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A Project report on study on Private Label

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A Project report on study on Private Label

A Project
Index report on

study on Private Label


Table of Contents
1. Introduction to Retail Industry 3
2. Future Group
5
3. Big Bazaar 7
3.1History of
Big

In the partial fulfilment of MBA-GTU Programme 2009-11,


Shree Jairambhai Patel Institute of Business Management and
Computer Application.
Submitted by:
Bazaar……………………………………………………………………………………
……………..7 Submitted to:
Aakash Kukreja(B-22
3.2Facilitates offered by Big

Meraman Odedra(B- Prof. Krunal


Bazaar………………………………………………………………………………….7

31)
3.3SWOT Analysis of Big
Joshi
Bazaar……………………………………………………………………………………
Giriraj ….8
Jadeja(B-60)
4. Private
Dhaval Solanki(A-54)
Label…………………………………………………………………………………………
…………………………10
Himmatsinh Bhatti(A-
4.1Private Label as a Marketing and Business
Tool…………………………………………………………10

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4.2Reasons for acquiring Private
Label…………………………………………………………………………..10
4.3Percentage share in Private
Labels…………………………………………………………………………….11
4.4National V/s
PLBs………………………………………………………………………………………
………………11
4.5Big Bazaar-Private
labels……………………………………………………………………………………
……..12
5. Consumer
Perception…………………………………………………………………………………
……………………13
6. Research on consumer Perception towards Private
Labels…………………………………….………..14
7. Management
Implications………………………………………………………………………………
………………28
8. Limitations of the
Research……………………………………………………………………………………
……….29
Appendix……………………………………………………………………………………
…………………………………..30
Bibliography………………………………………………………………………………
…………………………………...32

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A Project report on study on Private Label

1. Introduction to Retail Industry

Retail is India's largest industry. It accounts for over 10 per cent of the
India's GDP and around eight per cent of the employment. Retail sector is
one of India's fastest growing sectors with a 5 per cent compounded
annual growth rate. India's huge middle class base and its untapped retail
industry are key attractions for global retail giants planning to enter
newer markets. Driven by changing lifestyles, strong income growth and
favourable demographic patterns, Indian retail is expected to grow 25 per
cent annually. It is expected that retail in India could be worth US$ 175-
200 billion by 2016.

The organized retail industry in India had not evolved till the early 1990s.
Until then, the industry was dominated by the un-organized sector. It was
a seller’s market, with a limited number of brands, and little choice
available to customers. Lack of trained manpower, tax laws and
government regulations all discouraged the growth of organized retailing
in India during that period. Lack of consumer awareness and restrictions
over entry of foreign players into the sector also contributed to the delay
in the growth of organized retailing. Foundation for organized retail in
India was laid by Kishore Biyani of Pantaloon Retails India Limited (PRIL).
Following Pantaloon's successful venture a host of Indian business giants
such as Reliance, Bharti, Birla and others are now entering into retail
sector.

A number of factors are driving India's retail market. These include:


increase in the young working population, hefty pay-packets, nuclear
families in urban areas, increasing working-women population, increase in
disposable income and customer aspiration, increase in expenditure for
luxury items, and low share of organized retailing. India's retail boom is
manifested in sprawling shopping centres, multiplex- malls and huge
complexes that offer shopping, entertainment and food all under one roof.

But there is a flip side to the boom in the retail sector. It is feared that the
entry of global business giants into organized retail would make
redundant the neighbourhood kiryana stores resulting in dislocation in
traditional economic structure. Also, the growth path for organized retail
in India is not hurdle free. The taxation system still favours small retail
business. With the intrinsic complexities of retailing such as rapid price

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changes, constant threat of product obsolescence and low margins there


is always a threat that the venture may turn out to be a loss making one.

A perfect business model for retail is still in evolutionary stage.


Procurement is very vital cog in the retail wheel. The retailer has to fight
issues like fragmented sourcing, unpredictable availability, unsorted food
provisions and daily fluctuating prices as against consumer expectations
of round-the-year steady prices, sorted and cleaned food and fresh stock
at all times.

Trained human resource for retail is another big challenge. The talent
base is limited and with the entry of big giants there is a cat fight among
them to retain this talent. This has resulted in big salary hikes at the level
of upper and middle management and thereby eroding the profit margin
of the business. All the companies have laid out ambitious expansion
plans for themselves and they may be hampered due lack of requisite
skilled manpower.

But retail offers tremendous for the growth of Indian economy. If all the
above challenges are tackled prudently there is a great potential that
retail may offer employment opportunities to millions living in small town
and cities and in the process distributing the benefits of economic boom
and resulting in equitable growth.

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2. Future Group
Future Group, led by its founder and Group CEO, Mr. Kishore Biyani, is one
of India’s leading business houses with multiple businesses spanning
across the consumption space. While retail forms the core business
activity of Future Group, group subsidiaries are present in consumer
finance, capital, insurance, leisure and entertainment, brand
development, retail real estate development, retail media and logistics.

Led by its flagship enterprise, Pantaloon Retail, the group operates over
16 million square feet of retail space in 73 cities and towns and 65 rural
locations across India. Headquartered in Mumbai (Bombay), Pantaloon
Retail employs around 30,000 people and is listed on the Indian stock
exchanges. The company follows a multi-format retail strategy that
captures almost the entire consumption basket of Indian customers. In the
lifestyle segment, the group operates Pantaloons, a fashion retail chain
and Central, a chain of seamless malls. In the value segment, its marquee
brand, Big Bazaar is a hypermarket format that combines the look, touch
and feel of Indian bazaars with the choice and convenience of modern
retail.

In 2008, Big Bazaar opened its 100th store, marking the fastest ever
organic expansion of a hypermarket. The first set of Big Bazaar stores
opened in 2001 in Kolkata, Hyderabad and Bangalore.

The group’s specialty retail formats include supermarket chain – Food


Bazaar, sportswear retailer - Planet Sports, electronics retailer - eZone,
home improvement chain - Home Town and rural retail chain, Aadhaar,
among others. It also operates popular shopping portal -
www.futurebazaar.com.

Future Capital Holdings, the group’s financial arm provides investment


advisory to assets worth over $1 Billion that are being invested in
consumer brands and companies, real estate, hotels and logistics. It also
operates a consumer finance arm with branches in 150 locations.

Other group companies include, Future Generali, the group’s insurance


venture in partnership with Italy’s Generali Group, Future Brands, a brand
development and IPR company, Future Logistics, providing logistics and

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distribution solutions to group companies and business partners and


Future Media, a retail media initiative.

The group’s presence in Leisure & Entertainment segment is led through,


Mumbai-based listed company Galaxy Entertainment Limited. Galaxy
leading leisure chains, Sports Bar and Bowling Co. and family
entertainment centres, F123. Through its partner company, Blue Foods
the group operates around 100 restaurants and food courts through
brands like Bombay Blues, Spaghetti Kitchen, Noodle Bar, The Spoon,
Copper Chimney and Gelato.

Future Group’s joint venture partners include, US-based stationery


products retailer, Staples and Middle East-based Axiom Communications.

Future Group believes in developing strong insights on Indian consumers


and building businesses based on Indian ideas, as espoused in the group’s
core value of ‘Indianness.

The group’s corporate credo is, “Rewrite rules, Retain values”.

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3. Big Bazar
Big Bazaar is a chain of hypermarket in India, which caters to every
family’s needs and requirements. This retail store is a subsidiary of Future
group, Pantaloons Retail India Ltd. and is an answer to the United States’
Wal-Mart. Big Bazaar has released the doors for the fashion world, general
merchandise like sports goods, cutlery, crockery, utensils, and home
furnishings etc. at best economical prices.
3.1 History of Big Bazaar:
The worldwide country chain, Big Bazaar, is formed by CEO of Future
Group, Mr. Kishor Biyani. The group do not promises more than what it
delivers. Their basic attraction associated with reasonable prices is their
Unique Selling Price.
Though, the products Big Bazaar stores stocks might not be advanced, but
the customers are assured to avail the worth of the money spent by them.
In 2001, the group opened its first store on the VIP Road, Calcutta, which
was the primary departmental store offering regulated services of
parking, steel vessels, apparel, electronics etc under the one roof at the
competitive prices. Big Bazaar has become a massive hit with lower
middle-class and middle class people as a major client base.
At present, the Future Group comprises various formats and brands like
Pantaloons, F123, One Mobile, Urbana, Brand Factory, Hometown and
Central. The Big Bazaar has several stores located all over the India,
among that Chennai, Hyderabad, Ahmedabad, Bangalore, Kolkata, Pune,
Mumbai and Delhi is those metro cities where the stores of Big Bazaars
are located.
3.2 Facilities offered by Big Bazaar:
• Online shopping: Big Bazaar has an official website,
FutureBazaar.com, which is one of the most favourite sites among
people of India for online shopping. Future Bazaar is an online
business venture of Future Group, which sells an assortment of
products such as fashion, which includes merchandise for men and
women, mobile accessories, mobile handsets and electronics like
home theatres, video cameras, digital camera, LCD TVs, kitchen
appliances and many more.

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• Discounts: “Hfte ka sabse sasta din was introduced by the Big


Bazaar, wherein extra and special discounts were offered on
Wednesday every week, to attract the potential buyers into their
store.

• Free Gift wrapping: Big Bazaar also provides Gift wrapping facility
for the product purchased from the store. This facility is provided to
all customers that also free of cost.

3.3 SWOT Analysis of Big bazaar:

Before going in to depth first of all let’s clear the meaning of SWOT
analysis. Following terms clarifies the meaning of the SWOT analysis.

Figure 1.1

All industries and companies have some strength, weaknesses,


opportunities and threats. Strengths and weaknesses are internal and are
controllable while opportunities and threats are external and are
uncontrollable. I have done SWOT analysis of Big Bazaar which is as
below.

➢ Strengths of Big bazaar:

✔ At Big Bazaar customer can get large variety of goods under


one roof

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✔ A price of products at Big Bazaar is lower than the market


prices.
✔ It has good security system at all stores.
✔ Quantity of sales is high at all stores.\
✔ High quality private labels.

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➢ Weaknesses of Big bazaar:

✔ Lacks in branded products


✔ Unable to provide enough parking spaces to its customers at
all stores.

➢ Opportunities:

✔ To grab the rural market of India.


✔ To bring in the customers of other retail outlet by dealing
with branded products.
✔ Add more products to its product category
✔ To open up more and more number of big bazaars in different
cities of the country.

➢ Threats for Big bazaar:

✔ Opening up of other discounted stores like Vishal mega mart,


D Mart etc.
✔ Customers have the option of nearby kirana stores so they
may prefer to go there for small purchases.
✔ Availability of products in other retail outlets.
✔ Possible future competition from International retail
companies like Wal-Mart

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1. Private Label
Private label products or services are typically those manufactured or
provided by one company for offer under another company's brand.
Private label goods and services are available in a wide range of industries
from food to cosmetics to web hosting. They are often positioned as lower
cost alternatives to regional, national or international brands, although
recently some private label brands have been positioned as "premium"
brands to compete with existing "name" brands.

4.1 Private Label as a Marketing and Business Tool

Retailers have extended the concept of private label to identify a brand


with a store, a concept known as the store brand. This can be a far more
profitable business than selling nationally advertised brands.

Use of Private Label goes well beyond the Store Brands, though certainly
this is the most frequent situation in which a customer will have contact
with one.

4.2 Reasons for acquiring Private Label/Brands

Several corporations source an extremely wide range of products from


specialized manufacturers, which may or may not own their brand. The
reasons for this business practice are several.

A company, having identified a business opportunity in a new product or


groups of products, may assess that setting up their own production line
or facility may require a substantial investment in equipment, human
resources, patents and so forth. In many cases, a viable alternative is to
source from a specialized company that has already made such
investments and that has spare production capacity. If the two companies
find that the market situation allows avoiding or minimizing direct
competition without stealing each other's market share (cannibalization),
then both companies may find an agreement whereby the specialized
manufacturer supplies the goods to the other. The methods to reduce
'cannibalization' are general marketing practices such as: dedicated
distribution channels, different image and customer perception of the
brands, pricing, separate regional presence etc.

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4.3 Percentage share in Private Labels

4.4 National Brands V/s Private Label Brands

Advantages of National Brands Advantages of Private Label Brands

1. Product recognition — almost everyone 1. You have control over your pivotal
recognizes the names of the leading product, and that means over your
nationally branded coffees. Millions of business.
dollars are spent advertising these 2. It is the only way to be able to
products, making them easier to sell. market high quality products, if you so
2. People can choose between various choose.
familiar labels. 3. You save substantially in product
3. A buyer interviewing a private label cost. You can spend these savings on
salesman and a national brand salesman is anything you please, including higher
likely to have more confidence in the latter, product quality.
all other aspects of their presentations 4. You have no competition for the
being equal. brands that you carry. No one can
4. Consistent quality control trade on your name legally. This is a
strong motivational plus for your
5. The nationally branded companies help
salespeople.
promote sales with and for you, albeit sales
for their own brand. 5. With your exclusive brand you can,
if you wish, enters the entire Out-of-
6. Nationally branded products are
Home market supply.
generally available in constant supply from
local wholesalers with short lead times on 6. You can sell the mystique as well as

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ordering. the real quality of your brand,


enabling you to achieve a higher
average selling price (though many
operators make the mistake of selling
their private label for a lower price
than the national brands).

4.5 Big Bazaar-Private labels:

Big Bazaar, the hypermarket of Pantaloon Retail, has come out with a
breakfast cereal range under its private label, Tasty Treat. Big Bazaar
already sells noodles, pasta, vermicelli, soups, namkeens, chips, toast,
khari, papads, jams, pickles, carbonated drinks, and ketchup and fruit
beverages under the brand. It has now added breakfast cereals to the
range.
The breakfast cereals will be available in three variants — plain
cornflakes, chocolate-flavoured Choco Gols and honey-flavoured Honey
Circles. There are two reasons for launching the product, says Pantaloon
Retail’s head of private brands, Devendra Chawla. “One is that private
brands give us far higher margins, and the second is that cornflakes as a
category is under-penetrated and has a lot of scope to grow.”
The market for breakfast cereals is still small. While the packaged food
market is valued at Rs 33,234 crore, the organised breakfast cereal
market is just Rs 250 crore — less than one per cent. But the market is
growing fast, given the growing health consciousness in the country,
especially the urban middle class. Kelloggs monopolises the market for
breakfast cereals with its range of flakes. Some other multinational
players have also shown keen interest in this market. PepsiCo has already
entered with its bestseller brand, Quaker Oates. Heinz India, which has a
hugely strong bond with households because of its Complan health drinks,
too has joined the bandwagon.
In spite of the presence of a large number of players in the branded
packaged food segment, Tasty Treat is growing at about 70 per cent. This
perhaps has given Big Bazaar the confidence to try its luck in breakfast
cereals as well.
In a recent development, Pantaloon Retail, promoted by Kishore Biyani,
has boycotted Kelloggs at all its retail formats for turning down its
demand for higher margins. Not surprisingly, Big Bazaar is pushing its own
brand of cornflakes now. This is not the first time Big Bazaar is doing this.
A while back Cadburys and PepsiCo owned snack food brand Frito Lay had
to bear the brunt.

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As an introductory offer, the cornflakes brand will be priced at Rs 99 along


with a free bowl worth Rs 60.
According to Chawla, the brand will provide 10 to 15 per cent value when
compared to rivals. “We have the option of pricing it lower as we don’t
have to pay intermediaries and can pass on that advantage to
consumers,” says Chawla.
List of the private Brands available at Big Bazaar:

Cleanmate, Tasty treat, Caremate,Sach, John Miller, Premium Harvest,


Fresh And Pure, Ekta,

Dj & C, Knighthood, Spunk.

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1. Consumer Perception
In general psychological terms, perception is our ability to make some
kind of sense of reality from the external sensory stimuli to which we are
exposed. Several factors can influence our perception, causing it to
change in certain ways. For example, repeated exposure to one kind of
stimuli can either make us oversensitive or desensitized to it. Additionally,
the amount of attention we focus on something can cause a change in our
perception of it.

In other words,

Perception is the process through which a person forms an opinion about


the various stimuli he receives from his sensory organs. In marketing,
perception is concerned with understanding how the consumer views a
product or service. The five senses of a person help him in this process.
The marketer uses various props to stimulate the consumer, that is,
through the use of colours, sound, touch, taste, or smell, to observe the
product.

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2.Research on
consumer
Perception
towards
Private Labels

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Q.1 Do you purchase private label brands?

We have selected all 30 members purchases Private brands.

Q.2 Generally in which category you purchase private label brands?

Consumer
FMCG Durables Apparels Grocery Other

16 7 16 6 0

Findings:

From the above Pie chart, it can infer that large amount of purchase is
occurring in FMCG and Apparels category which are followed by Consumer
Durables. It may be, because the consumer durables products are normally
high involvement products. Consumers normally don’t hesitate in spending
their money easily in low involvement products which does not have long
term life.

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Q.3 Where do you buy the private label brands from?

Speciality
Shopping mall stores Internet others

20 11 3 0

Findings:

From the above Pie chart, it can be infer that normally consumers’ gives first
preference to large shopping malls and speciality stores who sells their own
branded product, who are also known to local public. With some increase in
use of internet in shopping habits of Indians, these medium also has starting to
play their role.

Q.4 Mark the following statements with 1 if you strongly agree to 5 if


you strongly disagree.

Statement 1- I feel confident when I use PLBs

Strongly agree agree neutral disagree highly disagree


4 14 8 2 1

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Findings:

From the above data, it can be inferred that out of 30 respondents, majority
of them are more confident when they use private label brands. They don’t
hesitate to use private label brands.

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Statement 2- I find economical to buy PLBs.

Strongly agree agree neutral disagree highly disagree


5 16 6 3 0

Finding:

From the above data, it can be inferred that out of 30 respondents, high
percentage of them are feeling economical when they purchase private
brands.

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Statement 3-PLBs may be associated to luxury.

Strongly agree agree Neutral disagree highly disagree


3 10 8 9 0

Findings:

From the above data, it can be seen that respondents showed a mix
response though the weightage is more inclined to positive side for
private label. 12 respondents (3-strongly agree, 9-Agree) were agree that
it may be associated to luxury, while 9 were disagree.

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Statement 4- I find PLBs good for one’s image.

Strongly agree agree Neutral disagree highly disagree


3 9 9 7 2

Findings:

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Statement 5- PLBs have youthful image.

Strongly agree agree neutral disagree highly disagree


3 7 6 13 1

Findings:

One negative aspect about PLBs which is seen in this context of Youthful
image of PLBs is if we compare the data, few of respondents have
considered the PLBs as having youthful image. The reasons may low
advertisement of private label brands than that of national brands.

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Statement 6- It is securing to use PLBs

Strongly agree agree neutral disagree highly disagree


11 12 5 2

Findings:

Most of responded have agreed that it’s secure to use PLBs as we can see
from the above chart. Most of the owners of PLBs provides all information
about their products so that there will be no confusion regarding the
same. This may be the main reason.

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Statement 7- I find PLBs simple to purchase.

Strongly agree agree neutral disagree highly disagree


5 16 4 5 0

Findings:

From the above data, it can be seen that most of the respondent found it
simple to purchase PLBs compare National Brands. This may be because
the owner of the shop always has more information about his products
rather than the products of the National brands. So the consumer can
easily acquire the information which he needs to make a purchase of a
product.

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Statement 8- It’s reasonable to buy PLBs

Strongly agree agree neutral disagree highly disagree


6 10 9 3 2

Findings:

From the above data, it could be gained that majority of the respondents
find Private label brands to be very reasonable to buy. Reasonability is not
gaining very strong response but major of them agree on a neutral scale
that it is reasonable to buy PLB.

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Statement 9- Warranty is provided with PLBs

Strongly highly
agree Agree neutral Disagree disagree
4 13 8 5 0

Findings:

Normally owner of shop provides warranty on his own products, because


he is confident about his product as this would build up his brand. And
giving warranty is a major source to attract clients and also repurchase
could be enhanced by the same. Respondents also agree with this belief
as it can be seen from the above table and chart.

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Statement 10 I think that PLBs are innovating

Strongly agree Agree Neutral disagree highly disagree


4 13 8 3 2

Findings:

From the above data, it can be seen that consumers agree that PLBs are
innovating. The major reason could be because of the launch of the
Private label brands in many new sectors and that too with more features
and quality in comparison to the national brands.

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Statement 11 It is convenient to purchase PLBs

Strongly agree agree Neutral disagree highly disagree


6 16 6 2 0

Findings:

From the above data, it can be imbibed that respondents/consumers feels


purchasing PLB to be convenient may be due to the easy availability and
reasonable pricing.

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3. Management Implications

In consumer marketing, brands often provide the primary points of


differentiation between competitive offerings, and as such they can be
critical to the success of retailers and manufacturers.

Private label brands have made tremendous inroads over the past two
decades. Although the success of private labels has been limited to
certain product categories and segments of consumers, retailers continue
to expand the domain of private label offerings.

In this exploratory study, our objective was to assess how PLBs are
perceived in a multicultural context. Findings comprise some main points
that are valuable for retail firms operating in multi-cultural contexts.

First, an array of statements is found to be highly associated with PLBs


image including convenience, economy, reason and simplicity. Some of
these items (i.e. convenience and reason) were previously associated with
national brands. This result shows that consumers are now aware that
PLBs are improving their quality. So, from now on, retailers have to launch
much more PLBs products and to focus on their improved PLBs quality.

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4. Limitations of the Research


This work does suffer from some limitations. The first of these limitations
stems from the use of a student sample.

Although the sample does have some characteristics that are desirable in
terms of their similarity to the wider population of consumers’ students,
the sample does not allow for consideration of the impact of consumer
variables such as income or education, both of which have been
demonstrated to impact private label purchasing behaviour.

Future research in this area needs to consider a broader array of


consumers living in multi-cultural contexts. Second, future studies should
also investigate other factors that influence the PLB image perception, i.e.
characteristics of the consumers who buy PLBs, their exposure to global
consumer culture, amongst other traits. In this respect, they can
distinguish clearly between intrinsic and extrinsic cues in PLB image
perceptions.

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Appendix

Consumer perception towards private label


Questionnaire
1. Do you purchase private label brands?

Yes
No

2. Generally in which category you purchase private label brands?

FMCG
Consumer Durables
Apparels
Grocery
Other(please specify)_______

3. Where do you buy the private label brands from?

Shopping malls
Speciality stores
Internet
Others (please specify)_________

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4. Mark the following statements with 1 if you strongly agree to 5 if you
strongly disagree

Statements Stron Agre Neutr Disagr Stron


gly e al ee gly
Agree Disagr
ee
1
2 3 4
5

I feel confident when I use PLBs

I find economical to buy PLBs

PLBs may be associated to


luxury

I find PLBs good for one’s image

PLBs have youthful image

It is securing to use PLBs

I find PLBs simple to purchase

It’s reasonable to buy PLBs

Warranty is provided with PLBs

I think that PLBs are innovating


It is convenient to purchase
PLBs

Personal Details:

Name:____________________________________________________________________
_

Area of
Residence:___________________________________________________________

Age:

15 – 20
21 – 25
26 – 30
Above 30

Gender:

F
M

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Bibliography

Marketing research by Naresh Malhotra

Consumer Behaviour by schiffman and Kanuk

Websites:
http://iims-markathon.blogspot.com/2010/02/private-labels-from-cheap-
substitutes.html

www.futuregroup.in/home.asp

pantaloon.futurebazaar.com/indexPantaloon.jsp

http://bizdom.blogspot.com/2010/03/brand-update-sach-toothpaste-from.html

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