Private Label Brands at ASDA

Why Supermarket Retailers Should Understand Consumer Behaviour

Seminar Paper , 2005 , 13 Pages , Grade: 69%

Business economics - Offline Marketing and Online Marketing

A thorough understanding of consumer behaviour, ‘to know and understand the consumer so well that the product or service fits him’ (Drucker n.d. cited in Kotler 2003) precedes the marketing activities of all consumer-oriented organisations. The aim of this paper is to explain, with reference to associated theoretical models, why consumer behaviour is important to supermarket retailers and how it can be influenced. To put theory into context, I have selected the UK food retailer ASDA to demonstrate how responsiveness to consumers is implemented into its food trading strategy to ensure the organisation’s effectiveness.

Table of Contents

1. Introduction
1.1 About ASDA
1.2 The Rise of Private Label Brands

2. Understanding Consumer Behaviour in a Retail Setting
2.1 ASDA’s Influence on the Consumer’s Buying Process
2.1.1 Need Recognition / Problem Awareness
2.1.2 Information Search

3. Conclusion

References

1 Introduction

A thorough understanding of consumer behaviour, ‘to know and understand the consumer so well that the product or service fits him’ (Drucker n.d. cited in Kotler 2003) precedes the marketing activities of all consumer-oriented organisations. The aim of this paper is to explain, with reference to associated theoretical models, why consumer behaviour is important to supermarket retailers and how it can be influenced. To put theory into context, I have selected the UK food retailer ASDA to demonstrate how responsiveness to consumers is implemented into its food trading strategy to ensure the organisation’s effectiveness.

1.1 About ASDA

ASDA was established in 1965 as ‘ As sociated Da iries’, but the organisation traces its origins back to Hindell’s Dairies, which was formed in the 1920s by a group of farmers from Yorkshire. By 1980, ASDA operated over 70 stores. In 1991, it bought another 61 stores from Gateway. It was taken over by US-based retail giant Wal Mart in 1999 and currently operates 265 stores in the UK, ranking #2 of the top UK food retailers.

1.2 The Rise of Private Label Brands

The recent ACNielsen study ‘The Power of Private Label’ found that 82 percent of British shopping trips include private label products, which account for 28 percent of UK retail sales (ACNielsen 2005).

The strength of the ASDA private label is indicated by a 45 percent share in grocery and a 50 percent share in non-food in relation to its total store sales.

2 Understanding Consumer Behaviour in a Retail Setting

Central to understanding consumer behaviour in a retail setting is an understanding of the way the consumer approaches purchases. Figure 1 illustrates the purchase decision sequence.

Figure 1: The consumer purchase decision sequence

illustration not visible in this excerpt

Source: Froggett 2005

This decision-making process is to a large extent dependent on the type of buying situation the consumer finds himself in. In general, there are three distinct types of buying situations to resolve, each involving a particular series of decisions:

illustration not visible in this excerpt

2.1 ASDA’s Influence on the Consumer’s Buying Process

ASDA needs to appreciate how consumers buy their private label brands, and what role the brands will play in enhancing their lifestyle. The ‘superstore’ format, typically trading up from 4,000m2, poses an issue for both the organisation and its customers, since ASDA consumers are presented with an extensive choice of brands. Assuming an extended problem solving scenario, I will describe how ASDA influences the consumer’s buying process at the need recognition and information search stage.

At [an extended] level of problem solving, consumers have established the basic criteria for evaluating the product category and the various brands in the category. However, they have not fully established preferences concerning a select group of brands. Their search for additional information is more like ‘ fine tuning ’ ; they must gather additional brand information to discriminate among the various brands. (Schiffman and Kanuk 2004 p.549)

2.1.1 Need recognition/Problem awareness

Swiss Re (1999 cited in De Chernatony 2001 p.186) have considered how Maslow’s hierarchy of needs can be translated into a brand environment. De Chernatony has adapted their model to show how brands meet consumers’ needs at different levels of the hierarchy.

ASDA has a portfolio of six private label brands in the food, health and beauty and household product categories, shown in the table below.

ASDA Range Achitecture

illustration not visible in this excerpt

Source: ASDA (2005a), Scottish Food and Drink (2004)

[...]

• College: Anglia Ruskin University (Ashcroft International Business School)
• Grade: 69%
• Author: Valentin Nehls (Author)
• Publication Year: 2005
• Pages: 13
• Catalog Number: V62007
• ISBN (eBook): 9783638553360
• ISBN (Book): 9783640737055
• Language: English
• Tags: Brands, ASDA, Supermarket, Consumer Behaviour, Consumer Behavior, Branding, Private Label, Private Labels, Retail