 1: Background and Objectives. Topic of Research:

The research topic was chosen by the author according to the interest on the relevant subject i.e. consumer buying behaviour. Author held various sales positions in different organizations during past 12 years, in 5 different countries. The study of consumer perceptions regarding MB and ROB empowers the author for future endeavors. The purpose of this research is based on consumer perceptions about brands in the UK market. Different aspects of consumer behaviour including the reasons for choosing certain detergents and consumer response to stimuli. This research also considers different categories of consumers, e.g. male and female, working and not working, adults and amateurs, and their perceptions about detergents available in the UK market, hence the research tends to present a clear understanding of clothes washing detergents in UK from consumers perspective. Research Objectives: The objectives of research are to study the consumer perceptions about brands. The following areas will also be considered, Consumer behaviour about ROB compared to MB. Variations in perceptions about ROB and MB. Relate other theories, models and analysis, how they impact on the market. Recommendations for MB(s) and ROB(s). These were determined and focussed on the relevance of the topic rather than studying wider areas i.e. to study what factors of buying behaviour influence consumers towards selection

between MB(s) and ROB(s), discuss existing theories, published literature and findings of researchers. This leads to an investigation about current market share between MB(s) and ROB(s), the reasons behind market domination by MB(s), growth trends and speculations about future indicative market growth. Problem Statement: The total market size of UK detergents was valued at 2 billion in 2006, clothes washing detergents are valued at 1.19 billion. There are 2 major MB(s) in the detergents market of UK, Procter & Gamble or P&G (47%), Unilever (30%), together they control more than 3/4 th market share. ROB(s) are estimated to be around 17% and the rest 6% by other companies. (Mintel 2007) 2 Photo Image Description ARIEL Bio Washing Powder 2.85 Kg. BOLD Automatic Washing Powder 2.85 Kg. PERSIL Automatic Washing Powder 3 Kg. ROB Budget Washing Powder 3 Kg. Tesco Sainsbury's price price Asda price Morrisons price

5.98

5.98

5.98

5.98

5.99

5.99

5.98

5.99

5.00

5.98

5.98

5.98

1.41

1.41

1.41

1.41

Fig. 1.2.1 Price comparisons of Detergents in U.K (Tesco 2007 & Sainsburys 2007) (The prices stated above were checked at Tesco Price Check at www.tesco.com on 23-10-2007 and11-06-2007, during this period of 4 months, prices remained constant.) As shown in figure 1.2.1, the table shows price comparison of 3 brands (Ariel & Bold belongs to P&G and Persil is with Unilever in UK) against Retailers Own Brands, while MB costs in the range of 1.67- 2.10 per kilogram (Avg. 1.88/Kg), ROB costs 0.47/Kg. The total number of households in 2006 were around 25 million in UK, With the average household purchasing 1 Kg of detergent in a week, the following conclusions can be drawn (National Household Statistics 2006)

Description MB ROB Savings

Detergent / Week 1.88 0.47 1.41

Detergent / month 8.14 2.03 6.11

Detergent / Year 97.76 24.44 73.32

Table 1.22 UK House hold detergent expenses. A single house hold can save 73.32 per year (6.11/month) by switching to ROB and in total the whole of UK can save around 2 billion.

Chapter 2: Literature Review:

Literature review avails the opportunity to explore the published research material about relevant area of interest, critical analysis in terms of debate and arguments about the merits as well as de-merits of the published records and establish relations between this secondary information with primary data collection. Literature review enables the researcher to explore all important variables, including those having repeated impact as well as influence over the problem. There is a need to know what work has already been done, critical analysis of the previous findings as well as scope to do further research. Finally relate the primary data collected with the previous secondary research. (Saunders et al 2003).

The purpose of this research is to study buying behaviour in the UK market for detergents, why consumers choose Manufacturers Brands (MB) even when Retailers Own Brands (ROB) exists at a low price and similar quality. In the global environment we live today, there are different choices for a consumer to adapt. Every company influences customers towards pull effect in order to achieve push effect. Through marketing tools, companies create a pull effect, i.e. pulling customers towards its products as well as encouraging customers to pull the product off shelf. Thus creates a push effect for its products. In short, pull customers towards purchase of the product which in turn pushes the product off shelf. The consumer perception about Retailers Own Brands (ROB) is similar but not equal to the quality standards of Manufactured Brands (MB), hence consumers still perceive it risky to switch over to ROB. The likely effect of a bad purchase and the resulting ill effects on the clothes could also add up for this perception. More over the habitual purchases, familiarity and high level of confidence in manufactured brands, retention of stimuli about the company, brand, sub-brands particularly benefits and attributes, the bad experience about ROB in detergents as well as other categories, natural tendency resistance to change are some of

the reasons why consumers choose MB over ROB. Consumers perceive MB as superior to ROB in terms of various factors like quality standards (ingredients and final product), reliability, and fragrance and hence the final outcome. ROB lack behind due to less price (low price-low quality perception), lack in strong brand recognition, negligible or non existent advertising at the national level and lack a distinct identification with a particular manufacturer. Hence MB enjoys a level of brand image and brand equity along with quality standards that is difficult to offset by low price ROB. (Mieres et al 2006)

4 Consumers generally are not confident to make judgments on the basis of product attributes to determine the best available alternative, hence depend on brand name and price to gauge the product quality. MB is higher in price and from a well known manufacturer hence preferred to ROB. (Sethuraman & Cole 1997, DelVecchio 2001, retrieved from Mieres et al 2006).

Due to the low cost strategy of own brands, retailers spend less on advertising, though it is effective in offering low costs but at the same time lacks promotion of the ROB, while MB(s) have reached market leader status with a focus on high quality production, rigorous advertising and promotion strategies (investments) for their brands, which in turn is viewed as a sense of quality, performance standards, reliability and low risk by the consumers. (Aaker 1996 retrieved from Mieres et al 2006) However Uncles (& Ellis 1989 sited in Davies & Brito 2004) contradicts these views and argues that consumers perceive ROB(s) as similar to MB(s). Consumer perceptions about ROB(s) are influenced by different factors apart from price, like specific behaviours ( Baltus, 1997 sited in Davies & Brito 2004), demographics(Hoch 1996 sited in Davies & Brito 2004) and the risks involved(Batra and Indrajit 2000 sited in Davies & Brito 2004), these perceptions are common to any product irrespective whether it is ROB or MB. In response to quality concerns ROB(s) have developed internal quality control systems ( Senker 1987 sited in Davies & Brito 2004) and have developed premium ROB(s)( Quelch and Harding, 1996 sited in Davies & Brito 2004) to place them on par with MB(s). (Davies & Brito 2004) One of the important focus areas in the debate about consumer choice between MB and ROB is the availability, MB(s) have a degree of advantage over ROB, for example an Ariel customer will find it at any grocery, corner shop or retailer and hence finds it convenient to stick or be brand loyal, while a Tesco washing powder customer may not find the same even in Tesco shops (metros) apart from other retailers, grocers or corner shops, instead of launching a search to the next available Tesco store where it is available, customer will find it practically inconvenient to be brand loyal for ROB.

MB(s) ensure availability in retail stores as well as grocers, while ROB are just another own label product which are subject to availability, in short the focus and attention MB(s) pay towards availability is rarely seen with ROB, this leads to a situation where in times of need, consumers find MB easily accessible compared to ROB.

5 As per 2006 statistics (UK clothes detergent market share), more than 80% of market share is with MB leaving less than 20% for ROB. (Mintel 2007). According to authors primary data collection, ROB stands at 10% while MB shares 90% of the market share. (Fig. 5.4.2, Pg :75) The UK clothes detergent market from 2004 (1.178 billion) to 2006 (1.190 billion) reflects a growth of + 0.01% for the total 3 year period. MB(s) reflect a growth of - 0.01% (from 0.95 billion in 2004 to 0.94 billion in 2006) while ROB(s) have grown by +12% (from 0.179 billion to 0.201 billion) (Mintel 2007). Analyses of the above statements reflect market share in favour of MB whereas ROB has a very little effect and way behind MB. However with reference to market growth, the total market has grown by a slow progress (0.01%), MB(s) have shown de-growth (-0.01%) while ROB(s) have shown higher growth (+12%) despite slow growth of the total market. Even though at present market share is heavily dominated by MB(s) if the same growth rates continue for all the 3 segments (Total market, MB and ROB), future looks favourable for ROB(s), higher growth rate of ROB(s) and de-growth of MB(s) will lead to a situation where market share of MB(s) will be captured by ROB(s). According to a research commissioned by Somerfield supermarket UK (published in Private label magazine), it is estimated that consumers through out UK save around 336 million per week with ROB which amounts to a weekly saving of 7.15 per adult and amounts to a saving of 371 per person annually. (Knothe 2007) Brand and advertising study enables the reader to understand what a brand is and why it is important to build a brand. Consumer buying behavior brings the focus to the key area of research i.e. why consumers buy and the factors that influence the buyer. 2.1 Brand:

Brand is a very important factor for detergent markets (for both MB and ROB), with the variety of global as well as regional brands available for consumers at competitive prices, quality, packing, etc. There is a stiff competition for detergents to compete for business as well as survival. Retaining as well as increasing sales or market share depends on the influence of brand on consumer buying behaviour, ultimately the intended revenues targeted depend mainly on consumer choice.

6 As to valuing brands, fashions in business models may come and go but cash flow remains a trusty and constant yardstick. The allegiance that a consumer feels towards a favourite brand the predisposition to purchase that is built on a better product and a more useful bundle of benefits is a capital asset. It is a reservoir, if you like, of future cash flow. (Niall FitzGerald, chief executive, Unilever, as stated in CIM 2003). According to FitzGerald as quoted above, brand ensures secured income or cash flow, which can be achieved only by building a brand that is perceived by the consumers, as a symbol of high quality backed by product benefits and attributes. Brand empowers (a product/service) to demand and retain a better price from consumers as well as to project itself as a value for their money, this leads to long term profitability as well as growth which is the main purpose of brand. It is important to note that while all leads to sales of a particular brand, otherwise there is no much a results, as all detergents serve the purpose of cleaning. Chartered Institute of Marketing states that the brands originate from planning documents and end up in the hearts as well as minds of customers. (CIM 2003) CIM explanation points towards the actual process, it takes years of planning as well as trial and error methods in terms of R&D costs to establish a brand which is again a subjective matter. According to Temporal, brand image or brand building over a period of time, is essential for the long term growth of the brand. This process involves constant monitoring of attributes like values, positioning as well as perception by customers, every time a customer comes in contact with the brand combined with tracking of competitor activity. (Temporal 2002) detergents are placed in the same shelf next to one another, it is the brand choice of the consumer which difference in terms of

The explanation given by Temporal highlights the time factor. Temporal emphasizes the importance of building brands over a period of time through monitoring customer perception as well as competitor activity. With the aid of packaging and promotion, brands have reached a stage where it sells for a price that exceeds well beyond the cost of its ingredients, i.e. what makes it so important to create a consistent brand (De Chernatony & McDonald 2003)

7 In 1999, David DAessandro (President of John Hancock Mutual Life Insurance, USA) speaking on the importance of brand said, It can take 100 years to build up a good brand and 30 days to knock it down, this statement reflects the importance of not only building a brand but also maintaining the brand. (Klien 2000) 2.1.1 Brand loyalty: Brand loyalty is an important aspect of brand, one of the main aims of brand creation is to create brand loyalty. According to Giddens, brand loyalty is the commitment of a customer to continue purchasing the product as well as recommending to others. There is emphasis on areas like the need for higher sales volumes with respect to gaining new customers as well as loosing old ones. Brands can charge premium prices where as consumers are less sensitive in terms of pricing for preferred brands, this also incurs less costs on brand marketing as well as advertising. (Giddens & Hofmann 2002) According to Rowley (1997), Brand loyal customers can be classified into 4 main groups, Hard core consumers who will always prefer to buy a single brand. Soft core consumers exhibit loyalty between 2 to 3 brands. Shifting Consumers change brands very often. Switchers keep switching between brands. (Rowley 1997),

2.1.2 Brand Equity: The measure of customer confidence or the value(s) perceived by customers in a brand is called brand equity. Firms having high brand equity gain a competitive advantage in terms of successful line extensions, high barriers to competitor entry and exit and resilience against competitor promotional activities (Farquhar, 1989, sited in Lassar et al 1995). An indication of the importance of well-known brands is the premium asset valuation that they obtain. For example, 90% of the total price of $220 million paid by

Cadbury-Schweppes for the Hires and Crush product lines of Procter & Gamble is attributed to brand assets ( Kamakura and Russell, 1991; Schlossberg, 1990 sited in Lassar et al 1995) Brand equity consists of two main components, brand strength (brand associations held by customers) and brand value (brand values are the gains that accrue when brand strength is leveraged to obtain superior current and future profits). ( Srivastava and Shocker, 1991). (Sited in Lassar et al 1995).

8 Brand equity is created with the aid of different tools like Advertising as well as in house promotions. Advertising can be local, regional as well as international. Brand in short is a representation in terms of a product or a service, enabling the customer to identify as well as differentiate in terms of requirements, expectations, performance, etc. Since the customer has to make the ultimate choice, firms need to differentiate their product from competitors as well as identify the product with certain parameters of accordance with customer expectations. Most of the MBs (Ariel, Tide, and Persil) comes from companies which are around 100 years old, their experience, knowledge, R&D and resources have enabled them with the opportunity to build brands worth millions of dollars. ROB companies (Tesco, Sainsbury) are also around a century old, however their experience of own brands is a couple of decades old, hence are of no match when comes to expertise and experience. 2.1.3 Advertising: Advertising is an important factor to convey the message about brands. Every day consumer stimuli receives attention from advertising of brands through print as well as electronic media. Print media includes printed material like newspapers, magazines, product catalogues as well as brochures. Expert opinion, write ups as well as critical analysis of brands are also part of print media. Electronic media is gaining more importance due to the increased usage of internet on a daily basis by vast majority of consumers for information as well as shopping. Electronic sources used for advertising are search engines (Google, yahoo, msn), online trading sites (eBay), online news papers, e-journals, online articles, online reviews, solicited as well as unsolicited emails (spam). performance in

Kotler explains the importance of advertising in terms of establishing a strong brand position or in short, advertising is an important tool for branding. Advertising aids branding in different ways like building brand awareness, efficiency in reminding consumers, generation of leads, legitimization as well as reassurance, this leads to encouraging as well as creating competitive advantages (Kotler 2006).

9 In house promotions consist of tools like, POS posters, POS stands, pack on pack offers, discounts, rebates, coupons as well as persons promoting the product as promoters distributing leaflets, samples as well as educating consumers at the retail stores. From this chapter the importance of brand and advertising has been highlighted as a way of differentiating the product from competition in order to achieve long term growth, however the choice still lies with the consumer as brands can be measured on the success scale depending mainly on consumer choices, hence the next chapter will present this important area of study i.e. consumer buying behaviour or simply the study of the factors influencing consumers towards making purchases. 2.2 Consumer Buying Behaviour: Consumer Buying Behaviour enables the readers to understand the most important area of this research i.e. why consumers buy. The study of consumer behaviour consists of the factors that influence the consumers towards purchases, these can be classified as Internal, External influences as well as traditional and additional elements of marketing mix. It is important to note that There is no shortcut to success, hence theoretically strategies could be planned but practical implications are much more complex than that. Firms have to work as leverage between consumer needs, influences and decision making process on the one hand and on the other, match it with product/service features and benefits; this will help in creating Tailor made solutions for consumer needs as well as long term profitability for the sellers.
Innovators (2.5%)

Early According to Rowley (1997) Purchasing will also be influenced by individuals attitudes to risk

and innovation. The following summarizes a widely accepted model of the roles of customers (13.5%) in the diffusion of innovation:

Early m ajority (34%) Late m ajority (34%) Laggards (16%)

adoptors

Innovators 2.5 per cent;

Early adopters 13.5 per cent; Early majority 34 per cent; Late majority 34 per cent; Laggards 16 per cent. (Rowley 1997)

Fig.2.2.1 Diffusion of Innovation model.

10 Environmental Influence Culture Social Class Groups / Family Situational factors Marketing efforts Individual Influence Psychological aspects Demographics Lifestyle Economic situation

Memory

Decision Making Process Feed back Motivation Search Evaluation Purchase choice Purchase outcomes

Fig 2.2.2 A frame work of Consumer Buyer Behaviour (Lancaster et al 2002, Pg: 75) With the aid of A frame work of Consumer Buyer Behaviour as in fig.2.2.2, the various influences on consumer buy behaviour leading to the ultimate purchase outcomes have been explained in detail. These influences can be classified as Environmental (external) influences and Individual (internal/personal) influences. (Lancaster et al 2002)

2.2.3 Environmental Influences: These are external or environmental influences, mainly outside influences on ones personality, these are as follows. 2.2.3.1 Culture: Culture is a broad spectrum consisting of various aspects or sub cultures like nationality groups (US/UK/Indian/Polish), Racial groups (White/Black/Asian/Hispanics), and Religious groups (Christian/Muslim/Jew/Buddhist/Hindus). These sub cultural groups are influenced by the different media they are exposed to, choice of outlets, product contents, etc. While Jews avoid non kosher food and alcohol, Muslims avoid non halal food and alcohol, Hindus and Buddhists keep them selves on vegetarian diets. 11 According to authors experience, most consumers, when asked about their purchase choice, indicated habitual decision making which exhibits a strong indication of cultural influence, passed from generation to generation, in short, what parents follow, off springs tend to follow the same. In case of habitual purchases Manufactured Brands have a degree of advantage compared to ROB, for instance the major detergent brands (Persil, Tide, Ariel) are almost half a century old i.e. being used or at least known to 2 generations where as ROB (Tesco & Sainsbury own labels) are known only to the current generation and hence could also be one of the reasons in favour of MB. 2.2.3.2 Social Class: This class exhibits the various income levels of the individuals. This can be classified into 3 main groups, Low income group (income support and unemployment benefits), Middle class (working class paying taxes) and Elite (high incomes). (Lancaster et al 2002) Low income groups may have very less income levels; hence they are not regular buyers and tend to buy the lowest or cheapest goods irrespective of quality or brand concerns. Elite buy premium products and are not bothered about the price. Middle class are usually the target group of marketers for two obvious reasons, first they have income to dispose of on purchases and second they constitute a majority among the social classes. Middle class individuals are also conscious about factors like price, brand, quality, ethics, environment, etc. 2.2.3.3 Groups/Family: These are classified into Primary groups and Secondary groups. Primary groups consist of family, friends, peers, colleagues and neighbours. Secondary groups consist of celebrities

from various fields like sports, entertainment and fashion industry. Both of these groups have a major impact on consumer decision making process due to the choice of products used and recommended. Marketers are using this information in terms of Celebrity brand endorsements and Brand Ambassador, Beckhem brand endorsements are not only popular in UK or Europe but also globally. Manufactured Brands extensively afford to use Brand endorsements as it reaches larger audiences in terms or investments and return on investments, the same cannot be achieved by ROB as their target customers are far less than the MB and hence cannot justify huge investments. (Lancaster et al 2002)

12 2.2.3.4 Situational factors: The choice of purchase or consumption can change according to convenience. During primary data collection, author realised the fact that consumers rated convenience as on of the top priorities for decision making. The availability of the product at the store near to the place of residence or work, price variations in terms of discounts and offers, availability of time and waiting periods at tills are some of the important situational factors. (Lancaster et al 2002) While Tesco detergent is exclusively available in Tesco outlets whereas Ariel is available at corner shops, local groceries as well as retailers like Tesco, hence in terms of convenience also MB has a degree of advantage over ROB. 2.2.3.5 Marketing efforts: The marketing information gathering (data collection) about consumer choices with respect to a firms own products as well as competitor activities, results in firms launching marketing campaigns through various sources like, electronic and print media as well as in store promotions. These actions also influence decision making process in terms of creating Pull & Push effects. (Lancaster et al 2002) Since the target customers as well as availability of MB covers vast geographical areas, they invest millions of dollars on marketing efforts like, market research, advertising, promotions, etc, whereas ROB are either local players or with limited geographical coverage and hence cannot match MB in terms of marketing resources and expenditure. For instance, P&G and Unilever advertise and promote not just their respective companies but also individual detergent brands (Ariel, Bold, Fairy, Persil, Surf) through TV commercials and soap operas,

where as Tesco and Sainsbury concentrate there marketing efforts on just the company not individual product. 2.2.4 Individual Influences (personal or internal Influences): 2.2.4.1 Psychological factors: This is a broad spectrum of consumers personal behaviours like perception, stimuli retention, attitude, motivation, personality, etc.

13 The interpretation of stimuli, exposure and comprehension results in a specific attitude towards a brand, if positive then firms benefits otherwise negative attitudes have to be dealt with changing the brand itself. (Lancaster et al 2002) The way consumers interpret or even translate advertisements are important. One airlines advertising campaign designed to promote its push leather seats urged customers to fly on leather translated for its Latin American and Hispanic customers, ends up with the meaning fly naked(Ghauri & Cateora, 2006, pg: 87) Ariel Febreze and Turn to 30 degree attracts the consumer stimuli as it conveys the message that in spite of laundry cleaning there are other benefits too, like fragrance with Febreze and reducing CO2 with Turn to 30 degree, comparatively Tesco Price check reflects more focus on price than other areas. 2.2.4.2 Demographics: Factors like age, sex, location, education, occupation have a specific influence on individual choices about wants, shopping and partying habits, etc. While a teenager may prefer fashion, latest trends and celebrity endorsements, a middle age person would prefer quality, competitive prices and previous experience. 2.2.4.3 Life style and Economic situation: The term purchasing power of consumers is a matter of primary concern for marketers specially in terms of pricing. These include income levels, spending attitudes, credit status of the consumers, which determine the nature of spending as well as amount available for the same. (Lancaster et al 2002)

Life style conscious customers tend to choose branded detergents since they offer other interesting benefits apart from cleaning, like fragrance, environmental concerns and to some extent even supporting charitable causes worldwide. 2.2.5 Decision Making Process: The various environmental and individual influences over the consumers and the retention of stimuli (memory), motivates consumers towards making a decision about purchases by matching the features and benefits of products on one hand and wants, requirements and necessities on the other. Once the purchase is executed, consumers expectations come into focus. If the product is up to the accepted levels of the consumer, it leads to habitual purchases or even Brand loyalty which is not easy to break in, by new products, this area it seems is mostly dominated by MB(s).Another similar explanation about buy behaviour is provided by Maslows hierarchy of needs.

14
Self actualisation needs (Self development & realisation)

Esteem needs (Self esteem, recognition, status) Social needs (Love, sense of belonging) Safety needs (Security, Protection) Physiological needs (Hunger, Thirst) Figure 2.2.51 Maslows hierarchy of needs Lancaster et al 2002, Pg: 80 The buyer decision making process explained (by Kotler & Armstrong 2006) is similar to the Maslows hierarchy of needs with a detailed explanation. Need Recognition Evaluation of Alternatives Purchase decision Post purchase behaviour

Information Search

Fig 2.2.52 Buyer Decision Process (Kotler & Armstrong 2006:155) 2.2.5.1 Problem or Need recognition: It is human nature to act only in times of need. A persons internal influences like hunger, thirst, shelter, protection, security, cleanliness, etc or external influences like family, friends, society, advertisements, either of the two or a combination of both can trigger a need. Experts have always emphasised the need for marketers to examine the needs that influence consumers towards purchase decisions. This argument seems very important as it helps not

only to understand consumer needs but also to place the product as a tailor made offer for those needs. (Czinkota & Kotabe 2001)

Personal hygiene cleanliness and personality are the needs that trigger a consumer towards purchase of detergents. This lands the consumer in front of the shelf where detergent products are available however which product to choose is next step that again depends on other factors as discussed in this chapter. 2.2.5.2 Information Search: Once the consumers fully recognize the need, they will tend to search the best available product to match their needs. There are several sources a consumer can explore to search for information, the more visibility of the product benefits and reviews present in these sources, more are the chances of consumer inclination towards that particular product. The following are the some of such sources.

15 Personal knowledge. Suggestions from friends, family and colleagues. Mass media (advertisements and communication) Product ratings (www.nextag.com) Critical analysis and views Expert advice (CIAO Shopping Intelligence, www.ciao.co.uk) Product catalogues and websites. (Ariel.co.uk, Tide.com, Persil.com,Tesco.com) Price comparison sites (Tesco price check)

As per Ariel website, this detergent offers various benefits apart from contributions in reducing effects of global warming by using Ariel at 30 degrees mode of the washing machine. Ariel product Biological Febreze Colour & Style Benefits Brilliant cleaning, stain removal, clothes remain fresh and look new, whites remain whiter. great cleaning, fragrance and clothes retain just washed freshness all the day. With no bleaching agents used, garments retain colour and hence looks vibrant in addition to the expected levels of Sensitive cleaning. Recommended for sensitive skin apart from expected levels

of cleaning. Table 2.2.5.21 Ariel product benefits (Ariel 2006) As shown in table 2.44, Ariel is not just a cleaning solution provider, it highlights various benefits like stain removal, colour protection, freshness, fragrance, sensitive skin, etc these are some of the features which have considerable influence on the buying process. In case of ROB, such detailed information about individual detergent store brands is not yet available, for example Tesco (Tesco.com) gives information about Tesco marketing efforts, fair price practises and environmental efforts of Tesco, however there is no such benefits or detailed information regarding Tesco washing powder, more over consumers are aware of the fact that Tesco does not have manufacturing facilities and its own label products are sourced from different manufacturers. 16 2.2.5.3 Evaluation of Alternatives: The information gathering process ends up with alternatives being evaluated by the consumers in terms of various factors like benefits, brand, quality, price, etc. It is a very broad and complex spectrum of factors used by consumers during evaluation process; at times it could be impulse or some times due to intuition. Some consumers tend to make decision at the POS also however such chances are limited to special offers and well organised marketing campaigns of own brands. 2.2.5.4 Purchase decision: Usually purchase decisions are taken after a care full study of alternatives but some times time restrains could force quick decision making. A range of factors can influence purchase decision like, Personal experiences Experiences of friends and family Price wars between brands Special offers (pack on pack offers like buy one get one free) Unstable economy (Eg. Zimbabwe, prices change many times in a day) Fluctuating forex values (price variations in global and non local brands) (Boone & Kurtz 2005)

2.2.5.5 Post purchase behaviour: This area can make or brake brand loyalty. If the consumer is satisfied with the product, it will result in 2 ways, first the consumer is retained and ends up brand loyal and second, the

person will recommend the product to friends, family and colleagues through word of mouth, in short it enhances sustainable growth and brand building efforts. However a dissatisfied customer can cause harm in terms of a double edged sword, first the consumer is lost and second, will promote negative marketing about the product to others. 2.3 Marketing Mix: 7 Ps. Another important area of study in order to understand consumer buy behaviour are the elements of marketing mix. Consumers are influenced to a greater extent by elements of marketing mix. The traditional 4 Ps of marketing have been extended to include 3 additional Ps of People, Physical evidence and Process. Hence 7 Ps of marketing can be explained as follows.

17 1) Product 5) People

2) Price Consumers 3) Place 6) Physical Evidence

4) Promotion

7) Process

Fig 2.31 The 7 Ps of Marketing Mix (Lancaster et al 2002 & Kotler and Armstrong 2006) The 7 Ps of marketing mix acts like (air pressure) forces acting in all directions inwards, resulting in encouragement as well as motivation of consumers towards decision making, hence marketers need to pay high attention to these elements. 1) Product: The combination of different components, parts and services involved in delivery of the final product/ service to the consumer. In case of detergents, it is the various chemical compositions, fragrances in producing the detergent as well as quality control, variety and brand name associated with the product delivery process. (Kotler & Armstrong 2006) A product from P&G or Unilever is perceived to be both higher in quality and standards compared to the same from Tesco or Sainsbury by the consumers due to reasons like, Established brands of companies with 100 of years of experience and expertise.

R&D, marketing efforts and advertising reaching global audiences apart from national and local consumers, which are limited with own brands. Habitual purchases from generation to generation.

2) Price: The final price paid by the consumer for the end result, includes a variety of costs incurred from raw materials, production, storage, transportation, retailer margins, offers, list prices, discounts, coupons, advertising costs, etc. In short all these costs are recovered from consumers. Manufactured brands charge higher prices compared to own brands, through there are savings with own brands limited consumers choose the same as own brands are still perceived to be low price low standards compared to high price, high standard perception of MB. Hence consumers are still willing to pay a premium for their perception of high results. However own brands are improving the brand and marketing efforts to reach more consumers but still remains behind MB.

18 3) Place: Place includes not just point of sale but also supply chain management (logistics, transport, schedules. MB does not have their own franchises or wholly owned departmental stores and hence are dependent on groceries and other departmental stores for retail distribution, it is not practical for MB(s) to limit the supply of their brands to retailers even with own brand stores like Tesco or Sainsbury as this will limit their sales in the short term and in long term there are threats from other MB competitors as well as own brands. ROB(s) also have a similar situation to face, though they can restrict MB presence in their stores and decide to display only own labels, the risk here is that consumers may switch to other stores which offer both and hence may loose out to competitors. 4) Promotion: The various Pull & Push strategies involved in marketing as well as sales activities. Advertising through media (print & electronic), in store promotions, sponsorship of TV soap operas, music, fashion and sports live events, etc. (Kotler & Armstrong 2006) inventory management) and channels (supplier-producer-agent-distributorwholesaler-retailer). The effective management of these elements leads to on time delivery

The promotion efforts of MB(s) like P&G and Unilever in terms of advertising and marketing investments are to the tune of millions of dollars. They have developed several key brands (Areil, Tide, and Persil) for detergents and again each key brand includes sub brands (Ariel biological, Ariel Febreeze, etc). These huge investments are perceived by the consumers as a sign of higher standards and higher results. It can be understood from an example of how credit card is issued, Credit card companies look at the credit history of the applicant, particularly the earnings reflected in the bank statement of the applicant for the past 3-6 months, the more an applicant earns in a month, the higher credit limit is given as it reflects the higher capacity to pay back, similarly the more MB(s) spend on promotion, consumers rate them to be of higher value compared to ROB which spend less. 5) People: All people either directly or indirectly involved in the delivery of end result, work like a sequential chain in terms of adding value to the process. An excellent explanation of which was termed by Porter as Value Chain. (Sutherland & Canwell 2004)

19 Raw material suppliers, production work force, personnel involved in storage and supplies as well as customer service and sales force, etc. There are well co-ordinated departments specially in R&D and Marketing to gather maximum information on improving the quality and services provided to the end user, the result is product benefits are highlighted in a user friendly way and more sub categories are introduced as per consumer demands with separate departments being setup to monitor consumer complaints (like toll free numbers), these efforts end in up in constantly improving the results as desired by consumers. Comparatively own brands are not as organised as MB and hence lag behind. 6) Physical evidence: The features and benefits offered in terms of quality, commitment, promises, warranty, guarantee, concerns addressed by marketers regarding environment, health care, hygiene, etc as well as the experiences during consumption. Recommendation of experts, critical views also encourages consumers to perceive the high standards of quality. In short both tangible and non tangible elements are involved.

The availability of MB through out the retail sector, product from companies with high brand values, strong penetration into the consumer base, appeal to the maximum end users, long standing credibility of the manufacturers along with product features, recommendations on the pack from fabric and washing machine manufacturers act as a form of physical evidence that the product offers results as per expectations and hence consumers stick to these brands. In case of ROB low price, sourced from different manufacturers and availability only in particular stores are a few of the limitations when comes to physical evidence. 7) Process: The efficient process management is ultimately responsible for sustainable growth in sales revenues. Availability of inventory through out the retailer network, accessibility in terms of convenience, has to be ensured by manufacture-retailer network.

20 In short, the product should be made available to the consumer as per consumer needs and convenience; otherwise competitors can exploit this situation to capture the market share. (Lancaster et al 2002) As discussed the penetration of MB is much higher compared to ROB and the various departments MB(s) use for product development, in short the effective utilization of the process is the key to success. In the global environment we live today, there are different choices for a consumer to adapt. As discussed in the Marketing Efforts of Consumer Buying Behaviour model, every company influences customers towards pull effect in order to achieve push effect. Through marketing tools, companies create a pull effect, i.e. pulling customers towards its products as well as encouraging customers to pull the product off shelf. Thus creates a push effect for its products. In short, pulls customers towards purchase of the product which in turn pushes the product off shelf.

Chapter 3: An overview of detergent market. 3.1 Detergents:

21

Detergent can be explained as a substance which when dissolved increases the capacity of water to clean or rinse the fabric or cloth. Detergents consist of a variety of products but the two main bifurcations are 1) Laundry or Clothes washing detergents. 2) Dish washing detergents. For the purpose of study, the focus will be on clothes washing detergents or laundry detergents, available in various forms like powder, tablets and gel. Records show that Europe was producing soaps in 7 th century and English during 12th century. French are believed to have developed detergents before the middle of 19 th century, however the shortage of soap fats in first world war lead to its further development by Germans during 1916. However detergents were developed for commercial use only by 1950. (The Columbia Encyclopedia 2007) The following chapter relates to detergents market in detail. Leading detergent manufacturers, strategies adopted by them to succeed. The positions of Manufactured Brands like P&G and

Unilever as well as Retailer Own Brands in the UK market are discussed. Detergents can be classified mainly into 2 main groups ROB(s) and MB(s). 3.2 Retailers Own Brand (R.O.B): These are also known as Private labels or Store brands, retail giants in UK like, Tesco, Sainsburys, Morrisons, Asda and Marks and Spenser have developed their private labels or ROB(s) for most of the consumer products. Due to legal protection like Trademarks, copy rights and patents, MB demand a high price from consumers and offer minimal margins to retailers. Retailers explored a better way to deal with such scenarios by creating their own private brands with the aid of different manufacturers. These manufacturers are either certain brand manufacturers willing to generate incremental revenues from excessive manufacturing capabilities or non brand manufacturers exclusively producing for retailers.

22 According to Datamoniter, MB(s) are facing intensive competition from ROB(s) (Dunne & Narasimhan, 1999, cited in Davies & Brito 2004). By 1990, ROB accounted for one-quarter of retail sales in countries like Britain, Germany and Switzerland and more than 15% in other nations like USA, France, Denmark, Belgium and Holland (The Economist, 1995, cited in Davies & Brito 2004). It is estimated that ROB growth rate stands at 11% of the total product lines sold in Europe (Corstjens & Corstjens 1995 cited in Davies & Brito 2004). 3.2.1 Why retailers display MB(s). Retailers do not refuse to list MB(s) in their stores due to the following factors. i) ii) Due to legal restrictions it is difficult to refuse brands. Competition: If retailer decides to display only ROB instead of MB or provide maximum area for ROB compared to MB, they will lose sales on MB(s) and risk competition. Consumers may switch to other stores due to unavailability of their choice. iii) Retailers earn more on MB(s) compared to ROB due to margins combined with volume of sales, listing fees, shelf rentals, special charges for promotions, etc. Margins are less with MB(s) but the volume is high, in total the net result is high

revenues however with ROB(s) margins are high but with low volume, the result is less revenues compared to MB(s). iv) ROB requires direct investments however there are no direct investments on MB, further MB(s) are profitable from day one while for ROB(s) there are risks involved with respect to time, investments and are subjective to success. 3.2.2 ROB Growth in UK: According to a research commissioned by Somerfield supermarket (published in Private label magazine), it is estimated that consumers through out UK save around 336 million per week with private label products which amounts to a weekly saving of 7.15 per adult and equivalent to a saving of 371 per person annually. During this survey, majority of the respondents (62%) expressed their preference for ROB for weekly purchases, while more than half (59%) respondents preferred buy-one-get-one-free style offers at least once in a week. Majority (63%) expressed price comparison as the main factor in shopping and almost all of them (97%) compare prices in search of the best deal. The findings of this report also indicated that the household cleaning products featured twice within the Top 10 ratings of ROB purchased at UK supermarkets with washing up liquid rated at 8 th position and cleaning products rated at 9th position. (Knothe 2007)

23 According to Mintel, the estimated value of clothes washing detergent market in UK is 1.19 billion, mainly dominated by 3 segments MB, ROB and Others (Acdoco, Ecover, PLP, SC Johnson, and Dylon International). Segment Year 2006 % Market (value in Share billions) Manufacturers 0.919 77 % Brands (MB) Retailers Own 0.201 17% Brands (ROB) Others 0.070 6% Total 1.19 100%

MB (77%) ROB (17%) Others (6%)

Figure 3.2.21 Segmented market share of clothes washing detergents in UK (Mintel 2007) While 77% of market being controlled MB and 6% by others only 17% market share lies with ROB, this reflects the situation that market is dominated by MB leaving very little scope for ROB. However own brands detergents are worth 200 million, though there is a slow growth in ROB detergents however the total ROB market is growing as per the estimates (in

fig.3.2.22 & fig.3.2.23) and according to experts there are chances of this situation improving further. Key note is predicting a growth of 39% by the end of 2007 for the ROB in UK, specially in the grocery segment. (Key note April 2003). The estimated value of ROB in UK in 1998 was 30billion (Key note Jan 2000) increased in 2000 to 57.4billion compared to 1996 it exhibits a growth rate of 18.6%.(Key note Jan 2001). The same figures were 61.1billion in 2003, compared to 1998 this reflects a growth by 15.1%(Key note June 2003).

Year

Estimated Value () billions

100 80

1998 ( 30 billion) 2000 ( 57.4 billlion) 2003 ( 61.1 billion) 2007 ( 85 billion expected)

1998 2000 2003 2007

30.0 57.4 61.1 85.0 (expected)

60 40 20 0 ROB Grow th in UK

Fig. 3.2.22 ROB growth in UK.

24 If the predicted growth rate of 39% by 2007 is taken into account, by end of 2007 ROB(s) will cross the 85 billion in estimated value, from 1998 till 2007, in a span of 9 years, the estimated value will increase by 55 billion or 283%, yearly avg. growth of 31% or 6 billion.

Source of Own Label Growth UK

100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%
34.2 31.8

15.3 19.4
14.7 16.4

13.7 15.6
8.8 30.0

Brand Leader No 2Brand Brands over 2% Brands under 2% Own Label

1975

1997

Fig. 3.2.23: Source of Own Label Growth UK. (Oxford 2005) According to Oxford University journal (figure 3.2.23 above) ROB has grown from 16.4 % in 1975 to 30.0% in 1997, i.e. and increase of 13.6% in a span of 22 years or 0.6% annually. If this trend continues, at this rate there will be a 6% rise leading to 36% market share of own labels by the end of 2007.

Fig. 3.2.24: Retailer concentration of the most developed ROB Markets (Perrin 2005:11) Market research firm A C Nielsen conducted a survey on ROB. According to this report, Across the 38 countries and 80 categories included in this study Private Label sales accounted for 17% of the value sales over the 12 months ending the first quarter of 2005. In comparison to year ago, Private Label sales grew by 5%. UK was ranked among the top 5 EU nations along with Switzerland, Germany, Spain and Belgium in the list of EU countries with highest ROB shares. UK ROB share is 28% against retailer concentration of 65% in the EU. UK consumers choose ROB for most (82%) of their purchases. Low income households and large families prefer ROB(s) for savings. (Perrin 2005) 25 There are various reasons for the growth of ROB. According to Oxford university journal, the following are the main reasons fuelling an up ward trend, Vertical integration of UK retailers, particularly grocery segment.

Highly effective and coordinated Supply Chain Management (SCM) of the retail giants both internally (within the company) as well as externally (with the suppliers).

Opportunities for retailers to earn higher margins on ROB as well as MB. Retailers list both ROB and MB in their stores. The brand plans of MB(s) are being updated to the retailer, empowering retailers to initiate brand plans for ROB(s).

Convenience in planning competitive strategies for ROB(s) against the innovations launched by MB(s). Brand management and inventory controls. (Oxford 2005)

According to Key note ROB market is dominated by four major players in UK, Tesco, Sainsbury's, Asda and Safeway together they accounted for a total estimated value of 67.5% of grocery sales in 1999, an increase of 1.2% compared to 1996 statistics. (Key note Jan 2000)

100 80 60 40 20 0 Tesco (51%) Sainsbury (54%) Asda (54%) Safeway (47%) Somerfield (36%) National Average (45%)

Fig 3.2.25 UK Differentiation % Sales in ROB. (Oxford 2005)

3.2.3 Tesco: Tesco was founded by Jack Cohen in 1919 but the brand Tesco appeared in 1924. The word Tesco came into existence when Cohen used 2 alphabets from his name CO and 3 alphabets TES from T. E. Stockwell (from whom he bought a tea shipment). The retail giant Tesco plc is a UK based company in the market segments like grocery and general merchandising.

26 Tesco stands at a 3rd position globally (after Wal-Mart, USA and Carrefour, France) and at 1 st position in UK. Almost a third (30%) of the total UK grocery market share is with Tesco (almost equal to the combined strength of its two main rivals Asda and Sainsburys). Tesco declared a profit of 2.55 billion in 2007 and employs 273,028 employees and operates 2,291stores world wide. Tesco is present in 11 different countries globally, it has started its operation in India in 2007. Tesco serves around 15 million customers globally. (Wikipedia Tesco 2007 & Tesco corporate 2007) According to A C Nielsen, some of the main Tesco ROB segments are as follows, Tesco Organics the organic range of foods from cookies to sausages and 150 products in the free range, free from gluten, wheat or dairy. Tesco Healthy Living constitutes a range of over 500 products having reduced fat, sugar and sodium for diet conscious consumers. Tesco Carb Control has been specifically developed to guide consumers for a low carb eating program. Tesco Fair Trade includes a range of products procured from small suppliers of third world countries, guaranteed to receive fair price for their produce due to fair trade certification. Tesco brand equity also includes personal finance, insurance and telecom portfolio. (Perrin J. 2005:20) Sainsburys: Sainsburys have ROB segments like Free From, Way to Live, Blue Parrot Caf as well as value and premium range. The competition from Tesco, encouraged Sainsburys to penetrate non food segments with (ROB(s) like) Perform+Protect and Active:Naturals. ROB(s) account for more than a third (38%) of Sainsburys total revenue. Taste the Difference premium range ROB is valued between 200m and 300m. (tutor2u 2007) Asda: Asdas clothing range of ROB George is valued at 1billion, incrementing Asda to be the leading cloth retailer in UK. (tutor2u 2007)

3.2.4 Five Forces model of ROB: Barriers to Entry

27

Bargaining Power of Buyers

Competitive Rivalry within a Market.

Bargaining power of Suppliers

Threat of Substitutes Fig. 3.2.41 Porters Five forces model. 3.2.4.1 Competitive Rivalry within a market. According to Keynote, UK ROB market is dominated by four major players, Tesco, Sainsbury's, Asda and Safeway together they accounted for a total estimated value of 67.5% of grocery sales in 1999. (Key note Jan 2000) According to Tutor2u.net, in 2006 in UK, Tesco dominates the ROB market share (31.4%) with a neck to neck race between Asda (16.5%) and Sainsburys (16%) followed by Morrisons (11.3 %) and other retailers (24.8%).(Tutor2u 2007) Analysis of the above statistics conclude an intense as well as competitive rivalry among them (Tesco, Sainsburys, Asda and Morrisons) along with other small players. While there is a cut throat competition between Asda and Sainsbury with a difference of 0.5% market share, Tesco is far ahead with almost equal to their combined strength. The estimated value of ROB in UK in 1998 was 30billion (Key note Jan 2000) increased in 2000 to 57.4billion compared to 1996 it exhibits a growth rate of 18.6%.(Key note Jan 2001). The same figures were 61.1billion in 2003, compared to 1998 this reflects a growth by 15.1% (Key note June 2003). (Source: Porter 1980 /amazon.com)

28 With an upper trend in ROB growth, the major retailers are in stiff competition and with projected growth in ROB market share, this competitive rivalry while increase its intensity further with years to come. 3.2.4.2 Barriers to entry. There are certain legal barriers to entry for new players in terms of minimum distance between retail stores and the number of stores that can be opened up in a borough or county, however given the competitive advantages the major retailers like Tesco have in terms of market share, penetration, presence and financial resources is highly unlikely to get affected by new players, in case of threats form new players these companies can offer price-cuts apart from attractive offers to the consumers, in addition to that they can increase advertising and marketing investments. For new players it is very difficult to sustain price wars or price cuts against these market leaders, hence there is a very little scope for new entrants given the low margins they have to settle for along with high cost of exit and hence on practical grounds there are strong barriers to entry. 3.2.4.3 Threat of substitutes. Given the mass penetration of these major retailers in most parts of UK and considering the growth of retail market and legal regulations governing the location of retail stores in a particular area, there is less number of threats from substitutes. However if MB increase their advertising and marketing expenditure combined by attractive offers for consumers, it can affect ROB(s) in the long run. The external factors like legal regulations to control retail growth (concerns about monopolistic rise of Tesco in the UK retail segment), environmental concerns, fair price issues, child labour ,health issues and animal testing (from manufacturer sources) are some of the issues which may effect ROB(s). Overall there are no immediate threats from substitutes, however unlikely events in the future can affect them. With the growth of the total ROB market, future threat perceptions exist with less effect immediately. 3.2.4.4 Bargaining power of Suppliers. Retailers like Tesco source ROB products from different sources or manufacturers in order to extract maximum benefits with respect to costs, quality control, and supply chain management in order to achieve a competitive advantage over other retailers and MB(s). In particular this helps in keeping costs low and passing on the same to the consumer. In case of these retail giants, instead of suppliers, ROB(s) have the bargaining power.

29 Since ROB(s) have the purchasing power in terms of volumes, suppliers are dependent on them more than vice versa, moreover there is no direct link between suppliers and consumers, consumer interests lie in the final product and not basic ingredients. However external influences like environment, legal and political situations may affect the suppliers, which is again a subjective matter. Finally there seem to be no immediate or direct threat from bargaining power of suppliers. 3.2.4.5 Bargaining power of Buyers. The legalities with respect to how many retail stores can be opened in an area, particularly in UK, restricts the number of retail stores. Consumers give high priority to convenience for retail shopping, this creates a favourable scenario for retailers. Consumers face problems like time, convenience and emotional distress in case they want to travel to another store in search of their choice. Retailers highlight the best discounts to attract consumers and earn on other products not on the discount list, as consumers shop for a variety of products while present in a retail stores, however increasing number of consumers search for best bargains for maximum products they shop, through various sources like Internet, Flyers, catalogues, news papers, magazines, etc this leads to increased savings for consumers.

Most ROB consumers represent price conscious segments of the market, within one store only that particular store ROB is available while MB(s) cost more which is again in favour of retailers. The numbers of buyers are more for one single retailer in that particular area considering factors like time and convenience, buyers have limited bargaining power compared to retailers. Final conclusion on 5 forces model of ROB(s). High competitive rivalry. High barriers to entry and exit. Limited threat of substitutes. Negligible bargaining power of suppliers. Limited bargaining power of buyers.

3.2.5 SWOT Analysis of ROB(s):

30

Strengths, Weakness, Opportunities and Threats, combined are known as SWOT. Mintzberg has discussed the SWOT analysis in the book Strategy safari it forms the for designing any business strategy. (Mintzberg et.al 1998). SWOT analysis is an important field of information to know the internal capabilities (Strengths and Weakness) in order to exploit external influences (Opportunities and threats). 3.2.5.1 Strengths: The ROB market share in 2004 was 15% (179 million) and in 2005 it was 16% (186 million) these figures have shown a consistent growth of 1% annually, increasing to 17% (201 million) in 2006. (Mintel 2007) The market for ROB in general is growing at an estimated rate of 31% annually or 6 billion per annum since 1998. ( Fig. 3.2.22, Pg:23. ROB growth in UK). ROB market share for the consecutive 3 years (2004-05-06) have shown an upward trend reflecting strong potential, growth trends and exhibits the strength of the ROB market. Consumer strength has also shown growth trends. It is important to note that with the ROB focus on quality along with price, it is highly likely that Brand conscious customers will tend to switch towards ROB(s), while a Price conscious ROB customer is unlikely to switch over to MB(s) with prices higher than ROB(s), hence the situation favors ROB(s). ROB(s) have their own stores giving them the leverage to offset any strong competition from MB(s) and other ROB(s), while MB(s) do not have retail infrastructure and hence they are dependent on retailers. 3.2.5.2 Weakness: Consumer perception about Low cost-Low quality ROB(s) still exist and a limited number of consumers tends to switch to ROB(s) from MB(s). ROB(s) still lag behind MB(s) in terms of advertising and promotional strategies, In general ROB(s) are confined to the geographical regions, local areas and stores in terms of reaching the consumers, while MB(s) have national and global out reach. The availability of ROB(s) is confined to certain stores of that particular retailer, for example, Tesco detergent is available only in large Tesco stores(Tesco super, Tesco metro and Tesco extra) not in small stores (Tesco express, home plus and one stop). Apart from this Tesco detergent is not available in retail stores like Sainsburys, Asda, Morrisons, Sommerfield, local groceries or corner shop. (Wikipedia / Tesco 2007) basis

31 The limited availability of ROB(s) can force customers to switch to either competitor ROB(s) or even MB(s) when influenced by factors like time and convenience. 3.2.5.2 Opportunities: Retailers like Tesco have taken over other retail chains to increase their market size, market share, penetration and consumer reach. (May 1987 Hillards chain of 40 stores in the North of England and 1994, Scottish supermarket chain William Low). (Wikipedia / Tesco 2007) Major ROB(s) (Tesco, Sainsburys, Asda and Morrisons) have introduced Loyalty Cards a rewards program for loyal customers. This helps retailers to keep track of Sale demographics empowering them with information like age,area of residence, purchases to plan their strategies in accordance with consumer trends, needs and demands. (Wikipedia / Tesco 2007) Expansion through opening new stores (subject to legal conditions), acquiring other smaller retail chains are some of the local and national opportunities available. In the global market, venturing into new avenues through strategic partnerships with local firms as well as direct foreign ownership are some of the methods used by ROB(s). Tesco operates in 11 different countries of the world and has started its operation in India in 2007. (Wikipedia / Tesco 2007) International operations not only provide opportunities to increase revenues through sales but also provide opportunities to source ROB products at competitive rates in terms of price, quality and supply chain management. 3.2.5.3 Threats: In Nov.2007, London borough of Marylebone received media attention with the resident and Liberal democrat activist Martin Thompson called for rebranding Westminster as Tescoland when the opposition organised by him failed to stop the 10 th Tesco store from coming into existence, in the area. (Prynn 2007:18) The concerns regarding monopolistic dominance of ROB(s) like Tesco can create public attention leading to new legal frame work governing restrictions on increasing market share, acquiring other retail networks and opening new stores, this can affect growth.

32 Increased focus on advertising and promotional strategies of MB(s) and attractive offers to offset price factor competence of ROB(s), Quality at low prices marketing strategies of other ROB(s) are some of threats existing in the market. Hostile takeover bids, increasing dominance through stock invest by rival ROB(s) in the business of major retailers like Tesco, concerns with suppliers like environmental issues (CO2 emissions), fair price issues, child labour, health issues and animal testing. Unforeseen circumstances like war, natural disasters, economic downturn, increase in unemployment, high interest rates are some of the threats existing in the market. Threats existing in the market are subjective not certain and could affect in the long term while in the short term they are limited. 3.3 Manufactured Brands (M.B.): Manufacturers invest a lot of capital and resources on their products over a period of time, aiding it with legal tools like patents, copyrights and trademarks, in order to develop a brand. This is a very complex and lengthy procedure; however it is one of the best methods available. Competitors find it difficult to copy or replicate such products; hence it provides long term profitability for the manufacturers. In the current global scenario, MB(s) are facing lot of challenges from competitors like ROB. MB have to pay on listings, shelf rentals and promotions to retail outlets as well as compete specially on price ROB, in order to compete, they are investing highly on advertising and direct brand marketing to retail consumer or brand loyalty. The prices of manufactured brands are almost 3 times higher than retailers own brands because of the various costs involved like, Production. Logistics (supply chain management between stores from international stores to national, regional, local and retailer). Tax structure (tariffs, quotas, customs, excise, national and local taxes). Research and Development costs. Advertising costs (global, national, regional and local media and channels).

Infrastructure costs. Human resource costs (employees from Executive management to sales person involved).

33

Fig 3.30 Washing up liquids (Source: Davies G.& Brito E. 2004: 40, EJM 38 1/2) The manufacturing cost of Persil is lower than for ROB and leading MB (Fairy). ROB sells at a price 44 % lower than MB1(Fairy) The major explanation for the difference in the consumer selling prices is in the difference in the manufacturers overheads and profit on the product line that was being spent elsewhere in the firm. (Davies & Brito 2004: 40), EJM 38 1/2) According to Market research firm Mintel, there are around 17 million wash cycles carried out every day by UK consumers, the emphasis here is on multiple factors like convenience, contents like natural ingredients, eco friendly, stain removal, effects on skin as well as environment. Mintel estimates clothes washing detergents, valued at 1.19 billion in 2006 against 1.165 billion in 2002, an increase of 2.2%. (Mintel 2007). According to Market Research, the total market size of UK detergents was estimated to be 2 billion in 2006. There are 4 major companies in the detergents market of UK, Procter & Gamble (P&G), Unilever, Reckitt Benckiser and SC Johnson, almost 50 % of market share is dominated by US Muti-national company P&G.(Market Research 2007) According to market research firm Keynote, the total market size of detergents is 2.06 billion, an increase by 7.8% compared to figures in 2002. However these figures include fabric care, household cleaning and dishwashing detergents. (Kidd 2007).

34 Sector Year 2002 (value in billions) 1.91 Year 2006 (value in billions) 2.06 % Growth
Clothes w ashing detergents 1.19 bn (58%) Other detergents 0.87 bn (42%)

UK Market size for Detergents Clothes washing detergents

7.8

1.16

1.19

2.2

Figure 3.31 Market size of Detergents in UK. (Mintel 2007) Analyzing the data given by the market research firms (fig. 3.31) the following calculations can be drawn, The total market size of detergents in UK is around 2.06 billions of which Clothes washing detergents constitute 58% at 1.19 b, while there has been a 7.8% increase in value of total detergent market, clothes washing detergents have increased by 2.2%, during 4 year consecutive period (2002-2006). Clothes washing detergent market in UK is mainly dominated by 4 major players Procter and Gamble (P&G), Unilever, ROB and Others ( Acdoco, Ecover, PLP, SC Johnson, Dylon International).. Company Year 2006 (value in billions) 0.559 0.360 0.201 0.070 1.19 % Market Share 47 % 30% 17% 6% 100%
P&G Unilever ROB Others

Procter and Gamble (P&G) Unilever Retailers Own Brands (ROB) Others Total

Figure 3.32 Market shares of Clothes washing detergents in UK (Mintel 2007)

While 77% of market being controlled by P&G and Unilever and 6% by others and17% with ROB, market is dominated by MB.

35 In this chapter MB refers to two major players (P&G and Unilever) since they are the leaders in UK (Market share and Brand share). 3.4 Procter and Gamble (P&G): P&G is a US based MNC and one of the worlds largest consumer products company with $76.5 billion in revenue and $10.3 billion income during fiscal year 2007, UK turnover for 2005 was 5.13 billion and employs more than 1 million employees working in 80 countries worldwide. P&G site proudly proclaims that Three billion times a day P&G brands touch the lives of people around the world, making life a little better every day. P&G 2007 , Annual Report 2007). Founded in 1837 in USA, UK operations started in 1930. 23 brands worth 1 billion dollars & 18 brands between $500 million and $1 billion. Major Brands in UK: Ariel, Bold 2 in 1, Daz and Fairy. Tide laundry detergent launched in 1946 in USA. Ariel laundry detergent launched in 1969 in UK. Investment of 100 million in 2006 for the laundry detergent sector. (Wikipedia/P&G 2007) In October 2006 a new fragrance was introduced in Bold portfolio called Crushed Silk & Jasmine available in powder, tablet and liquid formats. During the same period, there was a line extension in Fairy for the fabric softening sector, a product which is dermatological tested and is endorsed by Allergy UK. In 2007 Ariel Febreze was introduced as an additional feature (fragrance) to Ariel. (Kidd 2007) In tune with the Environmental concerns, Ariel Turn to 30 degrees was launched in 2007, which claims to give excellent results even at 30 degrees (washing machine mode) in addition to saving 40% of energy, hence contributing to less CO2. (Kidd 2007) P&G Brands Ariel Bold Daz Fairy Others Year 2006 (value in millions) 160 130 68 65 136 % Share within P&G 29 % 23% 12% 11% 25%
Ariel 160 m n (29%) Bold 130 m n (23%) Daz 68 m n (12%) Fairy 65 m n (11%) Others 136 m n (25%)

(P&G

Total sales

559

100%

Figure 3.41 P&G share of Clothes washing detergents in UK (Mintel 2007)

36 Analyzing the figures from figure 3.41, the total sales of P&G clothes detergents in UK stands at 559 million in 2006, which is shared by Ariel at 160 m, a share of 29 %, Bold at 130 m (23%), Daz 68 m (12%), Fairy 65 m (11%) and Other P&G brands at 136 m (25%). 3.5 Unilever: Unilever is one of the prominent MNCs in consumer products and is the second major player in the UK clothes detergent market after P&G. Unilever has reported over $50 billion in global turnover ( 39.6 billion). It employs 179,000 people in 100 countries around the globe. The official website claims that Every day, 160 million people choose our brands to feed their families and to clean themselves and their homes. Unilever invested 1 billion in research and development during 2006 and for the same year investments in advertising and promotions amounted to 5 billion. (Unilever key facts 2007) Unilever owns around 400 brands, some are available on country basis whereas others are available globally. (Wikipedia/ Unilever 2007 & Richards 2001) In UK Unilever is the second largest player in clothes detergent market after P&G. In 2005 it posted a turnover of 918 million, major brands are Persil and Surf. (Kidd 2007) Persil brand belong to German company Henkel, Henkel manufactures Persil in countries like Germany, Netherlands, most other European countries, Egypt and Saudi Arabia. Unilever acquired rights of Persil in 1931 for other countries worldwide. Persil is Unilever's premium brand in the UK and the Republic of Ireland. (Wikipedia/ Unilever 2007). In July 2006, Persil Colour Gel tables were introduced. This product claims convenience and strong washing power due to the presence of a gel layer and a composition of pre-treating agents to deal with tough stains. (Kidd 2007) Surf is a laundry detergent from Unilever introduced in 1950 and is a global product specially in countries like USA, UK and Ireland. (Wikipedia/ Unilever 2007). Unilever Brands Year 2006 (value in millions) Persil 205 Surf 45 Others 110 Total Unilever 360 sales % Share within Unilever 57 % 13% 30% 100%

Persil 205 m n (57%) Surf 45 m n (13%) Others 110 m n (30%)

Figure 3.51 Unilever shares of Clothes washing detergents in UK (Mintel 2007)

37 Analyzing the figures from figure 3.51, the total sales of Unilever clothes detergents in UK stands at 360 million in 2006, which is shared by Persil at 205 m, a share of 57 %, Surf at 45 m (13%), and Other Unilever brands at 110 m (30%). 3.6 Brand share: P&G (51%) and Unilever (29%), together have a brand share of 80% of the total brand share of clothes detergent market in UK. The top brand in terms of sales revenues is Persil from Unilever with a share of almost a quarter (24%), this could be due to various reasons like, Habitual consumer purchases being passed from generation to generation, the trust in brand, quality, desired results and resistance to change or switch to any other product.(Mintel 2007)

Brand share in the clothes washing detergent segment of UK. Brand & Company Year 2006 (value in millions) Persil (Unilever) 205 Ariel (P&G) 160 Bold (P&G) 130 Daz (P&G) 68 Fairy (P&G) 65 Surf (Unilever) 45 Retailers Own 135 Brands (ROB) Others 40 Total 848 % Market Share 24% 19 % 15% 8% 8% 5% 16% 5% 100%
Persil 205 m n (24%) Ariel 160 m n (19%) Bold 130 m n (15%) Daz 68 m n (8%) Fairy 65 m n (8%) Surf 45 m n (5%) ROB 135 m n (16%) Others 40 m n (5%)

Figure 3.61 Brand shares of Clothes washing detergents in UK (Mintel 2007)

Analyzing the data from figure 3.61, the total brand share of clothes detergents in UK stands at 848 million in 2006, which is shared by Persil at 205 m, a share of 24 %, Ariel at 160 mn (19%), Bold at 130 mn (15%), Daz at 68 mn (8%), Fairy at 65 mn (8%), Surf at 45 mn (5%), ROB at 135 mn (16%) and Other brands (Acdoco, Ecover, PLP, SC Johnson, Dylon International) at 40 mn (5%).

3.7 Five Forces model of Manufactured Brands: Barriers to Entry

38

Bargaining Power of Buyers

Competitive Rivalry within a Market.

Bargaining power of Suppliers

Threat of Substitutes Fig. 3.70 Porters Five forces model. 3.7.1 Competitive Rivalry within a market. P&G and Unilever together hold a 77% of the market share and 80% of the brand share in the UK Clothes detergent market. Competitive rivalry among them is intense along with other players ( Acdoco, Ecover, PLP, SC Johnson, Dylon International, etc). (Mintel 2007) Investments in R&D, advertising, promotions and line extensions during 2006 amounted to millions of US$, hence these factors mainly contribute to the intensive competition over pricing structures. While other companies (smaller brands) implement lower pricing structures in order to compete with these giants, P&G and Unilever concentrate there efforts on Brand more compared to pricing. Hence from both companies point of view, the market looks potential as well as attractive. 3.7.2 Barriers to entry. There are certain legal barriers to entry for new players in terms of minimum distance between retail stores and the number of stores that can be opened up in a borough or county. like P&G and Unilever invest heavily on promotion and have crafted an image on consumer perceptions which are very difficult to break in, they together have a 80% brand share (Mintel 2007) which is highly unlikely to get affected by new players, in case of threats form new players these companies can offer attractive offers and increase advertising and marketing strategies. For new players it is very difficult to invest heavily either in advertising or pricing to (Source: Porter 1980/Amazon.com)

compete with these market leaders, there is a very little scope for new entrants given the low margins they have to settle for along with high cost of exit and hence on practical grounds there are strong barriers to entry. 39 3.7.3 Threat of substitutes. Given the long standing of manufactured brands like P&G and Unilever with respect to brand image, quality and consumer perception, which has been a part of habitual purchases from generation to generation, there are less number of threats from substitutes. However if own brands improve their consumer perception about quality over the period of time combined with less price, it can affect manufactured brands in the long run. In the long term external factors like environmental concerns, fair price issues, child labour, health issues and animal testing are some of the issues which may affect manufactured brands. Overall there are no immediate threats from substitutes, however unlikely events in the future can affect them. With the growth of ROB there are future threat perceptions but not immediately. 3.7.4 Bargaining power of Suppliers. Since manufactured brands achieve economies of scale in production (global distribution or national production for regional and local distribution) instead of suppliers, manufactured brands seems to have the bargaining power. Since manufactured brands have global presence, they can source the ingredients (chemicals and packing materials) from different parts of the globe to achieve economies of scale, moreover there is no direct link between suppliers and consumers, as consumers are only interested in the final product and not the basic ingredients. However external influences like environment, legal and political situations may affect the suppliers, which is again a subjective matter. Finally there seem to be no immediate or direct threat from bargaining power of suppliers. 3.7.4 Bargaining power of Buyers. The brand loyalty and brand image along with high quality perception of brands enforce customers to remain loyal and hence less chances of switching even though own brands and other manufactured brands exist. The number of buyers and suppliers are more in general however in specific terms brands are few and buyers are more and hence brands dictate prices not the buyers. Low prices have less impact on the majority of brand conscious buyers compared to price dependent buyers. Retailers who also act buyers cannot refuse to buy due to legal restrictions, competition and profit of margin on brands. Hence bargaining power of buyers remains low and subjective.

40 Final conclusion on 5 forces model of manufactured brands. Limited competitive rivalry. High barriers to entry and exit. Limited threat of substitutes. No or very less bargaining power of suppliers. Less bargaining power of buyers.

3.8 SWOT Analysis of Manufactured Brands: Strengths, Weakness, Opportunities and Threats, combined are known as SWOT. Mintzberg has discussed the SWOT analysis in the book Strategy safari it forms the basis for designing any business strategy. (Mintzberg et. al 1998). SWOT analysis is an important field of information to know the internal capabilities (Strengths and Weakness) in order to exploit external influences (Opportunities and threats).

3.8.1 Strengths: The major advantages the MB (P&G and Unilever in particular) have over ROB is that they are decades old in the market (P&G, Unilever operations in UK since 1930). P&G and Unilever together hold a 77% of the market share and 80% of the brand share in the UK Clothes detergent market. (Mintel 2007). 3.8.1.1 Global Expertise: P&G and Unilever are known and used by millions of consumers around the globe. Three billion times a day P&G brands touch the lives of people around the world, making life a little better every day. (P&G 2007) Every day, 160 million people choose our brands to feed their families and to clean themselves and their homes. (Unilever key facts 2007). Given their global presence, P&G employs more than 1 million employees working in 80 countries worldwide. (P&G Annual Report 2007).

Unilever employs 179,000 people in 100 countries around the globe. (Unilever key facts 2007)

3.8.1.2 Financial Resources: 41 P&G and Unilever are global brands and invest heavily on brand strategies like advertising and promotional campaigns (P&G 500 million & Unilever 5 billion in 2006) ( Wikipedia/P&G 2007 & Unilever key facts 2007). Unilever has reported over 39.6 billion in global turnover (Unilever key facts 2007) P&G global turnover is $76.5 billion in revenue and $10.3 billion income during fiscal year 2007, UK turnover for 2005 was 5.13 billion (P&G Annual Report 2007). Unilever owns around 400 brands, some are available on country basis whereas others are available globally. (Wikipedia/ Unilever 2007 & Richards 2001) Among the major brands of P&G, 23 brands are worth $ 1 billion & 18 brands between $500 million and $1 billion. (Wikipedia/P&G 2007) The expertise MB(s) have in global and financial resources enables them to compete and lead through aggressive advertising, strong distribution network, sponsor major global events, implement brand endorsements, etc. these factors contribute to the strength of MB. 3.8.2 Weakness: 3.8.2.1 Price: The major weakness from price conscious customers perspective is high price compared to ROB. This is the segment where retailers are exploiting, to ensure the placement of ROB. MB cannot reduce price to the level of ROB due to the high costs involved in brand administration, however MB can use advertising and promotional strategies to offset this weakness. In store promotions like pack on pack (buy one get one free) offers, incremental quantities (get 3.5 kg for the price of 3 kg) and coupons to win gift hampers can also portray the message. 3.8.2.2 Research on Animals: P&G research and development activities include animal research or animal testing. This is to ensure the safety or efficacy of their raw materials and finished products. Some animal rights activists are protesting to stop animal testing at P&G labs through public awareness campaigns (Uncaged Campaigns in UK and Stop Animal Exploitation Now in the USA). However another animal rights activist, The Humane Society of the United States, has recognized the efforts of P&G for "advancing alternatives to animal testing". (Wikipedia/P&G 2007) Unilever is facing criticism from PETA (People for the Ethical Treatment of Animals) for using animal research. Apart from animal concerns, Unilever has been accused for causing environmental pollution by environmental activists like Green peace. Unilever has also been criticized for being involved in child labour. (Wikipedia/ Unilever 2007).

3.8.3 Opportunities:

42

MB(s) have various opportunities to grow within the existing markets as well as explore new territories. Strategic decisions regarding in house activities, special displays in retail stores, advertising space in print and electronic media, prime advertising slots on air (TV and internet) certain areas to explore in terms of opportunities. 3.8.3.1 Brand Leverage: MB(s) have established brands this can be explored to provide leverage in terms of sales and growth. Their national as well as global presence enhances brand value in terms of popularity as well as usage. In case of competitive threats, they have resources to launch massive advertising and promotional campaigns. Line and brand extensions are another way of capitalizing the brand leverage. 3.8.3.2 Sponsorship and Co-branding: The sponsorship of major live entertainment, sports and cultural events enhances brand value. Sponsorship of social causes like charity for aids in Africa, education for third world countries direction. 3.8.4 Threats: MB faces different threats from within and outside (ROB). Price wars due to struggle for existence between MB(s) and ROB(s). Competition with respect to prime slots for media advertisements and shelf display at retail stores. Retailers negotiating terms in favour of ROB. Surplus or unnecessary expenditure in advertising with respect to cost realization. ROB focus on quality at low price segments. External factors like environmental concerns, fair price issues, child labour, health issues and animal testing. Un foreseen circumstances like war, natural disasters, and economic downturn. is a way of reflecting ethics. Recommendations by washing machine manufacturers, apparel houses and designers can be termed as A right step in the right

Threats exist at various levels, however they are subjective to future. Hence being aware of the surroundings and taking necessary steps about the threats can limit their occurrences.

Chapter 4: Research Plan Introduction:

43

Research methodology chapter will describe the research methods applied as well as the justification for the same, with reference to relevance. The main areas of study like research objectives, research design, questionnaire design, pilot study, sample selection and limitations of research will be discussed with reference to relevance, of this report. During the research the areas stressed upon by Walliman (2001) (sited Saunders et al 2007:4) have been taken into account. Data collection (facts and information) have a clear purpose. Interpretation of recorded facts and information with respect to relevance. The process justifies the objectives of the research.

The research process is based on logical relationship and not just beliefs. It also includes description and explanation about the problem, author exhibits understanding of the problems and a critical analysis of the existing published material. (Ghauri & Gronhang 2005 sited in Saunders et al 2007:5).

1) Topic of Research: Formulation and Identification

2) Research Objectives

3) Research Design

4) Data Collection Secondary Data Sampling Primary data: Questionnaires

5) Data Analysis

Fig 4.1 The Research Process (Saunders et al 2007:10) Research Topic and Research objectives have discussed in Chapter 1 Background and Objectives and hence author does not find to repeat the same in this chapter.

Research Design:

44

Brown (2006 sited in Saunders et al 2007:31) states that the main purpose of the research design is to offer relevant answers to the research question. (Saunders et al 2007:31) According to Jankowicz (2005) research design has been classified into 3 types, a) Exploratory research (Identification of key issues to address the main problem). b) Descriptive research (explanation of issues systematically). c) Causal research (explanation of the reasons behind the outcome). (Ghauri and Gronhang 2002:48-52, sited in Jankowicz 2005:197), Exploratory research was quiet helpful in the initial stages of this report, particularly when author did not had enough understanding of the research areas (Malhotra 2004) According to Robson (2002) descriptive research can de explained as an extension of exploratory research while Malhotra (& Birks 2003) stresses that the objective of descriptive research is to give a description, for example certain market characteristics or functions. Descriptive research was used by the author in the form of questionnaire. Data collection methods: Secondary data: Data is collected from previous research published material from different authors about relevant areas of study, material from books, journals and articles to present a critical analysis in the literature review chapter of this report. Secondary data and literature was extracted from various sources. Books from authors like Kotler, Lancaster, Ghauri and Cateora and Saunders, Journals from Oxford University, CIM, European journal of marketing and Journal of Consumer Marketing, Market research reports from Mintel, Emerald and Keynote, were used due to concerns about credibility, reliability and authentication. Sampling: Saunders (et al 2007:206) highlights the importance of sampling due to following reasons, Survey of entire population is not feasible on practical grounds. Financial resources required are difficult to procure.

Time management will be a difficult task. Data collection and analysis require large volume of resources.

45 Author approached 400 samples of consumers in view of the expected practical responses and received 100 responses, vital for the primary research. Survey was started with friends and neighbours using non-probable, convenience, door to door survey method for the initial 10 responses. Some of the hurdles faced during door to door surveys are follows, Respondents have concerns about the surveyor (author) an intruder asking questions about their purchases. Respondents not present or unwilling to respond, as it disturbs their privacy at home. Security controls restricting door to door surveys in certain buildings and apartments. Time consuming process in retrieving results.

Due to the above mentioned reasons, author designed a structured process to over come the problems faced. The survey was conducted in London Transport Buses for the balance 90 responses. Author personally travelled in the buses covering different areas (routes) of London given in the Table 4.2 below. Bus Number 12 Destination Route

Dulwich Library - Peckham - Camberwell - Walworth - Elephant Westminster - Oxford Circus 25 Ilford - Manor Park - Stratford - Bow - Whitechapel - Aldgate - Bank - Holborn - Oxford Circus 35 Clapham Junction - Clapham Common - Brixton - Camberwell Walworth - Elephant - London Bridge - Shoreditch 40 East Dulwich - Camberwell - Walworth - Elephant - London Bridge Aldgate 133 Streatham - Brixton Kennington - Elephant - London Bridge Moorgate - Liverpool Street Station 148 Camberwell - Walworth - Elephant & Castle - Westminster - Victoria - Marble Arch - Notting Hill Gate - Shepherd's Bush 188 North Greenwich - Greenwich - Surrey Quays - Bermondsey Elephant - Waterloo - Aldwych - Holborn - Russell Square (Table 4.2 Survey Route, Source: http://www.londonbusroutes.net/routes.htm#main retrieved 20-11-2007) The reasons for conducting the survey on buses are as follows, Maximum coverage of London areas. Cluster as well as random methods apply, cluster / passengers present in the bus, random as passengers change (get in or get out) at every bus stop.

Convenience in terms of respondents accessibility. The bus routes chosen travel for a minimum of 30 minutes before reaching end of the route from authors residence (Elephant and Castle).

46 This provides a minimum of 5 responses on each trip, contributing to 10 responses for around an hour (return journey). Prospective respondents do not mind spending around 5 minutes for answering the questionnaire as they are bound to spend time travelling in the bus till they reach their destination. This method is also called as Captive Respondents. Provides opportunities in terms of time and financial management. A week bus pass cost less than 10 (9.70) for students. Authors physical presence during questionnaire administration ensures accuracy, validity and reliability. It also helps in minimising errors and bias like non responsive error, prejudice, un answered questions and clarification about specific questions. Buses provide convenience, security and cordial environment necessary for smoother conduct of the survey. Primary data: In order to investigate the practical situation in order to retrieve primary or first hand information relevant to the report and relate the findings to secondary research, it was necessary for the author to collect primary data. Primary data was collected through administration of 100 questionnaires. Questionnaire (Appendix 1) Questionnaire is based on 15 questions. The first 10 questions are related to consumer buying behaviour about the purchases, importance of the particular brand (ROB or MB), switching products, importance of retail outlets used for regular shopping, influence of advertising on the media, all the 10 are multiple choice questions with the option Others please specify to extract and relevant additional information. The last 5 questions are related to demographics, this has be done in order to avoid non response as respondents may not like questions relating to their age group or work at the initial stage. According to Bell (2005) (sited Saunders et al 2007, 354-356) certain areas are to be considered while preparing questionnaires Appropriately designed to produce necessary information. Clear and easily understood by respondents.

Easy to analyse and interpret the data gathered. (Saunders et al 2007)

47 Author has designed questionnaire according to lecture notes (McGee 2006). Questionnaire has been designed specifically to obtain quantitative primary data for the descriptive research as required for this report. This has been done for standardising the data collection process to ensure that the primary data obtained is internally consistent with respect to relevance and can be analysed in a uniform and coherent manner. The following areas were taken into consideration while designing questionnaires, 1) Questions were developed that respondents could easily answer and yield the desired relevant information. 2) Questions uplift, motivate and encourage the respondents to become more involved, co-operate as well as complete the questionnaire. 3) Response error (in accurate answers and bias leading to mis-recorded or mis-analysed data) is minimised due to the physical presence of the author during all the 100 responses. 4) A single questionnaire is viable and suitable for all 100 respondents in regard to relevance. 5) Un clear or confusing areas were revised and eliminated during pilot survey of first 10 responses. 6) Structured, multiple choice questions using a Likert scale were used to yield clear and maximum accuracy. 7) Wordings were designed to avoid or at least minimise non response. 8) Questions were designed to encourage respondents to take part in survey, questions pertaining to demographics (sex, age, education, work) which can discourage initially were asked in the last section. 9) Lay out, design, quality of print and paper were taken into consideration, in order to avoid as well as eliminate potential problems. 10) Questionnaire was shown to the dissertation supervisor prior to administration. (McGee 2006). The data obtained from questionnaires is analysed by univariative method (analysis of a single variable at one time) with aid of pie diagrams. (Jewell 2007, 10.21) Validity: To present the data on part with validity, the questionnaire was designed to ensure that the findings are really about what they appear to be about (Saunders et al 2007,150) Reliability:

Robson (2002) (sited Saunders et al 2007,149) states, there are 4 threats to reliability,

48 1) Subject of participant error: As this area is difficult to control, author has completed the questionnaire survey during 2 weeks period (between 24-9-07 to 7-10-07) by travelling in various areas of London, in order to reduce the risk of external (environmental, political or legal) influences. 2) Subject of participant bias: The author was physically present at the time of accurate as possible in order to limit bias. 3) Observer error: Questionnaire had been set with open and closed questions along with options like if others please specify in order to reduce errors. 4) Observer bias: It is challenging to control such bias, however author tried to avoid it by acting neutral while interpreting and reporting results as well as data. Pilot study: A pilot survey was conducted with 10 questionnaires on the basis of which, it was observed that Question 4 regarding the choice of product tends to confuse respondents. Respondents were displaying signs of confusion between the store and ROB, for example they were marking Tesco as well as Ariel for product choice assuming these are 2 different options from different questions, hence author revised this question from Tesco to Tesco washing powder enabling customers to answer without confusion. The questionnaire available in the appendix is the revised questionnaire format used for the balance 90 responses. Research Ethics: Questionnaire are designed for anonymous response. The following ethics were considered during designing and administration of questionnaires. In view of the Data protection concerns, personal details like name, date of birth or contact details have not been included. Authors physical presence ensured accuracy and doubt clarifications during the survey. Questions which can distract, confuse or harm the respondents in any way have been excluded from the questionnaire. Questionnaire analysis was undertaken by the author in most accurate manner avoiding bias and prejudice. questionnaire completion by respondents to explain and ensure that respondents answer the questions as

Questionnaire introduction explains the reasons and the purpose of the survey and offer thanks for participation. Prospects were approached with a humble manner and unwillingness of the respondents was dealt in a polite manner.

Limitations of Research

49

This research has a number of limitations like constraints in terms of time, resources and the word limit. It is difficult to present the data in detail because of the following reasons. 1. Lack of time and resources to present the data in detail. 2. Software (like SPSS) could not be availed and utilised. 3. Out of a population of around 61 million in UK, only 100 consumer responses were considered for primary research. (National Statistics 2006) 4. The 10 respondents were chosen from residential areas and 90 were bus passengers, it can be termed as biased towards London bus passengers. 5. The report is about UK, however primary data collection is based only on London residents and due to time and resource constraints other parts of UK were not considered for the survey. 6. Author approached around 400 consumers to complete questionnaires about relevant research but was successful only in retrieving 100 responses, the ratio is 4:1, hence cannot represent the views of 300 consumers who refused to take part in the research. 7. There is a huge amount of secondary data and literature available in the books, journals and internet, however very less information was utilised due to space, time and resource constraints. Research GANTT Chart: Description Review of Literature Research Design Research Methodology Sources of Data Collection of Data Data Analysis Draft Completion Final Report Week 1 Week 2 Week 3 Week 4 Week 5 Week 6 Week 7 Week 8 Week 9 Week 10

Editing Document Binding

Chapter 5: Data Analysis Questionnaire Analysis conclusions and analysis about every main and sub question. Q: 1, Frequency of detergent purchases: Once in a week Once in 2 weeks Once in a month Once in 3 months
once in 1 w eek (30%) Once in 2 w eeks (17%) Once in 1 m onth (46%) Once in 3 m onths (7%)

50

Questionnaire analysis has been under taken with the aid of tables and pie charts followed by

30 17 46 7

Fig 5.1 Frequency of detergent purchase. In response to question 1 about the frequency of detergent purchase, majority (46%) of consumers purchase once in a month, while 30 % purchase once in a week, followed by 17% once in 2 weeks and only 7% purchase once in 3 months. Q: 2, Which pack size do you buy? 1 kg (small) 2 kg (medium) 5 kg (large)
1 kg (sm all) (21%) 2 kg (m edium ) (46%) 5 kg (large) (33%)

21 46 33

Fig 5.2 Pack size purchased.

In response to Q2, Which pack size do you buy, majority (46%) prefer medium or 2 kg pack, followed by 33% choose large or 5 kg pack and small 1 kg pack is preferred by 21% only.

Q: 3, Reason for purchase of a detergent? Washing at home. 92 Washing at laundry. 8

51

Washing at hom e (92%) Washing at laundry (8%)

Fig 5.3 Reason for purchase. In response to Q3, Reason for purchase of detergent, most (92%) answered washing at home compared to only few (8%) washing at laundry. Since most households have washing machines at home and is convenient to wash at the available time compared to laundry where it is only in day and during fixed time plus there could be waiting periods. Q:4 Which product do you buy? Ariel Bold Persil Tide Fairy Surf Daz Linor Ecover Tesco washing powder Sainsburys washing powder Morrisons washing powder Lidls washing powder 33 19 29 1 2 2 2 1 1 6 1 2 1

Ariel (33%) Bold (19%) Persil (29%) Tide (1%) Surf (2%) Daz (2%) Linor (1%)
Fig. 5.4.1 Choice of the product or brand.

Ecover (1%)
52 90 10

Manufactured Brands (MB) Retailers Own Brands (ROB)

Manufactured Brands (MB) (90%) Retailer's Ow n Brands (ROB) (10%)

Fig 5.4.2 Consumers choice between MB and ROB. In response to Q4, about choice of the product or brand, MB (90%) dominates the consumer choice, the leading brand is Ariel (33%) followed by Persil (29%), Bold (19%), in total manufactured brands are the leaders while only a tenth (10%) choose own brands (Tesco 6% and others 4%). The purpose of this research i.e. what is the reason behind such choices have been discussed in detail through out this report. Q: 5, How do you feel about the product you are using at present with respect to results (clean washing)? Highly Satisfied Satisfied No difference 23 71 6

Highly Satisfied (23%) Satisfied (71%) No difference (6%)

Fig.5.5 Consumer response about the product in use. In response to Q5, about the product they are using, most of them (94%) felt they are satisfied with the results only 6% felt no difference. However none answered dissatisfaction and hence they stick to their habitual purchase or brand loyalty.

53 Q:6, Have you ever switched, if yes, what was your experience regarding results (clean washing of clothes) (Appendix 1) No 62 Yes 38 % Satisfied 22 No Difference 11 Not Satisfied 5
No (62%) Satisfied (22%) No Difference (11%) Not Satisfied (5%)

Fig. 5.6 Switch between brands and the experience of the same. In response to Q6, about switching brands and the resultant outcome, majority have not switched their brand and hence answered no (62%) while only a third (38%) have switched and felt satisfied (22%) or no difference (11%) only a little (5%) were not satisfied. It is difficult to change choice of the brand, however once they switch, it is not hard to retain as majority of consumers who switch were either satisfied or felt no difference with the new choice. Q:7, What sources do you usually use to obtain information about detergents? Friends 10

Past Experience Television News Paper Magazines In store promotions

Friends (10%)

90 15 1 1 5

Past Experience (90%) Television (15%) New s paper (1%) Magazines (1%) In store prom otions (5%)

Fig. 5.7 Sources of Information

54 In response to Q7, about the sources of information used for purchase decision making, where consumers were asked to choose more than 1 choice if appropriate, most of them (90%) reflected past experience, while 15% use television as a source of information while 10% rely on friends, in store promotions stand at 5%. Q:8, On the basis of what factors do you choose the product? Please rate by circling the relevant number. ( 1 = Very low, 2 = Low, 3 = Medium, 4 = High, 5 = Very High) a) Brand (importance) Very Low Low Medium High Very High
Very Low (1%) Low (4%) Medium (29%) High 40%) Very High (26%)

1 4 29 40 26

Fig 5.8 (a) Importance of Brand.

In response to Q:8, a , importance of brand, almost all of the respondents (95%) stressed the importance of brand name to an average of High importance, only a few (5%) disregarded the importance of brand. Hence Brand name is a very important factor that influences a consumer choice. Q:8, b) Price (importance) (Appendix 1) Very Low 3 Low 11 Medium 53 High 21 Very High 12
Very Low (3%) Low (11%) Medium (53%) High 21%) Very High (12%)

Fig: 5.8 (b) Importance of Price. 55 In response to Q:8, b, importance of price, more than half (53%) felt at the medium level, while 21% felt high importance and 12% very high importance while only small number of respondents (14%) felt price is not important. Hence, price stays an important factor with an average of high status for the respondent. Q:8, c) Quantity (importance) (Appendix 1) Very Low 4 Low 6 Medium 64 High 16 Very High 10
Very Low (4%) Low (6%) Medium (64%) High 16%) Very High (10%)

Fig: 5.8 (c) Importance of Quantity. In response to Q:8, c, importance of quantity, most of them (90%) felt quantity is important with 2/3rd (64%) felt at the medium level, while 16% felt high importance and 10% very high

importance while only a tenth (10%) felt quantity is not important. Hence, quantity remains an important factor with an average of medium status for the consumer. Q:8, d) Quality (importance) (Appendix 1) Low 3 Medium 22 High 50 Very High 25
Low (3%) Medium (22%) High 50%) Very High (25%)

Fig: 5.8 (d) Importance of Quality. In response to Q:8, d, importance of quality, most of them (97%) felt quality is important with half (50%) felt at the high level, while 25% felt very high importance and 22% felt medium importance, while only a negligible (3%) felt quality is not important. Hence, quality remains an important factor with an average of High status for the consumer. Q:8, e) Packaging (importance) Very Low Low Medium High Very High
Very Low (7%) Low (5%) Medium (38%) High 36%) Very High (14%)

56 7 5 38 36 14

Fig: 5.8 (e) Importance of Packaging. In response to Q:8, e, importance of packaging, most (88%) felt packaging is important with 38% felt at the medium level, while 36% felt high importance and 14% felt very high importance, while around a tenth (12%) felt packaging is not important. Hence, packaging remains an important factor with an average of High status for the consumer. Packaging at times also results in impulse buying, the quality of the product is usually judged by consumers with the way it is packed or how it looks.

Q:8, f) Promotion offers (importance) Very Low Low Medium High Very High
Very Low (44%) Low (6%) Medium (26%) High 14%) Very High (10%)

44 6 26 14 10

Fig: 5.8 (f) Importance of Promotion offers. In response to Q:8, f, importance of promotion offers, respondents were divided while half (50%) felt packaging is important with 26% felt at the medium level, while 14% felt high importance and 10% felt very high importance. The other half (50%) felt promotion offers are not important. Hence, promotion offers remains in the centre of the scale. Promotion offers also results in impulse buying with respect to pack on pack offers. Q:8, g) Price Discount (importance) Very Low Low Medium High Very High
Very Low (44%) Low (14%) Medium (20%) High 13%) Very High (9%)

57 44 14 20 13 9

Fig: 5.8 (g) Importance of Price Discount. In response to Q:8, g, importance of price discount, majority of the respondents (58%) felt price discount is not important with 44% felt at the very low level, while 14% felt low level, while less than half (42%) felt promotion offers are important. Hence, promotion offers remains low on the order of preference and not as important as other factors. Q:8, h) Coupons (importance) Very Low Low

68 6

Medium High Very High

Very Low (68%) Low (6%) Medium (12%) High 10%) Very High (4%)

12 10 4

Fig: 5.8 (h) Importance of Coupons. In response to Q:8, h, importance of coupons,

2/3 rd

of the respondents (74%) felt

coupons are not important with 68% felt at the very low level, while 6% felt at low level, while (26%) felt coupons are important. Hence coupons remain Very low on the order of preference and not important. Coupons cannot influence the consumers to the level that they switch their product choice it can only accelerate once consumers have decided to make a product purchase, more over majority of consumers do not earn rewards through coupons and term such practises as a gimmick by companies to attract sales.

58 Q:9, To what extent you are influenced by the advertising on the following media. Please rate by circling the relevant number. ( 1 = Very low, 2 = Low, 3 = Medium, 4 = High, 5 = Very High) a) Television Very Low 24 Low 14 Medium 18 High 25 Very High 19
Very Low (24%) Low (14%) Medium (18%) High (25%) Very High (19%)

Fig 5.9 (a) Influence of Television advertising. In response to Q:9, a , influence of television advertising, majority (62%) reflected they are influenced by advertising on television with 18% felt at the medium level, 25% at the high level and 19% at the very high level, while a third (38%) felt they are not influenced by television. Hence the influence of television advertising is a very important factor that influences a consumer choice with an average of High status.

Sponsorship of soap operas, sports and live entertainment show coverage, celebrity brand endorsements in the form of TV advertisements are some of the techniques used by companies. Since television channel viewer ship attract mass media beyond national boundaries and geographical locations (Global viewers), advertisers pay millions of dollars for per second slot and attracts billions of consumers world wide, hence television remains the most dominant advertising tool today. Q:9, b) Radio (Appendix 1) Very Low Low Medium High Very High
Very Low (71%) Low (14%) Medium (11%) High (3%) Very High (1%)

71 14 11 3 1

Fig 5.9 (b) Influence of Radio advertising.

59 In response to Q:9, b , influence of radio advertising, most of the respondents (85%) reflected they are not influenced by advertising on radio with 71% felt at the very low level, 14% at the low level, while only few (15%) stated they are influenced by advertising on the Radio. Hence the influence of radio advertising is not an important factor that influences a consumer choice with an average of Very Low status. Most consumers does not even listen to the radio and hardly knew about any radio programmes, the increase in the viewer ship of television and increasing use of internet have decreased radio listeners. Q:9, c) News papers Very Low Low Medium High Very High
Very Low (45%) Low (17%) Medium (26%) High (9%) Very High (3%)

45 17 26 9 3

Fig 5.9 (c) Influence of News paper advertising.

In response to Q:9, c, influence of news paper advertising, majority of the respondents (62%) reflected they are not influenced by advertising in news papers with 45% felt at the very low level, 17% at the low level, while a third (38%) stated they are influenced by advertising in the news papers. Hence the influence of news paper advertising is not as important as other factor that influences a consumer choice with an average of Low status. Most consumers read news papers (mostly free news papers supplied daily at bus and tube stations in London), however they overlook the advertising content and focus mainly on news and other sections. Q:9, d) Magazines Very Low Low Medium High Very High
Very Low (51%) Low (10%) Medium (27%) High (10%) Very High (2%)

51 10 27 10 2

Fig 5.9 (4) Influence of Magazine advertising.

60 In response to Q:9, d, influence of magazine advertising, majority of the respondents (61%) reflected they are not influenced by advertising in magazines with 51% felt at the very low level, 10% at the low level, while a third (39%) stated they are influenced by advertising in the magazines. Hence the influence of magazine advertising is not as important as other factor that influences a consumer choice with an average of Low status. Magazines are read mainly for news about celebrities, current issues as well as health issues, hence though it has some influence but not as high as TV advertising. Q:9, e) Internet Very Low Low Medium High Very High 52 12 12 15 9

Very Low (52%) Low (12%) Medium (12%) High (15%) Very High (9%)

Fig 5.9 (e) Influence of Internet advertising. In response to Q:9, e, influence of internet advertising, majority of the respondents (64%) reflected they are not influenced by advertising on internet with 52% felt at the very low level, 12% at the low level, while a third (36%) stated they are influenced by advertising on the internet. Hence the influence of internet advertising remains at Low status. Internet has been on the rise specially in the third millennium with a lot of activities like internet shopping, banking, email communication, etc, however at present internet advertising is not as effective as TV advertising. Internet is mainly used for email communication and information search (Google). Internet advertising will prove very effective and even could surpass TV advertising in the days to come. Q:9, f) Sign boards Very Low Low Medium High Very High

49 15 26 8 2

61
Very Low (49%) Low (15%) Medium (26%) High (8%) Very High

Fig 5.9 (f) Influence of Sign borads. (2%)

In response to Q:9, f, influence of sign board advertising, majority of the respondents (64%) reflected they are not influenced by advertising on sign boards with 49% felt at the very low level, 15% at the low level, while a third (36%) stated they are influenced by advertising on the sign boards. Hence the influence of sign board advertising remains at Low status. Q:9, g) In-store promotions Very Low 19

Low Medium High Very High

Very Low (19%) Low (13%) Medium (28%) High (31%) Very High (9%)

13 28 31 9

Fig 5.9 (g) Influence of In-store promotions. According to Datamoniter, research conducted by P&G exhibits a large number of consumers (85%) make purchasing decisions at the point of sale and hence, in-store promotions can strongly influence consumer decisions. Experts are of the view that half of the consumers (50%) switch between brands due to product unavailability or in-store promotions. (Khan 2001) In response to Q:9, g, influence of in-store promotions, majority of the respondents (68%) reflected they are influenced by in-store promotions with 28% felt at the medium level, 31% at the high level, while a third (32%) stated they are not influenced by in-store promotions. Hence the influence of in-store promotions remains at High status.

62 Consumers first check for in-store promotions like bargains, pack on pack offers, clearance items and discounts before proceeding to main shelves. Majority of stores have separate display areas for in-store promotions, it also contributes to impulse purchases. In shopping seasons like Christmas, in-store promotions are very effective through the pull & push effect. Q:10, How important are the following factors regarding the environment of the store. Please rate by circling the relevant number. ( 1 = Very low, 2 = Low, 3 = Medium, 4 = High, 5 = Very High) a) Location Very Low Low Medium 4 3 19

High Very High

Very Low (4%) Low (3%) Medium (19%) High (43%) Very High (31%)

43 31

Fig 5.10 (a) Store Location. In response to Q:10, a , location of the store, most of them (93%) reflected they are influenced by the location of the store with 19% felt at the medium level, 43% at the high level and 31% at the very high level, while a few (7%) felt they are not influenced by store location. Hence the influence of store location is a very important factor that influences a consumer choice with an average of High status. Store location or convenience, is one of the most important factors i.e. near to the place of residence or work. Consumers tend to shop at the nearest store available mainly to save on time and expenses related to the journey, parking problems, etc. b) Design Very Low Low Medium High Very High 34 10 27 17 12

63
Very Low (34%) Low (10%) Medium (27%) High (17%) Very High (12%)

Fig 5.10 (b) Store Design. In response to Q:10, b , design of the store, majority (56%) reflected they are influenced by the design of the store with 27% felt at the medium level, 17% at the high level and 12% at the very high level, while less than half (44%) felt they are not influenced by store design. Hence the influence of store design is an important factor that influences a consumer choice with an average of medium status.

c) Atmosphere Very Low Low Medium High Very High

Very Low (24%) Low (11%) Medium (30%) High (24%) Very High (11%)

24 11 30 24 11

Fig 5.10 (c) Store Atmosphere. In response to Q:10, c, atmosphere of the store, majority (65%) reflected they are influenced by the atmosphere of the store with 30% felt at the medium level, 24% at the high level and 11% at the very high level, while one third (35%) felt they are not influenced by store atmosphere. Hence the influence of store atmosphere is a very important factor that influences a consumer choice with an average of high status. Friendly and cordial atmosphere is usually preferred by consumers, usually the sales counter staff at stores greet customers with a smile and welcome gestures, however a majority of the customers also felt that corner shops or grocers provide better and conducive atmosphere than stores as grocers have less customers and keep a personal touch by enquiring about their well being, offering free home deliveries and even certain credit facilities to their regular customers.

d) Cleanliness Very Low Low Medium High Very High

Very Low (2%) Low (3%) Medium (13%) High (50%) Very High (32%)

64 2 3 13 50 32

Fig 5.10 (d) Store Cleanliness.

In response to Q:10, d, cleanliness in the store, most of them (95%) stressed on store cleanliness with 50% at the high level, 32% at the very high level and13% felt at the medium level, while a few (5%) felt they are not influenced by store cleanliness. Hence the influence of store cleanliness is a very important factor that influences a consumer choice with an average of high status. Cleanliness is a human nature hence consumers want the store areas to be clean. All major stores and grocers have some cleanliness mechanisms in place where display areas in particular are cleaned more than once a day. Stores like Tesco and Sainsbury have automated machines to clean the store and display areas 3-4 times a day. e) Shelf display Very Low Low Medium High Very High
Very Low (7%) Low (6%) Medium (26%) High (48%) Very High (13%)

7 6 26 48 13

Fig 5.10 (e) Shelf display.

65 In response to Q:10, e, shelf display in the store, most of them (87%) stressed on better shelf display with 48% at the high level, 13% at the very high level and 26% felt at the medium level, while a few (13%) felt they are not influenced by shelf display. Hence the influence of shelf display in the store is a very important factor that influences a consumer choice with an average of high status. Good shelf display attracts the customer and saves time in retrieving the product and out) principle is applied in shelf display to control expiry problems. f) Searchable in store Very Low Low 7 5 offers

instant details about price and quantity as required by the consumer. Usually FIFO (first in first

Medium High Very High

Very Low (7%) Low (5%) Medium (22%) High (48%) Very High (18%)

22 48 18

Fig 5.10 (f) Searchable in store. In response to Q:10, f, searchable in the store, most of them (88%) stressed on easy to search basis with 48% at the high level, 18% at the very high level and 22% felt at the medium level, while a few (12%) felt they are not influenced by easy to search basis. Hence the influence of searchable in store is a very important factor that influences a with an average of high status. Products should be searchable in store as it provides easy accessibility, less time and convenience in shopping. If products are not easy to search, customers tend to switch over to other stores where it is easy to search. With large mega stores and hyper markets, it becomes very tedious if products are not displayed section wise with respect to time and ease of shopping. consumer choice

Q: 11, Gender: Male Female

66 63 37

Male 63 Female 37

Fig 5.11 Gender. Author has tried to approach equal number of respondents with respect to gender in order to reflect proper view point, however majority of the males (63%) participated while female response was a little over one third (37%). A large number of females refused to take part in the survey and hence their views could not be considered for analysis. Q: 12, Age : Under 20 8

20 25< 25 30< Over 30

22 22 48
Under 20 yrs = 8 20 yrs to less than 25 yrs = 22 25 yrs to less than 30 yrs = 22 Over 30 yrs = 48

Fig 5.12 Age. Out of the 100 respondents who participated in the survey, 8 were less than 20 years of age at the time of survey, 22 were between 20-25 years (less than 25 years of age), another 22 were between 25-30 (less than 30 years) and majority of the respondents (48) were older than 30 years at the time survey was conducted. According to Kotler (1994) age is an important consideration for research. Q: 13, Education : No degree. Professional qualification. Have Bachelors degree. Have Masters Degree. 26 32 34 8
No Degree = 26 Professional Qualification = 32 Have Bachelors Degree = 34 Have Masters Degree = 8

Fig 5.13 Education. 67 In response to Q:13, Education level of respondents, a quarter (26%) were found with no degrees, while 32% had professional qualification, 34% had a Bachelors degree and only a few (8%) had Masters degree at the time survey was conducted. Q: 14, Work : Not working Working Part Time (between 10 - 20 hours a week) Working Full Time (more than 20 hours a week) 10 24 66

Not Working = 10 Part time (10-20 hrs/week) = 24 Full time (more than 20 hrs/week) = 66

Fig 5.14 Work pattern. In response to Q:14, Work patters of respondents, a tenth (10%) were not working, 24% were working only part time (10-20 hours a week) and majority (66%) were on a full time position (more than 20 hours a week) at the time survey was conducted. Q: 15, Family status : (see Appendix 1) Living alone. Single parent. Living in a family (with a partner or parents). 50 4 46

Living Alone (50%) Single Parent (4%) Living in a family (parents or partner) (46%)

Fig 5.15 Family status. In response to Q:15, Family status of respondents, half of them (50%) were living alone, only a few (4%) were single parents and less than half (46%) were living in family with either parents or a partner. Conclusions 68

Consumer perceptions and the factors that influence buying behaviour determine the consumer choice between MB(s) and ROB(s).

Consumer perception about MB(s) associated with high price act as a reflection of high quality standards. The risks involved in sub-standard detergent on clothes and laundry appliances influence consumers towards MB(s). Power of brand is another factor that influences consumer buying behaviour. Brand reflects a unique identity for the product standards, features, benefits and attributes, enabling the consumer to identify the product during every purchase. Over the period of time consumers have developed an inclination to the particular product leading to habitual purchase. Presence of MB(s) for a long time as well as delivering consumer expectations (to a certain extent) from generation to generation, combined with human nature resistance to change results in brand loyalty. Aggressive advertising and promotional campaigns through electronic and print media, particularly through Television advertising on regional, national and global level have significantly contributed towards brand building efforts over a period of time. The effective and hi-tech systems developed by MB(s) for administration of different process involved in the delivery of final product to the consumer, ensure product availability according to performance standards, expected by consumers. Moreover the availability of MB(s) is independent of the particular store unlike ROB(s), hence also contributes to brand loyalty. Massive production facilities, sourcing of ingredients from different parts of the world, effective supply chain management, strong distribution network, used by millions of consumers world wide, massive global turnover to the tune of billions of pounds enabling millions of pounds worth advertising, promotional and R&D strategies combined with enormous pool of high skills, commitment and expertise, results in increasing quality levels as well as developing innovations. MB(s) have developed brands, line extensions and co-brands in accordance with consumer expectations that have resulted in repeated purchases. Detergent market (in UK) is dominated by MB(s) as most of the market share is controlled by them, however MB(s) are facing significant challenges from ROB(s).

69 UK detergent market has reflected slow growth during the last few years, while MB(s) are affected to a minimum level, ROB(s) have shown strong growth despite sluggish market conditions.

If the market grows at similar trends, ROB(s) will significantly increase their market share to a level that MB(s) will face severe competition. ROB(s) are investing in developing premium brands at lower prices to place themselves on par with MB(s). Statistics and data from credible sources highlight the growth as well as brand development efforts of ROB(s). ROB(s) are investing in quality control, advertising and promotional strategies to have an edge over competition in the future. In the current situation they still lack behind the efforts of MB(s), however this situation can change with time to come. Recommendations for MB(s). MB(s) should implement following measures to offset the strategic challenges faced from ROB(s). In house promotions explaining brand features, attributes and high quality standards through individual sales promoters at high volume and strategic locations of retail stores. Promotional offers like pack on pack, discounts, gift vouchers and gift hampers. Donations to charitable causes on sales, displaying messages on the products about the same. Increase advertising and promotional strategies to enhance brand value, with a special focus on electronic media like Television, Internet and SMS technology. The conventional print media like news papers, magazines, catalogues and write ups from experts should also be explored for maximum consumer reach. Focus on R&D to develop new innovations as a competitive advantage against ROB(s) and other MB(s).

70 Collaborations with laundry appliance manufacturers and apparel firms to improve quality standards for the end user and encourage recommendations and media focus.

Stock investments (shares and debentures) in retail and media sectors to enhance the interests of MB(s). Exploring untapped markets like countries in Eastern Europe and Africa for new avenues to grow through collaborations with local partners and foreign ownership. Loyalty programmes similar to Loyalty card concepts of ROB(s). Invest in ethical concerns like Aids awareness, poverty control, education in the third world, reducing effects of global warming, sponsorship of global charities. These measures will provide a high social credibility and enhance brand loyalty as consumers view these measures in high moral spirit.

Recommendations for ROB(s). ROB(s) should implement following measures to increase their market share ensuring current and future prospects. Investments on quality control and supply chain management to ensure product availability as per perceived consumer standards. Increase brand extensions to provide better choices for consumers. Aggressive marketing, advertising and promotional strategies on regional as well as national level. These steps should take into consideration the strategic presence of retail stores and specific prospective segments of the population. These efforts should highlight high performance and quality standards to offset consumer

perceptions of low price low quality. Branding techniques like creation of brand equity through celebrity endorsements, recommendations from experts should be used to enhance brand value. Increase market penetration by expanding existing store areas, opening new stores and acquiring other retail network on regional, national and global level to increase consumer reach.

71 Develop and source more products to provide alternatives to the consumers.

Loyalty programmes like Loyalty card should further develop to increase customer loyalty.

Sponsorship of live sports and entertainment events like London 2012 Olympics will influence consumer perceptions.

Support of charitable, ethical and social causes to increase credibility.

Personal Reflection Author has learnt significant lessons from this research to ensure career growth in future endeavors. The most important lesson is regarding research administration i.e. how to conduct the research. Developing solutions for the problems faced through gathering secondary data relevant to the topic from credible sources, critical analysis of the same and testing the same through primary research. Decisions can be taken depending on successful research undertaken on the subject relevance. Long terms investments, educating the customer about product benefits, features, attributes and quality standards are the focal areas for long terms profitability and survival of any commercial venture. Reducing prices only will not yield a competitive advantage against a high quality (perception) competitor. Price reductions only increase sales not customer loyalty, customer loyalty requires branding measures. Consumer buying behaviour model explanation provided an insight into the different factors that influence consumers and the effective implementation of strategies should consider these factors. Brand and advertising study has empowered the author with knowledge of brand significance in long term success through brand building, creating brand equity leading to brand loyalty. The effective utilization of advertising as well as promotion techniques, to enhance brand perception. Questionnaire design and analysis opened up new horizons in terms of extracting relevant primary data and analysis to establish solutions for the problems faced.

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72

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Appendix 1 : QUESTIONNAIRE

Pg: 1/3.

Author is an MBA student of Coventry University, UK, conducting research on consumer buying behaviour towards selecting Retailers Own Brands (ROB) or Brand Manufacturers of Detergents in U.K. Kindly answer the following questions, if you reside in the U.K. The information gathered will remain anonymous and shall be used for statistical analysis. Thank you very much for your cooperation. Section A: There are 10 questions regarding consumer buying behaviour towards Retailers Own Brands v/s Brand Manufacturers. 1) Frequency of detergent purchases. a) Once in a week. b) Once in two weeks. c) Once in a month. d) Once in 3 months. e) Others Please Specify _________________________________________ 2) Which pack size do you buy? a) 1 kg (small) b) 2 kg (medium) c) 5 Kg (large) d) Others Please Specify _________________________________________ 3) Reason for purchase of a detergent? a) Washing at home. b) Washing at laundry. c) Laundry business. d) Others Please Specify _________________________________________ 4) Which product do you buy? a) Ariel. b) Bold. c) Persil. d) Tide. e) Tesco Washing Powder. f) Sainsburys Washing Powder. g) Asda Washing Powder. h) Morrisons Washing Powder. i) Others Please Specify _________________________________________

5) How do you feel about the product you are using at present with respect to results (clean washing) ? a) Highly satisfied b) Satisfied c) No difference d) Not satisfied e) Highly un satisfied f) Thinking to switch g) Others Please Specify _________________________________________ Pg: 2/3. 6) Have you ever switched, if yes, what was your experience regarding results (clean washing of clothes) a) No b) Yes i) Highly satisfied ii) Satisfied iii) No difference iv) Not satisfied v) Highly un satisfied 7) What sources do you usually use to obtain information about detergents? a) Friends b) Past experience c) Television d) Radio e) Newspapers f) Magazines g) Internet h) Sign boards i) In store promotions j) Others Please Specify _________________________________________ (Please select more than ONE if appropriate) 8) On the basis of what factors do you choose the product? Please rate by circling the relevant number. (1 = Very low, 2 = Low, 3 = Medium, 4 = High, 5 = Very High ) a) Brand Name b) Price c) Quantity d) Quality e) Packaging f) Promotion offers g) Price discounts h) Coupons 1 1 1 1 1 1 1 1 2 2 2 2 2 2 2 2 3 3 3 3 3 3 3 3 4 4 4 4 4 4 4 4 5 5 5 5 5 5 5 5

9) To what extent you are influenced by the advertising on the following media. Please rate by circling the relevant number. ( 1 = Very low, 2 = Low, 3 = Medium, 4 = High, 5 = Very High )

a) Television b) Radio c) Newspaper d) Magazine

1 1 1 1

2 2 2 2

3 3 3 3

4 4 4 4

5 5 5 5

Pg: 3/3. e) Internet f) Sign Boards g) In store promotions 1 1 1 2 2 2 3 3 3 4 4 4 5 5 5

10) How important are the following factors regarding the environment of the store. Please rate by circling the relevant number. ( 1 = Very low, 2 = Low, 3 = Medium, 4 = High, 5 = Very High ) a) Location b) Design c) Atmosphere d) Cleanliness e) Shelf Display f) Searchable in store 1 1 1 1 1 1 2 2 2 2 2 2 3 3 3 3 3 3 4 4 4 4 4 4 5 5 5 5 5 5

Section B: There are 5 questions of demographic information. 11) Gender 12) Age: a) Under 20. b) 20 25. c) 25 30. d) Over 30. 13) Education: a) No degree. b) Professional qualification. c) Have Bachelors degree. d) Have Masters Degree. 14) Working: a) Not working. b) Working occasionally (less than 10 hours a week) c) Working Part Time (between 10 - 20 hours a week) Male_________ Female__________ (Kindly tick as applicable)

d) Working Full Time (more than 20 hours a week) 15) Family status. a) Living alone. b) Single parent. c) Living in a family (with a partner or parents). d) Others Please Specify _____________________________________