Antecedents of the difference in perceived risk between store brands and national brands

Antecedents of the difference inperceived risk between storebrands and national brandsCelina Gonzalez Mieres, Ana Marıa Dıaz Martın and

Juan Antonio Trespalacios GutierrezDepartment of Business Administration, Facultad de Ciencias Economicas,

University of Oviedo, Oviedo, Spain

Abstract

Purpose – The present study sets out to analyze the effects that a set of variables related topurchasing behaviour has on the difference in perceived risk between store brands and nationalbrands.

Design/methodology/approach – The methodology proposed to achieve the objective consists ofanalyzing the existing relationship between different aspects relating to purchasing behaviour of theconsumer and the difference in perceived risk between the two types of brands through a causal andintegrated model. Such a model covers both the direct effects and the indirect effects caused by thesevariables jointly. In order to do so data were obtained from two groups of people, which has allowedfor cross-validation of the methodology used, which, in turn, permitted a greater generalization of theresults.

Findings – The variables which have proven to be most relevant when explaining this difference arethe perceived quality of the store as opposed to that of the national brands, familiarity with the storebrands and confidence in the extrinsic attributes of the product to assess its quality.

Originality/value – Previous empirical research has focused primarily on the individual effects ofthese variables. A causal model is proposed capable of demonstrating that, besides the direct effect of avariable on the difference in perceived risk between store brands and national brands, there may beother ways for this variable to exercise its influence. This is important because of the implications forretailers when managing their own brands.

Keywords Risk management, Generics, Consumer behaviour

Paper type Research paper

IntroductionSince the introduction of store brands into the Spanish market in the 1980s, we havewitnessed to a substantial increase in the availability of such products. At present,most of the distribution chains that operate in Spain offer own brand alternatives foran ever-increasing range of products. In fact, in sectors such as food and cleaningmaterials/perfumery, store brands reached market shares of 20.3 per cent and 16.2 percent in 2002, respectively, representing an increase of more than 10 per cent from thebeginning of the 1990s, making Spain the European country with the second bestdevelopment with respect to own brand products at present.

This continuous growth in store brands is in part due to the constant evolution thatthey have undergone since their initial appearance in the market. Retailers have tried toconvert their own brands into just one more brand within the range of alternativesavailable to the consumer (Nandan and Dickinson, 1994). They have improved the

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Store brands andnational brands

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Received February 2004Revised October 2004,

March 2005

European Journal of MarketingVol. 40 No. 1/2, 2006

pp. 61-82q Emerald Group Publishing Limited

0309-0566DOI 10.1108/03090560610637310

www.emeraldinsight.com/0309-0566.htm

quality of their own brands, they have repositioned their products, and they have triedto boost the image of their own brands in such a way that they are not perceived assimply a copy or imitation of national brands in order that they might acquire theirown identity in the marketplace.

However, the idea that store brands are a second-rate alternative still persists amonga large sector of consumers who perceive them as inferior to the corresponding nationalbrands (Bellizi et al., 1981; Cunningham et al., 1982; Millan, 1997; Richardson et al., 1994).A perceived risk is one of the key factors leading to consumer apprehension of inferiority.In fact, various studies have shown that the risk associated with buying a store brandproduct is significantly higher than that of buying a national brand alternative (Bettman,1974; Dick et al., 1995; Livesey and Lennon, 1978; Richardson et al., 1996).

The present study can be classified within this field of research. Its main objective isto analyze in greater depth the difference in the risk perceived by consumers whenpurchasing store brands as opposed to national brands, and to try to evaluate therelevance of those variables which help to explain this difference.

The methodology proposed to achieve our objective consists of analyzing theexisting relationship between different aspects relating to the purchasing behaviour ofthe consumer (such as familiarity with the product, confidence in selecting andevaluating it, and the perceived quality of store brands as opposed to national brands)and the difference in perceived risk between the two types of brands. One of thecontributions of this work is, thus, considering the perceived risk difference betweenstore brands and national brands. Previous empirical research has focused primarilyon the perceived risk associated with store brands individually. Since risk can beperceived by consumers in any kind of brand, we consider that what is really relevantis the difference between brands. This difference is what will make the consumer tochoose between a store brand and a national brand.

In order to analyze the above relationship the present study proposes a causal andintegrated model which covers both the direct effects and the indirect effects caused bythese variables jointly. In fact, this is another contribution of the work since very littleresearch has been done on analyzing the indirect effects. We propose a causal modelcapable of demonstrating that, besides the direct effect of a variable on the difference inperceived risk between store brands and national brands, there may be other ways forthis variable to exercise its influence. On the other hand, if the direct effect of a variableis not empirically supported, the indirect effects can justify the necessity to continueconsidering this variable when managing store brands. Therefore, the contribution ofthe paper is not only to identify the origin of perceived risk in store brands but toevaluate the relevance of the variables considered when explaining this concept. Webelieve this is important and worthy of investigation because of the implications forretailers when managing their own brands. This study permits to know which are thekey variables on which retailers have to stress so that the store brands are notperceived riskier than the national brands.

First, a brief bibliographic review is presented on the difference in risk betweenstore brands and national brands. Then, the causal model is proposed and thehypotheses derived from it are described. Thereafter, we explain the methodologyfollowed and set out the results obtained. Finally, the main conclusions andimplications of the study are commented on, the limitations of the study are described,and future lines of research are suggested.

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Difference in perceived risk between store brands and national brandsSince the outcome of a choice decision can only be known in the future, the consumer isforce to deal with uncertainty and, to the extent that consumers realize they may notattain all of their buying goals, risk is perceived (Mitchell, 1998).

The existing relationship between the consumer’s perceived risk and the choice ofstore brands or generic brands as opposed to national brands has been the object ofnumerous studies in the last two decades.

The first studies carried out in this area present a comparative analysis of theperceived risk of generic brand and national brand products and all conclude thatconsumers perceive more risk in generic alternatives than in manufacturer brands.Subsequently, store brands were incorporated into the above-mentioned comparisons.While the store brands surpass the generic brands with regard to the consumer’sfavourable perception of them, they are still considered inferior alternatives havinggreater risk than the national brands.

Table I lists the main studies which have analyzed the perceived risk in genericproducts and in store brands as opposed to national brands. They have constituted akey reference when designing the model described in the following section on whichthis study is based.

Proposed model: justification and hypothesisAs explained in the previous section, store brands are generally considered to be riskieralternatives by end consumers. Once this conclusion has been reached, the next step isto determine what causes this difference in risk between store brands and nationalbrands. According to the literature review on this topic, among the variables whichhave proven to be most relevant when explaining why store brands are perceived asriskier alternatives than national brands are the following (see Figure 1): difference inperceived quality between store brands and national brands, experience with theproduct category, familiarity with store brands, consumer self-confidence and relianceon the extrinsic attributes of the product to evaluate its quality.

Effect of the perceived quality of store brands as opposed to national brandsZeithaml (1988, p. 3) defines perceived quality as the consumer’s judgement about aproduct’s overall excellence or superiority. Considerable evidence from previousresearch suggests that significant differences exist between store brands and nationalbrands regarding quality, revealing the consumer’s higher perception of the latter(Bellizi et al., 1981; Cunningham et al., 1982; Hawes et al., 1982; Millan, 1997;Richardson et al., 1994).

This perceived inferiority of the store brands is a source of uncertainty for endconsumers on the level of satisfaction that they can obtain with the purchase of thistype of brand and, therefore, increases the risk associated with its purchase. In fact,Hoch and Banerji (1993) determined that store brands have a smaller market share inthose product categories in which there is a greater difference in quality between storebrands and national brands. On the other hand, Richardson et al. (1996) proved that thedifference in perceived quality between store brands and national brands reduces theperceived value of the store brands through the risk associated with their purchase asthe latter is increased. Finally, Batra and Sinha (2000) observed that the difference inquality had a positive, direct and significant effect on the possibility of making a bad


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purchase choice, and a negative and indirect effect, through this last variable, on thedecision to purchase store brands.

As a consequence, we consider that the greater the perceived equality is betweenstore brands and national brands in terms of quality, the less the difference will be inperceived risk between the two types of brands, setting the first of the hypotheses ofthe study out in the following terms:

H1. The closer the quality perceptions between store brands and national brands,the lower the difference in perceived risk between the two types of brands.

Although this relationship may seem obvious, its contrast is crucial in the proposedmodel given the indirect effects that other variables have on the difference in perceivedrisk through the perceived quality.

Author Product category Comparison Result

Bearden andMason (1978)

Medicines Generic brands vsnational brands

Greater perceived risk ingeneric brands

Toh and Heeren(1982)

Tinned food, beautyproducts, stationery,drinks, detergents andfrozen food

Generic brands vsnational brands


Harrison et al.(1983)

Rice, precooked dishes,kitchen rolls, tinnedtuna, bread loaves andcoffee



Wu et al. (1984) Tinned food, dry food,beauty products,stationery, soft drinks,detergents and frozenfood



Dunn et al. (1986) Detergent, softener,ice-cream and pastries

Generic brands, storebrands and nationalbrands

Generic brands have thegreatest functional riskand the lowest financialriskNational brands have thegreatest financial risk butthe lowest functional riskStore brands in anintermediate position

Dick et al. (1995) 28 categories ofconvenience products

Buyers and non-buyers ofstore brands

The non-buyers perceivea greater functional andfinancial risk in storebrands

Richardson et al.(1996)

28 categories ofconvenience products

Store brands vs nationalbrands

Greater perceived risk instore brands

Table I.Perceived risk in storeand generic brands asopposed to nationalbrands

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Effect of the reliance on extrinsic attributes of a product to evaluate its qualityWhen it is difficult for consumers to evaluate a product from its intrinsiccharacteristics and, moreover, they do not have much confidence in their own capacityto select the most appropriate alternative, they usually rely on a series of extrinsicattributes of the product, such as price (Rao and Monroe, 1989; Sethuraman and Cole,1997) and brand name (DelVecchio, 2001), from which to infer the quality of theproduct.

The confidence that the consumer places in these kinds of attributes has a clearinfluence on the perception of store brands, since this type of brand has traditionallyfollowed a low cost strategy. Retailers reduce advertising and promotional costs withrespect to their own brands to thereby keep the price of the product down. However,this relative advantage derived from very competitive, low prices is at the same time ahandicap with regard to national brands. National brands, and above all the marketleaders, have developed their brand reputation and prestige based on large advertisingcampaigns (Aaker, 1996; Kirmani and Wright, 1989), and these have conferred on thema degree of security and protection against risk perceived by the consumer. Therefore,those that use extrinsic attributes as criteria for selecting a brand tend to consider storebrands as higher risk alternatives. Consequently, we consider that reliance on theextrinsic attributes of the product to evaluate its quality has a direct effect on thedifference in perceived risk between store brands and national brands.

Furthermore, the confidence in the extrinsic attributes also causes a greaterdifference between the two types of brands in terms of perceived quality (Richardsonet al., 1996), so it has an indirect effect on the difference in perceived risk through thislast variable.

Figure 1.Model of the antecedents

of the difference inperceived risk between

store brands and nationalbrands


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Taking the above-mentioned considerations into account, we propose the followinghypotheses:

H2. Reliance on the extrinsic attributes of a product to evaluate its quality has aninfluence on the difference in perceived risk between store brands andnational brands:(a) positive and direct.(b) positive and indirect through the perceived quality of store brands as

opposed to national brands.

Effect of the individual’s specific self-confidenceConsumer self-confidence is defined as the extent to which an individual feels capableand assured with respect to his or her market place decisions and behaviours. As such,consumer self-confidence reflects subjetive evaluations of one’s ability to generatepositive experiences as a consumer in the market place (Adelman, 1987).

When the effect of this variable on the perceived risk is analyzed, a distinction mustbe made between two types of self-confidence (Cox and Bauer, 1964): generalself-confidence, which is comparable to self-esteem and can be considered as apersonality characteristic (its general nature makes it difficult to adapt it to specificsituations or choices), and specific self-confidence, which reflects the ability of theindividual to face a specific task or situation. In the case of the individual’s purchasingbehaviour, this last type of self-confidence refers to the individual’s confidence in theirown ability to properly select a specific product, brand or commercial establishment.

In the present study, given that we evaluate the difference in risk associated withbuying store brands as opposed to national brands, specific self-confidence will be thevariable included in the proposed model.

Regarding the relationship between this variable and the perceived risk when buyinga product, Schaninger (1976) determined a negative effect of specific self-confidence on it.More specifically, Bailey (1999) observed that those consumers with a higher level ofself-confidence perceived a lower risk associated with buying store brands.

In light of these results it can be concluded that the greater the specificself-confidence of the individual the less the risk associated with buying store brandssince the uncertainty that the consumer may have is reduced. When consumersconsider that whichever choice they make will be the correct one given their ownability to evaluate the product, they feel less need to seek security in national brands.Therefore, the difference in risk between store brands and national brands is reduced.

In fact, specific self-confidence also has an indirect effect on the difference inperceived risk through the confidence placed in the extrinsic attributes to evaluate thequality of a product. The more confidence consumers have in their own ability to makea good choice of brand, the less the need to rely on attributes such as price or brandname to evaluate the quality of a specific alternative.

The formal expression of the above-mentioned considerations leads to the followinghypotheses:

H3. The specific self-confidence of the individual has an influence on thedifference in perceived risk between store brands and national brands:(a) negative and direct.(b) negative and indirect through reliance on the extrinsic attributes of a

product to evaluate its quality.

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Effect of the familiarity with store brandsAlba and Hutchinson (1987) argue that as consumers become more familiar with abrand, the structure of their knowledge of it changes due to a reduction in theuncertainty that the consumer perceives when buying it.

In the specific case of store brands, Monroe (1976) determined that for goodspurchased in supermarkets, as the level of use or consumption of this type of brandincreases, the risk associated with buying it decreases and, as a consequence,consumers change their preferences regarding the brand. That is to say, the nationalbrands lose out as experience with store brands increases so long as the experience hasbeen positive. Bailey (1999) and Richardson et al. (1996) reached similar conclusions,giving empirical evidence on the direct and negative effect of familiarity with storebrands on the perceived risk associated with its purchase.

On the other hand, familiarity also has an indirect influence on the difference in riskthrough two variables: confidence in extrinsic attributes and perceived quality of storebrands as opposed to national brands.

Regarding the confidence placed in the extrinsic attributes of a product to evaluateits quality, familiarity with store brands contributes to reducing reliance on thoseattributes since the consumer is more capable of evaluating it from a wider range ofattributes, not simply relying on price or brand name as indicators of quality (Raju,1977; Valenzi and Eldridge, 1973; Wheatley et al., 1977).

As regards the perceived quality of store brands, it has been shown that the greaterthe knowledge of this type of brand the smaller the difference in terms of perceivedquality with respect to national brands (Richardson et al., 1996). That is to say,familiarity with store brands makes the consumer consider them higher qualityalternatives than they would have if they had not had knowledge of them.

The following hypotheses are proposed based on these different considerations:

H4. Familiarity with store brands has an influence on the difference in perceivedrisk between store brands and national brands:(a) negative and direct.(b) negative and indirect through the reliance on the extrinsic attributes of a

product to evaluate its quality.(c) negative and indirect through the perceived quality of store brands as


Effect of experience with the product categoryRoselius (1971) considers relying on past experience with respect to the use andconsumption of a product a basic strategy for risk reduction. Being familiar with aproduct reduces the risk associated with buying it and increases the probability thatconsumers buy those brands that have met their quality standards in the past (Nelson,1970). This occurs due to the fact that previous purchases by the consumer result in akind of learning process which leads to the consumer perceiving less risk (Seth andVenkatesan, 1968). Through the experience of buying a specific product categoryconsumers gain understanding when making their choice and this has a positiveinfluence on the buyer in terms of knowing what to evaluate in a product and how to doit so that the end result will be satisfactory (Grønhaug, 1972).

In the case of store brands, it is more likely that consumers with great experience inbuying a specific product will have tried store brands and, if their quality is


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satisfactory (i.e. equal or even higher than that of national brands), it is very probablethat they will start buying those brands regularly and, thereby, reduce the cost ofbuying the product. Bailey (1999) empirically proved that those individuals with littleexperience in buying a product perceive a greater risk in store brands than those withmore experience. Therefore, we can conclude that experience with the product categorycontributes to reducing the difference in perceived risk between store brands andnational brands.

Besides this direct effect, we consider that this variable also has an indirect effectthrough a series of aspects which we will now describe. First of all, the fact of havingexperience in the use and consumption of a product causes consumers to feel moreconfident in their own capacity to make a good purchase choice. That is to say,experience has a positive effect on specific self-confidence of the individual.

On the other hand, greater knowledge of the product reduces the need for theconsumer to have to rely on its extrinsic attributes, such as price or brand name, toevaluate its quality; knowledge of the product is sufficient in order to evaluate it basedon its intrinsic attributes. As a consequence, experience with the product categoryreduces the reliance of the consumer on extrinsic attributes to make a choice.

Lastly, greater experience with the product increases the possibility that theconsumer will try store brands, thereby, increasing familiarity with this type of brand.At the same time, this greater knowledge also allows the consumer to discover that thequality of store brands can be similar or even higher in some cases than that of nationalbrands.

These different arguments lead us to propose the following hypotheses onexperience with a product category:

H5. Experience with the product category has an influence on the difference inperceived risk between store brands and national brands:(a) negative and direct.(b) negative and indirect through the consumer’s specific self-confidence.(c) negative and indirect through reliance on the extrinsic attributes of the

product to evaluate its quality.(d) negative and indirect through familiarity with store brands.(e) negative and indirect through the perceived quality of store brands as


MethodologySample description and information gatheringWith the aim of analyzing the suitability of the causal model proposed to explain thedifference in perceived risk between store brands and national brands and toempirically test the proposed hypotheses, two product categories were selected onwhich to gather information: kitchen rolls and shampoo. Each of these products wereevaluated by a different sample of consumers which allowed us to carry outcross-validation of the proposed model; that is to say, using one of the samples as ameasuring model and the other to validate it.

The selection of the product categories was carried out according to the followingcriteria[1]:

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. The products are bought regularly by consumers, which makes it easier for themto evaluate aspects and perceptions related to its purchase.

. They are product categories in which the store brands have significant marketshares[2].

. They are product categories which have different levels of involvement in theirpurchase on behalf of the consumer (Kapferer and Laurent, 1986; Murphy andEnis, 1986), which may have an influence on the risk associated with itspurchase, allowing the generalization of the conclusions obtained to otherproduct categories. The different level of involvement is reflected in the fact thatthey are categories with prevalence of characteristics of different nature; whilekitchen rolls are perceived as a search product, shampoo is perceived as anexperience product[3]. This makes the selected product categories differentenough from each other to permit the results to be considered significant andgeneralizable.

On the other hand, and given that one of the aims of the study is to determine thedifference in perceived risk between store brands and national brands, for each productcategory consumers were asked to evaluate the two types of brands. Therefore, acomparison was made between the store brand of the commercial establishment whereindividuals usually buy the product category under study and the national brandwhich they most frequently buy in this category.

Once the product categories were selected, in accordance with the objectives of theresearch we started gathering information through a personal questionnaire. Datawere obtained through personal interviews with individuals in charge of doing theirshopping for grocery products at the distribution chains with the highest market sharein the north of Spain. The choice of the sample was made through a multistagestratified process according to the market share of the different distribution chainsconsidered. A total of 436 valid questionnaires were obtained in the case of kitchenrolls, and of 422 in the case of shampoo. The main sociodemographic characteristics ofthe samples for both product categories are shown in Table II.

Measures usedAll the items which make up the corresponding scales of the different explanatoryvariables of the model are based on literature review carried out in connection with thepresent study. A Likert seven-point scale has been used in all cases. The attributesinclude in each of the scales and the studies which they come from, as well as theirCronbach’s alpha coefficient which shows the reliability of each of the measurements,can be seen in Table III.

Regarding the variable “difference in perceived risk between store brands andnational brands”, it was calculated from the levels of risk associated with each of thetwo types of brands. Generally, consumers perceive store brands as opposed tonational brands and for this reason we decided to use a difference measure instead ofassessing the perceived risk associated with store brands individually.

Risk evaluation was carried out using a scale made up of 23 items which refer toeach of the underlying dimensions of overall risk: functional, financial, social, physical,psychological and time (Jacoby and Kaplan, 1972; Roselius, 1971). The traditionalmethodology measures risk through its double component: uncertainty and


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consequences. However, in the present study we have opted for a more innovativemethodology than that followed especially during the past decade which we considermore appropriate and precise, since measuring perceived risk through multi-attributescales allows one to take into account in a more specific way all the differences betweenthe different risk dimensions, as well as to verify the reliability and validity of thescale. The measurement instrument was derived from the review of specific literatureon this subject, with the studies done by Stone and Grønhaug (1993) and Dholakia(1997) being fundamental. The evaluation was conducted using a Likert seven-pointscale, both in the case of store brands and national brands[4], and for the two productcategories on which the research is based, kitchen rolls and shampoo[5]. The itemsused in detail, as well as Cronbach’s corresponding alpha coefficients can be seen inTable IV.

ResultsAntecedents scalesA confirmatory factor analysis was carried out using structural equations to verify thereliability and validity of the scales. This analysis was done for both the kitchen rollsand the shampoo, thereby, allowing for cross-validation of the measurement model.This cross-validation procedure contributes to establishing the validity of the model,separating the evaluation from its estimation and, thus, preventing the possibility ofthe fit of the model being dependent on the characteristics of the sample. In both cases,the goodness-of-fit indexes of the model can be considered satisfactory, reaching orapproaching the minimum recommended values (Bagozzi and Yi, 1988; Bentler andBonnet, 1980). More to the point, the Comparative Fit Index (CFI) is 0.902 for kitchen

Variables Kitchen rolls (%) Shampoo (%)

SexMen 18.8 24.4Women 81.2 75.6

AgeFrom 18 to 40 51.0 59.2Between 41 and 65 41.7 35.9More than 65 7.3 4.9

StudiesPrimary 26.7 18.6Secondary 43.4 48.0University 29.9 33.4

Civil statusSingle 32.9 46.5Married-with couple 56.1 48.9Divorced-widowed 11.0 4,6

Income (monthly)Less than 1,000e 22.8 19.2Between 1,000 and 2,500e 66.9 68.9More than 2,500e 10.3 11.9

Table II.Socio-demographiccharacteristics of thesamples

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toco

mp

are

the

qu

alit

yof

the

stor

eb

ran

dof

the

stor

eth

eyu

sual

lyp

urc

has

efr

oman

dth

atof

the

nat

ion

alb

ran

dth

atth

eym

ost

freq

uen

tly

bu

yin

the

pro

du

ctca

teg

ory

anal

yze

d.T

her

efor

e,th

eh

igh

erth

eav

erag

ele

vel

giv

en,t

he

mor

eeq

ual

the

per

cep

tion

ofq

ual

ity

ofth

etw

oty

pes

ofb

ran

ds Table III.

Measurement scales ofthe explanatory variables

of the difference inperceived risk between

store brands and nationalbrands


71

Coefficient AlphaKitchen rolls Shampoo

ScaleStorebrand

Nationalbrand

Storebrand

Nationalbrand Items

Functionalrisk

0.908 0.882 0.869 0.781 You are suspicious of the qualityYou are afraid that its resistance level may not besufficient (kitchen roll)/You are afraid that it maynot leave your hair in good condition (shampoo)You are afraid that its absorption level may not besufficient (kitchen roll)/You are suspicious of theingredients used in its manufacturing (shampoo)You think that it is not going to give you a goodresult

Financialrisk

0.886 0.904 0.875 0.813 You think that buying it is a waste of moneyYou are worried that it is not worth the moneyspentYou think that it is not a wise way of spendingmoney

Social risk 0.955 0.955 0.932 0.948 You are worried that, if you buy it, the esteemyour family or friends have for you may dropYou are afraid that, if you buy it, it may negativelyaffect what others think of youYou think that, if you buy it, others will not seeyou the way you want them toYou are afraid that, if you buy it, others may lookdown on you

Physical risk 0.900 0.890 0.928 0.916 You are afraid that it may not be safe for you oryour familyYou are afraid that it may damage your healthYou think that it may cause you some physicalharmYou consider that it may be dangerous for you orsome member of your family

Psychological risk

0.8600.902 0.890 0.895 Buying

it willmakeyou feel

uncomfortable with yourselfBuying it makes you feel unhappy or frustratedIt does not fit in well with the concept you have ofyourselfIt makes you doubt whether you were right inbuying it

Time risk 0.942 0.918 0.933 0.944 You are afraid that it may be a waste of time dueto its bad resultYou are afraid that buying it will be a waste oftime if you have to change it for another brandYou are afraid that you may waste time withpossible complaints and refunds as a consequenceof buying the productYou consider that buying the product may be anuisance due to wasted time as a consequence ofbuying something that may be worthless

Table IV.Measurement scale ofperceived risk

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72

rolls and 0.894 for shampoo. Likewise, the Root Mean Squared Error of Approximation(RMSEA) has values of 0.080 and 0.078, respectively.

To evaluate the reliability of the scales, the composed reliability index and averagevariance extracted (AVE) were calculated. The results obtained confirm that the scalesare reliable, as for all the considered variables these coefficients surpass the minimumrecommended values of 0.7 and 0.5, respectively (Bollen, 1989).

The convergent validity of scales was also verified since all the standardizedlambda parameters had values greater than 0.5 and were statistically significant(Bagozzi and Yi, 1988). Finally, to evaluate the discriminant validity of the scale, theapproach proposed by Anderson and Gerbing (1988) was followed consisting ofestimating the confidence interval of the correlation between variables and checkingthat none of them contain the value one.

Perceived risk scaleThe confirmatory factor analysis technique using structural equations was also used tovalidate this scale. The application of this analysis was carried out for both the storebrands and the national brands and for each of the evaluated product categories, onceagain allowing for cross-validation of the model. Initially, a confirmatory first orderfactor model was estimated to evaluate the reliability and validity of the proposedscale, and then a confirmatory second order factor model was tested with the aim ofcontrasting the multidimensionality of the overall perceived risk.

Regarding the confirmatory first order factor analysis, in both product categoriesand for both types of brands, satisfactory goodness-of-fit indices were obtained. TheCFI is 0.944 and 0.945 in the case of the kitchen rolls for store brands and nationalbrands, respectively. In the case of the shampoo, the value is 0.952 for store brands and0.929 for national brands. Similarly, the RMSEA have values of 0.074 and 0.070 forstore brands and national brands, respectively in the case of the kitchen rolls, and 0.065and 0.079 in the case of the shampoo.

The composed reliability coefficients and the AVE are greater than 0.7 and 0.5,respectively, in all cases, confirming the reliability of the scale. Regarding theconvergent validity, it has been shown that all the standardized lambda parameterswere statistically significant and greater than 0.5 for both the store brands and thenational brands and for the two product categories analyzed. Regarding thediscriminant validity, it was shown that none of the confidence intervals of thecorrelation between each pair of latent variables or dimensions of risk contain the valueone. Therefore, it can be said that this scale is reliable and valid.

The next step was to verify whether the six specific dimensions converged in asecond order factor, considered the overall risk. The goodness-of-fit indexes obtainedshow an acceptable fit to the model, both for the store brands and the national brandsand for both product categories. The CFI is 0.931 and 0.932 in the case of kitchen rollsfor store brands and national brands, respectively. In the case of the shampoo, thevalues are 0.949 and 0.929. On the other hand, the RMSEA is 0.080 and 0.077 for storebrands and national brands, respectively, in the case of the kitchen rolls, and 0.066 and0.079 in the case of the shampoo. Likewise, the lambda parameters that define thesecond order factor from the six first order dimensions or risk dimensions are allsignificantly different from zero, which confirms the multidimensionality of theperceived risk. Therefore, to asses the associated overall risk for both the store brands


73

and the national brands, the scales corresponding to each of the risk dimensions werejointly used, which allowed for a more complete and precise measurement of thisconcept.

Results of the causal model and test of hypothesesTo evaluate the effect that each of the variables previously mentioned has on thedifference in perceived risk between store brands and national brands, theabovementioned causal model was tested. The possibility of carrying out across-validation of such a model allows us to generalize the conclusions beyond theintrinsic characteristics of the sample.

Table V shows the results relating to the fit of the causal model and to the proposedhypotheses for both the kitchen rolls and the shampoo.

Since goodness-of-fit indexes surpass or approach the recommended value of 0.9 forboth the kitchen rolls and the shampoo, the proposed causal model can be consideredsatisfactory. With respect to the RMSEA index, this has a value of 0.061 and 0.067 ineach case.

Regarding the casual relationships hypothesized in the model, seven of them werestatistically significant in the suggested direction for both product categories analyzed.Therefore, the perceived quality of store brands as opposed to national brands has anegative effect on the difference in perceived risk (H1). In the same way, the reliance onthe extrinsic attributes of the product has a positive influence on the difference in risk(H2a) and a negative effect on the perceived quality for store brands as opposed tonational brands (H2b), so it exercises an indirect and positive effect through this lastvariable on the difference of risk. Familiarity with store brands has a negativeinfluence on the difference in perceived risk (H4a) and on the reliance on extrinsicattributes of the product (H4b), as well as a positive influence on the perceived qualityof store brands as opposed to national brands (H4c), so indirectly it exercises anegative effect on the difference of perceived risk through these two last variables.Finally, experience with the product category has a positive influence on specificself-confidence of the individual (H5b), exercising in this way an indirect and positiveeffect on the difference of risk through this variable.

H5d, which proposes a positive effect of experience with the product category onfamiliarity with store brands, has obtained statistically significant empirical support inonly one of the product categories analyzed; i.e. kitchen rolls. Therefore, in that caseexperience with the product category exercises a negative effect on the difference ofrisk through this last variable.

On the other hand, two other causal relationships included in the tested model werealso statistically significant for both product categories analyzed, but in an oppositedirection than that suggested: H3a (effect of specific self-confidence on the difference inrisk) and H5e (effect of experience with the product category on the perceived qualityof store brands as opposed to national brands). Therefore, the experience exercises anindirect and positive effect on the difference of risk between store brands and nationalbrands through the perceived quality of the first ones opposed to the second ones. Aneffect contrary to that proposed was also observed in the case of experience with theproduct category on the difference in risk (H5a), but was statistically significant inonly one of the product categories, that of the shampoo.

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74

BB

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936

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898

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132.

76*

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ive

0.01

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127

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ilia

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0.30

20.

282

6.30

*2

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du

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du

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172

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24.

09*

Note:

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Table V.Model fit and tests of

proposed relationships inthe model


75

The effects of the two remaining hypotheses (H3b and H5c) were not statisticallysignificant in either of the product categories.

Finally, it is necessary to comment on the lack of explanatory capability of thesocio-demographic variables with regard to the difference of risk between store brandsand national brands. The only such explanatory capability detected showed thatwomen perceived a slight higher difference than men and that result was onlystatistically significant with respect to the sample of the shampoo. These results are inline with previous works (Burton et al., 1998; Miquel et al., 2000; Omar, 1996) in whichresearchers have shown that these types of variables are not very useful in analyzingthe store brands market. In fact, this is the reason researchers began to use variablesrelated to purchasing behaviour, as we do in the present paper.

Discussion and conclusionsThe present study has tested a model that integrates a series of variables relating topurchasing behaviour, in which the difference in the risk that consumers perceivebetween store brands and national brands is explained.

One of the main contributions of this research relates to the use of two differentsamples of individuals to gather information. The data relating to each one of theproduct categories analyzed (kitchen rolls and shampoo) were obtained from differentsamples, which allowed for cross-validation of the proposed methodology. Thus, theconclusions reached are relevant not only because a fit of the model to the datacorresponding to a specific product category was achieved but also because thevalidity is generalized through a sample which evaluates products in differentcategories and takes into account that the category products are of a different natureand that they are perceived by consumers in a different way.

The validation of the causal model proposed in this study has allowed us to drawthe following conclusions. First, it has been verified that the more equal the perceptionof quality between store brands and national brands, the more the difference inperceived risk is reduced between the two types of brands. In fact, it has confirmed thegreat importance of this variable when managing perceived risk since practically all ofthe considered variables have influence on the perceived risk through perceivedquality.

On the other hand, it has been confirmed that the more consumers rely on theextrinsic attributes of a product to evaluate its quality, the greater the differencebetween store brands and national brands in terms of risk. Moreover, the reliance onthese types of attributes also contributes to indirectly increasing this differencethrough the effect it has on perceived quality of store brands as opposed to nationalbrands.

Our data has shown that the greater the familiarity with store brands, the less thedifference between these and national brands in terms of perceived risk, independent ofthe product category considered. Moreover, familiarity with store brands has also anindirect and negative effect on the difference in risk, both through reliance on extrinsicattributes of the product to evaluate its quality and through the perceived quality ofstore brands as opposed to national brands, so the total effect of this variable on thedifference of perceived risk between store brands and national brands is ratherimportant.

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However, contrary to our hypothesis, it has been observed that specificself-confidence of the individual has a positive influence on the difference in riskbetween store brands and national brands. It seems that as consumers become moreconscious of the implications of their purchasing decisions they begin to associate agreater risk with their purchase and to trust national brands more. Gronhaug (1972)reached similar conclusions, determining that the greater the level of self-confidence ofindividuals when buying a specific product the more emotionally they were involved inthe purchasing decision and, therefore the risk associated with it increased. Moreover,we have not been able to verify an effect of specific self-confidence on the difference inrisk through the reliance on the extrinsic attributes of the product to evaluate itsquality since the results in this regard were not statistically significant. The fact thatthe capacity of the individual to face a determined purchasing choice increases does notreduce their reliance on the extrinsic attributes of the product to evaluate its quality.

Lastly, regarding the effect that experience with a product category has on thedifference in perceived risk between store brands and national brands, results whichdiffer in certain aspects depending on the product category have been obtained. In thecase of kitchen rolls, experience in itself does not have a significant effect on thedifference in risk between both types of brands. Nevertheless, and contrary to ourhypothesis, it indirectly contributes to increasing this difference through the effect ithas on the specific self-confidence of the individual and the perceived quality of storebrands as opposed to national brands. On the other hand, when there is familiaritywith the store brands, the effect becomes negative; that is to say, it helps to reduce thedifference in the perceived risk. Regarding the shampoo, experience with the productcategory does have a direct influence on the difference in perceived risk between storebrands and national brands, but contributes to increasing it. In this product category itseems that a greater knowledge distances the consumer from the store brands, sincethis greater experience does not translate, as is the case with the kitchen rolls, into anincrease in familiarity with store brands and, moreover, it also contributes to anincrease in the difference in perceived risk when its effect is exercised through specificself-confidence and the perceived quality of the store brands as opposed to nationalbrands. This result may be related to the fact that the consumer considers that theconsequences of making a bad purchasing choice are more serious in the case of theshampoo than in the case of the kitchen rolls, and therefore feels a greater need to seekthe guarantee and reputation offered by market-leading brands. Therefore, in the caseof experience with a product category the importance of considering the relationshipsbetween this variable and the rest of those included in the proposed model has becomeclear since the indirect effects are those which justify its consideration as an importantfactor when analyzing the difference in perceived risk between store brands andnational brands.

Managerial implicationsAll the results described above can be very useful when managing store brands.Retailers must keep in mind that despite the changes in approach with relation to theirown brands in the last few years, they are still seen as inferior alternatives to thenational brands and are considered to pose a greater purchasing risk.

In this regard, it has been shown that reliance on the extrinsic attributes of aproduct to evaluate its quality, such as brand name and price, is a key element for the


77

consumer when making the decision to buy national brands as opposed to storebrands, making the latter riskier alternatives. Therefore, retailers must try to improvethe consumer’s perception of their own brands. The development of commercialpolicies orientated to reinforcing their brand image or corporate identity can contributeto increasing the familiarity with and prestige of store brands and to prevent themfrom being considered second rate alternatives. On the other hand, the traditionallylower price of this type of brand compared with that of national brands, which isindeed an appealing factor for those consumers who consider price to be the maindeciding factor, at the same time becomes a dissuasive factor for those consumers whoestablish a direct relationship between price and quality. It is essential that retailersbanish the idea from the consumer’s mind that store brands are of inferior qualitymerely because they are cheaper than national brands. It would be advisable forretailers to make it clear to consumers that the lower prices of their brands are not aconsequence of inferior quality but rather result from great cost savings in, forexample, the way they are marketed. In this sense, we should remember that perceivedquality influences directly and very significantly on the level of the risk that consumersassociate with the purchase of store brands and it also acts as a channel for theinfluence that many other variables exercise on this difference.

On the other hand, it is possible that store brands have not been able to transmit tothe consumers, in the same way that national brands (especially leader brands) have,the symbolic benefits that they seek in a brand[6]. Again, the traditional price andcommunication policies that have been developed for this type of brands can be thereason. The signs sent to the market can be interpreted by consumers as an indicator ofthe lack of capability of store brands to reach the level of prestige or self-expressionthat they wish[7].

Finally, given that a greater knowledge and familiarity with store brandscontributes to a reduction in the consumer’s perceived risk, it is of great importance topromote trials of store brands among consumers so that they can thereby evaluatethem not only based on the external aspects of the brand, such as their price or image,but also on their intrinsic attributes (reliability, quality, taste). In this regard, variouspromotional activities, such as offering free samples or tasting at the point of sale,could be put into practice.

Regarding manufacturers, it is clear that if they want to maintain their leadershipposition they must continue to stress those aspects on which the consumer relies inevaluating the quality of a product. Their relatively higher prices, their more attractivepresentation and their greater marketing campaigns, amongst other aspects, have upto now contributed to generating a more favourable perception by consumers of theirbrands as opposed to store brands, and to considering them less risky purchasingalternatives.

Limitations and future lines of researchThe main limitation of the present study lies in the fact that we have restrictedourselves to a comparison between two product categories (kitchen rolls and shampoo),both involving to the same sector, that of grocery. Nevertheless, as we have notedabove, they are two clearly different product categories as regards consumer buyingbehaviour which allows for a generalization of the results obtained.

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In this regard, new research opportunities arise which may contribute to improvingthe line of research undertaken. The use of the model applied in the present study toother product categories with different characteristics would allow one to test whetherthe intensity and direction of the effect that the analyzed variables have on thedifference in perceived risk between store brands and national brands vary whenconsidering, for example, more durable products or higher price-tag products.

It would also be interesting to incorporate new variables into the model related tothe consumer’s buying behaviour, such as their involvement in the purchase, theirmotivation or their attitude towards store brands. In this way, a more complete viewcould be obtained of the aspects which may contribute to an increase or reduction inthe perceived risk between store brands and national brands, and other lines of actionwould be open to retailers and manufacturers to reduce or maintain this difference,respectively.

A significant contribution could be made by an in depth study of the symbolic orfunctional character of store brands in order to verify the extent to which retailers arereaching the desired positioning for their own brands and the level of influence that hason the selection of store brands as opposed to national brands by consumers.

Lastly, future research should empirically study the influence exercised by thedifference in perceived risk between store brands and national brands on thepurchasing intention or consumption level of store brands with the aim of evaluating towhat extent the risk associated with a purchase inhibits the consumer from purchasinga specific brand.

Notes

1. This information was obtained through consulting secondary sources and through focusgroups held with individuals who regularly do shopping for grocery products for the home.

2. During 2002, the market share of store brands in Spain was 41 per cent for kitchen rolls and12 per cent for shampoo (A.C. Nielsen, 2002).

3. Search characteristics referred to the attributes that can be evaluated prior to the purchasethrough the inspection of the product or other sources such as its colour or ingredients.Experience characteristics can only be verified after the consumption or use of the product(Nelson, 1974).

4. To evaluate the items, each statement started as follows: “With respect to kitchenrolls/shampoo sold under store/national brand: . . . ”

5. In the case of functional risk, the wording of the items was adapted to the characteristics ofeach product for a better and more exact evaluation of this dimension.

6. Bhat and Reddy (1998) define a symbolic brand as one which satisfies symbolic needs suchthose for self-expression, prestige or status. They are needs related to self-image and socialidentification (Park et al., 1986).

7. Dimensions of perceived risk as social or psychological risk can reach higher values whenthey are associated with the purchase of store brands, contributing to an increase in thedifference between them and national brands.

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About the authorsCelina Gonzalez Mieres is Assistant Professor of Marketing in the University of Oviedo. Hermain lines of research are consumers’ and prescriptors’ purchase behaviour, store brands andgeneric products and perceived risk. She took the degree of Doctor with the dissertation titled“Consumers’ perceived risk: an empirical application to the purchase of store brands”. CelinaGonzalez Mieres is the corresponding author and can be contacted at: [email protected]

Ana Marıa Dıaz Martın is Associated Professor of Marketing in the University of Oviedo. Hermain lines of research are services marketing (specially services quality), tourism marketing andpharmaceutical marketing.

Juan Antonio Trespalacios Gutierrez is Professor of Marketing in the University of Oviedo.His lines of research are mainly related with services quality, strategic marketing and retailing.He is author of several books and papers in national and international journals.

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