Ethical Labeling: How Retailers Can Increase Their Brand and Store Image by Selling Ethical Labeled Private Label Products: An Abstract

Abstract

Due to their ongoing global increase in market share (Nielsen 2011), private label brands (PLBs) attracted attention in recent years. Retailers create multi-tiered PLBs with different levels of price and quality to address customer needs (Kumar and Steenkamp 2007). Nevertheless, further differentiation is necessary to deal with the issue of customers being loyal to private labels (PLs) in general, but not to those of a particular retailer (Richardson 1997). First studies address the idea of using ethical labels to overcome this challenge (e.g., Bodur et al. 2016).

PLBs are only available at one retailer and often associated with the brand itself (Richardson et al. 1994). Using ethical labels on PL products might be a possibility to tap a new customer group which did not buy PLBs or at the retailer before (Corstjens and Lal 2000) due to missing trust in the products (Nies and Natter 2012). Ethical labels have an influence on sensory acceptance of products (de Andrade Silva et al. 2017) and signal good quality as they follow objective standards. This can reduce the feeling of uncertainty and bring national brand and PL products closer together (Richardson et al. 1996).

There are just very few studies dealing with the impact of ethical labels on positive PLB evaluations (e.g., Bodur et al. 2016). None of these investigates the psychological processes underlying the consumers’ purchase decision-making of ethical labeled PL products. This study closes this research gap and contributes to scientific research by deriving product benefits and examining whether those affect customers’ self-perception. Moreover, it tests whether this enhancement of self-perception, which is highly linked to the PLB in consumers’ mind, has an impact on brand and store perception.

Fictitious brand labels were created and checked for the presence of associations with other brand labels. Two online experiments were designed, using different types of ethical labeled products (i.e. fair-trade labeled, organic labeled, and fair-trade and organic labeled). Study 1 concentrates on the effect of ethical labeled national brands on brand and store image, considering the psychological aspects of the model. Study 2 examines the effect of ethical labeled PL products and customers’ self-perception on brand and store perception.

Results show that perceived product benefits have no significant effect on customers’ self-perception. Nevertheless, there is a direct effect of ethical labeled PL products on customers’ self-perception, which has a positive effect on brand and store perception.