A Study of Brand Contribution to Earnings or Revenues.

Author:Chaturvedi, D.D.
 
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INTRODUCTION

Emerging markets like those of India are too juicy to be ignored. They carry the promise of retail expansion opportunities, a huge customer base, the right competitive environment and a generation of young and able professionals who are willing to pay a price for their comfort. Over the past 10 years, the Indian retail market has grown at the rate of 10% per annum and KPMG analysis points out that by 2015 55% of Indian population will be under 20 years of age, strengthening the logical inference that the markets are more than ready for further opportunities. The Indian government foresees the possibility of revenue generation by this sector and slowly but steadily it is moving towards full throttled participation by foreign retailers.

It is reported that a corporate brand can add value to a company's product policy and linking corporate and product brands will be beneficial to both the corporation and its individual products. Several multinationals have become aware of the importance of their names and are trying to establish and create a strong link between their corporate brand and product brand (Uehling, 2000). However, although there are many theories that have been advanced explaining how customers evaluate and select a particular product (Bettman, 1970; de Chernatony & Dall'Olmo Riley, 1998; Jamal & Goode, 2001; Kim & Chung, 1997; Lee & Ganesh, 1999; Low & Lamb, 2000; Mitchell & Olson, 1981; Muthukrishnan & Kardes, 2001; Woodside & Clokey, 1974), most of these attempts have only partially examined the impact of corporate branding on consumer product evaluation. This study aims at assessing the factors that influence the attitude of consumers when buying retail products. This study was conducted in New Delhi based on a five point Likert scale in which each attribute was ranked from 1 to 5. These attributes were the result of four focus group interviews. The representatives of these groups are customers who are majorly involved in purchasing activities and are the core decision makers in a household. The judgment sampling technique was used in getting the questionnaires filled by 500 consumers. A total of 250 consumers were contacted at various stores and the remaining at various malls across the city. A response rate of 72 per cent was obtained resulting in 360 complete questionnaires. The findings of the study regarding attitude of customers regarding purchases are as follows:

* With increase in earning capacity of households (working couples), there was an increased focus on brand image and perceived quality.

* The most interesting revelation was that consumers were very satisfied with the kind of identification they developed with the brand

* Women are becoming increasingly conscious of brand image, wherein they identify with the purchases made and consider themselves responsible in the decision making process

* Consumers under the age of 30 gave huge impetus to perceived value and those above 30 gave considerable importance to perceived quality present in goods and services

Store image has a direct, positive relationship with purchase intention. This result has important implications for retail managers and manufacturers alike. Consumers' intentions to purchase a product can be influenced by the store in which that product is sold above and beyond the value they perceive the product itself offers. Thus, consumers may derive some amount of "added value" from the image of the store. This means that manufacturers should be especially careful to choose retailers whose image is consistent with their brand's positioning. Retailers, on the other hand, may be able to leverage their image in negotiations with manufacturers or in store advertising to attract more customers. For example, a store's advertising could stress a pleasant shopping experience.

AT Kearney's annual Global Retail Development Index (GRDI) places India in the top position for the third year in a row as the most attractive market for retail investment. The retail industry in India was estimated to garner business to the level of $640 billion by 2015. But, this transition will not happen smoothly. Every change brings along with it challenges and at the moment there is a tug of war between India's organized and unorganized retail sector. The motivation behind this study is the fact that store brand sales will continue to gain share as retailers fine tune their approaches to meeting consumer needs (Walker, 1991). This implies that merchandise selection is very important, as it will affect store image. The quality of products offered by a retailer influences customer patronage behaviors (Dodds, Monroe, & Grewal, 1991). Brand name has been shown to be a critical cue for customer perceptions of product quality in a number of studies (e.g., Dawar & Parker, 1994; Dodds, Monroe, & Grewal, 1991). The role of merchandise and brand names that retailers carry are important for a better understanding of store patronage decisions.

Price and special promotions have been used to attract consumers to a retail store (i.e., providing greater value via the discount) and generate an increased level of store traffic (Grewal, Monroe, & Krishnan, 1998; Lichtenstein & Bearden, 1989). However, Doug Raymond, President and CEO of Retail Advertising & Marketing, argues that retailers cannot depend on these price promotions to attract customers on a regular basis. According to the trade publications, retailer's use of price promotions to attract customers and the desire to maintain margins have always been at odds with each other. The conflict has become more acute as...

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