Copycat or Distinctive? An Empirical Study of Consumers’ Perception Towards Private Label

Abstract

This research paper investigated the effects of copycat versus distinctive private label brand packaging design statements on consumers’ perception of Private Label Brand’s (PLB) compared to national brand’s (NB) perceived quality, purchase intention, price expectation and retailer equity. This study is the first to address how consumers perceived copycat versus distinctive private label brands in a side by side comparison with a NB, and whether their perceptions related to product quality, purchase intentions, price expectations, and retailer equity vary. A total of 200 subjects participated in a 2 (copycat vs. distinctive packaging) X 2 (copycat vs. distinctive product benefits) factorial experimental design with shampoo as the featured product. Only the packaging manipulation is reported in this study. Each respondent was randomly assigned to one of the four conditions, with 50 subjects in each condition. After browsing the product pictures (one PLB and one NB) and the benefit statements, respondents were asked to respond to the survey questions regarding perceived quality, purchase intention, price expectation and retailer equity. Respondents perceived NB to be higher quality than PLB (4.11 vs. 3.51, p < 0.001). NBs also warranted a higher price ($3.54 vs. $2.12, p < 0.001) and respondents had a higher purchase intention for NBs than PBs (3.31 vs. 2.64, p < 0.001). To test the collective influence of PLB’s packaging design on the multiple dependent variables (perceived quality, price expectation, purchase intention, and retailer brand equity), we used a one-way MANOVA. Distinctive packaging design had no influence on consumers’ quality perception, purchase intention, price expectation of PLB, but had a positive effect on retailer equity perception (3.88 vs. 3.70, p < 0.01). Results of the study demonstrate that a price and quality perception gap continues to exist between PLB and NB personal care products, and this gap influences purchase intention. Our findings imply that distinctive packaging for PBs is not a sufficient extrinsic cue to persuade consumers that quality and price of a PB is equal to a NB, nor does distinctive packaging seem to positively influence purchase intention. Even if a PLB has an innovative packaging design, and is distinguished from a leading NB, these efforts do not build a higher quality perception, an increased price expectation, or higher purchase intention. However, distinctive packaging was effective in enhancing subjects’ perception towards retailer equity; thus packaging has the potential to improve the consumer-retailer brand relationship, which is among the long-term goals of retailers. Stronger brand equity helps retailers in acquiring more loyal shoppers, and increasing PLB sales across categories.