Journal of Product & Brand Management

Perceptual categorization of private labels and national brands

Magda Nenycz-Thiel Jenni Romaniuk

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Magda Nenycz-Thiel Jenni Romaniuk, (2009),"Perceptual categorization of private labels and national brands", Journal of
Product & Brand Management, Vol. 18 Iss 4 pp. 251 - 261
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(2009),"Consumer-factors moderating private label brand success: further empirical results", International Journal of Retail
& Distribution Management, Vol. 37 Iss 11 pp. 896-914 http://dx.doi.org/10.1108/09590550910999343
(2005),"Consumer perceptions of store brands versus national brands", Journal of Consumer Marketing, Vol. 22 Iss 4 pp.
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Perceptual categorization of private labels and

national brands
Magda Nenycz-Thiel and Jenni Romaniuk

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School of Marketing, Adelaide, Australia

Abstract
Purpose This paper seeks to compare how brand users and non-brand users currently position private labels and national brands in three packaged
goods categories. It aims to provide guidelines for positioning strategies for both private labels and national brands through the outcomes.
Design/methodology/approach Data were collected in a telephone survey of 600 randomly recruited primary shoppers. Binary logistic regression
was used to examine the informational cues consumers use to categorize private labels and national brands. The memory structures of users and nonusers of private labels were then separately modelled.
Findings Results suggest that the perceptual categorization into private label brands and national brands differs once private labels have been
purchased. Users of private label brands did not see them as being any less trustworthy than national brands. However, non-users of private labels did
use trust to discriminate between the two types of brands, and tended to use negative attribute information to categorize the brands into groups.
Regardless of experience, however, private labels form a subgroup in consumers memory, with low price and low quality as the main drivers of this
categorization.
Originality/value This paper extends past studies by measuring the perceptions of private labels as individual brands within a market, which more
closely represents actual consumer memory structures. It also uses both positive and negative product attributes, which has not featured in prior work
on private labels perceptions. The findings have implications for retailers looking to launch and manage private labels and manufacturers who need to
compete with them.
Keywords Generics, Corporate brands, Brands, Perception, Product positioning
Paper type Research paper

category needs is to act as cues to retrieve the brand name or

to evaluate the appropriateness of a brand once retrieved
(Nedungadi, 1990). Therefore each PL brand competes in
consumer memory with national brands (herein referred to as
NBs) and other PLs.
Schemas reflecting the positioning of PLs have remained
unchanged for years (e.g. Bellizzi et al., 1981; Richardson
et al., 1994). Traditionally, PLs have been positioned as low
price/good value for money offerings. Their major selling
point has been their price advantage and as such PLs
themselves can act as a cue to trigger a perception of value
(Zeithaml, 1988) i.e. a product is perceiveed as a good value
offer simply because it is a PL. However, recently retail chains
have been launching premium, organic and health PLs,
which are often not cheaper alternatives to NBs (Richardson,
1997; Tarnowski, 2005). Moreover, the Private Label
Manufacturers Association (PLMA) espouses that the
quality of PLs is comparable to the quality of NBs. This
implies that consumers are receiving conflicting messages to
the once well-anchored perceptual positioning of PLs as
something very different to NBs.
Past studies on PLs have examined the correlates of store
brand proneness (e.g. Coe, 1971; Dick et al., 1995) or PL
brand attitude (e.g. Myers, 1967; Garretson et al., 2002). The
attention has been given to consumers perceptions of PLs has
been more limited (exceptions are Bellizzi et al. (1981);
Cunningham et al. (1982); De Wulf et al. (2005); Cheng et al.
(2007)). The findings to date show that consumers generally
do perceive differences between PLs and NBs across
dimensions in price, quality, value and risk/trust perceptions
at subcategory level. To our best knowledge, there is no
research to date that has examined customers perceptions of
PLs and NBs at individual brand level to see if the same

An executive summary for managers and executive

readers can be found at the end of this article.

1. Introduction
Private labels (PLs) are now a permanent feature of
competitive retail landscapes all around the world. In
Western Europe the PLs category is worth 20 percent of
FMCG sales (Nielsen, 2008). In the USA sales of PLs
exceeded $50 billion in 2002 (Sprott and Shimp, 2004).
Dollar sales of PLs grew at an annual rate of more than 7
percent from 1996 to 2004, far outpacing the growth of
manufacturers brands (Baltas and Argouslidis, 2007).
Today, the majority of people include PLs in their
repertoire for at least some categories (ACNielsen, 2005).
Prior studies show that consumers buy PLs in much the same
way as they buy manufacturers brands (Keng and Ehrenberg,
1984; Uncles and Ellis, 1989; Bound and Ehrenberg, 1997).
During the process of seeing, buying and using PLs, people
develop brand associations about them. Many of these PL
associations are about how the brand performs in terms of
meeting category needs which, under the Associative Network
Theories of Memory model (Anderson and Bower, 1979),
interact with associations of other brands. A key role of these
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Journal of Product & Brand Management

18/4 (2009) 251 261
q Emerald Group Publishing Limited [ISSN 1061-0421]
[DOI 10.1108/10610420910972774]

251

Perceptual categorization of PLs and national brands

Journal of Product & Brand Management

Magda Nenycz-Thiel and Jenni Romaniuk

Volume 18 Number 4 2009 251 261

discrimination is evident. Further, the impact of past usage of

a PL on the beliefs a consumer holds about what differentiates
PLs from NBs in a consumers memory is also yet to be
explored. Investigation of these areas is the aim of this paper.
We use binary logistic regression to examine how people
categorize the brands and what informational cues they use to
discriminate between PLs and NBs. We then examine the
brand perceptions of users and non-users of PL brands
separately.
The paper proceeds as follows. In the next section, we
present the conceptual background and hypotheses. We then
describe the method and present the results, followed by
discussion and conclusions with managerial implications.
Finally, we address the limitations and give directions for
future research.

group of brands increases. This makes those brands within the

group look more similar (Pan and Lehman, 1993). Since PLs
historically have specific qualities that differentiate them from
NBs, (even when they are assessed as individual brands) PLs
should form a distinctive sub-group of brands in consumer
memory. Thus, we would hypothesize, that:
H1.

2.2. Drivers of categorization

We now discuss price and quality attributes, which are two of
the core potential drivers of the categorization of PLs as
distinct from NBs.
2.2.1. Low price
Some cues will be more important indicators of similarity or
dissimilarity than others. There are two reasons why price is
likely to be an important driver in the categorization of PLs
and NBs. The first is that traditionally, PLs have been priced
below leading NBs. This is reflected in the expectations
consumers have about the price of PLs (Morton and
Zettelmeyer, 2004). The second is that price has also been
found to be the major selling point for PL brands in past
studies (e.g. Bellizzi et al., 1981; Cunningham et al., 1982;
Richardson et al., 1994; Hoch, 1996; De Wulf et al., 2005).
This continues to be the case despite the decrease in the price
gap between PLs and NBs caused by the introduction of
premium PLs (such as Tesco Finest in UK). This leads to the
following hypothesis:

2. Conceptual background and hypotheses

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There will be attributes that discriminate PLs from

NBs in consumer memory.

Consumer-based brand equity (CBBE) is underpinned by the

knowledge that consumers hold about brands in their
memory (Keller, 2003). CBBE is thought to drive brand
purchase, and thus is an important area to research
(Nedungadi, 1990; Aaker, 1991; Keller, 2003). The
Associative Network Theories of Memory (Anderson and
Bower, 1979) conceptualizes human memory as a network of
linked concepts, in which one piece of information (e.g. a
brand) is linked to, or associated with, another piece of
information (e.g. a usage situation). The overall network of
information about a brand in consumer memory (brand name
and linked associations) is defined as brand image (Keller,
1993). Brand associations may consist of descriptive
information (e.g. has four wheels), benefits (e.g. good
value for money) and purchase and consumption situations
(e.g. drink in a restaurant). Brand perceptions have two
important functions in the brand choice process they
facilitate brand retrieval at the time of decision-making, and
are used to evaluate the evoked options (Nedungadi, 1990;
Aaker, 1991).
Past research shows that PLs in general have been perceived
as an inferior quality alternative at a low price (e.g. Bellizzi
et al., 1981; Cunningham et al., 1982; Richardson et al.,
1994). Research has yet to address the shape and the
influencers on the perceptual space of a market with many
PLs from different stores competing with NBs. In order to
develop the hypotheses, we draw from the theory and
evidence about the perceptual categorization of brands in a
marketplace.

H2.

Low price will be the positive attribute that most

significantly discriminates between PLs and NBs in
consumers memory.

2.2.2. Low quality

According to Cue Utilisation Theory (CUT), attributes that
signal product quality can be divided into two groups
intrinsic cues (flavor, color) and extrinsic cues (price, brand
name, advertising) (Jacoby and Olson, 1977). Historically,
literature shows that consumers rely on both intrinsic and
extrinsic cues when making quality judgments (e.g. Jacoby
et al., 1971). In the case of PLs, however, Richardson et al.
(1994) found that extrinsic cues influenced consumers
judgments of quality regardless of product ingredients. As
the PLs examined were low priced, had poor packaging and
were usually not advertised, these extrinsic cues were used to
infer the (low) perceived quality of these products. Past
research has shown that the consumers expect PLs to be of
lower quality than NBs (Bellizzi et al., 1981; Cunningham
et al., 1982; Dick et al., 1995; De Wulf et al., 2005; Cheng
et al., 2007). This is a potential dissuader for purchase. In line
with this reasoning, we hypothesize that:

2.1. Perceptual categorization

Consumers knowledge forms schema-like structures in
memory, which enhances information processing efficiency
(e.g. Cohen and Basu, 1987). If two brands possess similar
specifications that differ from other brands, they will be
grouped together in consumers memory forming a subcategory. For example, diet soft drinks might be grouped
together as a subgroup within the soft drinks category,
because they contain less calories than other soft drink
brands. Past research on categorization shows that the
presence of a brand that is dissimilar to existing brands will
lead to consumers perceiving a new sub-category (Pan and
Lehman, 1993). If more brands that occupy a similar space in
consumers memory to the new entrant are added, the
perceptual space between this new set of brands and the prior

H3.

Low quality will be the negative attribute that most

significantly discriminates between PLs and NBs in
consumers memory.

2.3. The impact of consumers prior buying and usage

behaviour on categorization
Past research has shown that increased product knowledge
leads to better developed structures or schemas (e.g. Marks
and Olson, 1981). This is because people with differing levels
of expertise vary in how they organize their memory
252

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Perceptual categorization of PLs and national brands

Journal of Product & Brand Management

Magda Nenycz-Thiel and Jenni Romaniuk

Volume 18 Number 4 2009 251 261

structures (Alba and Hutchinson, 1987). An important

characteristic of novices memory is the tendency to make
inferences. One such type of inference, typical for novices, is a
halo effect (or evaluation-based inferences). This is described
as an unconscious transfer of affect from one concept to
another (e.g. Beckwith and Lehmann, 1975). For example,
knowledge of quality and safety about the German cars in
general will be a basis for the evaluation of any new German
car encountered. Since the expected schema about PLs is that
they are low priced and lower quality than NBs, these salient
cues would be used to make inferences about any PL brand.
Given that users of PLs have more experience with PLs than
non-users, we would expect that they have much richer
schemas about PLs. Therefore, users will be less likely to
make inferences about any PL based on extrinsic attributes,
such as price, and more likely to use intrinsic attributes that
have been experienced while using a PL (Dick et al., 1996).
In contrast, those with little or no experience with PL
brands will be more likely to rely on extrinsic cues, such as
price (Rao and Monroe, 1988) and pre-existing schemas
about PLs quality. In consequence, they will perceive PLs as a
very homogenous group being much different from NBs.
Thus, we hypothesize, that:

Table I Demographics
Toilet paper
(n 5 205)
%

Salad dressing
(n 5 204)
%

Sliced cheese
(n 5 187)
%

Gender
Female
Male

80
20

83
17

76
24

Age
18-24
25-34
35-44
45-54
55-64
> 64

3.5
7
17
20
27
25

4.5
8
13
29
21
25

0.5
8.5
18
25
23
25

commonly used in industry to assess brand associations in a

competitive market (Barnard and Ehrenberg, 1990).
Therefore, the free-choice technique was used in this study.
In order to capture brand image, we used different sets of
positive and negative attributes for each category (Table II).
The attributes were identified and pre-tested as relevant for
the chosen category by a group of experts, including
academics, industry marketers and researchers. The balance
of positive to negative attributes reflects the relative
proportion of each valenced association in memory, where
positive associations are overall more common than negative
associations (Krishnan, 1996). Some attributes such as price,
value, trust and risk were common across categories. The
remainder reflected the core performance and benefits
attributes in relation to each specific category, such as
strong for toilet paper, rich and creamy for salad dressing
and kids would love it for sliced cheese. Respondents were
read out a list of brands to facilitate the task.
In order to classify the respondents into brand users and
non-users we asked Which of the following brands have you
bought in the last 12 months? This was used to create a
binary variable of user/non-user for each PL brand. Based on
this, those who had used any PL brand were distinguished
from those who had not used any PL brands. A 12-month
time frame was chosen to ensure we included people who
used PLs as they are currently. This was to guarantee
respondents had recent memories relating to usage rather
than memories that might reflect stereotypes.

H4a. Among PLs users, the categorization of brands into

PLs and NBs will be weaker than for PLs non-users.
H4b. For PLs users the impact of price on categorization will
be weaker than for PLs non-users.

3. Method
3.1. Sample
The data are drawn from three categories in the Australian
grocery sector. Respondents were 600 primary household
shoppers from a large city in Australia. The categories were
toilet paper, salad dressing and sliced cheese. These three
categories were chosen to represent both food and non-food
examples. The respondents were screened to determine which
categories they had bought from in the past 12 months, and
then randomly allocated to one of the three categories that
they had bought. This provided three samples of 205, 204 and
187 respondents. All categories included PLs from the four
supermarket chains Woolworths, Coles, IGA and Foodland
which compromise 90 percent of the supermarket sector in
Australia. The data collection was conducted via telephone,
with the sampling frame drawn from the electronic telephone
directory. Data were collected in October 2007. The
demographic description of the sample is provided in Table I.

4. Results

3.2. Brand association measurement

A number of different techniques have been used to capture
consumer perceptions about competing brands. These
methods can be categorized as free choice, scaling and
rating (Barnard and Ehrenberg, 1990). One commonly used
approach is a free choice, pick-any approach, where the
respondents are presented with an image attribute (e.g. a
brand you can trust) and asked which, if any, of the listed
brands they associate with this attribute (Barnard and
Ehrenberg, 1990). Studies comparing free-choice and forced
choice methods have shown that although the measures differ
in respondent tasks, they produce similar results (Driesener
and Romaniuk, 2006). However, the free-choice method has
been found to discriminate better between brands and is

4.1. Perceptual categorization

To test H1, we employed binary logistic regression models to
estimate the attributes contribution to the brand being in the
PLs category. We coded NBs as 0 and PLs as 1 to create the
dependent variable based on actual status of being a PL or
NB. The independent variables for each category were the
image attribute responses (also coded as 1: association and 0:
no association). These models determine the probability of a
brand being a private label. The estimates of the coefficients
are then used to identify and rank the importance of each
attribute in discriminating NB from a PL.
Prior to the logistic regression analysis, both positive and
negative attributes were tested for colinearity using a
253

Perceptual categorization of PLs and national brands

Journal of Product & Brand Management

Magda Nenycz-Thiel and Jenni Romaniuk

Volume 18 Number 4 2009 251 261

Table II Attribute lists

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Toilet paper

Abbreviation Salad dressing

Abbreviation Sliced cheese

Abbreviation

Low price

Low price

Low price

Positive
Would cost a little less than other
brands
Would be good value for money
Is a brand I trust
Has an innovative range
Would be very strong
Would have a gentle texture

Good value
Trust
Innovative
Strong
Gentle

Is good for the environment

Would have a nice fragrance

Environment
Has all natural ingredients
Nice fragrance Would have lots of varieties

Could look good in my

bathroom
Would be soft

Looks good

Is light

Good value
Trust
Healthy
Convenient
Rich and
Creamy
Natural
Lots of
varieties
Light

Soft

It would taste great

Tastes great

Would cost a little less than other

brands
Would be good value for money
Is a brand I trust
Is healthy
Would be convenient to use
Would be rich and creamy

Would have an easy to use bottle Easy to use

bottle

Negative
Below average quality
I am not sure if it will be good
enough
Too expensive for what you get
Would be too thin

Expensive
Too thin

Could look unattractive in my

bathroom

Unattractive
look

Low quality
Risk

Good value
Trust
Creamy
For everyday
Inviting

Is healthy
Kids would love it

Healthy
Kids love it

Would be low in fat

Low fat

Would be for everyone in the

family
Low in cholesterol

For everyone

Low quality
Risk

Low
cholesterol
Good source of calcium
Calcium
Would taste great
Tastes great
Would be ideal for the lunch box For lunch box
Would be full of dairy goodness Dairy
goodness

Below average quality

I am not sure if it will be good
enough
Too expensive for what you get
Would be high in sugar

Expensive
High in sugar

Below average quality

I am not sure if it will be good
enough
Too expensive for what you get
Would be difficult to handle

Would be high in fat

High in fat

Does not look like real cheese

non-parametric correlation test (Kendalls Tau-b). This

testing resulted in the elimination of one attribute from the
sliced cheese category (full of dairy goodness) and one from
the salad dressing category (easy to use bottle) as they were
highly correlated with other attributes.
The logistic regression models for positive and negative
attributes (Tables III and IV) were statistically significant in
each category and explained high levels of variance
(Nagelkerke R2s ranging from 42 percent to 59 percent for
positive and 24 percent to 36 percent for negative). In each
category there were seven or eight positive attributes and three
to five negative attributes that significantly discriminated
between NBs and PLs. This provides evidence to support H1
in that there are some attributes that consumers utilize to
categorize PLs and NBs into separate groups.

Low quality
Risk

Would cost a little less than other

brands
Would be good value for money
Is a brand I trust
Would have a creamy texture
Is a brand to use everyday
Would look Inviting

Expensive
Difficult to
handle
Not real look

H2, that low price is the strongest positive differentiator

between PLs and NBs.
Value is a representation of the price-quality relationship
(e.g. Teas and Agarwal, 2000). In the models value also
contributed positively to PLs categorization for salad dressing
and sliced cheese (salad dressing: b 0:5, Wald 4:4,
p , 0:01, sliced cheese: b 1:1, Wald 23:5, p , 0:001),
but not for toilet paper. This may be due to the presence of
higher priced PLs in the toilet paper category, which might
blur the good value distinction between NBs and PLs.
After this, there was a succession of attributes relating to
product performance (e.g. rich and creamy) and benefits (e.g.
low fat) that contribute negatively to private labels
categorization. Trust also featured significantly in all three
categories, in the same way. It was strongest for toilet paper
(b 22:4, Wald 82:1, p , 0:001).
We hypothesized (H3) that low quality would be the best
negative attribute to distinguish between NBs and PLs. The
findings were in support of H3. In the toilet paper and salad
dressing categories, low quality was the strongest driver of
categorization and positively associated with being a private
label (toilet paper: b 1:7, Wald 63:8, p , 0:001; salad
dressing: b 3:0, Wald 24:8, p , 0:001). For sliced cheese,
low quality was the second highest driver (b 1:9,

4.2. Drivers of categorization

The attribute low price was the strongest discriminator
between PLs and NBs in all three categories. An association
with low price meant the brand was much more likely to be a
PL, as indicated by the positive coefficients (toilet paper:
b 2:4, Wald 149:3, p , 0:001; salad dressing: b 3:9,
Wald 140:7,
p , 0:001;
Sliced
cheese:
b 4:4,
Wald 242:3, p , 0:001). This provides evidence to accept
254

Perceptual categorization of PLs and national brands

Journal of Product & Brand Management

Magda Nenycz-Thiel and Jenni Romaniuk

Volume 18 Number 4 2009 251 261

Table III Logistic regression results for private label and national brand categorization for three products categories (positive attributes)
Toilet papera
b
Low price
Trust
Innovative
Nice fragrance
Environment
Looks good
Strong
Gentle
Constant

2.4
2 2.4
2 1.6
2 1.6
2 1.4
2 1.4
2 1.3
2 1.1
8.5

Salad dressingb
b

Wald
149.3 * *
82.1 * *
24.2 * *
25.1 * *
35.6 * *
18.5 * *
15.9 * *
13.7 * *
170.1 * *

Low price
Rich and creamy
Varieties
Trust
Tastes great
Value
Light

Sliced cheesec
b

Wald

3.9
2 1.6
2 1.4
2 1.3
2 1.0
0.5
2 0.5

140.7 * *

0.8

80.0 * *

32.0 * *
34.7 * *
21.9 * *
13.4 * *
4.4 *
5.5 *

Low price
Low fat
Tastes great
Value
Trust
Inviting

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Notes: a 22 Log likelihood 2,671:53 Nagelkerke R2 0:42; b 22 Log likelihood 1,222:10 Nagelkerke R2 0:59;
Nagelkerke R2 0:44; * significant at p , 0:05; * * significant at p , 0:001

Wald

4.4
21.5
21.1
1.1
21.0
21.1

242.3 * *
25.9 * *
24.8 * *
23.5 * *
20.0 * *
24.4 * *

0.6

2.6 * *

22 Log likelihood 2,592:61

Table IV Logistic regression results for private label and national brand categorization for three products categories (negative attributes)
Toilet papera
b
Low quality
Risk
Expensive
Too thin
Unattractive look
Constant

1.7
1.2
2 0.9
0.9
0.6
2 3.3

Salad dressingb
b

Wald
63.8 * *
50.3 * *
37.9 * *
19.4 * *
6.3 *
104.8 * *

Low quality
Risk
Expensive
High fat

Sliced cheesec
b

Wald

3.0
2.9
22.6
20.5

24.8 * *

23.0

19.9 * *

90.1 * *
75.7 * *
14.9 *

Risk
Low quality
Expensive

Notes: a 22 Log likelihood 3,132:95 Nagelkerke R2 0:24; b 22 Log likelihood 1,649:68 Nagelkerke R2 0:36;
Nagelkerke R2 0:23; * significant at p , 0:01; * * significant at p , 0:001

Wald 48:0, p , 0:001), behind risk as the strongest driver

of categorization (b 2:3, Wald 100:1, p , 0:001). In the
toilet paper and sliced cheese categories, risk was also found
to be a significant predictor of categorization (toilet paper:
b 1:2, Wald 50:3, p , 0:001; salad dressing: b 2:9,
Wald 90:1, p , 0:001). Therefore, perceptions of low
quality and risk were the strongest negative attribute drivers
of categorization. Association with these attributes increased
the likelihood that the brand was a PL. The fact that sliced
cheese is usually bought for children may have contributed to
the greater contribution of risk in this category.

2.3
1.9
21.0

23.4
c

Wald
100.1 * *
48.0 * *
47.5 * *

73.98 * *

22 Log likelihood 3,165:07

between PLs and NBs for users and non-users of PLs.

However, the models for non-users of PLs explained more
variance than for users of PLs (toilet paper 29 percent vs 20
percent, salad dressing 40 percent vs 32 percent, sliced cheese
23 percent vs 17 percent). This suggests that as hypothesized,
the categorization of brands in PLs and NBs is stronger for
PLs non-users than for PLs users. This is support for H4a for
negative attributes only.
In order to test the H4b, we examined the coefficients of the
different predictors (see Table V). We found that low price
was a key discriminator for both users and non-users of PL
brands (toilet paper: for non-users b 2:6, Wald 141:7,
p , 0:001, for users b 2:6, Wald 37:6, p , 0:001; salad
dressing: for non-users b 3:6, Wald 83:8, for users
b 6:0, Wald 28:6, p , 0:001; sliced cheese: for nonusers b 4:5, Wald 107:3, p , 0:001, for users b 1:5,
Wald 62:6, p , 0:001). The fact that price is the key
discriminator of categorization for both non-users and users
of PLs may be because low price could possibly be the most
foundational, first-learned part of the PL schema. Thus H4b
was not supported in that there were no substantive
differences between users and non-users in the utilisation of
low price as a cue to categorize PLs and NBs.
We then examined other general category attributes and
found some systematic differences between the user/non-user
groups. Trust was found to clearly distinguish between PLs
and NBs for PL non-users (toilet paper: b 22:2
Wald 11:9, p , 0:001, salad dressing: b 21:9
Wald 25:0,
p , 0:001,
sliced
cheese:
b 22:1

4.3. The impact of consumers prior buying and usage

behavior on categorization
In order to investigate the impact of prior usage of PLs on the
categorization effect (H4a), we split the sample into PLs user
and non-user categories. H4a was tested separately for
positive (Table V) and negative attributes (Table VI). For two
out of the three products categories (toilet paper and salad
dressing), there were no differences between the user and
non-user models and each explained similar percentages of
variance (toilet paper: 37 percent vs 36 percent; and salad
dressing: 60 percent vs 64 percent). For sliced cheese, low
price (b 1:5, Wald 62:6, p , 0:001) and value (b 0:7,
Wald 8:5, p , 0:01) were the only attributes that clearly
distinguished between NBs and PLs for PLs users. Thus, H4a
for positive attributes was not supported.
For the negative attributes we did not find any major
differences in the number of the attributes that discriminate
255

256

23.2
8.7 * * Low price
22.9 13.0 * * * Looks good
2.6 141.7 * * * Nice fragrance
22.2 11.9 * * * Value
21.8 15.7 * * * Environment
21.6 12.8 * * * Strong
21.5 19.2 * * * Gentle
21.2
3.9 *
12.0 52.4 * * *

37.6 * * *
17.2 * * *
7.5 * *
10.5 * * *
13.5 * * *
5.5 *
4.4 *

2.7 10.6 * * *

2.6
2 2.6
2 1.7
1.6
2 1.6
2 1.2
2 1.0

Low price
Rich and creamy
Trust
Lots varieties
Light
Value

2.0

3.6
2 2.0
2 1.9
2 1.6
2 0.6
0.6

9.8 * *

83.8 * * *
25.7 * * *
25.0 * * *
29.0 * * *
4.0 *
3**
Low price
Tastes great
Natural
Lots varieties
Value
Rich and creamy

20.4

6.4 * *

6.0 28.6 * * *
21.9 10.1 * * *
21.8 4.0 *
21.4 7.8 * *
1.0 4.2 * *
20.8 3.3 * *

Salad dressing
PLs non-users (n 5 110)
PLs users (n 5 77)
b
Wald
b
Wald

Notes: *Significant at p , 0:05; * * significant at p , 0:01; * * * significant at p , 0:001

Strong
Gentle
Low price
Trust
Nice fragrance
Soft
Environment
Innovative
Constant

Toilet paper
PLs users (n 5 77)
PLs non-users (n 5 110)
b
Wald
b
Wald

Low price
Low cholesterol
Low fat
Trust
Tastes great
Inviting
Value

4.6

14.7 * * *

4.5 107.3 * * * Low price

22.6
5.6 * * Value
22.3 20.6 * * *
22.1 20.3 * * *
21.6 17.2 * * *
21.3 15.9 * * *
0.7
5.2 *

20.2

6.8 * *

1.5 62.6 *
0.7 8.5 * *

Sliced cheese
PLs non-users (n 5 110)
PLs users (n 5 77)
b
Wald
b
Wald

Table V Logistic regression results for private label and national brand categorization for three products categories for private label users and non-users (positive attributes)

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Perceptual categorization of PLs and national brands

Journal of Product & Brand Management

Magda Nenycz-Thiel and Jenni Romaniuk

Volume 18 Number 4 2009 251 261

257

21.2 14.11 * * *
59.4 * * * Expensive
43.5 * * * Low quality
1.0 5.5 *
17.32 * * * Risk
0.9 5.8 *
*
*
*
21.2
4.3 *
60.7 * * *
21.8 8.7 * *

PLs users (n 5 43)

b
Wald
Low quality
Risk
Expensive
High in fat

18.2 * * *
65.2 * * *
38.8 * * *
6.6 * *

2 3.0 13.2 * * *

3.1
2.8
2 2.2
2 0.5

Sliced cheese
PLs non-users (n 5 110)
PLs users (n 5 77)
b
Wald
b
Wald

2 2.2

3.1

2 0.5 61.0 * * *

2 0.2 11.8 * *

Expensive
2 3.6 23.9 * * * Risk
2.6 73.3 * * * Low quality
2.2 15.9 * * *
Risk
3.1 20.0 * * * Low quality
1.9 32.8 * * * Risk
1.9 28.2 * * *
Low quality
2.8 7.5 * * Expensive
2 1.2 25.1 * * * Expensive
2 1.0 26.2 * * *
High in fat 2 0.8 8.1 * *

Salad dressing
PLs non-users (n 5 140)
PLs users (n 5 64)
b
Wald
b
Wald

Notes: *Significant at p , 0:05; * * significant at p , 0:01; * * * significant at p , 0:001

Low quality
2.1
Risk
1.3
Too thin
1
Expensive
2 0.9
Unattractive look
0.6
Constant
2 0.4

Toilet paper
PLs non-users (n 5 162)
b
Wald

Table VI Logistic regression results for private label and national brand categorization for three products categories for private label users and non-users (negative attributes)

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Perceptual categorization of PLs and national brands

Journal of Product & Brand Management

Magda Nenycz-Thiel and Jenni Romaniuk

Volume 18 Number 4 2009 251 261

Perceptual categorization of PLs and national brands

Journal of Product & Brand Management

Magda Nenycz-Thiel and Jenni Romaniuk

Volume 18 Number 4 2009 251 261

Wald 20:3, p , 0:001). However, PLs users saw the two

groups of brands as similarly trustworthy.
For negative attributes in all products categories and for
both users and non-users of PLs, low quality and risk were
found to be clear discriminators between PLs and NBs.
Associations with these attributes increased the probability
that a brand was a PL, as indicated by the positive
coefficients.

categorisation will be weaker for PLs users. However, we have

found that the non-users of PLs were slightly more likely to
use negative information to categorize the brands into groups
than PLs users, as indicated by model fits. This implies that
although both groups of customers use low price to categorize
the brands, they way they utilize this cue differs. PLs users see
lower price as the key reason why they buy PLs. This again
questions the retailers ability to increase the prices of PLs. As
noted by Sivakumar and Raj (1997) consumers are often
buying PLs because they are cheaper and because they cannot
afford NBs. On the contrary, PL non-users use low price as an
indicator of low product quality. This implies that, if retailers
want to keep the prices of PLs lower than NBs, they have to
put more efforts to signal the improved quality via other
extrinsic attributes that customers utilize to judge the
perceived quality prior to trial. This could be achieved by
improvements in packaging and more in-store advertising.
The results showed that the act of using PLs did change
consumers expectations about trust with regard to PLs and
NBs. PLs non-users were more likely to associate NBs with
trust than were PLs users. This suggests that when people
become PLs users they trust them just as much as they trust
NBs. This is an extremely positive finding for retailers, since
trial of a PL in one product category will lower the risk of
trying PL from other categories. This finding validates the
research by Alba and Hutchinson (1987), that familiarity with
a product changes consumers knowledge structures so that
the perceived risk associated with the brand decreases. Here,
consistent branding is crucial in order to spread the
associations across all categories.

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5. Discussion and implications

The objective of this research was to examine the drivers of
categorization of NBs versus PLs. The data provided strong
support that PLs form a sub-category in consumers memory.
This was generally consistent across the three consumer
packaged goods categories. Consumers expectations about
what PLs should stand for do continue to reflect their
historical positioning. This indicates that there is a strong
halo effect, which could make the process of changing
consumers perceptions more difficult. The managers of PLs
must take this difficulty into account when planning
repositioning strategies, or the introduction of PLs that
differ from this stereotype.
Pricing as a categorization driver remains particularly
strong, both in the positive for PLs (low price) and in the
negative for NBs (too expensive). Therefore, consumers
perceive that the price of PLs should be below that of NBs.
This was shown to be robust over the three categories and
across user and non-user groups. Consistent with what
retailers want to signal with their value and middle level tiers,
this low price comes at the cost of foregoing quality, which
consumers also considered in their schema formation. Low
quality was the strongest negative driver for PLs and NBs
categorization, with risk a close second. Since past research
has found that the perceived quality differential is an
important determinant of the difference in price consumers
will pay for a NB over a PL, our findings suggest that because
of the perceived quality differential, the price elasticity of PL
brands, (when prices increase), will be greater than for NBs.
This poses a challenge for the short-term success of the
introduction of premium PL since these brands are often
priced equal to or above NBs.
The fact that NBs were perceived as being too expensive for
what they deliver, may lead consumers to reject those brands
and switch to PLs. Here, the manufacturers of NBs face a
dilemma of either lowering the price, which in turn may hurt
the brand image and reduce margins; or they can keep the
price high, but aim to increase the added value. The latter
would involve more investments in innovation to provide the
justification for buying a more expensive product to
consumers. Finally, since retailers try to blur the physical
differences between PLs and NBs, it is crucial for NBs
manufacturers to keep up salience by maintaining national
advertising spending. While PLs may have an advantage over
NBs within the store, as they are given disproportionate shelf
space and promotional support (Nogales and Suarez, 2005),
outside the store, PLs suffer from selective distribution and
lack of national advertising. Thus it is easier for a NB to reach
non-users, and this advantage should be used wisely.
We have found that both users and non-users of PLs see the
two types of brands as different. This was consistent in
models with both positive and negative attributes. The results
also reject the hypothesis that the impact of price on PLs

6. Limitations and future research

There are some limitations to this paper, which form areas for
future research. First, we have not looked at the individual
PLs, but rather treated them as a group. Future research
should examine how store image (PLs of different retailers)
and different PLs price-quality tiers (value, mid-level and
premium) impact perceptual positioning. Further, we have
not taken into account the demographic and attitudinal
characteristics of the respondents. Future research should
investigate how other consumer level factors apart from PLs
usage may impact on the categorization effect. Finally, since
in the researched market the introduction of premium PLs
and advertising of PLs is only recent, further research in
needed to see if and how consumers perceptions of PLs are
changing over time.

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Volume 18 Number 4 2009 251 261

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About the authors

and extrinsic cues when it comes to judging product quality.

With PLs, however, evidence suggests that flavor, color and
other intrinsic cues are ignored and judgment is based entirely
on extrinsic cues that include such as packaging, advertising
and brand name as well as price. Faced with bland packaging
and a lack of promotion, many consumers regard the quality
of own label products as poor. It is felt that this belief can
negatively impact on purchase intention.
It has been put forward that consumers utilize knowledge to
develop structures that are stored in their memory thereafter.
This helps improve information processing and enables items
to be categorized accordingly. In this context, brands with
different characteristics to other brands will be placed in a
new sub-category. Diet soft drinks being a subgroup of the
soft drinks category is cited as an example. It is argued that
differences between products and brands is reflected in the
perpetual space between them and that this divide also
serves to make brands within the same group appear more
alike. On the basis of actual and perceived differences with
NBs, the belief is that consumers regard private label offerings
as a distinctive subcategory of brands.
Level of product knowledge is regarded as a key
determinant in how consumer schemas are formed. Those
who lack significant knowledge may be inclined to bridge
knowledge gaps by making inferences through a halo effect.
An example of this is relying on prior knowledge of the quality
of German cars as the basis for evaluating new models
produced by German automakers. It is correspondingly
believed that some consumers who regard PLs as inferior in
quality to NBs will make these assumptions about all own
label brands. To these consumers, private label brands are
perceived as homogenous and distinct from national brands.
On the other hand, those with more experience of using PLs
may be likelier to judge on the basis of intrinsic attributes
encountered during past consumption.
Limited previous research has explored subcategory rather
than individual brand level and found evidence to suggest that
consumers do perceive differences between private and
national brands in relation to price, value, quality, risk and
trust. Whether or not previous consumption of PLs
moderates these perceptions has not yet been investigated.
The purpose of the current study is to build on these earlier
investigations to ascertain what factors shape consumer
perceptions of own label brands.

Magda Nenycz-Thiel is a Research Associate at the

Ehrenberg-Bass Institute of Marketing Science, University
of South Australia. Her area of research is consumer-based
brand equity, particularly of private label brands. Magda
Nenycz-Thiel is the corresponding author and can be
contacted at: magda.nenycz-thiel@marketingscience.info.
Jenni Romaniuk heads the Brand Equity Research Stream
at the Ehrenberg-Bass Institute, based at the University of
South Australia. Her specialist areas of research are brand
salience, brand equity measurement, and the impact of
marketing activities on buyer memory structures, including
advertising and brand placement. Parallel to this she conducts
research into word-of-mouth, particularly in the area of
television programs. For this she has been awarded an
Australian Research Council grant. She has published widely,
including European Journal of Marketing, Journal of Business
Research, Journal of Product & Brand Management,
Australasian Journal of Marketing and the International
Journal of Market Research.

Executive summary and implications for

managers and executives
This summary has been provided to allow managers and executives
a rapid appreciation of the content of the article. Those with a
particular interest in the topic covered may then read the article in
toto to take advantage of the more comprehensive description of the
research undertaken and its results to get the full benefit of the
material present.
The rise in popularity of private label brands (PLs) has seen
sales rise significantly for fast moving consumer goods
(FMCG) in both USA and Western Europe, where such
products account for a fifth of all fast moving consumer goods
(FMCG) sales.

Private v. national brands

In some categories, many consumers are choosing such
products as an alternative to national brands (NBs). People
naturally form associations about private brands and these
associations consequently act as cues by which brand quality
or appropriateness in relation to meeting their needs within a
product category are measured. Brand associations may relate
to physical properties, benefits and purchase and
consumption situations. Consumers also rely on these cues
to compare PLs with their national competitors.
Past studies have revealed price to be an important
information cue for comparing private label and
manufacturer brands. Conventionally, PLs have been
cheaper than NBs and this has shaped consumer
expectations about private brands and positively influenced
sales. While price remains a key selling point, the expansion of
some PL ranges to include costlier premium, healthy, and
organic alternatives has made it more difficult to market own
label brands on the basis of this dimension alone.
A tendency to associate low price with inferior quality has
also prevailed but those with a vested interest are now
suggesting that PLs compare favorably with manufacturers
brands where this dimension is concerned. Some theorists
have proposed that consumers normally rely on both intrinsic

Survey and findings

Nenycz-Thiel and Romaniuk investigate these issues in a
study of household shoppers in a large Australian city. Toilet
paper, salad dressing and sliced cheese were selected as
categories in order to provide both non-food and food
examples. Initial screening identified purchase behavior
during the previous 12 months and samples of 205, 204
and 187 respondents were respectively obtained for the three
product categories. Each category included own label brands
from four chains that make up 90 percent of Australias
supermarket sector.
Respondents were presented with a series of positive and
negative attributes and asked to indicate if they were
associated with any of the study brands. Some attributes
were applicable to all categories, while others were more
specific. For each brand, participants were organized into
users and non-users based on purchases made during the
12-month period.
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Perceptual categorization of PLs and national brands

Journal of Product & Brand Management

Magda Nenycz-Thiel and Jenni Romaniuk

Volume 18 Number 4 2009 251 261

manufacturer brands as too expensive. With NBs, reducing

the price may affect margins and jeopardize image, so
increasing the value could prove a more viable strategy.
Nenycz-Thiel and Romaniuk recommend that NB
manufacturers maintain their investment in national
advertising to exploit their advantage over PLs whose
promotion and distribution is typically more localized.
They also recognize the challenge of reaching non-users
who perceive low price as an indicator of low quality.
Manufacturers of own label brands are urged to address this
issue by improving extrinsic attributes like packaging and instore advertising that consumers without prior experience of
the brand use to form their judgments. Attracting non-users
has additional significance with regard to the trust attribute.
The indication that users trust PLs as much as NBs may
lower the perception of risk for consumers who are persuaded
to try own label brands in other product categories.
Future research could explore individual own label brands
and the effect of factors like store image and different price
tiers. Demographic and other consumer related
characteristics may likewise influence the categorization
process. Research may also indicate whether or not
consumer perceptions of private label brands are evolving
over time.

The study revealed:

Consumers use certain attributes to separately categorize
PLs and NBs.
Low price is the strongest positive differentiator between
PLs and NBs in all three categories.
Perceptions of low quality and risk provide the strongest
negative categorization drivers and increased the
likelihood that a product was an own label brand. This
was the same for both users and non-users of private label
brands.
There were differences between users and non-users in the
categorization of brands into PLs and NBs but only for
negative attributes.
No significant differences in the way that users and nonusers employ low price to categorize PLs and NBs.
The trust attribute was a significant differentiator for nonusers, but not for users.

On this evidence, the authors believe that consumer

expectations about PLs remain unchanged and serve to
strengthen the halo effect. Changing these perceptions
becomes more challenging but necessary in order to
successfully reposition own brand products.
Implications for marketing and future research
That consumers appear to correlate price with quality has
particular implications for PLs. Scope to increase price is
limited, while the introduction of costlier premium own brand
products adds further to the dilemma. On the other hand, PL
owners may attract those consumers who regard

(A precis of the article Perceptual categorization of private labels

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Emerald.)

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