This dissertation addresses the question of the impact of packaging to demand a price premium leveraging the example of retailer brand premium products in the food segment in Germany. Product tiering is a pricing structure that is commonly used by producers, in which consumers are segmented by willingness to pay for specific (added) product benefits. This is a way of maximizing utility for both consumers and producers, and is commonly already leveraged by producers of branded products, but lately also retailer brands, especially to enable growth outside the value tier. The role or packaging in the current literature is described as being a key influencer in the purchase decision making process, especially in-store.
This research uses a survey across grocery purchase decision makers in Germany to identify the relationship of packaging and willingness to pay across a sample of retailer brand Tier 1, Tier 2 and Tier 3 products as well as a branded product in four different grocery categories (ham, cheese, jam and ice cream). Additionally five demographic factors such as e.g. age are collected. The intent is to answer whether i) packaging currently justifies the premium price of retailer brand tier 1 products compared to other product tiers, ii) packaging justifies the tier 1 retailer brand price premium, and iii) demographics influence the willingness to pay a premium price.
Overall results indicate that the difference in packaging appeal can explain up to 35% of the willingness to pay for a retailer brand tier 1 product. However, results differ by grocery category and can’t be easily generalized to the entire food segment, driven by the difference in perceived risk by the consumer. With regards to packaging as sole justification for the price the consumer is willing to pay for the retailer brand tier 1 product the research has not shown any meaningful correlation. Whilst some demographics such as the shopper profile, especially what is defined a loyal shopper in this research, household size, net income or age show a high association with a higher willingness to pay, this yet again can’t be generalized across all categories. Only the loyal shopper profile was common across most categories for a general higher willingness to pay.
Table of Contents
1. Introduction
1.1. Arrangement of the dissertation
1.2. The German trade and retailer brand environment
1.3. Research problem
1.4. Purpose of the research
1.5. Research questions
1.6. Limitations of the research
2. Literature review
2.1. Arrangement of the chapter
2.2. The Importance of packaging in the food segment
2.2.1. Packaging in the marketing mix
2.2.1.1. Building a brand with packaging
2.2.1.2. Packaging as pricing criterion
2.2.1.3. Importance of packaging in-store (shelf impact)
2.2.1.4. Gaining competitive advantage from packaging
2.2.2. Regulatory aspects of food packaging
2.3. Consumers and the purchase decision in the food segment
2.3.1. Influence of packaging on consumer expectations
2.3.2. What drives the purchase decision in-store
2.4. Retailer Brands and the shopper in the food segment
2.4.1. Why do consumers buy retailer brands?
2.4.2. Recent trends in Retailer Brands – Moving from value brands to multi-tier offerings
2.5. Conclusions from the literature review
3. Research methodology
3.1. Arrangement of the chapter
3.2. Research approach
3.3. Level of the research
3.4. Population and sample size
3.5. Data collection
3.6. Data analysis
3.7. Data presentation
3.8. Ethics
3.9. Reliability, validity and generalization
4. Quantitative analysis results and discussion
4.1. Arrangement of the chapter
4.2. Participants profile
4.3. Analysis strategy
4.4. Analysis of survey results for ham
4.4.1. Descriptive statistics for ham
4.4.2. Exploration of research questions for ham
4.4.3. Conclusions from analysis of the ham survey results
4.5. Analysis of survey results for cheese
4.5.1. Descriptive statistics for cheese
4.5.2. Exploration of research questions for cheese
4.5.3. Conclusions from analysis of the cheese survey results
4.6. Analysis of survey results for jam
4.6.1. Descriptive statistics for jam
4.6.2. Exploration of research questions for jam
4.6.3. Conclusions from analysis of the jam survey results
4.7. Analysis of survey results for ice cream
4.7.1. Descriptive statistics for ice cream
4.7.2. Exploration of research questions for ice cream
4.7.3. Conclusions from analysis of the ice cream survey results
4.8. Result summary and overall conclusions
5. Conclusions and recommendations
5.1. Arrangement of the chapter
5.2. Conclusions
5.2.1. Conclusions for research question 1 – confirmed by literature review and analysis
5.2.2. Conclusions for research question 2 – confirmed by literature review, but not analysis
5.2.3. Conclusions for research question 3 – confirmed by analysis
5.3. Recommendations for retailers
5.4. Recommendations for further research
Research Objectives and Focus
This dissertation investigates the impact of product packaging on consumers' value perception in the German food market, specifically testing if packaging enables retailers to demand a price premium for their premium-tier retailer brands. The research aims to understand how packaging influences consumer willingness to pay (WTP) and whether this relationship is affected by demographic factors, across four distinct food categories.
- The relationship between packaging appeal and price premiums for different product tiers.
- The efficacy of premium packaging in justifying the price gap between retailer brands and branded products.
- The influence of consumer demographics (age, gender, income, household size) on willingness to pay.
- The role of consumer shopping behavior (impulsive, functional, or loyal) in purchasing decisions.
Excerpt from the book
2.2.1.1. Building a brand with packaging
One of the most important things to understand about packaging is the fact that it is one of the most visible representations of the product and brand. The brand can be defined as the set of associations that are generated by the product’s physical attributes (like trademarks, symbols and packaging), including quality associations, social associations, sensory or emotional associations and previous brand experience (Drewniany, B.L., Jewler, A.J. 2011). The brand is the fundamental aspect of how the product is presented to consumers and how consumers recognize their potential experience with the brand (Drewniany, B.L., Jewler, A.J. 2011). Thus, it is particularly important to understand how the packaging of a product contributes to the development of the brand.
Branding is intended as a mean of product differentiation (Grimes, A., Doole, I. 1998). Generally, product differentiation between closely related consumer products is considered to be relatively meaningless, since it does not refer to functional qualities or differences between products. However, Grimes, A., Doole, I. (1998) noted that previous research by Carpenter et al. (1994) had shown that consumers actually value the seemingly meaningless differentiation through packaging. A highly effective form of differentiation is the inclusion of pictures of the product on the package, which serves as a resource to communicate brand equity (Underwood, R.L, Klein, N.M. 2002). According to Underwood, R.L, Klein, N.M. (2002) product pictures serve a number of purposes, they set consumer expectations for the brand, help them define the brand as a brand and improve assessment of the brand’s suitability to meet consumer needs. Thus, in a way, pictures of the product itself (even though this may not serve to differentiate the product) can result in improved brand recognition for food products (Underwood, R.L, Klein, N.M. 2002).
Summary of Chapters
1. Introduction: Outlines the German retailer brand environment and defines the research problem, objectives, and limitations regarding the influence of packaging on pricing strategies.
2. Literature review: Examines existing studies on the role of packaging in marketing, consumer decision-making processes, and the evolution of retailer brands towards multi-tier offerings.
3. Research methodology: Details the quantitative research approach, describing the online consumer survey methodology, data collection, and the statistical analysis strategy using SPSS.
4. Quantitative analysis results and discussion: Presents the statistical findings for four food categories (ham, cheese, jam, ice cream), analyzing the correlation between packaging, WTP, and demographic variables.
5. Conclusions and recommendations: Summarizes key research findings, confirms the impact of packaging on price perception varies by category, and provides strategic recommendations for retailers to leverage segmentation and brand equity.
Keywords
Retailer brands, product packaging, willingness to pay, price premium, food segment, consumer behavior, brand equity, marketing mix, shelf impact, demographic factors, shopper loyalty, product tiering, price elasticity, purchase decision, market research.
Frequently Asked Questions
What is the fundamental goal of this dissertation?
The research examines whether superior packaging design allows retailers to successfully charge higher prices for their "Tier 1" premium retailer brand products within the German food market.
What are the central themes of the work?
The study centers on the intersection of product packaging, consumer quality perception, pricing strategies, and the market segmentation of retailer brands.
What is the primary research question?
The primary question is whether retailers can succeed in demanding a price premium for their premium-tier retailer brands primarily through the use of premium packaging.
Which research methodology does the author utilize?
The author uses a quantitative analysis approach, specifically an online consumer survey involving 159 valid responses, which were analyzed using linear regression and ANOVA techniques.
What aspects are covered in the main body?
The main body covers a comprehensive literature review on packaging and branding, followed by a detailed quantitative analysis of consumer reactions across four food categories: ham, cheese, jam, and ice cream.
Which keywords best characterize this research?
The core keywords include Retailer brands, price premium, packaging appeal, willingness to pay, and consumer demographics.
How does the role of a "loyal shopper" influence the findings?
The study identifies that "loyal shoppers" demonstrate a consistently higher willingness to pay for premium tier products across most food categories compared to "functional" shoppers.
Why are the results in the ice cream and jam categories sometimes different?
The results vary because the perceived risk and usage patterns for these products differ; for example, jam is often consumed by the entire family, whereas other products may be favored more by specific demographics.
Does the study suggest that packaging alone justifies premium prices?
No, the findings indicate that while packaging is a significant factor in price differentiation, it is not the sole driver, as other elements like brand equity and consumer loyalty significantly impact willingness to pay.
- Quote paper
- Christoph Breetz (Author), 2013, The impact of product packaging on consumers’ value perception, Munich, GRIN Verlag, https://www.hausarbeiten.de/document/266639
