Private label (PL, hereafter) brand products have been in a growing trend worldwide. Thus, an extensive amount of research has been done in the PL brand area(e.g., Burton et al. 1998; Cuneo et al. 2015; Hoch 1993, 1996). However, the market shares of PL products vary across markets, being high in some European countries such as United Kingdom and France, but low in some Asian counties such as China and Korea. Therefore, Bronnenberg, Dhar, and Dubé(2007) suggest that further research will be needed to address the gap in the market shares of PL products across markets. To answer this call, our work investigates why the market shares of PL products vary across markets. Specifically, we draw upon one of the Hofsete(1984)’s cultural typology – power distance. Power distance refers to the degree to which a society accepts unequal power distributions(Hofseted 1984). The concept of power distance has typically been examined in the country level; however, recent studies suggest that power distance can vary in the individual level and thus can be used as an individual level construct(Winterich and Zhang 2014). One’s power distance belief can be defined as “consumers’ acceptance of power disparity in social interactions (p.266, Gao, Winterich, and Zhang 2016).” Research shows that one’s power distance belief can affect status consumption(Gao, Winterich, and Zhang 2016; Kim and Zhang 2014), impulsive buying(Zhang, Winterich, and Mittal 2010) and also charitable giving(Winterich and Zhang 2014). Important to the current work, Lalwani and Forcum(2016) demonstrate that one’s power distance belief influences his/her need for structure, resulting in his/her greater tendency to rank the given product options using the price-quality inference. That is, those with high power distance beliefs are more likely to perceive that high price products will have superior quality compare to those with low power distance beliefs.
Relying in these findings, the current research proposes that consumers’ power distance beliefs systematically affect their attitudes towards private label brand products. Specifically, we propose that, for utilitarian products, consumers with high power distance beliefs will show more positive attitudes towards PL products compared with those with low power distance beliefs. However, for hedonic products, the effect of one’s power distance belief will not be significant. Two studies were conducted to test these predictions and the results and implications are as follows.
Study 1 was a one factor design with product type(i.e., hedonic vs. utilitarian products) as a between-subject factor. Sixty three participants were recruited through Amazon Mturk(female 26.9%; Mage=33.6). First, participants were randomly assigned to either utilitarian or hedonic product condition. Then, two utilitarian/hedonic products of PL brands were presented and participants indicated their attitudes towards the products and purchase intentions. Then, as an ostensibly separate study, participants’ power distance beliefs were measured using the five-item scale of Yoo, Donthu, and Lenartowicz (2011). A regression with product attitudes as a dependent variable and product type(1=utilitarian; 0=hedonic),d power distance belief scale(α=.882), and the interaction term as independent variables was run. The results show that, as predicted, the interaction between product type and power distance belief was positive and significant(β=0.375, t(122)=1.845, p=.067; R2=.115, p=.002; see Table 1). These results were supportive of our prediction, such that those with high power distance belief were more likely to show negative attitudes towards PL products and lower purchase intentions of those products.
Another regression with purchase intention as a dependent variable and product type(1=utilitarian; 0=hedonic),d power distance belief scale(α=.882), and the iteraction term as independent variables was run. The results show that, as shown in Table 2, the interaction between product type and power distance belief was positive and significant(β=0.442, t(122)=1.910, p=.059; R2=0.120, p=.001). These results were also consistent of our prediction.
In study 2, we further investigate the underlying process of the joint effect of product type and power distance belief. We predict that, for utilitarian products, consumers with high power distance beliefs (vs. those with low power distance beliefs) will be more likely to use the price-quality inference, resulting in more negative attitudes towards PL products and lower purchase intentions of PL products. However, for hedonic products, these patterns will not be observed, since the price-quality inference is not likely to be applied to the hedonic products. To test these predictions, seventy one participants were recruited through Amazon Mturk(43.6% female; Mage=35). First, participants were randomly assigned to either utilitarian or hedonic product conditions. Then, as in study 1, two utilitarian or hedonic PL products were presented and participants indicated their attitudes and purchase intentions. Then, their price-quality inference and power distance beliefs were measured. The results of regression analyses were consistent with those of study 1. The interaction between product type and power distance belief was significant both when the dependent variable was product attitude(β=-0.218, t(138)=-2.458, p=.015) and purchase intention(β=0.207, t(138)=2.052, p=.042), indicating that those with high power distance showed more negative attitudes towards the PL products and lower purchase intention of the PL products in the utilitarian product condition, but not in the hedonic product condition. More important, we tested the mediation hypothesis using Preacher and Hayes (2004) bootstrapping method and the 90% confidence interval did not include zero(90% C.I.= [.0003， .1037]), supporting the hypothesis.
Taken together, the results of the two studies show that, for utilitarian products, consumers with high power distance are more likely to infer that PL products have inferior quality and thus tend to have lower product attitudes and purchase intentions of PL products. We believe that our findings will contribute to explain why PL products are not as popular in some Asian counties with high power distance scores as in some European counties with low power distance scores. Therefore, to overcome this limitation of PL products, we would like to advice marketing practitioners of PL products to strengthen the good quality of PL products rather than emphasizing the lower prices, when marketing utilitarian PL products in high power distance cultures in particular.
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