Consumer Behaviour In International Markets

Research Proposal On Consumer Behaviour In International Markets

– The effect of country of origin on the purchasing behaviour of consumers –

Introduction:           

Cultural differences, controlled by socio-economic variables, affect the purchasing decisions of the consumers. The relationship between cultural differences and product acceptance was studied using Hofstede’s cultural dimensions, secondary data on the socio-economic structure, and the rate of penetration of new products. The results indicate that power distance and uncertainty avoidance obstruct new product acceptance. Individualism, on the other hand, had a positive effect on acceptance, whereas masculinity had little significance on the dissemination of new products. The effect of socio-economic variables on product acceptance level was not clear (Yeniyurt & Townsend, 2003).

According to Mooi (2000), a cross-cultural communications expert who has investigated consumer behaviour for products and services across nationalities, it is a popular theory that as the markets in different countries undergo globalisation and economic development, the needs and incomes of consumers, media, and technology converge,and consequently marketing and advertising processes become standardised. In her later work, Mooij (2002) has stated that the convergence theory is unviable. She shows that the differences in consumer behaviour across nations have remained in spite of the convergence in national wealth. The differences are observed in the consumption of packaged products, the treatment and possession of durable products, and media actions, etc. Thus, culture is a naturally powerful variable, and it can be associated with the decrease in the variations of per capita GNP. Mooij presents evidence to show that consumer behaviour is divergent and not convergent. Moreover, she provides evidence to suggest that the variance in consumption is owing to the influence of culture and cultural variables; therefore, culture has a direct consequence on international brand management and on global advertising.

Mooij and Hofstede (2002)have also shown that the convergence of technology and the declining income differences across countries will not automatically result in the homogenisation of consumer behaviour. They show thatcultural differences will affect consumer behaviour, which will only become further heterogeneous in nature. The convergence of income across countries will result in a stronger expression of value differences in these countries. Consequently, it is essential to gain clarity regarding values and cultures in different nations for understanding consumer behaviour, as strategies suitable for one country may not necessarily be suitable for others.

Ogden D., Ogden J., and Schau HJ. (2004) emphasise on the importance of expanding the research focusing on the connection between culture and consumption (cited in Soaresa, Farhangmehra, & Shoham, 2002). Several researchers opine that culture is an obscure and mysterious concept capable of potentially hindering cross-cultural research. (McCort D. and Malhotra NK. (1993); Nasif EG., Al-Daeaj H., Ebrahimi B. and Thibodeaux M. (1991); and Lenartowicz T. and Roth K. (1999)cited in Soaresa, Farhangmehra, & Shoham, 2002).

An examination of various approaches of culture conceptualisation and operationalisation in marketing studies reveals that, using cultural dimensions, especially Hofstede’s values, is a useful method to deal with the challenge of cultural variations. (Soaresa, Farhangmehra and Shoham, 2002).Yaprak(2008) has critically reviewed a comprehensive body of cultural studies in international marketing and provided suggestions for further development. He believes international marketing academicians and managers can benefit from a structurally sound body of culture studies that gives a better insight into culture’s position in targeting, segmentation, and positioning and strategy formulation.

Luna and Gupta  (2001) recognise the fact that as organisationsforay into new markets, both managers and consumer researchers become appreciative of the culture influences on consumer behaviour. They have proposed a structure that combines and reinterprets existing researches in cross-cultural consumer behaviour as well as identified the areas requiring further research. Moreover, they have tried to combine and form a perspective from the anthropological approach and the cross-cultural psychology approach, two distinctive traditions significant in the study of culture and consumer behaviour.

Intrinsic as well as extrinsic product attributes are considered by the consumers while making purchasing decisions (Ulgado& Lee, 1998). The intrinsic attributes are related to the physical properties and composition of the product; whereas, extrinsic attributes are related to brand equity, the reputation of the retailer, and the country of origin of the product (Verlegh&Steenkamp, 1999). Even though the extrinsic attributes of a product do not directly influence the performance of the product, these attributes have important bearing on total image of the product, which in turn determines the perceptions of the consumers about the products.  Researchers have well recognized that the Image of a product plays significant role in the quality and performance perceptions of the consumers. According to Wright (1975), the consumers makes quality judgment decisions on the basis of the extrinsic attributes, such a country of origin, rather than the intrinsic attributes.

 

The impact of country of origin (COO) is on the purchasing behaviour of the consumers are significantly different in different countries. While it is now considered as an accepted fact that the COO does affect the perception of a product, various studies show the reasons for this impact. It has been shown that in some regions of the world (Slovakia), highly ethnocentric consumers show a preference to domestic products over foreign ones(Saffu, Walker and Mazurek, 2010). However, in some regions (China), contrasting perceived notions, COO has no competition from domestic products in terms of ethnocentrism, as ethnocentrism has little or no effect on consumer buying behaviour (Wong, Polonsky and Garma, 2008). The impact of COO in different industries and for different products has also has been studied in depth(Umberge et al., 2003)(Sedláková, 2003)(Bruning, 1997)(Chryssochoidis, Krystallis & Perreas, 2007).

 

It can be seen that various research reports clearly recognize the role of COO in consumer decision making. However, there is a significant scope of research to find out how the effect of country of origin varies in different countries. Various other issues which also provide scopes for further research in this filed include, the factors for which the effect of COO differs between countries, Patterns of the effect of COO in developed countries, developing countries and developed countries, and the reasons behind the negative and positive effects of COO. This paper intends to bridge these research gaps and find out valuable conclusions in this regard.

 

Aims:

Since the early 2000s, most studies on international marketing research seem to agree on the need for country-specific analysis of consumer behaviour. It has been identified that the structure and methodology of the current research has to be improved to achieve better results. The impact of emerging issues such as ecology has been dealt with in the existing literature. The impact COO on consumer research has been one of the most widely studied aspects of international marketing. However, my review of the secondary literature in this arena revealed that there is a significant scope of research in the field of COO to find out how the effect of COO varies in different countries, the factors for which the effect of COO differs between countries, patterns of the effect of COO in developed countries, developing countries and least developed countries, and the reasons behind the negative and positive effects of COO. Therefore, this paper aims to find out detailed information in this regard.

Objectives:

The objectives of the paper are as follows:

• To identify the factors influencing the effect of COO in different countries.
• To develop a pattern of the effect of COO in developed, developing, and least developed countries.
• To find out the reasons behind the positive and negative effects of COO in different countries.

 

Methodology:

 

World population statistics from the US census bureau and IMF’s list of emerging and developing economies are studied(US Census Bureau, 2011)(World Economic & Financial Surveys, 2010). Five countries that reflect large growing markets in different hemispheres of the world are selected, for example, India, China, Indonesia, Turkey, andGhana.Five countries of the developed world are also selected, for example, the UK, the US, Australia, Germany, and Hong Kong.The trade statistics obtained from available sources, such as the statistics division of the UN or country specific trade statistics from the country’s government-released documents, and are analysed to identify the largest and least imports into the country(UN data, 2010).

Secondary research regarding consumer behaviour towards the selected foreign products in these countries is accumulated and analysed. Primary research is conducted using open- and close-ended questionnaires based on secondary research. The products largely imported into these countries are focused on, that is, a list of such products is made and used in the questionnaire. The participants are contacted via e-mails, telephonic conversations, and social networking sites (for example, if coffee is the second-largest import in the US, US coffer lovers fan page on Facebook is used).

The collected data is analysed with an objective point of view that enables interpretation at every level as well as provides information that encourages independent assessment. The possible data measurement and operationalisation techniques are as follows. The questionnaire is analysed for various variables (demographic, nominal, control, etc.), which are listed along with their values. The variables are then given conceptual definitions (For example, if coffee is the second-largest import in the US, the country resources for coffee are gathered and consumers are questioned on whether they prefer coffee from Ghana or Colombia. The variables here are Ghana and Colombia).

Subsequently, the variables are operationally measured by using the suitable technique (For example, a Likert scale is used to gather information on respondents’ favoured country for coffee). The feasibility and validity of the measurement techniques is estimated along with its generalisability. Factor analysis is used to analyse the variation between variables, and regression analysis is used to understand the interdependence between variables.

Conceptual Framework:

It has been observed that people visiting a foreign country are keen to understand and acquaint themselves with the country’s culture. A study on sport tourists travelling to Australia revealed that ‘involvement and strength of motivation contributed to socio-psychological motivation while cultural experience and knowledge learning contributed to cultural-education motivation’. It was seen that generally, the respondents hailing from a different cultural background than Australia, found the Australian culture far more appealing (Funk & Bruun, 2007 ).
It will be interesting to know if people buying a product from a country dissimilar to theirs would give similar reaction. However, the question that comes to mind is, would a person from a low-income country visiting Australia find the culture equally or more appealing than one from another high-developed country?

A paper used canonical correlation analysis to investigate the correlation between the equity consumers correlate with a brand from a country and consumers’ country-level and product-level images of a country. The results revealed that both macro and micro images of the COO of the brand were strongly associated with the consumer-based equity of a brand (Pappu, Quester and Cooksey, 2007).

The low-income countries’ (LICs) international economic relations have been transformed by the emergence of rapidly growing economies such as the BRICs, Brazil, Russia, India, and China. Most LICs’ dominant development partners are the high-income industrial countries, but this is now changing.BRICs have emerged as new growth drivers for LICs, as LIC-BRIC associations have rapidly increased over the last few years. The value of the LICs trade with BRICs is approximately half of that with the European Union and the United States as well as surpasses the trade with other rising market economies. Moreover, BRIC FDI and development financing have a considerable impact on certain major factors irrespective of their relatively small volumes, especially when compared with those from advanced countries. Thus, not only have the BRICs increased goods and capital flows into the LICs but also have brought in a new set of trade dynamics in them(IMF, 2011).

A research was conducted to empirically study the consumer attitudes towards local and imported products in a developing country, Ghana’s market. A survey was used to question respondents from a cross-section of the Ghanaian community. The Roth and Romeo approach was employed to measure the COO impact. The results of this research indicated that COO surpasses price and other product attributes in terms of consumer impact. The average Ghanaian consumer held a low regard for a‘ Made in Ghana’ label in comparison to foreign labels. Moreover, superior product quality and consumer taste were found to be the two most important reasons for the preference for foreign products among Ghanaian consumers (Opoku and Akorli, 2009).

 

A study analysed the major policy issues in low-income countries associated with commodity dependence and export diversification. Contrasting some widely assumed views, they deemed that natural resources are not the factors affecting the underdevelopment of low-income countries, and that such resources can be useful to have a sustainable export-led growth. The study concluded that trade capacity building was important and highly relevant for the development of low-income countries(Bonaglia & Fukasaku, 2011).

Implications:

The countries selected for this study are lower,middle, and high-income countries. This enables a comparison among the effects of COO in countries with different income level. Thus, understanding the perceptions regarding a COO’s income-level could be very useful for marketers and researchers in international marketing.

The World Bank defines low development countries as ‘low-income countries where, according to the United Nations, economic growth faces long-term impediments such as structural weaknesses and low human resources development. (It is) a category used to guide donors and countries in allocating foreign assistance’ (The World Bank Group, 2004). Most of these countries are dependent on the export of their natural resources, such as cocoa beans in Côte d’Ivoire, as a major source of their income. Researching the perception of products from such countries in the high- and middle-income countries could be highly significant for the economy of low-income countries.

My contribution will be towards a conceptual framework which will have many practical implications and fulfil the research gap in this regard.

Time Frame:

Tasks to be completed

Description

Years / Per Quarter 2014 2015 2016

Begin meeting with my supervisor to discuss the proposal

Expecting to discuss the proposal and agree on the aims and objectives by early 2013

X

Proposal development

Amend and review proposal after discussion with principal supervisor

X

Literature Review

Write a background and a review of the literature from journal and books available online and from the university library.

X

X

X

X

Literature Review(Draft)

To discuss about the secondary information available and focus on the objectives regularly with the supervisors

X

Continuing reading/reviewing

Review and read on most appropriate methodologies which meets the objectives

X

X

X

X

X

X

Research Methods

Write on the RM in agreement with supervisors

X

X

Field Data collection

Sample using a pilot study and secondary data collection

X

X

X

X

Data Analysis and research output

Analysis of data to be done with the help of qualitative tools and produce a draft research output

X

X

X

Thesis writing

Chapters compilation

X

X

X

Submission and defence

 

References:

Bonaglia, F. and Fukasaku, K. (2011) ‘Export Diversification in Low-income Countries: An International Challenge after Doha’, Social Science Research Publishing, Inc., vol. 209, p. 1–45.

Bruning, E.R. (1997) ‘Country of origin, national loyalty and product choice: The case of international air travel’, International Marketing Review, vol. 14, no. 1, p. 59–74.

Chryssochoidis, G., Krystallis, A. and Perreas, P. (2007) ‘Ethnocentric beliefs and country-of-origin (COO) effect: Impact of country, product and product attributes on Greek consumers’ evaluation of food products’, European Journal of Marketing, vol. 41, no. 11/12, p. 1518–1544.

Fraj, E. and Martinez, E. (2007) ‘Ecological consumer behaviour: An empirical analysis’, International Journal of Consumer Studies, vol. 31, no. 1, p. 26–33.

Funk, D.C. and Bruun, T.J. (2007 ) ‘The role of socio-psychological and culture-education motives in marketing international sport tourism: A cross-cultural perspective’, Tourism Management, vol. 28, no. 3, p. 806–819.

Griffith, D., Tamer Cavusgil, S. and Xu, S. (2008) ‘Emerging themes in international business research ‘, Journal of International Business Studies, vol. 39, no. 7, p. 1220–1235.

Hult, G.T.M., Jr, D.J.K., Griffith, D.A., Finnegan, C.A., Gonzalez-Padron, T., Harmancioglu, N., Huang, Y., Talay, M.B. and Cavusgil, S.T. (2008) ‘Data equivalence in cross-cultural international business research: Assessment and guidelines’, Journal of International Business Studies , vol. 39, p. 1027–1044.

IMF (2011) ‘New Growth Drivers for Low-Income Countries: The Role of BRICs’, The Strategy, Policy, and Review Department in collaboration with the African Department.

Luna, D. and Gupta, S.F. (2001) ‘An integrative framework for cross-cultural consumer behavior’, International Marketing Review, vol. 18, no. 1, p. 45–69.

Mooij, M.d. (2000) ‘The future is predictable for international marketers: Converging incomes lead to diverging consumer behaviour’, International Marketing Review, vol. 17, no. 2, p. 103–113.

Mooij, M.D. (2002) ‘Convergence and divergence in consumer behaviour: Implications for global advertising’, International Journal of Advertising, vol. 22, p. 183–2002.

Mooija, M.d. and Hofstede, G. (2002) ‘Convergence and divergence in consumer behavior: implications for international retailing’, Journal of Retailing, vol. 78, no. 1, Spring, p. 61–69.

Opoku, R.A. and Akorli, P.A.K. (2009) ‘The preference gap: Ghanaian consumers’ attitudes toward local and imported products’, African Journal of Business Management, vol. 3, no. 8, p. 350–357.

Pappu, R., Quester, P. and Cooksey, R. (2007) ‘Country image and consumer-based brand equity: Relationships and implications for international marketing’, Journal of International Business Studies, vol. 38, no. 5, p. 726–745.

Saffu, K., Walker, J.H. and Mazurek, M. (2010) ‘The role of consumer ethnocentrism in a buy national campaign in a transitioning country: Some evidence from Slovakia’, International Journal of Emerging Markets, vol. 5, no. 2, p. 203–226.

Sedláková, J. (2003) ‘The perception of country of origin and consumer ethnocentrism in Slovak market: Domestic versus foreign products’, Faculty of Agriculture and Horticulture, Department of Agribusiness & Agrarmarketing, p. 1–5.

Soaresa, A.M., Farhangmehra, M. and Shoham, A. (2002) ‘Hofstede’s dimensions of culture in international marketing studies ‘, Journal of Business Research, vol. 60, no. 3, p. 277–284.

The World Bank Group (2004), [Online], Available:  HYPERLINK “http://www.worldbank.org/depweb/english/beyond/global/glossary.html” http://www.worldbank.org/depweb/english/beyond/global/glossary.html  [7th August 2011].

Ulgado, F., & Lee, M. (1998). The Korean versus American marketplace:

Consumer reactions to foreign products. Psychology and Marketing, 15(6), 595-614.

Umberge, W.J., Dillon, M.F., Calkins, C.R. and Sitz, B.M. (2003) ‘Country-of-Origin Labeling of Beef Products: U.S. Consumers’ Perceptions’, Journal of Food Distribution Research, p. 1–23.

UN data (2010), [Online], Available:  HYPERLINK “http://unstats.un.org/unsd/default.htm” http://unstats.un.org/unsd/default.htm  [6th August 2011].

US Census Bureau (2011), 27th July, [Online], Available:  HYPERLINK “http://www.census.gov/population/international/” http://www.census.gov/population/international/  [6th August 2011].

Verlegh, P. W. J., & Steenkamp, J-B. E. M. (1999). A review and meta-analysis

of country-of-origin research. Journal of Economic Psychology, 20, 521-546.

Wong, C.Y., Polonsky, M.J. and Garma, R. (2008) ‘he impact of consumer ethnocentrism and country of origin sub-components for high involvement products on young Chinese consumers’ product assessments’, Asia Pacific Journal of Marketing and Logistics, vol. 20, no. 4, p. 455–478.

World Economic and Financial Surveys (2010), April, [Online], Available:  HYPERLINK “http://www.imf.org/external/pubs/ft/weo/2010/01/weodata/groups.htm” \l “oem” http://www.imf.org/external/pubs/ft/weo/2010/01/weodata/groups.htm#oem  [6th August 2011].

Wright, P. L. (1975). Consumer choice strategies: Simplifying versus optimizing.

Journal of Marketing Research, 11, 60-67.

Yaprak, A. (2008) ‘Culture study in international marketing: a critical review and suggestions for future research’, International Marketing Review, vol. 25, no. 2, p. 215–229.

 

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