Examination of Factors Moderating the Success of Private Label Brands: A Study of the Packaged Food Market in China

Abstract

The major objective of this study is to explore how different determinants of perceived risk help explain variations in purchasing preferences for national brands versus private label brands (PLB) of the packaged food market in urban China. We selected the Chinese packaged food market because it is “one of the most rapidly fastest growing markets” in the world (Wu & Deng, 2002 Wu, S. and Deng, H. . Do you want a Big Mac or rice?. Report on the fast food industry in China. Agriculture and Agri-Food Section: Canadian Consulate General in Shanghai. April, [Google Scholar]). Following a description of the Chinese market, we build our conceptual framework by combining the PLB literature with searching versus experience, price consciousness, and product quality literature. Using the data we collected in GuangZhou, Shenzhen, and Shanghai cities, we find both their direct and indirect effects. Supporting theory-based expectations, we find that (1) PLB purchase in a category increases when consumers perceive reduced consequences of making a mistake in brand choice in that category; (2) when that category has more “search” than “experience” characteristics; and (3) consumer's degree of price consciousness in that category, through which we brought in PLB-favoring variables such as lower incomes, high deal-proneness, and a decreased belief in price-quality associations. We discuss our results in light of the managerial and theoretical implications, especially the important role played by “experience” attributes in leading consumers to favor national brands over PLBs.

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