Private Labels in Chile: Influential Factors in the Purchase Intention

Private Labels in Chile: Influential Factors in the Purchase Intention

Mónica Gómez-Suárez (Universidad Autónoma de Madrid, Spain), Galo Paiva (Universidad de La Frontera, Chile) and Berta Schnettler (Universidad de La Frontera, Chile)
DOI: 10.4018/978-1-5225-0220-3.ch004
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Abstract

The aim of this study was to contribute to the knowledge of Private Label (PL) brands in Chile. The question was whether there are differences in the perception between buyers and non-buyers and what factors affect the intention to purchase this type of brand. This involved an in-home survey in Temuco, Chile on the basis of multistage random sampling. Using a one-way ANOVA, it was determined that private label buyers are looking to save more on their purchases than non-buyers. They also had a better perception of the quality of these brands. Using linear regression, the main factors were obtained that determine the purchase intention: frequency of purchase and attitude towards private labels. The variable that affected attitude was mainly the perception of the quality of private labels. These results do not differ greatly from the studies conducted in Europe or the United States.
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Background

According to Nielsen data published by the Private Label Manufacturers Association (PLMA, 2015a), Europe is the region with the greatest market penetration of this type of brand, although there are large differences between countries. In some of them, participation exceeds 50%, e.g., Switzerland (53%) and Spain (52%). The UK (45%), Portugal (44%) and Germany (44%) or Austria (40%) also exceeds 40% of market share (PLMA, 2015a). Another region where the participation of these brands is growing is the United States, where the share is currently 21%, according to PLMA, (2015b). Precisely because these private labels have a greater penetration, most of the published studies use data from European countries or the US.

However, there are still emerging regions, where private label products have still not achieved the distribution they have in developed countries. Contrary to Europe, the US and Canada, private labels in Asia and Latin America have a participation in sales that does not exceed 10%. Nielsen data (2014) show that the share in sales in Colombia is 15%, Argentina 9%, Mexico 8%, Peru 7%, Brazil 5% and Venezuela 3%. In the case of Asia, the greatest participation is in Singapore 8%, Hong Kong 5%, India 5%, and South Korea 4%. The lowest participation, with 1% of sales, is in Thailand, China and the Philippines.

In Chile’s case, the participation of these brands in 2014 did not exceed 10%. Private labels are developed by the main supermarket chains, Walmart, Cencosud and SMU, which together comprise 93% of the sales in this channel (CERET, 2014). Department stores and household goods stores also have a wide product range with store labels, including clothes, electrical appliances and electrical tools. In the supermarket segment, Walmart Chile is the main driver of private labels with 40% participation in this segment. This retailer has 14 own labels, which combined grew 16% in 2011 (Walmart Chile, 2012).

Similar to what occurs in developed countries, private labels are also characterized as being cheaper in Chile. Nevertheless, although shoppers from this country can save up to 20% on private label purchases, this is not perceived by the consumers (CERET, 2014).

Key Terms in this Chapter

Customer: A person or business that actually purchase the product or service offered by a company. He/she pays for the product and creates demand.

Consumer Packaged Goods: A type of good consumed every day by the average consumer. They need to be replaced frequently, compared to those that are usable for extended periods of time. Fast-Moving consumer goods is also a synonym of this term.

Consumer: Individual who considers buying a product or a service for personal use. He/she makes decisions whether or not to purchase a product. He/she is the primary target of the marketing program.

Attitude: Thoughts, beliefs, feelings or intentions towards a particular product, service or brand. It is a composite of three elements: cognitive information, affective information and information concerning a consumer's past behavior and future intentions.

Preference: A feeling of liking one product, service or brand more than another one.

National Brand: The brand name of a product or service produced by manufacturers.

Purchase Intention: The plan in which a person intends to buy a particular product or service sometime in the near future.

Shopper: A person who visit the store in search of products, services or brands.

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