Generic Products

European Journal of Marketing 31,2 94 Received April 1995 Revised December 1995

Generic products: who buys them and how do they perform relative to each other? Gerard P. Prendergast School of Business, Hong Kong Baptist University, Hong Kong, and

Norman E. Marr School of Business, University of Huddersfield, Huddersfield, UK

European Journal of Marketing, Vol. 31 No. 2, 1997, pp. 94-109. © MCB University Press, 0309-0566

Introduction The brand name of any product has always been considered important. Branding has enabled producers to develop consumer loyalties, heighten consumer awareness and develop extensions of the brand. Thus, branding is an essential element of marketing strategies. In the recent history of the food business, few things have been as surprising or in some cases as controversial as the rapid proliferation of so-called generic products. Several titles are used interchangeably in the literature to describe generic products. In US literature, generic products may be described as “noname” or “un-brand”. In the UK they may be described as “plain packs” or “nofrills”. The different names aside, the features of generic products are their austere packaging and lack of a “recognized” brand name. The major attraction for the consumer is the significant price differential between generic products and their branded equivalent. This lower price is made possible through cost savings created by reduced packaging and promotional expenses. Numerous studies have attempted to identify consumer perceptions of generic products as a group by comparing them with their national brand equivalents. However, it is possible that consumers may have different perceptions for different generic products, and it may be unwise to draw sweeping conclusions about consumer perceptions of generic products in general. Despite this, no studies have attempted to gain consumer perceptions of specific generic products when compared with one another. The specific aim of this paper is to overcome this deficiency and thereby extend the work of previous researchers. The remainder of this paper begins with a brief history of generic products and then reviews the studies relating to who buys generic products and their perceptions. This is followed by a description of the methodology used for the research in this paper, discussion of the results and their implications, and suggestions for further research into this area.

History of generic products On 1 April 1976, Carrefour, a French retailer, became the first retailer to introduce a line of 50 generic brand grocery products throughout its 38 stores and hypermarkets[1]. Carrefour felt that it was timely for the existence of this range of products as own-label products only accounted for 7.5 per cent of the packaged grocery sales during that time[2]. These generic products were then termed as “produit libres” which literally carried the meaning “free products”. These produit libres were wrapped in plain white packaging and labelled with nothing more than the compositions inside these containers. They were positioned at a comparable quality level to the national brands, but were offered at substantially more competitive prices. Produit libres recorded a phenomenal success in France. Within a few months of introduction, they captured an average of 30 per cent of Carrefour’s sales in the 50 product categories in which these no-name products were offered[1]. Across the Atlantic, Chicago based Jewel Food Stores pioneered the introduction of generic grocery products into the US market. A range of 44 items was marketed in February 1977. The programme was so successful that it spurred Jewel Food Stores to increase its generic line to about 100 items. Within two years, generic marketing had reached Belgium, Canada, Australia and Japan[3]. With this encouraging pattern of diffusion, many believed that these no-name products had created their niche in the grocery market. Faria[4] suggested that these no-name products were not a passing fad but one of the most significant developments yet seen in the grocery business. Suffice to say the impact of generics was such that six years after their introduction they recorded a peak of 2.5 per cent of total sales in 1982 in the USA, up from the 1.0 per cent in 1980[5]. Unfortunately, the novelty of generics failed to sustain itself as sales started to decline at the start of 1983. By 1985, the sales of generics had fallen to 2.0 per cent of total grocery sales in the USA. At that point in time, Dunkin[5] reported that no-frills products had become an idea whose time has gone. A similar view was aired by Franz[6] whose report in Advertising Age bore the headline “Ten years may be generic lifetime”. The downfall of generics was such that Chernatony[2] suggested generics were merely a fallacy in the UK. Previous research on consumer perceptions of generic products In the event where there is limited or no information regarding the product, price might well serve as an indicator of the quality of the product. More often than not, consumers have perceived the price and quality of a product as being in tandem with each other. An expensive good is usually perceived as being of superior quality and vice versa. Applied to generics, the positive relationship between price and quality seems to be confirmed, as generics are usually associated with low price as well as low quality[4]. However, while the pricequality relationship is not disputed, the actual or perceived quality of generic grocery products has been a major issue covered in past studies[7]. In a study by Dietrich[8] conducted through telephone interviews, 70-72 per cent of generic

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European Journal of Marketing 31,2 96

buyers perceived the quality of generics to be of equal value to private or national brands. Only 28-30 per cent rated generics as a lower quality product. This result was supported by Murphy and Laczniak[9] whose study in the same year revealed that 74 per cent of their interviewees rated the quality of generics as comparable with other brands. Only a minority of 7.3 per cent considered generics as being low in quality. Given these results, it might seem that the actual perceptions of generics tended to be of a favourable nature. However, the results of these studies must be qualified to a certain extent because they were conducted at a time when generics were just being introduced in the market whereby the novelty of these products may have coloured perceptions. A year later, a study by Wheatley[10] found that the introduction of generic products had actually enhanced consumer perceptions of private labels or neogeneric products. A positive correlation was also found to exist between price and the perceived difference in quality. Hence, when the difference in quality was perceived to be great, there was a higher tendency for consumers to purchase the higher priced brand. In other words, consumers will only accept generics when the perceived difference in quality in comparison to branded counterparts is deemed to be negligible. This was amply illustrated in the experiment carried out by Bellizzi and Martin[11] where a taste test was given to 119 visitors at an annual student fair. The national brand was consistently given a higher rating, even though the respondents were actually given the same product to taste. This indicated that personal factors such as individual psychology existed and played a part in consumer perceptions during the taste test. Even good quality and lower priced generics might find it difficult to overcome the barrier of consumer perceptions of unreliability vis-à-vis their branded contemporaries. As the novelty of generics began to wane, so too the consumer perceptions of their quality began to ebb. Dietrich[8], and Murphy and Laczniak[9] found that the percentage of buyers who perceived generics to be of a comparable quality to national brand declined to only 50 per cent in 1984. This was a clear indication that the perceived quality of generics was declining when compared with national and private labels[12-14]. As can be seen, perceptions of the quality of generics have changed dramatically over time. This was only too clearly reiterated in the study by Rosen[14]. Part of this may be attributed to the fact that there was a steady decline in the sales of generics after 1982, leading to less consumer exposure to generics, which resulted in more negative perceptions, while on the retail front, less demand meant less effort was made to ensure the quality of generics or further promotion of these products. On the issue of perceived price differential, generic product buyers claimed to achieve a saving of between 16-20 per cent from not purchasing national brand items[8]. Burck[15] reported in Fortune magazine that the price of a typical generic product ranged from between 31-74 per cent of its branded counterpart. Perceptions of the lower price of generics were also evidenced in the study by Murphy and Laczniak[9]. In their structured telephone questionnaires, generics

were perceived to be priced at a lower level by two-thirds of the respondents. On top of that, 27 per cent found that the prices were very much lower than those of competing brands. Further research by Neidell et al.[16] showed that 92 per cent of generic consumers rated generics as lower in price. From the myriad of supporting studies, a general consensus seems to have been reached regarding the existence of perceptions that generics were generally lower priced. Actual or perceived lower prices of generics played a role in heightening the acceptance of generics throughout their market existence. Many studies have colluded on the fact that low price has been a major incentive for generic consumers[3,10,16-18]. In addition to the general perception of lower prices, some generic products were purchased on the basis of quality. Based on past studies[3,18], almost 30 per cent of respondents made purchases because they deemed that the quality of the generics fulfilled their requirements. By and large, this group of buyers viewed generics as offering excellent value for their money. Generics were also purchased by 19 per cent of the respondents in Yucelt’s[18] study by virtue of the availability of suitable package size. Since generics are usually packaged in large sizes, this catered directly to the needs of consumers from larger households. This group of consumers found that the low price of the generics coupled with packaging that came in the right size to fulfil their demands, was an attractive offer. All in all, it can be concluded that consumers perceive a price differential between generics and the other brands. Consumers recognize that this price differential is made possible by the absence or curtailment of any advertising cost involved in the marketing of generics. Other reasons cited by consumers include lower packaging and labelling cost, and also lower product quality[6,8,9]. Research aims A brief examination of previous research cannot provide by itself a clear prediction of the future of the generic concept, whether in packaged grocery goods or beyond. One of the major influences in the future development of generics is going to be consumers’ perceptions of such products. However, previous research tends to look at generic products as a product category, rather than looking at specific product types within the generic group. This is an important omission in the literature since the downfall of one generic product should not necessarily mean the downfall of the entire generic group. The research in this paper aims to overcome this deficiency in the research by comparing consumer perceptions of various types of generic products. Such information will allow both manufacturers and retailers of generic products to target their efforts towards increased market share or alternatively, recognize that the potential for growth may be limited to certain products. Manufacturers and/or retailers who are considering entering into generic product production and distribution will have guidance on the viability or otherwise of a potential market.

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European Journal of Marketing 31,2 98

Methodology To achieve the research aims, a nation-wide mail survey was conducted in New Zealand. The New Zealand grocery market has been subjected to a small number of private label products and an even smaller number of generic or plain pack products. Using the New Zealand market, therefore, gave the researchers the opportunity to gain insights into a relatively young market. In order to ensure the respondents were indeed grocery shoppers, a number of shoppers’ clubs and associations were contacted. Shoppers Bonus Club satisfied the purpose of this study as it provided a database of some 30,000 grocery shoppers which had in the recent past spontaneously responded to a one-page questionnaire included in a widely read television magazine, The Listener. One-thousand names were randomly selected from this database. The result was a sample which approximately adhered to New Zealand’s regional groupings (a summary of the sample demographics can be found in Tables I-V). It should be recognized that the sample was intended to generate respondents who were representative of New Zealand grocery buyers rather than the New Income bracket ($NZ)

Less than 10,000 10,000-14,999 15,000-19,999 20,000-24,999 25,000-29,999 30,000-34,999 35,000-39,999 40,000-44,999 45,000 plus Table I. Respondents’ household Missing cases income group Total

Amount per week ($NZ)

Table II. Respondents’ weekly household expenditure on groceries

Under 26 26-50 51-100 101-150 151-200 Over 200 Missing Total

Frequency 28 81 52 53 61 75 66 60 178 23 677

Frequency 3 62 238 258 82 27 7 677

Percentage 4.1 12.0 7.7 7.8 9.0 11.1 9.7 8.9 26.3 3.4 100.0

Percentage 0.4 9.2 35.2 38.1 12.1 4.0 1.0 100.0

Occupation

Frequency

Home duties Retired superannuitants Social welfare/unemployed Student Clerical/sales Semi-skilled Skilled/technical Manager/executive Service worker Professional Manual/agricultural Other Missing Total

Age group

8 96 43 5 56 18 85 102 100 85 63 10 6 677

Upper North Island Lower North Island South Island Total

1.2 14.2 6.4 0.7 8.3 2.7 12.6 15.1 14.8 12.6 9.3 1.5 0.9 100.0

Frequency

18-25 years 26-35 years 36-45 years 46-60 years Over 60 years Missing Total

Region

Percentage

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Table III. Respondents’ occupation

Percentage

63 191 186 148 80 9 677

9.3 28.2 27.5 21.9 11.8 1.3 100.0

Sample frequency

Sample percentage

493 315 192 1000

50 33 17 100

Table IV. Respondents’ age

National population percentage 50 26 24 100

Zealand population in general. Considering the small number of generics currently available in New Zealand there is obviously potential for growth in this market should the results suggest that success could be achieved through changing the product mix. The questionnaire was pre-tested for reliability and validity on a small group of pilot consumers. The questionnaire was then sent to the nation-wide sample

Table V. Geographical distribution of sample versus national population

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with a cover letter and free post envelope, and a response rate of nearly 70 per cent was achieved (677 usable returns). Semantic differential scales were used to identify respondents’ evaluation of generic products on a range of variables. Preliminary discussions with consumers, and consulting the literature, suggested that there are five key variables which consumers use to evaluate food products: (1) value for money; (2) quality; (3) freshness; (4) safety; (5) convenient package size. Results The response rate of 67 per cent with only one mail-out tends to demonstrate a strong interest among grocery shoppers for the subject of this research. Many respondents also volunteered information over and above the already lengthy and comprehensive questionnaire. This too demonstrates a strong interest in the topic of research. Generic products: who buys them? Respondents were given a list of generic product categories and asked in which of the categories they had ever brought generic products. The categories included: • personal care/hygiene (e.g. shampoo, soap); • paper products (e.g. toilet paper, paper towel, tissues); • detergents (e.g. bleach, washing powder); • canned foods (e.g. soup, jam, meat); • frozen foods (e.g. pastries, fish, vegetables); • dry goods (e.g. cereals, biscuits, rice); • coffee; • tea. The results are shown in Table VI. Only 14.8 per cent of respondents had never purchased generic products in the past. Of those who had, most had purchased on several different occasions and different product categories. In fact, 73 per cent of the total sample said they had made generic purchases in more than one of the product categories. There was a highly significant relationship between household income and purchase of generics. In particular those in the higher household income groups were less likely to purchase generics than those in the lower household income groups (χ2 = 32.11 with 16 df). There was, however, no significant relationship between age

and the purchase of generics, occupation and the purchase of generics, and weekly household grocery expenditure and the purchase of generics. As a measure of more recent purchasing behaviour, respondents were given the same list of generic product categories and were asked, in relation to the past month, in which of the categories they had bought generic products. The results are shown in Table VII. Number of generic products bought None Single Multiple Total

Number of generic categories bought in past month None Single Multiple Total

Frequency

Percentage

100 83 494 677

14.8 12.3 73.3 100

Frequency

Percentage

330 135 212 677

48.7 19.9 31.3 100

When asked about purchases which had occurred in the last month, almost 20 percent of respondents had performed a generic purchase in one of the categories, while another 31.3 percent had performed generic purchases in more than one of the categories. This demonstrates a high rate of penetration of generic products, with a majority (51.2 per cent) of respondents having purchased at least one generic good as recently as the past 30 days. The results also indicated a highly significant relationship between purchase of generics in the last month and the respondents’ age (χ2 = 19.48 with 8 df). In particular, it seems that older age groups are more likely to make multiple generic purchases. Not unexpectedly, there was a very highly significant relationship between the purchase of generics in the last month and household income (χ2 = 35.9 with 16 df). In particular, those in lower income groups were more likely to have purchased generic products in the past month. However, there were no significant relationships between the purchase of generics in the past month and respondents’ occupation or weekly grocery expenditure. Generic products: how do they perform? The respondents were given a list of common generic products, including: • rice; • shampoo;

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Table VI. Frequency of generic product purchase

Table VII. Number of generic product categories purchased in past month

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• coffee; • tissues; • washing powder; • canned soup; • cereals. They were asked to rate them along five variables using a semantic differential scale. The five variables were: (1) value (1 = good value and 5 = poor value); (2) quality (1 = low quality and 5 = high quality); (3) safety (1 = safe to use and 5 = unsafe to use); (4) freshness (1 = stale and 5 = fresh); (5) convenient package size (1 = convenient and 5 = inconvenient). As a starting point, it is of interest to rank the relative performance of each product on each attribute. This ranking is shown in Table VIII. The first figure in each cell shows the mean score (out of 5) the sample gave the product for each attribute. Figures in parentheses show how each product ranked on that particular attribute, relative to how the other products ranked on the same attribute. Although these average results are subject to rather large variations, they are indicative of respondents’ perceptions of these products along a number of variables. In general, some products enjoy a more positive reputation in the generic form than others. For instance rice and tissues, in particular, are clearly well thought of whereas shampoo, soup and coffee obtain a more mitigated

Product Rice Shampoo Coffee Tissue Washing powder Soup Table VIII. Generic product rating for each attribute

Cereal

Value rating

Quality rating

Safety rating

Freshness rating

Package rating

1.666 (2) 2.341 (7) 2.265 (6) 1.608 (1) 2.035 (4) 2.091 (5) 1.848 (3)

3.451 (2) 2.485 (7) 2.514 (6) 3.523 (1) 2.782 (5) 3.040 (4) 3.287 (3)

1.556 (1) 2.034 (6) 1.920 (4) 1.680 (2) 1.957 (5) 2.075 (7) 1.810 (3)

4.011 (1) 3.789 (3) 3.522 (7) 3.827 (2) 3.740 (4) 3.596 (6) 3.642 (5)

1.614 (1) 2.121 (7) 1.693 (3) 1.643 (2) 1.853 (6) 1.830 (5) 1.761 (4)

Sum of rankings

7 30 26 8 24 27 18

approval. It is interesting to note the close relationship between each product’s value and quality ranking. The results were then broken down and analysed for each demographic group. The demographic areas examined included the respondents, stage in family life-cycle, age, occupation, annual household income and weekly expenditure on groceries, and their views on the performance of generics are discussed as follows. Performance of generic rice. Overall, generic rice was judged by respondents to represent good value for money, with an average score of 1.67. The quality rating of rice was high with 3.45 average out of a maximum of 5. Generic rice was considered a safe product (1.56) with indisputable freshness (4.01). The package was regarded as convenient with an average of 1.61. The responses were then broken down for each of the demographic groups and the means compared using analysis of variance (ANOVA). While there were no significant differences between the mean ratings with regards to respondents’ age or stage in household life cycle, there were significant differences in the mean ratings given by the different grocery spend groups and household income groups, as shown in Table IX.

Source Value Grocery spend effect Error Household income group effect Error Quality Grocery spend effect Error

SS

df

F

Pr > F

8.2067 294.12 17.7849 281.8557

4 346 8 336

2.4135

0.0487

2.6502

0.0079

15.1830 422.2994

4 308

2.7684

0.0275

Those respondents in lower income groups, and those respondents in the lower grocery spend per week groups, tend to perceive generic rice as being of better value than the other groups. In addition, those in lower grocery spend groups tend to perceive generic rice as being of higher quality than those in higher grocery spend groups. Performance of generic shampoo. The results for generic shampoo were less clear. Value for money and quality produced indifferent results with 2.34 and 2.48 respectively. Likewise, safety and convenience of package showed only slightly positive scores. Only freshness was more marked with an average of 3.79 out of a maximum of 5. While the different occupational groups and household life cycle stage groups did not significantly differ in their perceptions of these attributes, there were significant differences for some attributes when comparing different age, grocery spend and household income groups, as shown in Table X.

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Table IX. ANOVA – significant differences in mean ratings of rice

European Journal of Marketing 31,2 104 Table X. ANOVA – significant differences in mean ratings of shampoo

Source Quality Grocery spend effect Error Household income group effect Error Freshness Age effect Error

SS

df

F

Pr > F

23.0606 363.8797 29.5019 354.4829

4 263 8 255

4.1669

0.0027

2.6502

0.0082

10.9477 162.2294

4 170

2.8680

0.0248

Those in older age groups gave shampoo a higher freshness rating and those in lower household income groups and lower grocery spend groups gave shampoo a higher quality rating. Performance of generic coffee. For coffee, the generic alternative performed indifferently on the value for money and quality dimensions with 2.26 and 2.51 each. However, generic coffee was considered safe (1.92) and fresh (3.52) while providing package convenience (1.69). However there were significant differences in the ratings for some attributes when comparing different age groups and grocery spend groups, as shown in Table XI. Source

Table XI. ANOVA – significant differences in mean ratings of coffee

Value Grocery spend effect Error Freshness Age effect Error Package Age effect Error

SS

df

F

Pr > F

20.4753 375.5955

4 221

3.0119

0.0190

15.7327 218.6774

4 173

3.1116

0.0167

10.2300 173.6916

4 199

2.9301

0.0220

Lower grocery spend groups tended to consider generic coffee as better value than higher grocery spend groups. Those in older age groups tended to consider generic coffee as being fresher than those in younger age groups. Those in older age groups also considered the package to be more convenient. Performance of generic tissues. Tissues performed well on the value for money, safety and convenience of package aspects with 1.61, 1.68 and 1.64 respectively. Quality was ranked high (3.52) and so too was freshness (3.83) which in the case of tissues may be interpreted to mean shelf life.

There were no significant differences in the mean scores for each attribute given by the different demographic groups. Performance of generic washing powder. Table XII indicates that washing powder did not demonstrate any particular strength on the value for money or quality aspects. However, it did perform well on both safety and package convenience aspects, and particularly well on the freshness dimension, which might be subject to the same interpretation as in the case of tissues. The oldest age group tended to give washing powder the highest quality rating, highest safety rating, and highest freshness rating.

Source Quality Age effect Error Safety Age effect Error Freshness Age effect Error

SS

df

F

Pr > F

30.6675 355.7325

4 235

5.0648

0.0006

17.4490 221.3361

4 223

4.3951

0.0019

20.1939 179.8001

4 163

4.5768

0.0016

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Table XII. ANOVA – significant differences in mean ratings of washing powder

Performance of generic soup. While value for money and safety aspects did not show any particular trend, generic soup did well quality wise with a score of 3.04 out of 5, and better still on freshness with 3.60. The convenience of package (which was positive in this case with 1.83) probably reflects the assessment of the general convenience of cans as a package rather than in the particular case of soups. These results are shown in Table XIII.

Source Quality Age effect Error Safety Age effect Error Freshness Age effect Error Package Age effect Error

SS

df

F

Pr > F

20.7745 219.9423

4 168

3.9671

0.0042

16.0398 165.0602

4 155

3.7655

0.0059

12.0568 150.3008

4 146

2.9279

0.0230

10.7040 161.3779

4 166

2.7526

0.0298

Table XIII. ANOVA – significant differences in mean ratings of soup

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The older age groups considered soup of higher quality, higher safety, higher freshness and higher package convenience. Performance of generic cereals. Cereals enjoyed positive ratings in terms of value for money, safety and convenience of package. They were also judged to be of high quality with 3.29 and freshness with 3.64. Age had a significant effect on perceptions, as shown in Table XIV. In particular, the older age groups tended to see cereal as being better value and safer. Source

Table XIV. ANOVA – significant differences in mean ratings of cereals

Value Age effect Error Safety Age effect Error

SS

df

F

Pr > F

14.0003 298.3369

4 250

2.9330

0.0214

14.4445 204.2496

4 214

3.7835

0.0054

Discussion There is a high penetration of generic products, with most respondents in this study having purchased a generic product recently. It is clear that the purchase of generics is negatively related to household income. This finding is consistent with that found in studies by Faria[4] and Dietrich[8]. This would seem to make sense, since one of the primary purposes of generic products is to “do-away” with the frills and therefore be more attractive to the cost-conscious consumer. A similar argument explains why, historically, generic products have enjoyed their best times during recessionary periods. Neidell et al.[16], Strang et al.[19] and McEnally and Hawes[20] found that generic buyers tended to come from middle income groups rather than being concentrated at the lowest end. They argued that this was the case because the lower income consumers did not like the lower status which the purchase of generics conferred on them. The age of the consumer also seems to be a factor influencing the purchase of generics, with older consumers more likely to purchase generic products. The rationale for this is more difficult to understand. It may be that older people are less brand conscious, or that their limited pensions make them a more costconscious consumer. Findings by others do not suggest that older people tend to be the main purchasers of generic products. For instance some have found that middle-age consumers make the largest purchase of generics[8,16,18,19]. On the other hand, Cunningham et al.[17] and Granzin[21] found that generic buyers were more likely to come from the young to middle-aged group. Further compounding the issue, some other studies[3,4,9,22] have concluded that since generics were served in a wide range of product categories, people of all ages could consume and therefore age had become an insignificant factor in segmenting the generic market. Occupation, on the other hand, did not seem to relate significantly to the purchase of generics, despite Strang et al.[19] finding

that homemakers were more likely to purchase generics than other occupational groups. This finding may have been due to the fact that homemakers have traditionally done most of the shopping. It was interesting to note the relationship between each generic product’s value rating and quality rating. Those products which are considered of low value are also considered of low quality. Those products considered of high value are also considered of high quality. This is consistent with the literature which suggests that when it comes to consumer perceptions, there is a positive relationship between price and quality[4]. Value for money is a vital factor encouraging consumer acceptance of generic products, as has been found in the studies of McGoldrick[3], Wheatley[10], Neidell et al.[16], Cunningham et al.[17] and Yucelt[18]. The quality aspect is important also, as traditionally this has been a weak area for generics. Based on studies by McGoldrick[3] and Yucelt[18] around only 30 per cent of generic consumers deem that generic products meet their quality requirements – even though they also view generics as offering excellent value for money. Thus consumers are prepared to trade-off quality for price savings. In the subject study it seems that the more processed generic products (such as shampoo and coffee) are those which have the dubious quality perceptions whereas the more standardized products (such as rice and tissue) score highly on quality. Tissue has traditionally been a strong seller in the generic field since it is an indigestible and therefore, in comparison to generic foods, the failure of the product poses virtually no physical risk to the consumer. In other words it seems that the generic concept is more easily applied to low-involvement products i.e. those products which carry less physical, social or financial risk. Consistent with this, Lastovicka found that “consumer acquisition of low involvement products is done without the commonly assumed meticulous examination of available brands. Despite the efforts of marketers to differentiate their brands, the lack of commitment suggests that consumers perceive brands in low involvement classes as near perfect substitutes”[23, p. 178]). In other words, it seems that a brand carries relatively less value with low involvement products. It is also interesting that Kassarjian[24] found that low income consumers tend to have less product involvement. This is consistent with the finding that lower income groups have more favourable perceptions of generics since they perceive fewer differences between generics and their branded equivalents. Overall, the implications of how respondents in this study ranked each product on the five attributes depends on how important consumers think each attribute is. Although not examined in this research, a further potential influence is whether or not the consumer’s decision-making rule is compensatory (where good performance on one attribute compensates for poor performance on another attribute) or non-compensatory (where good performance on one attribute does not compensate for poor performance on another attribute). Three main demographic variables consistently emerged as effecting the ratings given to the different generic products on the different attributes:

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household weekly grocery expenditure, household income, and respondents’ age. In general those in lower weekly grocery spend groups, lower household income groups and older age groups tended to rate generic products high in terms of their value for money, quality and freshness. These favourable perceptions held by these groups would also explain why they tend to purchase generic products more frequently than other groups in the population. Conclusion Generic products have a high level of penetration in the New Zealand market. They are held in particularly high regard by those in lower household income groups and older age groups. It is not appropriate to say that, when it comes to consumer perceptions, “all generic products have lower quality”, “all generic products are good value for money” or to make any rash generalizations of generic products as a category. This is not appropriate because some generics, relative to other generic products, perform poorly and well on different attributes. Thus each generic product needs to be examined on its own merit, and requires different attention from different elements of the marketing mix. The more standardized generics certainly have the greatest market potential since consumers accept them more readily. The challenge for manufacturers and distributors, however, is to encourage consumers to trust the less standardized generic products. Manufacturers and distributors need to convince consumers that such products are of adequate quality and are good value for money. Traditionally one would turn to credible advertising sources and media to achieve such a goal. But given the marketing of generic products is based on no advertising, manufacturers and distributors will need to convince consumers of product quality and value through the product itself. In other words consumers must, at the very least, get what they pay for. Predictions about the future of generic products now offered in supermarkets rest to some degree on perceptions of their current role by consumers of everything from gasoline to furniture and drugs. In New Zealand there already exists “generic drugs” which are the centre of much discussion, and it may be that other, more processed and highly involved goods, will reach the market in generic form. Indeed it would be useful for future research to conduct a more thorough examination of the relationship between product involvement and the purchase of generic products. In addition it would be useful for future research to examine whether the consumer’s decision-making process is compensatory (where good performance on one product attribute compensates for poor performance on another attribute of the same product) or non-compensatory when it comes to generic products. References 1. Hawes, J.M., Retailing Strategies for Generic Brand Grocery Products, UMI Research Press, Michigan, 1982. 2. Chernatony, L., “The fallacy of generics in the UK”, Marketing Intelligence and Planning, Vol. 6 No. 2, 1988, pp. 36-8.

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