Does consumer ethnocentrism affect purchase intentions of Chinese consumers? Mediating effect of brand sensitivity and moderating effect of product cues.
Author | Wei, Yujie |
INTRODUCTION
The American Chamber of Commerce-China issues a White Paper each year that reports the performance of American businesses in China based on surveys of its members. The latest report (2005) indicates that 83% of responding companies look at China not as a platform to export cheap goods to the US, but as a growing marketplace for US goods and services. The results of this 2005 survey indicate that only 26% of American businesses that have been in China for less than two years make money while about 52% of respondents break even or experience a small loss (American Corporate experience in a Changing China --- Insights from AmCham Business Climate Survey, 1999-2005, p.16). Many factors influence the performance of foreign companies operating in China. On a macro level, the legal and political environment, social and economic development, and cultural differences all impact the performance of foreign marketers. On a micro level, consumer characteristics including ethnocentrism, as well as the marketing mix variables of foreign products have a tremendous influence on the global marketers' success (Balabanis and Diamantopoulos 2004; Bruning 1997; Klein, Ettenson, and Morris 1998; Wall, Liefeld, and Heslop 1991).
Based on the theory of ethnocentrisms (Shimp and Sharma 1987), this study attempts to find which country's products are preferred by Chinese consumers and the reasons why Chinese consumers prefer those products. This study also investigates what foreign products Chinese consumers intend to purchase in the next five years and the major concerns when they choose foreign products. Finally, insight is provided to foreign marketers on what Chinese consumers intended to spend their disposable income in the next several years (2003 to 2007).
This paper specifically focuses on the impact of consumer ethnocentrism on Chinese consumers' intention to purchase foreign goods. The purpose of this study is threefold. First, the primary goal is to understand Chinese consumers' ethnocentric tendencies in the post-WTO era and their impact on the purchase intentions of Chinese consumers to foreign products. Second, this paper investigates the role of consumers' brand sensitivity in Chinese consumers' decision to buy foreign products. Third, the study examines the relationship between selected product cues and the consumers' decision to purchase imports. Finally, this study also investigates the influence of other demographic variables such as age, gender, occupation, and income on ethnocentrism.
Several contributions to global marketing are made. First, this study employs the 17-item CETSCALE with Chinese consumers. While CETSCALE has been used and tested in other countries and cultures, it has not been widely used with Chinese consumers (Klein et al used only 6 items of the scale). Second, most previous research has focused on a product's country of origin, an extrinsic cue only; this study also includes intrinsic product cues such as perceived quality, performance, price, variety, after-sale service, and packaging. Further, the data for this study were collected after China's entry into WTO, which has been considered a watershed event in the development of the Chinese economy. Consumer preferences for different products and consumption plans for the subsequent five years were also examined, which may provide more practical information for those foreign companies marketing in China.
This paper is structured as follows: first, we review the relevant literature regarding consumer ethnocentrism--thereby establishing the salience of the consumer ethnocentrism construct to marketing practitioners in China. Brand sensitivity is then introduced as a mediator to examine consumer ethnocentrism effects. Next, the data set employed in this study is described, and the sample composition in China is presented. The results and implications of this study are then presented and discussed. Finally, limitations and suggestions for further research are provided.
LITERATURE REVIEW CONSUMER ETHNOCENTRISM
The term "consumer ethnocentrism" is frequently used to represent the beliefs held by consumers about "the appropriateness, indeed, morality of purchasing foreign products" (Shimp and Sharma 1987, p.280). From this perspective, purchasing foreign products is undesirable because it is considered harmful to the economy of the consumer's own country and thus, unpatriotic. Therefore, ethnocentric consumers are more inclined to emphasize the advantages of domestic products and to neglect the positive attributes of foreign products (Sharma and Shimp 1995; Shimp and Sharma 1987).
Research from developed countries generally supports the notion that highly ethnocentric consumers overestimate domestic products, and underestimate imported products (Balabanis and Diamantopulos 2004; Shoham and Maja Makovec Brencinccirc 2003; Wang and Chen 2004). Even in the situation where there are no domestic brand or alternative available in a product category, consumer ethnocentrism and feelings of animosity can still have an important impact on the evaluation of foreign products in the Netherlands (Nijssen and Douglas 2004).
Consumer ethnocentrism is also a dynamic concept that is closely related to the degree of cultural openness, world-mindedness, as well as the changing pattern of patriotism, conservatism and nationalism (Rawwas, Rajendran, and Wuehrer 1996; Sharma, Shimp, and Shin 1995). For example, Japanese consumers evaluate the product that originate in the home country (versus foreign country) more favorably regardless of product superiority while consumers in the United States evaluate the product that originate in the home country more favorably only when the product is superior to competition (Gurhan-Canli and Maheswaran 2000). The American consumer ethnocentrism changed significantly after "911" and evidence showed that nationalism and internationalism became the most significant predictors of consumer ethnocentrism: more nationalistic and less internationalistic American consumers were more ethnocentric (Lee, Hong, and Lee 2003).
Research conducted in developing countries indicates that influence of ethnocentrism is related to other factors, such as, the levels of socio-economic and technological development of the country of origin and lifestyle dimensions of the home country (Kaynak and Kara 2001). For example, Reardon et al (2005) investigated how ethnocentrism and economic development within transitional economies (Kazakhstan, in the early stages and Slovenia, highly advanced) affect the formation of brand attitudes and attitude toward advertisements. The results show that ethnocentricity does result in negative advertisement effect, but the effect of ethnocentrism is stronger in a newly transitioning economy than in a more developed economy. In addition, in developing economies, imported brands are frequently distinguished from local brands by price levels. In the Philippines for instance, imports from all countries command significant price premiums over domestically produced products (Hulland, Todino, and Lecraw 1996). Recent research found that the magnitude of influence of consumer ethnocentrism on consumer preference varies with the specific country of origin and the particular product category (Balabanis and Diamantopoulos 2004).
BRAND SENSITIVITY
According to The American Marketing Association (AMA), a brand 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 to differentiate them from those of competition". Since brand is related to prestige, reliability, trustworthiness, social image, identification, and value for money (Klein et al 1998; Kotler and Gertner 2002; Watson and Wright 2000), it is able to enhance the perceived product "utility and desirability". A consumers' intention to buy domestic/ foreign products is influenced by the perceived product quality while brand is considered as indicator of quality, brand is among the external indicators of product quality (Kapferer and Laurent 1983, 1989) and therefore, has equity for consumers and translates into consumer preferences when consumers process product information (Kotler and Gertner 2002). For example, brand reputation as an attribute has impact on buyers' purchase decisions when they purchase video cassette recorders (d'Astous and Ahmed 1999).
Brand sensitivity is a psychological individual variable, which refers to the degree to which brand name plays a key role in the choice process of an alternative in a given product category (Kapferer and Laurent 1983, p.17). Consumer involvement is one of the factors that are the most directly related to brand sensitivity in a specific product category (Lachance, Beaudoin and Robitaille 2003; Muratore 2003). Involvement was defined as "a persons' perceived relevance of the object based on inherent needs, values, and interests" (Zaichowsky 1985, p.342) or as "the level of perceived personal importance and/ or interest evoked by a stimulus within a specific situation" (Antil 1984, p.204). In product (brand) class, the involvement is the relevance or perceived importance of the brand to the needs and wants of consumers. A high involvement product implies that an individual consumer perceives that product to be of high personal importance to him/her, or that product has higher symbolic and pleasure value, or has higher perceived risk. The marketing literature has indicated that involvement on a product range is "a minimum requirement for a potential brand sensitivity" (Muratore 2003, p.253). Put differently, a consumer always takes into account the presence of brand names on a range of products in which he or she is involved (Kapferer and Laurent 1985).
Depending on their level of involvement, consumers differ in decision process and information processing (Laurent and Kapferer 1985). In purchase intention, involvement...
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