Consumer Preference Of International Brands

Introduction:

Globalization is an inevitable phenomenon that is leading the entire world towards becoming one market, a global village. With the world becoming a single market, globalization has had a major contribution in enabling the organizations worldwide to step out of the restricted domestic markets and to set up their operations across the globe with confidence. This has largely led to a decline in the importance in national borders and a greater emphasis on what the consumers actually demand; be the consumers located in the very country in which the organization exists or an entirely different part of the world.

Globalization has had a huge impact on the branding strategies of international companies. Since the early 1990’s many multinational companies, such as Unilever have moved from a multidomestic to a global marketing approach including global branding strategies (Schuiling and Kapferer 2004). Increased consumer knowledge and awareness have played an important role towards this globalization of markets and escalating the power of global brands such as Pepsi, Apple etc.

As the competition in global arena increase, organizations find it important to serve international consumers along with local ones to achieve competitive advantage. However for some products and services “the tastes and preferences of consumers in different nations are beginning to converge on some global norm” (Holt 2002). From a consumer perspective, however, reactions to the prevalence of global brands seem to vary among the different customers. On the one hand, consumers seem to value and admire global brands and regard such brands as a status symbol. On the other hand, global brands are often criticized for threatening the local differences and leading to a loss of cultural identity.

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Since the trend of consumption by our people is changing, people are becoming more prone to buying the international brands rather than the local ones. Consumers feel proud in purchasing imported goods and this has increased the power of international brands. Apart from just focusing on where the product has actually been produced, consumers consider various other factors when making purchasing decisions. It has been noted that consumers are reluctant to buy goods made in less developed countries as they perceive them to be low in quality. Brands have also been perceived as being a status symbol and this thinking is most common in young people.

Literature review

There have been a number of researches done on brands. A definition of a brand by The American Marketing Association (AMA) in the 1960s (Keller, 1998:2) is “a name, term, sign, symbol, or design, or a combination of them, intended to identify the goods and services of one seller or group of sellers and differentiate them from those of competitors.” Research has proven that consumers use brands to help them make decisions about the product they choose.(Ger et al., 1993).

De Chernatony and McWilliam (1989) stated that successful brands, be it domestic or international, will have some unique proposition that is satisfying consumer needs. Powerful branding will also have a positive impact on consumer franchises. as Kolter et al. (2002) suggests that powerful brands command a strong brand loyalty from their consumers where these consumers perform in a repeated buying and ignore alternative brands that may be at lower prices.

Recent researches suggests that influences on foreign product evaluations may be considerably complex, resulting from an interaction of various different factors such as ethnocentrism, price, perceived quality, country of origin, status, fashion consciousness, advertising campaigns etc.

Ethnocentrism

Research by Kinra (2006) states that ethnocentrism, which is a psychological construct whicha makes a product more favorable in the minds of the consumers simply because bit is made in their own country. Ethnocentrism is when consumers think their culture to be superior than other cultures. (Summer, (1906:13).)

Highly ethnocentric individuals tend to accept things culturally similar and reject things culturally dissimilar.(Crawford and Lamb, 1981; Heslop et al., 1998; Wang and Lamb, 1983). In a study conducted by Lantz and Loeb (1996) which focused on the relationship between consumer ethnocentrism and imported/international products, also found out that consumers who are highly ethnocentrism have more positive attitudes toward products from countries with similar cultures. Highly Ethnocentric consumers believe that purchasing local brands promotes patriotism and they accuse foreign brands of being a potential threat to country’s economy and employment level. They also prefer local brands because of their better understanding of local needs.

Quality

Quality is a trait which is very hard to define, because it is a very subjective term. Perceived quality is the perception of a consumer about a product’s excellence. Research proves that most consumers perceive international brands to be of higher quality and greater prestige.(e.g., Nguyen, Barrett and Miller 2005; Steenkamp, Batra and Alden 2003). If a brand is perceived as globally available, consumers are likely to attribute a superior quality to the brand, since its international acceptance is seen as a sign of its high quality. (Han 1989)

According to Iglesias and Guillen (2004), consumers pass five phases of purchase process and the first phase is that the consumer perceives the product with the consideration of its availability, quality, price and the marketing activities. The consumers will make a comparison between brands to other alternatives and then make a decision. This will then either leads to the action of purchase or not to purchase that certain product from a certain brand.

Country of origin

The country of origin will also have a deep impact on the consumer preferences. The country of origin effect has been defined as influences, be it positive or negative, that a product’s country of manufacture may have on consumers’ decision (Elliott and Cameron, 1994). 1991). It is related to different stereotypes which are attached to a country’s product by consumers.

Majority of the studies have supported a strong direct relationship between the ” made -in” label and perceived quality of the product.. The findings indicate that consumers hold stereotyped images of certain countries and that these images affect their perceptions about the country. These stereotypes vary from country to country. Products from developed and highly industrialized countries are evaluated more positively than products from developing countries.

Moreover, attitudes and perceptions of consumers toward brands and products will depend on categories, for instance, electronic goods from Italy may be perceived as a

poor quality but Italian clothing would be perceive as fashionable and high quality (Bikey and Nes, 1982). This would be differently perceived with Japanese brands as Japanese electronic goods would be perceive with positive attitudes and Japanese clothing will be negatively perceived.

Price

Price is considered one of the most important factors affecting the consumer perceptions of a brand or product. (Hansen, 2005) Researchers found out that once consumers perceive a price difference between local-owned and foreign-owned brands, price dissimilarities begin to affect their preference for local-owned brands. Therefore it is imperative that we test the impact of price against consumer’s ethnocentric tendencies to determine at what point price becomes more important to consumers than all the other factors mentioned.Consumers need a reference price as a cue for evaluating the price of an observed product/service .There are two forms of reference price – an internal one that resides in consumers’ memory (e.g. past purchase) and an external one that is formed during the purchasing process (e.g. price comparison between brands while shopping) (Mazumdar and Papatla, 2000). If consumers perceive the local-owned brand as more expensive than the foreign-owned brand, but its quality is similar to the foreign-owned brand, they should prefer the local-owned brand less because they perceive a higher loss with the local-owned brand. In other words, the price difference between local-owned and foreign-owned brands acts as a moderator between perception of brand ownership and purchase intention of local-owned brands

Social status

Authors have stressed that consumers may prefer global brands because of associations of higher prestige or because the ‘elite’ class use it.(Schuiling & Kapferer, 2004; Steenkamp, et. al., 2003). Global brands may have a higher prestige than local brands due to their relative scarcity and higher price.

Critical review of the key literature

In today’s world, consumers are faced with an overwhelming amount of brands available for the same product category. More than hundreds brands, both local and international, may be available for products like clothes, automobiles etc. When consumers are making their purchase decisions, they may evaluate brands on different factors such as variables like price, quality, country of origin, ethnocentrism, and social status. Price and quality are sometimes perceived to be correlated. A high-priced product may be perceived of being high in quality and this may be because of such image created by manufactures through advertising. Similarly, a global brand may perceived to be of superior quality as quality is believed to be a prerequisite for international acceptance.

Consumers today are increasingly aware of products made in both developed and developing economies. Goods from third world countries may perceived to be of lower quality standard. Consumer perceptions and opinions may also depend on the product category for e.g Italian clothing is generally perceived to be more fashionable (Bikey and Nes, 1982), while automobiles produced in country like USA may be perceived as of better quality than an Indian manufactured automobile. However, sometimes consumers believe that local organizations have a competitive edge over the foreign competitors as they have a better understanding of what consumer wants which are shaped by their cultures. While other patriotic consumers believe that buying foreign brands may hinder the growth of their local organizations.

Brands like Apple, Sony, Pepsi have empowered consumers and these brands are capable of evoking associations and feeling to an extent that they have now become an important part of our lives. Due to increasing peer pressure, these foreign brands have now become a necessity for every young person. Wearing Nike shoes may be considered as fashionable and trendy in universities. So the need to be accepted by a particular social group may compel young people to buy international brands even when local brands are available at the same price.

Research Question

Q) What are the reasons for consumer preference of global brands over the local ones?

Independent variable:

Price

Quality

Country of origin

Consumer ethnocentrism

Social status

Dependent variable:

Consumer preferences

Research methodology

This study is a descriptive study and more of a qualitative nature and was conducted to identify and analyze the reasons why consumers prefer international brands to national brands when purchasing consumer goods. The sample for this research included the 200 consumers whose ages ranged from 16-24 years. Convenience sampling was used for this study.

Questionnaires were used to collect primary data. The questionnaire comprised of closed ended questions and Likert scale is used in most of them. We classified our population according to gender. Frequency distribution and bar charts have been used to evaluate the results. In addition to this, the means of different factors that influence consumers’ preferences of the local and global brands were used to determine which factors are considered the most by consumers when purchasing different brands.

Limitations

As the data was gathered through convenience sampling, the results cannot be generalized. There is also a possibility that the respondents may not be honest and fill the questionnaires half-heartedly, thereby resulting in biased findings. Apart from these limitations of our study, the fact that the data was only collected through questionnaires provided us with the frequencies as to how many people would purchase the global or the domestic brand and what factors are rated as the most important by these people, but the reasons behind their buying patterns and preferences remain unknown because these people were not further interviewed.

Findings and Discussion

Question 1

Do you use international brands products?

According to the data collected, 72.5% of the people used international brands of which 60 were male and 85 were females. 18.5% of the people questioned claimed to use international brands occasionally, whereas, 9.1% of the people claimed not to use global brands at all. As indicated in the pie charts above,18.5% of the people who used the global brands sometimes included 28 males and 9 females, and those who did not use the global brands consisted of 12 males and 6 females.

Question 2

If an international brand and a national brand are priced same, would you prefer the international brand?

The purpose of this question was to evaluate and discover how important a factor such as price is in determining whether the consumers would go for the domestic brand or stick to the global one if both the products were in the same price range. The results found out that 76% of the consumers would go for the international brands whereas 24% would still purchase the domestic ones.

Question 3

Do you consider where a product is manufactured when purchasing it?

responses

Frequency dis

This question was asked to discover how much importance the youth lay on the country of origin as a factor when making a purchase. The results revealed far different results compared to what had been stated by the review of previous researches done. As indicated in the graph, the youth was found to be mailnly ignorant of the country in which the brand was manufactured. Majority of the consumers (76% males and 88% females) did not consider it as significant a factor as to affect his or her purchase decision.

Question 4

Do you consider the quality of the product when purchasing a good?

A good quality product indicates durability, reliability as well as good appearance and featuresThe review of the existing literature suggested that quality of the product and its price were rated by consumers as the most significant factor in purchasing decisions. This was supported by our empirical findings that showed that 87.5% people on average considered the quality of the brand above all the factors. This included 83 males and 92 females. The rest of the people, according to our research findings, did not place that much emphasis on the quality of the product alone.

Question 5

Do you think that international or local brands show the social status of a person?

Question 6

It is said that people buy international products so that they can be accepted in a particular social group. Do you agree?

The results to these two questions confirmed the general perception that exists in our society, that is, the global are purchased as a status symbol. The youth mainly bought foreign branded products to be able to fit in a particular social group. This occurs largely because peer pressure tends to be high at this age, and most of the people find themselves being victims of inferiority complexes. The results to the first of these questions indicated that on average 75% of the youth (71 males and 79 females) purchased the international and local brands as a status symbol. These results were further enhanced by the results to the next question, which showed that 72% of the males and 68% of the females did, infact, believe that the people purchased the international brands to be able to fit in a particular social group.

Question 7

Do you consider current fashions and trends while purchasing a good?

Owing to education and information disseminated through the media, consumers in our soceity are becoming increasingly aware of the current fashions and trends prevalent even in other parts of the world. Following the current fashions and trends have become a norm in our society. Consumers now make their purchases according to the ongoing fashions,and this assumption has been supported by our findings, which shows that 92% of the females and 85% of the males considered fashion and trends when making a purchase. There was not a single female in our sample who did not pay attention to the trends and styles when going for a purchase. Moreover, these results also indicate that females are more fashion conscious than their male counterparts.

Question9

Do you think buying international brands affect unemployment in a our country?

The purpose of this question was to take the point of view of consumers as to whether the existence of foreign brands affect unemployement rate in our country. The results revealed that on average 80.5% of the consumers believed that the businesses are affected by the international brands and that unemployment increases as a result. This figure included 88 males and 73 females. However 10.5% of the people, on average, believed that this case only occurs sometimes, whereas 9% of the people did not believe that unemployment is related to the existence of foreign brands.

Question11

If an international brand is not easily available, would you go for the domestic brand?

As the above graph indicates, the answers to this question represent differences in the opinions of the males and the females as to their willingness in substituting the domestic brand with an international brand in the case of non- availability of the international brand. The results revealed that whereas 57% of the males respondents claimed that they would go for the domestic brand if the global brand is not accessible, 78% of the females claimed not to compromise and do with the domestic brand, even if the international brand of their choice is not available. This may be indicative of the level of brand loyalty that females possess. In addition to this, only 16% of the respondents, on average, claimed that they would sometimes opt for the domestic brand in the case that the international brand is not accessible to them.

Mean number of people ( in percentages)

Yes

Sometimes

No

Price of the product

76%

16.5%

7.5%

Country of origin

4.5%

13.5%

82%

Quality of the product

87.5%

7.5%

5%

Status symbol

75%

15.5%

9.5%

Current fashion and trends

85%

10%

5%

Ethnocentrism

60%

20.5%

19.5%

The table above compares the means of the different factors in influencing consumer preferences of the global brands over the local ones.

Conclusion

After researching on the preferences of consumers for the global and foreign brands, and finding out what factors are considered the most important by consumers when making their choices, it has been concluded that consumers do purchase the global brands and give preference to them. Consumers gain increased knowledge about international products by television. Our findings show that quality was the foremost factor that affected consumers decision about a product, with fashion and trends being second and price was rated the third most important factor in influencing consumer choice. Moreover, a foreign brand is usually regarded as a symbol of prestige and social status and as a means of being accepted in a particular group. Because of this extreme peer pressure at this age, the youth often views the use of such a foreign brand as a necessity rather than a want. Because of this extreme peer pressure at this age, the youth often views the use of such a foreign brand as a necessity rather than a want.

Consumers were also hardly aware of how global brands affect the local economy and country of origin, as a factor in influencing consumers’ choice of the brand was hardly a significant factor.

However, in spite of the fact that for some products the local brands are now available in the relevant price range, and quite well meet the quality standards too, nevertheless the consumers of our country find some sort of inner satisfaction in spending money on the global brands. For reasons termed brand loyalty, and even for the reason of social status, our locals continue to regard and look upto the foreign branded products .