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Consumer Perceptions of Global and Local Brands in the Indian Retail Industry
By Smriti Bajaj
(2006-2007)
A dissertation submitted to the University of Nottingham In part consideration for the degree of MA in Marketing
Consumer perceptions of Global and Local Brands in the Indian retail Industry
Abstract
Purpose The purpose of this dissertation is to investigate, in an emerging market, consumer attitudes towards local and foreign brand purchases against a background of factors like Culture, Country of Origin, Product quality and services. A comprehensive model broadens knowledge on consumer behaviour by incorporating the above mentioned factors. Design/methodology/approach- India is the emerging market studied. A total of 18 respondents were interviewed face-to-face using a semi structured questionnaire in the city of Mumbai and Indian students studying in the United Kingdom. Findings- It was found that the quality of global brands was perceived to be generally higher and superior to local brands. Most consumers also associated greater accessibility of foreign brands in the Indian market with better quality at lower prices. Indian consumers were not prejudiced against foreign brand names. In fact, they evaluated them higher on technology, quality, status and esteem than Indian brands and attributed higher credibility to those countries of origin. Research Limitations/implications- This study adds to the body of knowledge about consumer behaviour and their perceptions of global vs. local brands, in a massive and fast developing market. Managerial Implications- As companies become global, managers must possess a thorough understanding of the attitudinal and behavioural characteristics of emerging consumer markets, because what is known about consumers in one part of the world is not applicable to consumers in other parts. Key words- Global Brands, India, Culture, Country of Origin and Product and Service Quality, Materialism.
Acknowledgements
I would like to convey my heartiest gratitude to my supervisor Dr Prithwiraj Nath for intensifying my learning curve. Without his guidance and support, this dissertation would not have been possible.
I also extend my appreciation to my Mom, Dad and my family for their unconditional love and support throughout my work. Their unwavering support and encouragement accompanied me through this journey.
I would like to give my special thanks to all my friends, and the other respondents who took time out to participate in this research, acknowledging that this study would not have been possible without their assistance and support. I also extend my gratitude towards Mr Kishore Biyani who gave me really valuable insights on the Indian retail sector without which my research would have been incomplete.
Specifically I would like to thank my friends at the University of Nottingham for their cooperation and support and making this year extremely unforgettable for me.
Table of Contents
CHAPTER 1- INTRODUCTION .................................................................................... 6 1.1 Introduction........................................................................................................... 6 1.2Objectives of the Study.......................................................................................... 8 1.3Dissertation Outline and Structure......................................................................... 8 CHAPTER 2-LITERATURE REVIEW ...................................................................... 10 Introduction............................................................................................................... 10 Conceptual Model affecting Consumer Purchases11 2.1 Global Brands ..................................................................................................... 12 (a) Consumer Perceptions of Global and Local brands ......................................... 12 (b) Reasons for preferences for global over local brands ...................................... 14 2.2 Antecedents of Global Brand Purchases............................................................. 16 (a) The impact of Product Quality in Consumer Satisfaction Responses, Country of Origin and Brand Image ................................................................ 16 (b) The impact of Service Quality in Customer Satisfaction Responses Country of Origin and Brand Image. ............................................................. 19 2.3Impact of Culture on Brand Image..21 2.4 Materialism and Self Identity.23 2.5 Consumer Segmentation25 Summary ............................................................................................................ 29 CHAPTER 3- METHODOLOGY ................................................................................ 35 3.1Introduction...........................................................Error! Bookmark not defined. 3.2Research Method ................................................................................................. 36 3.3 Why Qualitative Research .................................................................................. 37 3.4 Research Design.................................................................................................. 37 3.5Data Collection .................................................................................................... 38 3.6 Conducting the Interviews .................................................................................. 39 3.7 Data Analysis..41 3.8 Concept Map...43 3.9 Summary44 CHAPTER 4- ANALYSIS AND DISCUSSION .......................................................... 45 4.1 Consumer Perceptions of Global and Local Brands ........................................... 45 4.2 Cues of Product and Service Qualities that Affect Consumer Purchases..47 4.3 Consumer Segmentation..49 4.4 Impact of Culture on Consumption Patterns...50 4.5 Materialism and Social Identity..51 4.6 Discussion and Findings.52 CHAPTER 5- CONCLUSION....................................................................................... 57 5.1 Managerial Implications ..................................................................................... 57 5.2 Key Findings....................................................................................................... 62 Consumer perceptions of Global and Local Brands in the Indian retail Industry 4
5.3 Limitations .......................................................................................................... 63 REFERENCES ................................................................................................................. 64 APPENDIX....................................................................................................................... 68
Chapter One
Introduction
1.1. Introduction This study aims in understanding consumer perception of global brands vs. local brands in the Indian retail industry. The Indian retail industry is undertaken for the study for the simple reason being the strong growth of the retail sector in India. Organized retailing is at its infancy in India and presents huge growth opportunity. Standing on the threshold of a retail revolution and witnessing a fast changing retail landscape, India is all set to experience the phenomenon of a global village. India presents a grand opportunity to the world at large, to use it as a business hub. A vibrant economy, India tops A.T. Kearneys list of emerging markets for global retailers and it has climbed up three notches to emerge as the second most attractive investment destination for global retailers (A.T Kearney, 2005)
India is very often called as the nation of the dukandars (shop keepers) - around 12 million retailers- consisting of more retail shops than those in the rest of the world put together. The retail trade is highly fragmented in nature and it is often remarked that retail in India is nascent and mostly unorganized. The local bania or kirana store, the paanwala and the vegetable vendor who are very much a part of the Indian retail landscape are termed together by many as the unorganized sector. While it is true that they do not use technology, they are well aware of the needs and wants of their customers, are aware of their likes and dislikes and they know what and how much to stock. Many of them also know their customers by name and offer add-on services like free home delivery and credit facilities. This is the traditional form of retail in India (Pradhan, 2007)
However the business of retail in India has seen significant changes in the last few years. We have seen the emergence of new formats and the application of global concepts and
constructs albeit with modifications to suit the Indian environment. The emergence of store formats like Pantaloons, Shoppers Stop, Big Bazaar and Westside have changed the retail scenario in our country thus making retail from unorganized to organized. Many international retailers have also entered the Indian market on the strength of rising affluence levels of the young Indian population along with the heightened awareness of global brands, international shopping experiences and the increased availability of retail real estate space. Development of India as a sourcing hub will further make India an attractive retail opportunity for the global retailers. Retailers such as Wal-Mart, GAP, Tesco, JC Penney, H&M, Karstadt-Quelle, Sears (Kmart), etc are stepping up their sourcing requirements from India and moving from third-party buying offices to establishing their own wholly owned / wholly managed sourcing and buying offices and this can only increase that attractiveness for the global players (Roy, 2005)
Globalization has a lot to do with consumers. Consumers in India are now becoming more informed, sophisticated and demanding. India is one of the youngest countries in the world, and the attitudes of the Indian consumers are changing at a rapid pace. With Globalization more and more Indians are becoming aware of westernized products and they feel that possession of global brands in front of their social groups (friends and families) gives them a sense of status and prestige. It is therefore proposed that products and possessions seem to have more of symbolic attributes rather than functional attributes. This study therefore focuses on the reasons as to why consumers in emerging markets particularly India prefer foreign brands over local brands and it also proves that consumption is carried out for reasons such as symbolic consumption, materialism and depiction of high status and image. However this study is restricted to purely to the upper middle classes.
Factors like Culture, Country of Origin, Materialism, Product and Service Quality exert a strong influence on brand image. These factors have been explored and their influence on consumer perceptions which finally leads them to the purchase of global brands has been explained. There seems to exist a gap in the Indian markets for young-relatively low cost retailer brands like H&M, Primark and Zara. This gap is evident due to the international fashion luxury brands that have been expanding into India over the past few years as Consumer perceptions of Global and Local Brands in the Indian retail Industry 7
compared to the high street brands. With brands like Gucci, Versace, Valentino, Chanel as well as the Indian designer wear brands such as Ritu Kumar, Rocky S, etc on the opposite end there are the unorganized local stores, selling their products in small family run retail outlets, hence leaving very few fashion brands operating in the middle end of the market. There are not many options left for young people who want speedy fashion at reasonable prices. In absence of strong brands in the womens wear segment, for women who are looking for stylized garments, be it casual or formal at reasonable prices, the current scenario is unbalanced with either the price element or the style element. Hence there is a need for brands for which can balance both the price and the style element.
1.2Objectives of the Study

The primary objective of this study is to understand consumer perceptions of global and local brands in the Indian retail industry. The secondary objectives are mentioned as follows
To analyze the factors that effect consumer preference for global brands. Factors like Product and Service Quality, Country of Origin, Culture, Materialism affect consumer perceptions of global and local brands. To determine the main reasons as to why people consume brands as symbolic identities. To identify the key discrepancies that exist between managerial and consumer expectations of delivering brand satisfaction which have led to the gap for foreign low cost retailer brands.
1.3 Dissertation Outline and Structure Chapter Two-Literature Review

This chapter provides a wide-spread discussion on the existing literature on global branding and how consumers perceive global and local brands. The reasons for their preferences have also been explored. Factors like Quality of Products and Services, Impact of Culture, Materialism, and Country of Origin have been discussed in detail Consumer perceptions of Global and Local Brands in the Indian retail Industry 8
which lead consumers towards global brand purchases. In addition market segmentation has also been discussed in order to relate to the class of people which help us achieve our objective of why people particularly from the upper middle classes construct symbolic meanings of brands. A model explaining the various antecedents that lead consumers to purchase global brands has been developed based on the literature review. Based on the model relevant hypothesis has been proposed in this chapter. The validity of these hypotheses will be tested and further examined in the following chapters.
Chapter Three-Methodology
This chapter clearly defines the basic purpose of this study. It then discusses in depth the relevant methodology that has been made use of to carry out this research. It also explains in detail how data for this purpose has been collected by briefing on the method of sampling and the technique used for collecting relevant information.
Chapter Four -Analysis and Discussion

This chapter discusses the findings from the data collected and concluding discussions are presented. For the purposes of analysis and to achieve the objectives of this research the results from the interviews have been broken down to various themes so that the hypothesis proposed in chapter Two can be tested. The themes have been broken down such that they correlate to the literature review to facilitate discussion of each issue in depth.
Chapter Five-Conclusion
This chapter presents a key summary of findings obtained from the above chapter. These findings would be of interest to managers to understand consumer perceptions of global and local brands in a developing country like India. It then provides various implications for managers of various global retailers like Tesco, H&M etc before entering the Indian markets based on the responses of the Indian retailers and lastly it discusses the limitations of this study.
Chapter 2
Literature Review
In light of the primary objective of this research to understand consumer perceptions of global and local brands this chapter will examine and present a detailed review on the reasons as to why consumers in emerging in emerging markets prefer foreign brands over local brands. Several studies show that preference for imported, branded products over domestic ones seems to prevail among consumers in developing countries (Batra et al, 2000). Consumers in developing economies appear to perceive that products from developing countries are of lesser quality and will result in higher levels of dissatisfaction (Okechuku and Onyemah, 1999: cited in Batra et al)
A conceptual model has been developed which explains what are the basic factors that lead consumers in emerging markets to purchase global over local brands. This model will be applied and tested in our analysis to conclude and explore the main reasons for consumer purchases of global over local brands and what are the further implications that managers need to keep in mind while moving into emerging markets.
This chapter has been divided into several sections. The first part throws light upon the consumer preferences for global brands. It then moves on to explaining the antecedents of global brand purchases that affect consumers like Service Quality and Product Quality, Culture, and Materialism . It also discusses Consumer segmentation in order to identify different classes in different societies in order to study the consumption behaviour.
Figure: The figure below depicts a conceptual model for understanding Consumer Purchase Behavior .
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Antecedents
Intermediaries
Consequences
Service Quality
Country of Origin
Product Quality
Consumer Satisfaction
Purchase of Global Brands
Culture Brand Image Materialism
Consumer as Interpreter
Self Identity
Social Status
Value
Prestige
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2.1 Global Brands
People are pawns in the hands of giant companies with huge advertising budgets and global reach. Brands bring something that people think is better than what they feel. (The Economist)
Today brands have come to represent a fascist state where we all salute the logo and have little opportunity for criticism because our newspapers, television stations, Internet servers, streets and retail spaces are all controlled by multinational corporate interests (The Economist, 2004). With globalization touching the nooks and corners of every nation a global consumer segment has arisen whose needs and interests are becoming increasingly homogeneous. The growing integration of international markets as well as the growth of competition on a worldwide scale implies that adoption of a global perspective has become increasingly imperative in planning marketing strategy (Douglas, 1987)
As the world is shrinking in to a global marketplace, it is increasingly significant to understand the consumers perception of global brands and local brands. Studying consumer perceptions towards global vs. local brands have substantial implications in marketing and will also serve as a citation for future research. There would also be several reasons for consumers perceptions and attitudes towards these brands. Thus there is a need to uncover the reasons for consumers preference for global brands over local brands.
2.1. (A) Consumer perceptions of global and local brands. A local brand can be defined as a brand that exists in one country or in a limited geographical area (Wolfe, 1991). Schuiling et al (2004) point out that local brands belong to a local, international, or a global firm, they also provide a link between national economy and individual well-being. Several researchers define global brands as a brand that is marketed under the same name in multiple countries with similar and centrally located coordinated marketing strategies.
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Schuiling et al (2004) conducted an exploratory study across European countries to see how consumers perceive local brands. The study revealed that local brands benefit from strong brand equity and also benefit from higher consumer awareness than international brands do and they enjoy a strong brand image. They not only benefit from a good quality image but also from a better value and trust perception than international brands do (Holt et al, 2003). Value is linked with the fact that prices of local brands are usually lower than those of international brands, providing consumers as sense of better value for money (Schuiling et al, 2004). Local brands are perceived as more down to earth than an international brand, which means that local brands offer a more basic/no frills brand proposition. Local brands are also linked more to local traditions and local cultures than international brands are. It was also found that trust is an important advantage for local brands because it provides a unique relationship with consumers that take years to develop. Local brands are not more flexible than global brands in terms of their marketing activities when they compete in a foreign product category due to cultural categories being associated with the product category (Eckhardt, 2005). Just as global brands need to conform to international marketing dictums, local brands sometimes need to conform to deeply held preconceptions about product category in which they operate.
When a brand is marketed around the world, that fact alone gives it an aura of excellenceand a set of obligations (Holt et al, 2004). A study conducted by Douglas et al (2004) revealed that consumers all over the world associate global brands with three main characteristics and evaluate them on those while making purchase decision. These include Quality Signal, global myth and Social responsibility. Corsby, (1979) defines quality as conformance to requirements. Lewis and Booms (1983) are of the view that quality is a comparison between Expectations and Performance. Consumers prefer global brands because they usually offer more quality and better guarantees than other products. That perception often serves as a rationale for global brands to charge premiums. Consumers look to global brands as symbols of cultural ideas. They use brands to create an imagined global identity that they share with like-minded people. They feel that Local brands show them what they are while global brands show them what they want to be, global brands often make them feel like citizens of the world, and they somehow give them a sense of identity (Holt et al, 2004). Consumer perceptions of Global and Local Brands in the Indian retail Industry 13
Much of the assumed advantage of global brands centres on the status and prestige associated with global reach. A study of more than 10,000 consumers by Johansson and Ronkainen (2005) revealed that even though domestic brands are likely to be more familiar than global brands, where familiarity is equal, the global brands will have higher esteem. The researchers asserted that global branding will arguably face different challenges by product category. Certain categories such as automobiles and computers are deemed more global in terms of the similarity in consumer preferences. Apart from discussing the consumer perceptions of local and global brands it is also worthwhile exploring the reasons of preferences for global over local brands.
2.1. (B) Reasons for preferences for global over local brands According to Steenkamp, (2003) consumers become perceptive to global brands when consumers believe the brand is marketed in multiple countries and is recognised as global in these countries This perception occurs in two forms; consumers realize that the same brand is found in other countries through media exposure, word of mouth communication, or during travel overseas. Secondly as studied by Alden et al (1999) that a brand may assert or imply its globalness through marketing communications that use brand names, endorsers, advertising themes, etc.. Consumers prefer brands that they perceive as originating from a non-local country, especially from Western countries, more than they do local brands and that preference is linked not only to perceived quality but also to social status (Alden et al, 1999). According to Peterson and Jolibert (1995), consumers in developing countries generally seek to emulate western consumption practices and lifestyles and purchase foreign brands. It is asserted that considerable similarities exist in the needs of consumers around the world (Domzal and Unger, 1987) and this convergence in consumer needs is largely attributed to increased cross border population mobility and electronic mobility facilitated by telecommunications technology (Quelch, 1999).
Kapferer (1997) suggests that consumers may prefer foreign brands because of associations of higher prestige. Steenkamp et al (2002) argue that the influence of perceived prestige on purchase intention is stronger when product category is more Consumer perceptions of Global and Local Brands in the Indian retail Industry 14
conspicuous and its ownership or consumption is more publicly visible. The world scale of global brands allows people to associate themselves with globally recognized events (World Soccer Cup, Formula one, Olympics, etc) and celebrities (Brad Pitt, Beckham etc). Through a process of meaning transfer, the prestige attached to these events and celebrities may be transferred to the sponsoring global brand (Mc Cracken, 1986).
Empirical study conducted by Steenkamp et al (2003) has revealed that prestige is the second factor driving global brand preference. Foreign brands of most consumer durables and non durable categories were given significantly higher mean attribute ratings on status and esteem except where cold drinks and ice creams were concerned. A study conducted by Kinra (2006) held that COO credibility of foreign brands was a significant factor influencing consumer attitudes and preferences as it was correlated highly with quality and higher status and esteem.
According to Kapferer (1997), if a brand is viewable as globally available, consumers may attribute higher quality to the brand because such quality is likely to be thought of as critical to global acceptance. According to Kirmani and Baumgartner (2000), perceived quality is defined as a consumers evaluation of a brands overall excellence based on intrinsic (e.g. performance, durability) and extrinsic cues (e.g. brand name warranty)
Global brands often appeal to human universals and are purchased to signal membership in worldwide consumer segments. This signifies that global brands are often seen by consumers as brands that convey worldwide citizenship, when consumed (Dawar and Parker, 1994). A number of authors (Appadurai, 1990; Hannerz, 1990) note that media flows, increased travel, and other factors are creating widely understood symbols and meanings reflected in global brands that, in turn, communicate membership in the global consumer community with all its positive connotations (Mc Cracken, 1986). Although this was being said some twenty years back, this condition has grown eventually stronger.
Global Brands are viewed as luxury goods for an average Indian. The market for luxury goods has recently experienced a considerable growth. From the above it can be concluded consumers in developing countries tend to evaluate global brands in terms of Consumer perceptions of Global and Local Brands in the Indian retail Industry 15
better product and service quality, they also tend to relate global brands as symbols of social status. The COO of origin has also been found as a significant factor influencing global brand preferences in terms of status and quality. All these factors are discussed in detail below.
2.2Antecedents of Global Brand Purchases Quality affects consumer behaviour to a great extent. The importance of quality is further enhanced by Aaker (1991), who categorized perceived quality as one of the key subdimensions of brand equity. Quality can be defined as the consumers judgement about a products overall excellence or superiority (Zeithmal, 1988). Similarly, the definition of quality by Aaker (1991) is the customers perception of the overall quality or superiority of a product or service with respect to its intended purpose, relative to alternatives.
Satisfaction is the result of a post consumption or post usage evaluation, containing both cognitive and affective elements (Olivier, 1997). According to the expectancy disconfirmation paradigm (Olivier, 1980), customers judge satisfaction by comparing previously held expectations with perceived quality or service performance. Managerially, it is extremely important to understand how to create and offer customer satisfaction. Therefore, both in practice and in academic research, quality has emerged as a critical issue for determining customer satisfaction.
2.2 (A)The impact of Product Quality in Consumer Satisfaction Responses, Country of Origin and Brand Image. Products constitute an array of intrinsic and extrinsic attributes that consumers use to determine product quality. Intrinsic attributes are an integral part of and inseparable from physical product. Extrinsic attributes (e.g.-price, country of origin, or a brand name) are not physical components of a product, and changes have no material effects on the actual product, yet they often serve as cues that may affect consumers quality perceptions (Ghauri and Cateora, 2006)
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Garvin (1984: 1987) cited in Tamni et Sebastianelli (2002)
provides a well-known
framework for thinking about product quality that is often used by consumers to evaluate products that deliver satisfaction. These include: performance, features, reliability, conformance, durability, serviceability, aesthetics and perceived quality. The table below provides an explanation of the above.
Table 1
Dimension
Definition
Performance Features
The primary operating characteristics of a product The secondary characteristics of a product that supplement its basic functioning.
Reliability
The products profitability of failure-free performance over a specified period of time.
Conformance
The degree to which a products physical and performance characteristics meet design specifications.
Durability
A measure of useful product life, i.e., the amount of use a customer gets from a product before it deteriorates or must be replaced.
Serviceability Aesthitics
The ease, speed, courtesy, and competence of repair. How the product looks, feels, sounds, tastes or smells, a matter of personal preferences
Perceived
Quality based on image, brand name, or advertising rather than Product attributes and, of course, is subjectively assessed.
Source: Garvins Eight product quality dimensions cited in (Tamni et Sebastianelli) (International Journal of Quality and Reliability Management)
Hooley et al (1998) found that consumers often tend to relate product quality to pricing as well. High pricing is generally associated with higher quality, superior brand image and strong reputations. German manufacturers such as Mercedes, BMW and Audi have successfully positioned their offerings at the high quality end of spectrum through superior Consumer perceptions of Global and Local Brands in the Indian retail Industry 17
design, technical engineering skill and attention to quality control. For quality positioning to be viable, customers must be prepared to pay for superior quality as there are usually, though not always higher costs associated with offering a higher quality product. In the automotive industry, German manufacturers such as Mercedes, BMW and Audi have successfully positioned their offerings at the high quality end of spectrum through superior design, technical engineering skill and attention to quality control through the manufacturing process.
Zhang (1999) defines COO as information pertaining to where a product is made. It is operationalised and communicated with the phrase Made in and the country name. Johansson et al (1985) define country of origin as the country where corporate headquarters of the company marketing the product or brand is located. Typically, this is the home country for a company. It can also be defined as any influence that the country of manufacture has on a consumers positive or negative perception of the product and services (Cateora, 1996).
Consumers in emerging countries consciously shop for quality goods but often are unfamiliar with product category attributes and benefits (Batra, 2000). Therefore, brands and COO serve as surrogates to inform the consumer about products quality. A study conducted by Schooler (1965) in Guatemala revealed that products made in less developed countries were not evaluated as quality products. Consumers were biased for or against products from a less developed country when they were evaluating products made in different, less developed countries.
Consumers hold stereotyped images about countries and these images are used as information cues in judging products from different origins (Lotz and Hu, 2001). They also tend to generalize their attitudes and opinions across products from a given country, based on their familiarity and background with the country and their own personal experiences of product attributes such as technological superiority, product quality, design, value for money, status and esteem, and credibility of country of origin of a brand. Favorable country perceptions are known to lead to favorable perceptions of associated attributes such as product quality indicating thereby, that consumer evaluations are Consumer perceptions of Global and Local Brands in the Indian retail Industry 18
governed by influences other than the quality of the product (Peterson and Jolibert, 1995). In this context COO effect refers to the extent to which the place of manufacture influences consumers product evaluations.
One might generalize that the more technical the product, the less positive is the perception of one manufactured in a less developed country. There is also the tendency to favor foreign-made products over domestic-made ones in less developed countries. Not all foreign products fare equally well because consumers in developing countries have stereotypes about the quality of foreign- made products even from industrialized countries. A survey of consumers in Czech Republic found that 72 percent of Japanese products were considered to be of the highest quality, German goods followed with 51 percent, Swiss goods with 48%, Czech goods with 32% and last, the United States with 29% (Cateora, 1996)
2.2 (B) Service Quality Impact on Customer Satisfaction, Country of Origin and Brand Image Over the past two decades the theory and practice of service quality has received considerable attention. Viewed as a means by which customers distinguish between competing organisations (Marshall and Murdoch, 2001), service quality is known to contribute to market share and customer satisfaction. Thus the pursuit of quality services in organisations is driven by the need to survive and remain competitive (Agus et al, 2007). Perceived service quality can be defined as a global judgement or attitude related to the superiority of a service (Parsuraman et al, 1988). The term perception pertains to the consumers beliefs concerning the received or experience. (Brown and Swartz, 1988). Service quality has been discussed in only a handful of writings (Gronroos 1982; Lehtinen and Lehtinen 1982; Lewis and Booms 1983; Sasser, Olsen and Wyckoff 1978). According to them Service quality is a measure of how well the service level delivered matches customer expectations. Delivering quality service means conforming to customer expectations on a consistent basis. In line with this thinking Parsuraman et al (1988) developed a global measurement for service quality, namely SERVQUAL. SERVQUAL has been applied to measure service quality in various service industries by many
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researchers. They highlighted five dimensions of service quality (tangibles, assurance, reliability, responsiveness and empathy) which are explained in the table below.
Table 2
Tangibles
Physical facilities, equipment, and appearance of personnel.
Reliability
Ability to perform the promised service dependably and accurately
Responsiveness
Willingness to help customers and provide prompt service
Assurance
Knowledge and courtesy of employees and their ability to inspire Trust and confidence
Empathy
Caring, individualized attention the firm provides its customers.
Source : Parsuraman et al, 1988 (Journal of Retailing)
Most of the studies on country of origin have revealed that COO of a product does affect product evaluation. Studies also reveal that COO affects the consumption of services. Javalgi et al. (2002) examined three types of services that were affected by COO. These include core services e.g. (travel services), supplementary services, e.g. (warranties) and cross-national service comparison where services are produced (source) and consumed in individual countries.
When examining core services by COO, consumers tend to prefer their own, and from economically progressed countries (Javelgi et al, 2002). Supplementary services, those offered along with the sale of products, tend to be important in developing, competitive advantage (Lovelock, 1995, 1999) as cited in Javelgi et al. It appears that most consumers hold negative images of products from economically less progressed countries (Javelgi et al, 2002).
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Finally when services are produced and consumed in individual countries, consumers tend to exhibit similar attitudes and preferences with regard to the criteria they deem important when evaluating services (Javalgi et al, 2001). The challenge for service providers is that they must anticipate consumers concerns regarding a specific COO, especially services originating from less developed economies.
On the basis of the above literature it is hence proposed:
H1: Customer satisfaction is enhanced by product and service quality which are perceived higher in global brands. H2: There are country specific advantages for brands from countries which are seen as strong in that product category. Such a country of origin effect has a direct impact on product quality which provokes consumers to purchase global brands. H3: Service Quality is affected by the country of origin which affects purchase of local brands.
2.3 Impact of Culture and Acculturation on Brand Image Globalisation of markets and international competition are requiring firms to operate in a multicultural environment. In addition, migration patterns and transnational
communication media like satellite television are creating multicultural populations in domestic markets and exposing consumers to alternative behaviours and wants (Craig and Douglas, 1997). Hence it is very important to understand people and the background from which they prevail. Understanding people means understanding their background, from which present and future behaviour can be predicted. Their background has provided them with a certain culture. The word culture is used here in the sense of the collective programming of the mind which distinguishes the members of one category of people from another (Hofstede, 1994).
Culture is the main determinant for consumer behaviour. Since the literature on culture is very broad, it is necessary to narrow down the focus of this research to meet the purpose of
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findings of this study by describing certain points of culture influencing consumer behaviour.
Usuiner (2000) points out factors like individualism, collectivism, independence, interdependence, loyalty, consumers involvement, and cognitive styles and have cultural implications on human behaviour which affect consumption of which only the independent and Interdependent self is explained below as it realtes directly to our research purpose. Independent and Interdependent self. As cited in Usuiner (2000), Markus and Kitayama (1991) have outlined two construals of the self: the independent and interdependent. The independent self corresponds to the western conception: it is based on assumption of individualism (people are seen as inherently separate and distinct). In the area of consumption personal preferences are suppose to reflect a persons tastes, values and convictions; expression of self is encouraged. On the other hand, the inter dependant self of most Asians is based on the assumption of collectivism (people are seen as not fully separable that is they are connected to each other by a multiple of overlaps and links: they share a common substance). As a result in identity lies in familial and social relationships. People with interdependent selves tend to value the criteria of appropriate social conduct in their consumption behaviour. Chiou (1995) notes that individuals in Asian societies have to consider the wider implications of their actions and it causes consumers to identify certain roles and behaviors and to have less personal freedom in adopting new products. Independent and Interdependent selves are reflected in the concept of belonging to a certain class.
India represents a cultural society in which most people belong to a particular group or a society which expects the people in behaviour of a special kind and certain obligations as well. Indias collective culture has significant impact on individuals consumption behaviour. Cultural variables influence the symbolic meanings individuals give to brands and thereby leading them to purchase global brands due to a better brand image.
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Acculturation The increase migration of people around the world creates complexity in most markets. As these people are exposed to their host culture they begin to acculturate and adopt its norms of behaviour. As Douglas and Craig (1997) suggest, increased migration is one of the forces that are causing radical changes in consumer behaviour. Immigrants not only adapt, or acculturate, to their host culture, but also they change the culture themselves. Because of the mutual influence between immigrants and their host culture, some researchers refer to acculturation as one of the components of a more general construct, cultural interpenetration, which includes the bidirectional links between immigrants and their host culture (Andreasen, 1990).
Acculturation has been found to moderate the effect of sub(culture) on consumer behaviour by a number of researchers. Studies have found that acculturation has a moderating effect on affective variables such as attitudes towards advertising (Ueltschy and Krampf, 1997) and on the comparative persuasion of TV commercials in different languages (Roslow and Nicholls, 1996). Acculturation also moderates sub cultural influences on behaviour, such as spousal or family roles in consumer decision making (Ganesh, 1997, Webster, 1994), general consumption patterns (Wallendorf and Reilly, 1983), the weights given to certain attributes in the choice process (Kara and Kara, 1996), and brand loyalty and purchase of prestige products (Deshpande et al, 1986). Thus the moderating role of immigrant acculturation highlights the importance of understanding how culture affects consumer behaviour at the domestic level (cited in Luna and Gupta, 2001).
On the basis of the above literature it is hence proposed: H4: In developing countries the increase influence of modernisation and westernisation (impact of culture) affects consumer perceptions of brand image.
2.4Social Identity and Materialism Social Identity theory defines self in terms of personal identity and social identity. Individuals shift their focus from personal to social identity, which influences their Consumer perceptions of Global and Local Brands in the Indian retail Industry 23
perceptions, cognitions, evaluations and attributions about issues and events. Individuals want to make sense in the increasingly complicated world and one way of doing this is from the shift to social identity, the categorisation from which they belong to and to be recognised as part of (Burgess, 1999).
As cited by (Burroughs & Rindfleisch, 2002)) Materialism is widely viewed as an important life value. It can be defined as a set of centrally held beliefs about the importance of possessions in ones life. It can be viewed as the value a consumer places on the acquisition and possession of material objects. For some possessions are essential to their lives and identities. Materialism represents a mind set or constellation of attitudes regarding the relative importance of acquisition and possession of objects in ones life. A defining characteristic of highly materialistic individuals is a belief that well being can be enhanced through ones relationships with objects.
For materialists, possessions and their acquisitions are at the fore front of personal goals that dictate ways of life. They value possessions and their acquisitions more highly than most other activities in life. Belk (1984) defines it as the importance a When a large portion of the society avidly desires to consume goods for reasons that economists have traditionally defined as nonutilitarian (e.g. status seeking, novelty), a consumer culture is said to exist.
According to Inglehart (1990, 1994) a persons basic sense of economic insecurity is formed during childhood. If a person experienced affluence and economic stability as a child, later they will pay less attention to economic concerns and allocate more attention to higher order needs, such as self-actualisation, freedom and quality of life. He also advocated that if a person experiences economic difficulty in their early life, they will tend to carry the fear of poverty with them through their entire lifetime and may become obsessed with acquiring more wealth and possessions even though there is no real risk of loosing their wealth. Hence it can be perceived that economic insecurity as a child can lead to materialism as an adult.
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Ingleherts (1990, 1994) theory can be linked to the materialist culture among the Indians. According to his theory individuals may become obsessed with acquiring more wealth and possessions even though there is no real risk of loosing their wealth. Economic insecurity as a child may lead to materialism as an adult. It is well accepted that India is a developing economy and has been continuously facing rapid economic growth in the last several years. There has been a sudden rise of a middle class with incredible spending power. This indicates that the middle class is increasingly becoming richer and entering into the upper class categorisation. Hence, there is a large faction of the population who have experienced economic instability and poverty in their childhood.
Inglehert concludes that societies, which experience economic instability and perceived poverty, should develop materialistic cultures. As a result we can expect: 1 richer nations would have fewer materialists than poorer ones; (2) societies that have experienced economic growth should show intergenerational differences in which the young are less likely to be materialists than are the old and (3) the size of those intergenerational differences should be greater in society that have experienced little or no growth.
Ger and Belk (1993) point out that in collectivist cultures the wealth status and possessions of the family maybe more important that that of the individual, therefore as compared to people from the West tend to integrate their sense of self. Thus the self is once again emphasised, and is illustrated how it manifests through possessions, which in turn highlights the development of materialistic behaviour. According to Richard and Dawson (1992) materialist tend to judge themselves and others success by the quality and quality of possessions attainted thus the value of the possessions stem not only from their ability to reflect status, but also their ability to project a sought after self-image.
It is hence proposed H5: The materialist individualists are inclined more towards global brands as they provide them with higher status, identity and prestige.
2.5 Consumer Segmentation Consumer perceptions of Global and Local Brands in the Indian retail Industry 25
In todays increasingly competitive global market, market segmentation is essential to the survival of global companies. Market segmentation permits the market managers to reap the advantages of both standardisation and customisation (Baalbaki and Malhotra, 1993). A segmentation approach is essential in either domestic or international markets, is no longer questioned, rather the bases for segmentation has become the focus (Day et al, 1998)
Consumer segmentation is the selection of groups of people who are most applicable for the product. Following are a few segmentation techniques that companies implement either in isolation or combination.
Geographic segmentation: This calls for dividing the markets into geographical units. such as nations, states, regions, counties, cities or neighbourhoods. A company may decide to operate in a few geographical areas, or operate in all areas but pay attention to geographical differences in needs and wants.
Demographic segmentation- This consists of dividing the market groups based on variables such as age, gender, sexual orientation, family size, family life cycle, income, occupation, education, religion, ethnic community and nationality. Demographic factors are the most popular bases for segmenting customer groups. One reason is that consumer needs, wants and usage rates often vary closely with demographic variables.
Psychographic segmentation- This divides buyers into groups based on social class, lifestyles or personality characteristics. People in the same demographic group can have very different psychographic make-ups. (Kotler et al, 2004)
Social classes are societys relatively permanent and ordered divisions whose members share similar values and interests and behaviours. All societies place people in particular strata. In economic oriented societies they may divide people into haves and haves not, but other criteria are feasible based on birth, education, even in the absence of obvious wealth or income criteria (Usunier, 2000). Not only do class systems differ in various parts of the world: the relative sizes of the classes vary with the relative prosperity of countries. Some classes have a greater influence on buying behaviour than others. In most western countries Consumer perceptions of Global and Local Brands in the Indian retail Industry 26
lower classes may exhibit upward mobility, showing buying behaviour similar to that of upward classes. But in other cultures where a caste system gives people a distinctive role, buying behaviour is more firmly linked to social class. Upper classes in almost all societies are often similar to each other than the rest of their own society. While making purchases they make choices that are less culture bound than those of the lower classes. This tendency accounts for the strength of global luxury brands such as Burberry, Tag Heuer and Mont Blanc. Generally the lower social classes are more culture bound, although young people of all classes are less so and account for the global youth brands like Nike, Coca-cola and Swatch.
Wong and Ahuvia (1995) argue that Americans generally see ones social class as primarily reflecting ones personal income level which in turn is believed to reflect (atleast in part) ones individual professional merit. But to the interdependent Chinese, class does not belong to oneself, but also to ones group, usually ones family. Relatives and kinship clan. Like many other elements of the self and others, social classes are important for consumer behaviour, people expressing their class differences, real or fantasized, by consumption (Usuiner, 2000).
Marketers have also used personality variables to segment markets, giving their products personalities that correspond to consumer personalities. Honda used personality segmentation to power its way into the US market.
Behavioural segmentation- divides buyers into groups based on their knowledge, attitudes, uses or responses to a product. Many marketers believe that behaviour variables are the best starting point for building market segments. Here elements such as user status, usage rate, loyalty status are taken into consideration.
Tam and Tai (1997) identified five distinct segments in China that can be extended to the Indian markets as well. The largest segment to emerge were identified as traditionalists and accounted for 41% of the population. According to the findings the traditionalists adhered closely to the old attitudes and beliefs. They were resistant to change and reluctant to try new and premium products. They also tended to remain strongly loyal to the brands Consumer perceptions of Global and Local Brands in the Indian retail Industry 27
that they had frequently purchased. Strivers and achievers were defined mainly by their spending habits and materialistic values. Strivers were very materialistic, immersed in an aggressive pursuit of achievement and made up about 20% of the population. Most of them wanted to change their roles in lives but it is probable that the majority would not achieve this. Strivers were impulse buyers and insisted on instant gratification. Achievers also valued achievement and materialism, but they have been more successful than strivers. They could be described as yuppies and were found to be more keen on luxuries that they constituted a special sub group: super-achievers. They were the first to latch onto new trends, products and premium brands. Adapters were generally older people who were comfortable with their accomplishments in life but were still open to new experiences.
China and India have over a billion consumers, presenting tempting prospects for international companies. The experience of international companies suggests that despite the attractiveness of these emerging markets, their consumers remain an elusive target. A common fallacy lies in the thinking that there are huge margins to be gained from skimming the 3-5% affluent consumers in emerging markets who have global preferences for luxury goods and purchasing power. In India Coca cola came in at the top and tried to trickle down. It launched pricey 350 ml bottles instead of offering cheaper smaller ones. Rather than concentrating on the main towns, it went for the whole of India with a single size and price, using expensive and flawed distribution and advertising. Ford and other motor manufacturers also misjudged the Indian market. They started with medium-sized cars in a market dominated by small ones, and expected to compete with nearly 70% overcapacity in medium sized car manufacturing. Kelloggs offered premium priced cereals supported by expensive marketing. They soon learnt that, although market research showed that India was the largest cereal-consuming nation on earth, consumers were choosing to buy Champions products costing a fifth price of Kelloggs. Analysts argue that it is important to define the Indian market not by income alone, but by consumption. (Kotler et al, 2004)
2.6Summary
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The table below summarises the key findings of the authors that are directly related to our research objectives. From this table it also becomes clear how the conceptual model has been developed.
Section
Author/ Article
Key Findings
Consumer Perceptions of Global and Local Brands.
Holt et al (2003) Managing the Transnational Brand: How Global Perceptions Drive Value, working paper, Harvard Business School.
Local brands have strong brand equity and higher consumer awareness but global brands do have a higher brand image
Douglas et al (2004) How Global Brands Compete, Harvard Business Review
Global brands are associated with Quality Signal, Global Myth and Social Responsibility
(Alden et al, 1999), Brand Positioning through advertising in Asia, North America and Europe: the role of global consumer culture, Journal of Marketing, Vol. 63, pp.75-87.
Consumers prefer brands that they perceive as originating from a nonlocal country, especially from Western countries, more than they do local brands and that preference is linked not only to perceived quality but also to social status.
Peterson, R.A. and Jolibert, A.J.P (1995), A meta-analysis pf countryof-origin effects, Journal of International Business Studies, Vol. 26 (4), pp. 883-900
Consumers in developing countries seek to emulate western consumption practices and lifestyles and purchase foreign brands 29
(Culture)
Steenkamp et al (2003) ), How perceived brand globalness creates brand value, Journal of International Business Studies, Vol. 34 (1), pp. 53-65.
Studies revealed that prestige was one of the important factors driving global brand preferences. Foreign brands of most consumer durables and non durable categories were significantly given higher mean attribute ratings on status and esteem.
Product Quality
Ghauri, P. and Cateora, P (2006), International Marketing, 2ND EDN, McGraw-Hill Companies, Berkshire. Cateora (2000)
Extrinsic cues (Price, Country of Origin, Brand name) and Intrinsic cues were identified which affect quality of Products
Garvin (1984: 1987), cited in Performance, Features, Sebastianelli et al, 2002) International Journal of Quality and Reliability Management Reliability, Conformance, Durability, Serviceability, Aesthetics and perceived Quality were identified as cues to judge product Quality Hooley, G.J., Mller, K. and Broderick, A.J. (1998) Competitive Positioning and the Resource Based View of the Firm, Journal of Strategic Marketing, 6(2), 97-115. Product Quality is also associated with high pricing leading to superior brand image and strong reputations thereby affecting customer satisfaction
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Batra et al, (2000) Effects of Brand Local and Nonlocal Origin on Consumer Attitudes in Developing Countries, Journal of Consumer Psychology, Vol. 9 (2), 8395.
Consumers use COO as an important cue to shop for quality products, COO informs the consumers about a products quality when they are unfamiliar about a products.
Peterson, R.A. and Jolibert, A.J.P (1995), A meta-analysis pf countryof-origin effects, Journal of International Business Studies, Vol. 26 (4), pp. 883-900
Consumers generalise their attitudes and opinions across products from a given country, based on their familiarity and background with the country and their own personal experiences of product attributes such as technological superiority, product quality, design, value for money, status and esteem, and credibility of country of origin of a brand.
Service Quality
Parsuraman et al (1998), SERVQUAL: A MultipleItem Scale for Measuring Consumer Perceptions of Service Quality, Journal of Retailing, Vol. 64(1)
Five dimensions affecting service quality were identified tangibles, assurance, reliability, responsiveness and empathy that have an
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impact on brand image Javalgi, R., White. D. (2002), Strategic Service quality is affected Challenges for the by COO. marketing of services internationally, International Marketing Review, VOL.19, no.6, pp.563-581
Culture/ Accultuartion
Usunier. J, (2000), Marketing Across Cultures, Chapter 3 and Chapter 4, Third Edition, Prentice Hall, Pearson Education.
Factors like Individualism, Collectivism Independence, Interdependence, loyalty and cognitive styles have cultural implications on human behaviour which affect consumption thereby affecting brand image.
Douglas S.P. and Craig, C.S. (1997), The changing dynamic of consumer behaviour: implications for crosscultural research, International Journal of Research in Marketing, Vol. 14, pp.379-95.
Increased migration is one of the forces that are causing radical changes in consumer behaviour. Immigrants not only adapt, or acculturate, to their host culture, but also they change the culture themselves. Because of the mutual influence between immigrants and their host culture, some researchers
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refer to acculturation as one of the components of a more general construct, cultural interpenetration, which includes the bidirectional links between immigrants and their host culture Self Identity Burgess, 1999 Individuals want to make sense in the increasingly complicated world and one way of doing this is from the shift to social identity, the categorisation from
which they belong to and to be recognised as part of Materialism Inglehert, R. (1994) Economic Security and a persons basic sense of Value Change, The economic insecurity is American Political Science formed during childhood. Review, If a person experienced affluence and economic stability as a child, later they will pay less attention to economic concerns and allocate more attention to higher order needs, such as self-actualisation, freedom and quality of life. Richins. M, and Dawson. R, (1992), A Consumer materialist tend to judge 33
Values Orientations for Materialism and Its Measurement: Scale Development and Validation, Journal of Consumer Research, Vol.19, pp.303
themselves
and
others
success by the quality and quality of possessions
attainted thus the value of the possessions stem not only from their ability to reflect status, but also their ability to project a sought after self-image
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Chapter 3
Methodology
3.1Introduction This chapter discusses the methodology employed in carrying out the proceeding study. Initially the aims and purpose of the research are identified, as they provide the foundation of selecting the appropriate methodology. It then discusses the data collection and the method used for data analysis.
3.2Research Method Research Methods are of basically two types, qualitative and quantitative. In both the methods the marketer is interested in gaining knowledge about the market. Since the literature on consumer perception towards global and domestic brands is not yet rich enough to provide a sound conceptual foundation for investigating consumer purchase behaviour, an exploratory qualitative study was undertaken to investigate the reasons for consumer preferences for global over local brands in emerging markets
Qualitative research is open ended, in depth and seeks unstructured responses that reflect the persons thoughts and feelings on the subject. Qualitative research interprets what the .people in the sample are like, and their outlooks, their feelings, the dynamic interplay of their feelings and ideas, their attitudes and opinions, and their resulting actions (Ghauri and Cateora, 2006). According to Patton (1980) the main objective of qualitative research is to gain in-depth understanding of a situation which is based on the researchers immersions in the phenomenon to be studied, this can mean collecting data to provide a detailed description of the events occurring and situations and interactions occurring between people.
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Semi structured interviews of executives in four nationally recognized retail organizations and of Indian customers residing in the U.K. and India were conducted to gain insights about the following questions:
What are the main reasons for consumer preferences of global over local brands? What do managers of retail organizations perceive to be the key attributes of a brand that delivers customer satisfaction? What problems and tasks are involved in delivering products that maintain customer satisfaction?
What do consumers perceive to be the key attributes of a brand that delivers satisfaction?
Do discrepancies exist between the perceptions of consumers and brand owners/ retailers?
3.3Why Qualitative Research... The main purpose of this research is to explore the impact of various factors like culture, country of origin, quality on the consumption patterns of consumers and also to explore the materialistic attitudes among the Indians which makes them class and prestige conscious that lead them to purchase foreign brands. The changes in the retail sector has also been looked into as a result of foreign brand entry which has affected the consumption patterns of the consumers, thus making qualitative research the best method for exploring the outlooks, opinions, interplay of feelings and ideas of consumers. With this method the researcher could interact more freely with the retailers and consumers and gain an indepth insight on consumer purchase behaviour. By using qualitative research, the experience can be described and the opinions of how and why questions can also be answered.
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3.4Research Design (Sampling Method) In order to opt for the appropriate data collection approach, a researcher should plan out the sampling method. Sampling involves selection of the research participants for a particular study. Various types of sampling methods are used by researchers which can broadly be divided into probability and non-probability sampling. Probability sampling refers to sample designs where units are selected by some probability mechanism, allowing no scope for the influence of subjectivity (Greenfield, 1996). There are various approaches to probability sampling some of which are random, systematic, stratified and stage sampling (Coleman and Briggs, 2002). Non probability sampling allows interviewers to choose sample members at random (meaning as they wish or where ever they find them) which is not random sampling.
Due to the availability and accessibility of the sampling frame, a probability sample was not feasible for the present research. Non probability sampling which is non-random and subjective (Cooper and Schindler, 1999) is applied in the study to carry out the interviews. A combination of two non-probability subcategories were selected which were more feasible for the study. The Convenience and Judgement sampling were made use of (Coleman and Briggs, 2002). Convenient sampling is one which is composed of members most easily available to the researcher. Convenient sampling was chosen by the researcher, mainly due to the selection of participants who were geographically convenient. Judgement sampling occurs when a researcher selects sample members to conform to some criterion. The aim is to produce data representative of the population to be sampled, but judgement is used in the sample selection procedure in order to make data more useful to the decision maker (Crouch and Housden, 1996) With the application of Judgement sampling, people who belong to the upper middle class who normally spend a major portion of their income on branded products were picked up as per the researchers choice from the general public for study.
This study primarily focuses on India One (The upper middle and middle class). There are vast differences in consumption patterns of all the three classes. Also among India Consumer perceptions of Global and Local Brands in the Indian retail Industry 37
One the desire to acquire wealth and products as symbols of success and wealth is greater as compared to India Two (lower middle class) and Three (service class). In order to understand the symbolic meanings of brands created by individuals this study focuses on the consumption patterns and habits of India One.
3.5Data Collection Secondary data collection has been made use of in the first part of this research. Secondary data can be collected from internal and external sources. Internal data collection source is collected from company documents like sales report or customer data base while external information is collected from outside sources like government reports, books and periodicals etc. This research involved data collection from secondary external sources. Various academic journals like Journal of Consumer behaviour, Harvard Business Review, Journal of Marketing Management etc and various databases like EBSCO, Emerald and Mintel were used to gather information on the relevant topics. Various academic textbooks and industry reports have also been made use of that were useful in reviewing the existing literature on branding and in understanding consumer purchase behaviour.
Primary research has been used for the second part of the research. Primary data can be collected through various methods which include interviewing, direct observation, the analysis of artifacts, documents and cultural records; the use of visual materials and the use of personal experiences (Denzin and Lincoln, 2005). Interviews were used as the primary source of data collection. They are considered one of the most fundamental methods of qualitative inquiry and can reveal what guides and determines peoples actions, bringing to life their thoughts, perceptions and emotions (Darlington and Scott). Interviews can be used conducting various techniques such as telephone interviews, faceto-face interviews and focus group interviews. In qualitative research interviews may be classified as semi-structured, unstructured and group based. Semi structured interview is normally a mixture of pre-coded and open-ended questions combined in the questionnaire. The interviewer is bound by the structure of the questionnaire but the respondent is free to answer the open ended questions in any way but more skill is needed Consumer perceptions of Global and Local Brands in the Indian retail Industry 38
in interpretating the responses. However danger exits that the interviewer will edit the responses to those which seem to be most appropriate, or most required.
In the current research face to face semi interviews were conducted to gather empirical material. According to Saunders et al (1997) face to face interviews consist of open ended questions thus allowing the respondent to describe the perceptions in detail. Researchers have a list of themes and questions to be covered and can vary from interview to inter looking at the appropriateness. This form of an interview provided the researcher with the prospect of exploring answers where the researcher wanted interviewees to explain and build up on the responses and obtain facts. The interviews were conducted in the homes of the informants (all lived in apartments or with parents), lasted for 45 minutes to one hour. In each interview I sought to elicit numerous perceptions of consumers towards brands and what are the main cues of a brand that lead them towards purchase of global brands. The conversations were loosely structured by questions that introduced the importance of various factors like Country of Origin, Culture, Quality of Product and Services in evaluating consumer decision for brand purchases. The interview structures for the executives were built around managerial perceptions about key attributes of a brand that deliver customer satisfaction. The interviews with managers and consumers enabled to uncover the discrepancies that exist in perceptions between both the groups.
3.6Conducting the Interviews A pilot interview was conducted before interviewing the actual chosen respondents. The main purpose of this pilot interview was to test the designed questions for flaws. The pilot interview helped the researcher to examine the flaws in the questions that were designed and accordingly rectify the mistakes. The pilot interview was conducted with a respondent from Mumbai (India). During the pilot interview it was discovered that global brands were really popular with the upper middle and middle class that is basically India One. Brands were consumed as symbols of status and self-identity only among the upper middle classes. The lower classes that is India Two and Three did not give too much importance to global branding. The consumption patterns between all the three classes vary distinctively. Thus in order to make the study meaningful the researcher focused on Consumer perceptions of Global and Local Brands in the Indian retail Industry 39
only the upper middle classes who relate to brands as symbols of self identity and personality.
Consumer Interviews The consumers who belonged to the upper middle and middle class and those who connected themselves with highly social people were selected. These consumers were from the age group of 20-30 and included teenagers and married people. In total 15 consumers were interviewed out of which 7 were students currently studying in the UK since a year and the rest 7 were of consumers residing in the city of Mumbai. They all belonged to the age group of 20-25. The students belonged to different parts of India from metropolitan cities like Jaipur, Delhi, and Kolkatta. They were selected from various cities in order to gain consumer opinions about global and local brands from all over India. These interviews were conducted in order to show a comparison in the perceptions of Indians living here and the ones who have always been purchasing high street/ global brands in India.
Executives Interviews Nationally recognised companies from the retail sector of India participated in the study. Semi structured interviews with open ended questions were conducted with four executives totally from the retail sector. The executives were selected from customer relations, production, and senior management. The respondent held titles such as production head, senior manager of customer relations, and managing director. Four executives were interviewed about a broad range of questions which mainly pertained to issues on factors affecting purchases of local brands and why do local brands face tough competition from global brands. These questions were manly asked to get a retailers perspective on foreign competition. Although this study required a large number of interviews of retailers, but due to time and availability of retailers interviews with only four could be conducted. The executive interviews lasted for about 45 minutes.
The research questions varied slightly according to the age group interviewed. Questions were posed to obtain factual information: some attitudinal information and some targeted both purposes. A sample of the questions asked and the rationale behind each question Consumer perceptions of Global and Local Brands in the Indian retail Industry 40
is displayed in Appendix 2 as an Interview template. Due to the lack of time only one of the interviews is transcribed. As far as the retail interviews, out of 4 interviews one sample interview is transcribed and shown in the appendix
3.7Data Analysis The interviews were analysed using the grounded theory approach recommended by Strauss and Corbin (1998). The grounded theory approach allows for the identification of different concepts that emerge and allows for a descriptive analysis of consumer preferences of global over local brands. This was done by interpreting, segregating and combining responses pertaining to consumer perceptions. Subsequently the anecdotal data transcribed was able to follow pattern coding. Pattern codes are explanatory or inferential codes, ones that identify an emergent theme, configuration, or explanation. They pull together a lot of material into more meaningful and parsimonious units of analysis. They are a sort of meta- code (Miles and Huberman, 1994). They usually turn around four, often interrelated, summarizers: themes, causes explanations, relationships among people and more theoretical constructs.
During fieldwork the researcher is looking for threads that tie together bits of data, pattern coding enables the researcher to bring common bits of data by breaking them down into themes. Pattern coding was chosen by the researcher since the course of the interview took place in terms of the literature review which was divided into various segments, it would be easier for the researcher to interpret the data from interviews which would be broken into themes that correlate to the literature review presented. During the interview a number of themes were discussed with the consumers: the notion of brands, what it means to them, what are their perceptions about global and local brands, the impact of culture, country of origin and materialism on their buying behaviour and also how the coming in of high street brands have affected their consumption patterns. The first step during the analysis, using pattern coding was listening to the audio-taped interviews several times and transcribing the same. The transcriptions was then broken down into discrete part and examined closely. Lastly the transcriptions were compared for differences and similarities (Strauss and Corbin, 1988). Concepts that were similar in
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nature were then grouped together under more abstract concepts which can be termed as categories (Strauss and Corbin, 1988). The final results of the categories were then conceptualised and compared to secondary data which led to formulating key themes and ideas. This helped form a perception of Global brands amongst the Indian consumers. After the key themes, ideas and concepts have been grouped under common categories a concept map was used to illustrate the relationships between concepts. A concept map is a graphical illustration that is used to organise information by systematically linking the relationships between categories using connecting lines (Novak & Gowin, 1984). The subject is represented in a circular box and the related concepts are illustrated in square boxes. These linking lines have clarifying words to clarify the specific relationships among concepts (Nowak & Gowin, 1984). The concept map is used as a tool to easily visualis the main concepts and analyse the emerging themes (Strauss and Corbin, 1998).
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3.8Table: Concept Map of Factors leading Consumers to Purchase Global Brands
Consumers who believe in symbolic consumption Collectivist are Materialist
are
Consumers who believe in westernisation
Due to
Such as
Believe in society, status and image
Impact of Culture/ Acculturation
Lead to Country of Origin, Price,Brand Image are extrinsic cues
Global Brand Purchases
are Extrinsic cues Product Quality Performance, features, reliability Lead to Assurance, reliability, Responsiveness Service Quality
Are cues of
are
Intrinsic cues
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3.9Summary This chapter clearly outlined the research method followed and the method of analysis for the data gathered. It elucidated the purpose of this research, the research techniques adopted and the reasons for adopting the respective techniques. The above is a summary of pathway that was adopted in order to reach a desired result. The grounded theory approach, and concept mapping helped to generate themes and form a map that depicted reasons for global brand purchases (This map was developed based on the respondents replies).
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Chapter Four
Analysis and Discussion
The results of the interviews produced various themes related to consumer preferences of global brands. The themes were: Consumer perceptions of Global and Local Brands, Cues of Product and Service Quality that affect purchases, Consumer Segmentation Impact of Culture on Consumption and lastly Materialism and Social Identity.
4.1Theme One: Consumer Perceptions of Global and Local Brands. The emergence of a global marketplace has fuelled the growth and awareness of fashion brands across India. As India opened up its economy to the rest of the world a whole lot of foreign brands like Benetton, Tommy Hilfiger, Mango etc entered India thus influencing the minds of the consumers in decision making. Due to the immense exposure of these global brands there have been major changes in perceptions of Indians as far as local brands are concerned. It was observed that consumers tend to evaluate global brands in terms of better quality and perceived globalness. International brands appeal to me to a great extent. I think they are better quality than Indian brands and give more customer satisfaction. They may be more expensive but then one has to pay for quality products. said a respondent from Mumbai. A citizen from Jaipur studying in U.K agreed: I like global brands because they usually offer more quality and better guarantees than other products. Consumers exhibited that global brands made them feel a part of the global consumer culture and gave them recognition. It was also revealed that consumers preferred paying for brands which were recognised as they gave them a sense of global identity. I can afford global brands and local designer brands but everywhere you go it is like D&G OR Channel and Dior..Rocky S is also a good brand but not recognised Consumer perceptions of Global and Local Brands in the Indian retail Industry 45
globally...so why pay for local designer brands that are not recognised said a respondent from Mumbai. A respondent from Calcutta studying in the U.K echoed The main difference between a global and local brand is just the name I guesspeople recognise the brand that I am wearing and this makes me feel a part of something bigger..Like for instance before coming to the U.K I purchased a pair of sunglasses which read Ted Baker. I didnt know what a Ted Baker was! It was only until I got to the U.K that people around me noticed and remarked OH youre wearing Ted!which made me realise it was a big brand in the U.K. and it gave me a sense of a global identity Not only did the consumers associate global brands with quality but also trust. innovation and technological advancement. This is very evident with responses like: My ideal brand would be Sony, as they have over several years maintained the high standards set by them by offering great quality products and constantly innovating and staying ahead of competition.
If given a choice between global and a local brand I would go in for a global brand for sureI mean Indian (local) brands are good but not as good as the foreign ones in quality technical expertise and designs..Global brands are always upgrading themselves and keep coming out with new products all the time whereas local brands are pretty predictable ya... For certain product categories local brands exhibited a higher level of satisfaction and trust. In terms of household products it is only the Indian retailer who can understand the mindset of the consumer. They know the tastes and preferences rather the priorities of the Indians when buying a product. When I want to buy butter or yogurt I would only go in for Amul because of its quality and trust and not for any foreign brand for sure. If I have to buy a car for travelling purposes...Like travelling for long distances it would be a TATA SUMO because of the trust that I have in TATA but for a status symbol I would never go in for a local brand it would probably be Mercedes pointed another respondent. Quality and Trust was found to one of the major influencers for Consumer perceptions of Global and Local Brands in the Indian retail Industry 46
possessing local brands. Recognition and status had only a submissive role in respondents perceptions who owned a local brand.
Earlier Indians use to correlate to branded goods as luxury items but today due to the immense exposure and more and more Indians travelling abroad there has been a tremendous change in the way Indians perceive branded goods.
4.2Theme Two: Cues of Product and Service Qualities that Affect Consumer Purchases. Similar to the findings of Cateora and Ghauri (2000) it was found that consumers used certain intrinsic (reliability, performance, aesthitics etc) and extrinsic cues (Price, Country of Origin and Brand Image) to evaluate quality of products and services. In the study conducted by Garvin (1984: 1987) eight dimensions were identified which affect product quality. However when this study was analysed only three intrinsic cues were identified. Product Performance, Aesthetics and Reliability were prevalent amongst the consumer responses. In terms of aesthetics consumers felt that global brands were more appealing than local ones. My ideal brand is Mango (apparel brand).I like it because the finishing of their garments is excellent and their quality is very good. Their styles and designs are always in sync with the forthcoming trends. Global brands evaluated higher in terms Product performance and reliability especially in products pertaining to automobiles and electronics. My favourite brand is Apple..it symbolises the youth and constantly keeps coming up with newer products for generation next- the I pod is the biggest example. The performance of Apple Products is very steady...in my social set of friends I think all of us possess an I-Pod and never have I never heard of any of us complaint that freak my ipods giving problems or Mac notebook has crashed As far as extrinsic cues are concerned Price and Brand Image were found to be the most impactful on quality. Price and Brand Image were found to be correlated by the Consumer perceptions of Global and Local Brands in the Indian retail Industry 47
consumers which were in relation to the findings of Hooley et al (1998) that consumers often relate pricing and brand image to superior quality. Louis Vuitton and Gucci are my ideal brandsI mean they are high priced but u know one has to pay for the quality of products. The fact that these brands are expensive and global recognised (higher brand image) says it all. Country of Origin seemed to affect very few consumers. When asked how big a role did country of origin play in terms of product purchases, most of the consumers replied Not that much,, depends from product category to product category, but I would definitely not pay too much for a made in India label not because of quality standards but because its made in my country.. These were the standard replies of most of the respondents. These findings seemed to be in consistent with the findings of Lotz and Hu, (2001) who assert that consumers tend to generalise products based on familiarity and background such as technological superiority- which was associated by the Indian consumers from Goods that originated from China, status and esteem were mainly associated to goods from European countries, and design- goods from U.S.A and U.k and value for money- to Indian goods.
As far as service quality was concerned in line with the thinking of Parsuraman et al (1988) who identified five dimensions that consumers use to evaluate service quality, consumers conformed to three dimensions: Assurance, reliability and responsiveness. When asked consumers what aspect of service quality they consider extremely important for customer satisfaction? The above three dimensions were the most common. If I go and buy clothes from Mango..and the next day if I decide to go and return it due to my mind change..i dont have to think twice yathey are very quick in action Consumer perceptions of Global and Local Brands in the Indian retail Industry 48
and would change it instantly for me providing my full money back. Well something of this an Indian brand would not do..Definetly not provide me with the money back! It was observed that most of the respondents when asked the above question along with a brand example revealed global brands like Dell-for reliability and assurance, Sony for reliability hardly any Indian brands (local) brands were named. As far as Country of Origin effects on service quality were concerned it did not affect the Indian consumers to a great extent. I do believe that foreign brands are capable of delivering service quality, but its not that brands like Reliance, Parle, and Tata do not offer good quality servicesits not that I am not going to purchase a made in India brand because of lower quality judgements or so replied one of the respondents. From the above analysis it can be concluded customer satisfaction is enhanced by product and service qualities which are found to higher in global brands (H1). Consumers still prefer brands that hail from countries that are considered to have particular expertise: Switzerland chocolates, Italy in clothing, France in cosmetics, Germany in cars, Japan in electronics, for example. And hence (H2) also gets accepted. Service quality is not influenced to a great extent while purchasing of brands. Our H3 which proposes that country of origin which affects service quality influences consumer decisions of local brand purchases gets rejected.
4.3Theme Three: Consumer Segmentation As presented in the literature review different classes of people have different consumption patterns. As a developing country India is very different from the West. Mr Kishore Biyani of Pantaloons says Indian consumers can be divided into three setsIndia One, India Two and India Three. These groups can be understood as the consuming class, the serving class and the struggling class. Studies show that India One (consuming class) constitutes only 14 % of the countrys population. Till recently all modern retail formats including Big Bazzar, were attracting customers mostly from this segment. Most of these customers have a substantial disposable income and form part of what are Consumer perceptions of Global and Local Brands in the Indian retail Industry 49
usually called the upper middle and India two (serving class) includes people like drivers, household helps, office peons, liftmen, washer men, etc. They are the people who make life easier and more comfortable for the consuming class or India One. For every India One there are at least three India Twos, making up almost 55% of the population. But India One doesnt care to pay India Two too well. While their numbers are huge they still have disposable income to spend on buying aspirational products and services.
Then there is the struggling class or India Three, which lives a hand to-mouth existence and cannot afford to even aspire for a better living. Unfortunately, this segment will continue to be on the peripheries of the consumption cycle in India for quite a few years to come. Their needs cannot be addressed by the business models.
From the interviews it was observed that Upper middle class popularly called as the socialites or India One are becoming more and more brand conscious. They consider possession of global brands as status symbols which give them self identity. This is very evident from responses like People dont admit it-but I feel Global brands can be correlated to symbols of identity and status In relation to the findings of Tam and Tai it can be concluded that India Two could be called as Achievers- who valued achievement and materialism, and they are more keen on luxuries that they constituted a special hub and India One the upper middle class can be called as Strivers- very materialistic and immersed in an aggressive pursuit of achievement.
4.4Theme Four: Impact of Culture on Consumption Patterns Culture amongst the Indians depicted status, gratitude, approval and disapproval which were consistent with the findings of Usunier (2000). India represents a collectivist society where people are seen as not fully separable: they are connected to other people by a multiple of overlaps and links). They come to represent the interdependent selves wherein identity lies in familial and social relationships and they tend to move in their social circles. Class and Status also need to be maintained in the social circles in which one moves. This was very evident from responses of consumers when asked how much Consumer perceptions of Global and Local Brands in the Indian retail Industry 50
does culture affect their purchase decisions?. Responses like One always has in mind their culture and styles of living so one will always buy products that suit that.
When I go shopping...particularly for clothes I sometimes do have to keep in mind what the neighbour will think like picking up short clothes for instance and shop ...I mean we live in a society which has certain norms and conducts. I rather stick by them
I am a completely brand conscious person ...Cause people really notice what brands your wearing. If I enter a party the first thing that I am asked is oh so what brand is your watch.I guess its the people you move around with make you all the more brand conscious confirm that Indian culture is subjected to status, gratitude, approval and disapproval. Due to travelling and exposure a lot of Indians are exposed to the host culture and have begun to acculturate and adopt its norms and behaviour (Douglas and Craig, 1997). Culture does play some part while buying the brands in the U.K. You get use to the place you stay in and you tend to follow whats happening there replied a respondent from Chandigarh studying in the U.K. It was noticed that Indian consumers seeked to emulate Western consumption practices and lifestyles which are consistent with the findings of Peterson and Jolibert (1995). It was noticed among the respondents that due to travel and exposure more Indians have started becoming aware of global brands but they would yet purchase brands that are recognised in their social groups. If given a choice between Dior and Chloe, I would rather purchase Dior as it is more recognised back home, particularly the social group that I hang out with. Hence it can be concluded that culture and acculturation leads to westernisation of consumption patterns which affects brand image (H4) and hence global brands are perceived to have a higher image.
4.5Theme Five: Materialism and Social Identity In India the collectivist culture is at its peak. It was observed from the respondents replies that Indians tend to identify themselves not on the basis of personal identity but Consumer perceptions of Global and Local Brands in the Indian retail Industry 51
social identity. Respondents tended to purchase belongings that were socially recognised as it gave them a sense of status and recognition. I am a kind of person who even if you tell me that an Indian brand is better in quality than a foreign brand ...thats why I should buy it I yet wouldnt. Cause its a mindset I guess that Foreign brands can be that wow image amongst my friend circleAt least the people who I hang out with all go in for foreign brandsIndian brands must be for the masses (the middle and lower middle class)- replied one of the respondents. It could also be seen that increase in westernisation due to cultural impact was leading consumers to develop a more materialist attitude as far as consumption was concerned.
It was also observed among the participants that increase in materialistic attitude was also because many Indians had faced hardships in their early age. If you have the money, then why not spend on branded goods that give you status and symbol, If I can afford the best for my children then why not provide them with the best of branded products that give them luxuries and represent my status as well- were some of the replies from the respondents indicating that when one experiences economic instability as a child a materialistic culture tends to develop (Inglehert, 1990, 1994).
Indians are very vulnerable to influences such as group norms. The interdependent self of the Indians tends to focus more on the crowd and public appearances. Therefore possessions like car, jewellery, good designer brands hold a lot of importance for them. Thus it can be concluded that collectivist societies can also be viewed as materialistic societies. In other words India can be perceived as a materialistic society hence our H5 gets accepted.
4.6 Discussion and Findings

From the above analysis various findings have been concluded in relation to the literature review which shall be discussed in detail below.
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1. Increase In Westernisation It can be seen from the above analysis that consumption patterns have changed to a great extent. It has been taken for granted that westernisation in India is on a rise. With the entry of foreign brands in India and more Indians travelling abroad there has been an immense exposure to these brands and western culture. Indians travelling abroad tend to dress and imitate the western styles particularly the manner in which they dress thereby leading to western consumption behaviour. This is very evident when consumers particularly studying in the U.K. were asked how their shopping habbits have differed after coming to the U.K. When I got to the U.K. I was very fascinated with the way women dress hereboots, scarfs and long over coats and lots of makeup.it mad them look very attractive and prettyI know its kinda embarrassing for me to saybut I too wanted to look like them and dress the way they are
After coming to the U.K I have become terribly brand consciousmy shopping habbits have changed to a great extent especially the way I dress the mostI mean it has become more western and modernnot typical Indian types Similar to the above replies were noticed amongst Indian students studying in the U.K. It can thus be concluded that increase in Westernisation which has resulted in the change and needs of the consumers has led to a transformation of the Indian economy from a socialist to a consumption-led economy. The current generation is therefore more proud of being an Indian, and more modern when it comes to their lifestyles, than their predecessors. It is a generation that feels that everything is within their each and aspires for it. And this is true for everyone, whether they live in large metros or small towns. I call this paradigm shift- the 3-C theory: Confidence AND Change bringing in an unprecedented era of Consumption. The increase in Westernisation is responsible for the materialistic attitude among the Indians which have led them to consume brands as symbols of status and prestige.
2. Symbolic Consumption of Products
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Due to westernisation of consumption patterns more Indians particularly who belong to the upper middle classes are developing a materialistic attitude and consuming more and more brands for symbolic purposes. Consumption in India is affected by a symbolic identity which basically means that brands are creating a social identity for the consumers thus affecting their purchase behaviour. India represents a collectivist society wherein a lot of emphasis is given to the outer self, basically the way in which a person carries him/herself in public. A lot of importance is given to society, norms and values. From the replies of the respondents it was observed that people had to maintain a particular status amongst the reference groups that they move in and this prompted them to purchase global brands in order to maintain a particular status.
3. Key Discrepancies between Manager and Consumer Perceptions A set of key discrepancies or gaps exists regarding executive perceptions of product and service quality and the tasks associated with service delivery to consumers. These gaps can be major hurdles in attempting to deliver a service or a product which consumers would perceive as being of high quality. From the replies of the managers it was reviled that they gave a lot of importance to the concept of Indian-ness the younger generation will continue to embrace the values of family and community and live the Indian way. They have managed to interpret, understand and deliver consumer satisfaction in a way that takes into account the Indian context. But due to increase in westernisation the consumers feel that in when judging a product quality in terms of aesthetics they have failed to understand the needs of the audience and hence pushing consumers to look for brands outside India (Global brands). This is very evident as when consumers were asked that do you think Local retailers understand the needs of the Indian consumers well and deliver better customer satisfaction. Replies like Get life and colour in the clothesCopy some of the big designer brands I would definitely purchase Today brands like Gucci, Dior etc can give me the status symbol that I want...tell me of any one single good local Indian brand that can give me the status that I want.ah I seriously cant think of any. In terms of service delivery too there existed a gap between consumer expectancy and management delivery especially in terms of responsiveness. The consumers reviled that Consumer perceptions of Global and Local Brands in the Indian retail Industry 54
local retailers were not really prompt and responsive to their service complaints. As mentioned above respondents felt that Indian brands when purchased and returned next day would never give you the money back without purchasing something else whereas that wasnt the case with global brands. Once the money comes in. never let go commented one of the respondents which was believed to be the philosophy of most of the retailers by the consumers. The gaps between manager and consumer expectancy has led to the demand for low cost global fashion brands like H&M, Primark and Zara, and Forever 21. These brands would cater to the needs of not only the upper middle class by providing them with better aesthetics of products and better services but also cater to the price sensitive segments of India like the lower middle classes who desire to be trendy and fashionable but cannot due to unavailability of these characteristics in local Indian brands.
4. Growth of the Indian Retail Sector The gradual trend towards liberalization of the Indian economy during the past decade has served as a major factor in its progressive shift towards a global economy and the entry of foreign brands from Europe and US into this market. The materialist attitude among the Indians to possess products that provide them with a sense of self-identity and status and also due to changes in consumption patterns has increased the popularity of these brands thereby resulting in higher purchases of global brands as compared to local brands. Although this attitude is prevalent only in urban cities of India, times are not far where such an attitude will prevail amongst all the classes of people. Global brands have a tendency to focus on the upper middle classes and they often fail to address the needs and demands of the lower classes in India. Recent times have seen an array of Local retail outlets like Pantaloons, Big Bazaar, and Shoppers Stop etc that have rewritten the retail rules in India. The Indian retailers agree upon the upcoming trends of foreign brands in India and they being acceptable by the upper classes, but sustainability of these global brands is a major criterion that needs to be looked into. Their sustenance was guaranteed since they focused on the market as a whole which made them earn higher profits than international retail stores in India. They focus not only on the upper classes but also meet the needs and wants of the lower classes. Marketers are prone to classifying consumers into various categories, sub Consumer perceptions of Global and Local Brands in the Indian retail Industry 55
categories, income strata, etc...But For us very Indian who has aspirations is a potential customer replied one of the retailers when asked who the success mantra for his retail business.
Hence for sustainability and profits managers of multinational companies should look into all the segments of the Indian markets. The next chapter therefore provides certain implications for managers of global brands who waiting to tap the Indian markets.
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Chapter Five
Conclusion
The basic aim of this chapter is to provide recommendations and guidelines to those foreign investors who want to tap the Indian markets. It also provides a key summary of findings and provides limitations to the study.
6.1Managerial Implications On the basis of the replies and observations of various retail executives, foreign brands like Tesco, H&M and Wal-Mart who are on the verge of entering the Indian markets can get valuable insights as to what they should keep in mind before entering the Indian markets. This diagram below has been developed and explains the basic objectives that Foreign Investors should focus on, for them to be successful in the Indian Markets.
o Emergent Strategies necessary As advocated by Mr Biyani Global brands in India tend to appeal particularly to India One, the upper middle class which is a very niche segment considering our population. One of his key observations about the Indian consumers was that the master (upper middle class) and lower classes never shopped at the same store. While the lower middle Consumer perceptions of Global and Local Brands in the Indian retail Industry 57
class visits hypermarkets and discount chains, the upper middle class frequents department stores and speciality chains as well as supermarkets. And even though India Two may be buying some of the same products that India One consumes albeit in smaller quantities they never visit the modern retail chains. For them, the clean and shiny environment of modern retail stores creates the perception that such stores are too expensive and exclusive, and are therefore not meant for them. India two tends to feel alienated in environments frequented by India One. But with his format of Big Bazaar where goods were offered at reasonable prices and at much lower prices as compared to other stores he was able to attract the lower classes as well (India Two). The key to success in the retail business in India is firstly getting the retail model right and then scaling up quickly. The Indian customer needs an indigenous solution to her shopping needs- that gives her the best value for money in an environment where she is comfortable. At the same the heterogeneity of our country doesnt provide the luxury of following a cookie-cutter approach for setting up a store. replied B S Nagesh (Managing Director and CEO of Shoppers Stop Ltd) What sets India apart is the diversity and uniqueness of the Indian market. The rice that we eat, the apparel that our women wear, the dialects we speak, change every hundred kilometers in our country. There are a lot of conflicting trends and paradoxes that are evident across the country. Logic and emotion, individuality and social feeling, poverty and affluence, life and lifestyle, value and indulgence, and the past and the future simultaneously co-exist in India. And all these paradoxes converge to make India what it is. To the external world, this harmonious coexistence of seeming contradictions is one of the most confusing aspects of the Indian consumer market. But this signifies our countrys openness to change and its ability to add new dimensions to its social structure Consumer perceptions of Global and Local Brands in the Indian retail Industry 58
without losing the old ones. This opens up new and unique opportunities as well as brings forth challenges for marketers and retailers. Given above the unique characteristics of a specific market/industry like India emergent strategies (Shiner, 1988) would be more appropriate for multinational firms. Emergent strategies increase a firms flexibility and adaptability to environmental changes and fluctuations in consumers demand (Shiner, 1988).
o Flexibility and Adaptability A critical factor influencing brand structure is the degree of cultural embededness of a product. This can be defined as the extent to which there are strong and deeply ingrained local preferences for specific products or product variants (e.g. food) or the products which are an integral part of the culture (Douglas et al, 2001). The consumers in India have exhibited a strong preference for local brands when it comes to food and household commodities. Most of the Indians are accustomed to shopping at small neighbourhood stores or purchasing from street hawkers, only a fraction of the population have become comfortable with the whole organized retail stores. To persuade the consumers to try Big Bazaar, the company incorporated elements of the bazaar experience into its stores. For example, while shopping for food grains locally, consumers usually touched the products to assess quality. Hence, in addition to offering pre-packaged grains, Big Bazaar stores were designed to offer loose, self-serve grains that customers could touch said Mr Biyani (director of Future Group). When asked Mr Nagesh what were his views about the success of retail models like WalMart entering India he replied I strongly believe that in retail, the winner doesnt take it all. And this applies globally, too. Lets take the example of a big giant, Wal-Mart, in Consumer perceptions of Global and Local Brands in the Indian retail Industry 59
the US. The fact is it has an approximate 9.8 per cent share of a $3 trillion market! Maybe we need to look at why Wal-Mart was not successful in Germany and Korea, or why it was successful in some other markets. It all boils down to market dynamics. You cant take one model and apply it elsewhere. Each and every store in India needs to be customized after taking into account the diverse culture, tastes and preferences of every city or locality that multinationals want to set up their stores in. Indians belonging to any class always prefer to touch, smell and feel the wheat grains before they buy them and such an Indian psychology helped in the development of Food Bazaar where staples are sold loose. They have become a standard feature of most of the supermarkets in India. Hence if multinationals like Tesco or Marks and Spencers who want to venture into food hypermarkets as they offer big retail opportunities in India should adapt themselves to the consumers psychology and
preferences in a countrys product markets, But however companies should retain their core business propositions even as they adapt their business models. As suggested by Johansson and Ronkainen (2005) one of the marketing mantras is being local on a global scale, it is imperative to localize some features of the marketing approach. Multinationals should adopt a country centred strategy (Douglas et al 2001) which requires them to be extremely flexible and build or acquire a mix of national and international brands like Nestle and Uniliver have traditionally done. o Build Brand equity and avoid direct competition Operationalizing brand equity generally falls into two groups: those involving consumer perceptions such as awareness, brand association or perceived quality and those involving consumer behavior such as brand loyalty (Barbara, 2003). In terms of the household and food brands, local Indian Brands like Amul, Parle and Sunfeast have exhibited higher Consumer perceptions of Global and Local Brands in the Indian retail Industry 60
brand preferences and equity not only in terms of awareness, brand association or perceived quality but also brand loyalty. This is solely due to the fact that these brands have understood the Indian customers well and they deliver value for money products. The Foreign multinationals entering India try to compete with local brands for e.g. (Heinz tried competing with Kissan but was not successful), they instead should try and build a strong brand equity and lay more emphasis on the needs of the Indian consumers. A weakness of European retailers is that they are often stuck with old technology and systems. They are often too inward looking! Do not spend too much time worrying about the detail of what the competition is doing: look instead at the consumer said Jayani (Production Head Westside) o Strong Presence in all the Segments for Profitability and Sustainability Knowing the market, and identifying and catering to the need of the consumers are essential. Products transplanted from affluent, developed nations tend to appeal to relatively small elite (Douglas and Wind, 1987). The above analysis and discussion reveals that global Brands are generally perceived to be high priced but often delivering better quality. Due to their premium pricing they tend to appeal to the higher classes in India which is a very niche segment. Their premium pricing should be lowered as soon as success follows in order to tap larger market segments which comprise of almost 70% of the Indian population.
The above analysis and discussion indicates that there is a gap in the Indian markets for lower priced foreign retail brands like Zara and H&M. Hence if Brands like H&M and Zara enter the Indian markets they should follow a need based positioning as suggested by Porter (1996 cited in Hooley et al, 1998): seeing that the offerings according to the audiences expressed needs. Even though the initial positioning would focus on narrow segments the future positioning should attract customers from broader segments for sustainability and larger profits. International companies have to delve deeper into the local consumer base in order to tap the potential of the billion-consumer markets. We Consumer perceptions of Global and Local Brands in the Indian retail Industry 61
think the best opportunities are in rural markets, says a leading retailer. They have to develop value propositions that appeal to mass market.
6.2 Key Findings Indian consumers demonstrate unique purchasing behavior due to these differences. Due to the diversity of population, it is not unusual to see that a bullock cart, a bicycle and a BMW 7-series car traveling on the same roads in India. It is very important to understand the perceptions in such a vast and growing market. India One (consuming class) popularly referred to as the socialites (Biyani, 2000) are becoming immensely brand conscious and are constantly looking out for globally recognized brands that give them a status in society.
Key findings from the study can be summarized as follows: o Brand evaluations are related to consumers income, and as such higher income groups show preference towards foreign brands. Similar to Batra et al (2000), we found that brands from a developed country (UK) are perceived to be superior and preferred to those from a less than developed country (India). o In particular, it was found that just over than half of the sample preferred foreign brands to comparable local brands and brands in India are perceived to be reliable, good performance, hand made, and reasonably priced but to be of poor design, imitative, technically backward, and meant for the lower classes. In contrast, the brands in UK and USA are perceived to be technically advanced, good design, good quality, and reliability for the upper classes to be proud of ownership but mass produced, and unreasonably priced. o While globalness has become a stronger quality signal than nation of origin, consumers still prefer brands that hail from countries that are considered to have particular expertise: Switzerland chocolates, Italy in clothing, France in cosmetics, Germany in cars, Japan in electronics, for example. o Increase in Westernization has led Indians to develop a materialistic attitude towards possession of goods that are consumed for symbolic consumption. o There is a gap in the Indian markets for low cost retailer brands like Zara and H&M and Primark. Consumer perceptions of Global and Local Brands in the Indian retail Industry 62
These findings would be of interest to companies in their formulation of foreign marketing strategies by offering a better understanding of how foreign brands are likely to be perceived in relation to domestic products and those originating from other competing countries in the market.
6.3Limitations of the Study o The dissertation restricts itself to the perceptions of global and local brands only in the Indian retail markets. The scope of this study would envelop only consumers from the upper middle classes which comprise of only 10% of the entire Indian population. o Gathering adequate information during the collection of secondary data was an issue, due to limited information on consumer perceptions of global and local brands in emerging markets as consumption patterns differ in the East and West. o Due to time and resource constraints, only a limited number of retail executives could be approached. Furthermore only four retail executives and 14 consumers were interviewed to unravel the views about what leads consumers to purchase branded goods in the retail sector. o The views of the interviewees may have been based on intuition, current factors and experiences of the respondents and is not based on any quantitative facts or tracked data o The use of convenience and judgment sample was an additional limitation. The fact that data was obtained solely from one geographical location, created uncertainty about the sample representing the entire population. o The proposed model identified certain factors that were believed to affect consumer brand purchases. However the chosen set of variables and antecedents are not the only determinants that lead to global brand purchases. Factors like Consumer ethnocentrism and Brand Origin were also found to be high in susceptibility to normative influence and for product categories high in social signalling value (Batra et al, 2000) which haven been discussed and incorporated.
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Appendix
Background of Respondents Consumers studying in the UK Name Silky Kothari Kartika Godha Rahul Gupta Nayan Prasaran Vikas Arora Anvita Khandwala Saru Deswal Age 22 21 26 24 24 23 24 City Mumbai Jaipur Delhi Delhi Chandigarh Mumbai Haryana Gender Female Female Male Male Male Female Female
Consumers living in India (residing in the city of Mumbai) NAME Age Profession Isha Bhansali Karan Aldreja Seema Bajaj Rishabh Pareikh Harsh Kapadia Shreya Bubna Darshan Gandhi Executive Interviews Name Mr Kishore Biyani BS Nagesh 24 22 30 25 23 24 28 Fashion Stylist Engineer House Wife MBA Communications Designer Fashion Designer Project Manager
Gender Female Male Female Male Male Female Male
Company Future Group Raheja Group (Shoppers Stop)
Designation Managing Director of Future Group MD and Customer Relationship Manager
Gender Male Male
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Jayani Anjani Casliwal
West side Reid and Taylor
Production Head (Mens Wear) Customer Relations Manager
Female Female
Table 2
A template of the Consumer Interview questionnaire along with the rationale behind asking such questions. All the questions were asked keeping the primary objective in mind: to gain an insight of consumer perceptions of global and local brands.
Question No 1.
Question What do you perceive to be the key attributes of a brand and what do u associate it with? Which is your favorite brand and why?
Rationale This is a direct question to determine the different attributes of a brand like quality, status, Personality This question was asked to gain consumer perceptions of global and local brands and also depict their brand purchases preferences. This question was asked find out the various product and service quality cues that have an impact on customer satisfaction. This question was asked to unveil the impact of COO on consumer brand purchases. This question was asked in order to find out the affect of culture on brand image and changes in consumption patterns subjected to acculturation. 69
2.
3.
What do u associate product and service quality to?
4.
How does the made in label(COO) affect you purchase decision? How does culture play a role in terms of your purchase decision?
5.
6.
7.
8.
9.
Do you think that local retailers understand their home markets better and deliver better customer satisfaction and value to customers? Has the perception about domestic brands changed with the coming in of international brands? If so why has this change occurred? What do you think is the main difference between a global and local brand? Do you think shopping for global brands abroad differs from shopping in India?
This question was asked to find out the differences in thought between managers and consumers. This was asked to find out the main difference between global and local brands that have created a gap in the Indian markets. This question was in relation to the primary objective of this research This was asked to basically find out the areas in which global brands need to improve before entering emerging markets.
Table 2 Executive Interview Questionnaire No Question 1 In the face of retail boom in India, as one of the leading retail companies in the country I would like you to comment on the current retail scenario and the future outlook? How has the coming in of the international brands affected the domestic retailer and the local retail stores?
Rationale This question was asked to find out the growth of the company and its success in India.
2.
This question was asked to find out to gain an insight as to how Indian retailers view foreign competition.
3.
Big retailers like Wal- This question was asked Mart etc are coming to to find out the success of India. Most of these will local retail formats and Consumer perceptions of Global and Local Brands in the Indian retail Industry 70
have large and deep pockets and an edge over technology. How will you handle competition? 4. How do u segment consumers in India?
5.
Do you feel foreign retailers can add significant value in the Indian retail sector? At present Indias retail sector is largely unorganized, with about 15 million outlets catering to consumer needs across the country so do you think there is enough ground for modern retail formats to co-exist?
what are the key points that foreign investors should keep in mind before entering the Indian markets This question was asked to gain an understanding about Indian consumer markets This was asked to find out the manager perceptions of global brands. This question was asked to basically find out the success behind modern retail formats in India in the midst of large number unorganized retail outlets.
6.
7.
Do you think that your retail formats are matching up to the expectations of the consumers?
This question was asked to find out the discrepancies that exist between managers and Indian consumers.
8.
Do the Indian Consumers This was asked to gain an suffer from overseas insight on the consumer shopping addiction? segments in India.
71
A TRANSCRIBED INTERVIEW OF A INDIAN CONSUMER 1. What to you perceive to be the key attributes of a brand and what do you associate it with? a. Quality b. Price c. Status d. Personality e. Aesthetics
I think I would associate it to quality and status particularly. I also relate brands to my personalityespecially the foreign brands.People dont admit it-but I feel Global brands can be correlated to symbols of identity and status. Louis Vuitton and Gucci aresI mean they are high priced but u know one has to pay for the quality of products. The fact that these brands are expensive and global recognised (higher brand image) says it all.
2.Which is your ideal brand and why? My favourite brand is Apple..it symbolises the youth and constantly keeps coming up with newer products for generation next- the I pod is the biggest example. The performance of Apple Products is very steady...in my social set of friends I think all of us possess an I-Pod and never have I never heard of any of us complaint that freak my ipods giving problems or Mac notebook has crashed
3. What do u associate product and service quality to? I think it would be the looks and appearances of the product (aesthetics) If I go and buy clothes from Mango..and the next day if I decide to go and return it due to my mind change..i dont have to think twice yathey are very quick in action and would change it instantly for me providing my full money back. Well something of this an Indian brand would not do..Definetly not provide me with the money back!
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3. How does the made in label affect your purchase decision? I think when I see a made in label it gives me a certain kind of an information that makes me aware that if an electronic is made in ChinaI know for a matter of fact it is of good qualityu see it depends from product category to product category, but I would definitely not pay too much for a made in India label not because of quality standards but because its made in my country.
4. How does culture play a role in your purchase decision? One always has in mind their culture and styles of living so one will always buy products that suit that. When I go shopping...particularly for clothes I sometimes do have to keep in mind what the neighbor will think like picking up short clothes for instance and shop ...I mean we live in a society which has certain norms and conducts. I rather stick by them
5. Do you think that local retailers understand their home markets better and deliver better customer satisfaction and value to their customers?
Yes obviously in terms of household products it is only the Indian retailer who can understand the mindset of the consumer. They know the way of thinking, changing trends, peoples priorities when buying a product. They can conduct market research before launching products. They can get feedback from local customers more easily and make changes in the products easily. They only can render services that the consumer expects out of them.
6. Has your perception about the domestic brands changed with the coming in of international brands? If so why has this change in perception occurred? Yes in terms of Quality definitely. The quality expectations of the consumers is on a rise due to the coming of these international brands. International brands generally are better since they have more resources to work on and hence they offer better service as compared to a local brand. This does affect the local brands as they do not have the same resources. Hence the perception towards local brands does get changed. Consumer perceptions of Global and Local Brands in the Indian retail Industry 73
7. What do you think is the main difference between a global and local brand?
Generally an international brand is much more expensive compared to an Indian brand. They are even generally better in quality. There will be much more variety available when it comes to international brands. For eg: If one wishes to buy breakfast cereals in India one can choose from maximum 5 different types but in the U.K. one has 25 different types of cereals.
6. Do you think shopping for brands abroad differs from shopping in India? In the U.K. one gets to buy the latest collections and a huger variety is available. In India one may have to make do from a limited choice and outdated trends. In the U.K. one gets to see more brand compared to the ones we have in India and thus one can make a proper comparison and then buy products. In the U.K. one is offers certain services like full refund of money if one doesnt like the product. In India brands never allow such policies.
(Further additional questions will be asked during the interviews based on the interviewees responses and questions also differed for those consumers who were studying in the U.K.)
TRANSCRIBED INTERVIEW OF AN INDIAN RETAILER 1. In the face of retail boom in India, as one of the leading retail companies in the country I would like you to comment on the current retail scenario and the future outlook?
India is still in the nascent stage of organized retailing and is constantly evolving. Pantaloon Retail (I) Limited is a front runner in Indias modern retail space and we represent fashion ,food, general merchandise and other lines of business, through multiple delivery formats, primarily catering to the lifestyle and value customers.
The company has stores in nearly 30 cities across the country, constituting over 2.7 Consumer perceptions of Global and Local Brands in the Indian retail Industry 74
million square feet of retail space. The company has also signed close to 10 million sq. ft. of retail space to be operational by end 2008, which represents 20-30 % of all modern retail space coming up in the next three years.
I believe that consumption will be the next big driver of Indias economic growth. Rising incomes and increased exposure to global products and global consumption patterns have changed the average Indians attitude towards consumption and savings.
Consumption = Development. Increased and channelised consumption would lead to the development of the nation through improved and better infrastructure facilities, greater employment generation possibilities will emerge with increased consumption, leading to people wanting to spend more on themselves. This cycle is what will fuel the consumption boom in the country.
2. How has the coming in of the international brands affected the domestic retailer and the local retail stores?
I think these International brands tend to classify only appeal to the upper middle classes that is India One which I call. They do not appeal the masses whereas are retail models are for everyone. Most of the Indians are accustomed to shopping at small neighborhood stores or purchasing from street hawkers, only a fraction of the population have become comfortable with the whole organized retail stores. To persuade the consumers to try Big Bazaar, the company incorporated elements of the bazaar experience into its stores. For example, while shopping for food grains locally, consumers usually touched the products to assess quality. Hence, in addition to offering pre-packaged grains, Big Bazaar stores were designed to offer loose, self-serve grains that customers could touch and this was our success factor.Marketers are prone to classifying consumers into various categories, sub categories, income strata, etc...But For us very Indian who has aspirations is a potential customer. India has a vast consumer market presenting opportunities for a
75
whole lot of new investors. So even if these brands enter our country they are not in direct competition with us
3. Big retailers like Wal-Mart etc are coming to India. Most of these will have large and deep pockets and an edge over technology. How will you handle competition?
I strongly believe that in retail, the winner doesnt take it all. And this applies globally, too. Lets take the example of a big giant, Wal-Mart, in the US. The fact is it has an approximate 9.8 per cent share of a $3 trillion market! Maybe we need to look at why Wal-Mart was not successful in Germany and Korea, or why it was successful in some other markets. It all boils down to market dynamics. You cant take one model and apply it elsewhere. 4. How do u segment consumers in India? Indian consumers can be divided into three sets- India One, India Two and India Three. These groups can be understood as the consuming class, the serving class and the struggling class. Studies show that India One (consuming class) constitutes only 14 % of the countrys population. Till recently all modern retail formats including Big Bazaar, were attracting customers mostly from this segment. Most of these customers have a substantial disposable income and form part of what are usually called the upper middle and India two (serving class) includes people like drivers, household helps, office peons, liftmen, washer men, etc. They are the people who make life easier and more comfortable for the consuming class or India One. For every India One there are at least three India Twos, making up almost 55% of the population. But India One doesnt care to pay India Two too well. While their numbers are huge they still have disposable income to spend on buying aspirational products and services.
Then there is the struggling class or India Three, which lives a hand to-mouth existence and cannot afford to even aspire for a better living. Unfortunately, this segment will continue to be on the peripheries of the consumption cycle in India for quite a few years to come. Their needs cannot be addressed by the business models. Consumer perceptions of Global and Local Brands in the Indian retail Industry 76
5. Do you feel foreign retailers can add significant value in the Indian retail sector? Yes definitely. But again I think it depends who your target audiences are. International brands tend to focus on the upper segment of the society as they are priced higher and can be afforded only by that class. Whereas our retail formats focus on all the segments which I think is one of the advantage that we have as India One represents only 30% of our population.
6. At present Indias retail sector is largely unorganized, with about 15 million outlets catering to consumer needs across the country so do you think there is enough ground for modern retail formats to co-exist? Modern retail is booming in India. Consumers are becoming more and more demanding. It is this demand of the consumers which have led us to develop modern retail formats which have proved extremely successful The current generation is therefore more proud of being an Indian, and more modern when it comes to their lifestyles, than their predecessors. It is a generation that feels that everything is within their each and aspires for it. And this is true for everyone, whether they live in large metros or small towns. I call this paradigm shift- the 3-C theory: Confidence AND Change bringing in an unprecedented era of Consumption.
7. Do you think that your retail formats are matching up to the expectations of the consumers? Change is something constant that we need to bring about there are couple of emotions that determine shopping behavior in India. The most fundamental of them are greed, altruism, fear and envy. Greed drives a customer to purchase more than what he or she needs. A wide range of options, better products and lower prices generate that increased desire to purchase. Often a customer would consider it a good opportunity to buy more than what she needs and gift to others as well. Higher purchase is also driven by the fear that current price offer may not be available for long and so the product has to be purchased right away. And envy sets in when one sees others buying and making the best out of deal. Big Bazaar and Pantaloons which are example of modern retail formats was successful because it effectively capitalizes all of these emotions. Consumer perceptions of Global and Local Brands in the Indian retail Industry 77
8. Do the Indian Consumers suffer from overseas shopping addiction?
Again you see its all depends upon the classes. As I mentioned earlier India One which represents the upper section of the society in my opinion shops a lot from abroad and who are prone to more western influences. Whereas India Two and Three are yet very traditional in thinking and demand for the Indian ways of doing things. They are less subject to western influences.
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Consumer Perceptions of Global and Local Brands in the Indian Retail Industry

1.2Objectives of the Study

1.3 Dissertation Outline and Structure Chapter Two-Literature Review

Chapter Four -Analysis and Discussion

Purchase of Global Brands

Culture Brand Image Materialism

2.1 Global Brands

Garvin (1984: 1987) cited in Tamni et Sebastianelli (2002)

The products profitability of failure-free performance over a specified period of time.

Physical facilities, equipment, and appearance of personnel.

Ability to perform the promised service dependably and accurately

Willingness to help customers and provide prompt service

Caring, individualized attention the firm provides its customers.

Source : Parsuraman et al, 1988 (Journal of Retailing)

On the basis of the above literature it is hence proposed:

Consumer Perceptions of Global and Local Brands.

Douglas et al (2004) How Global Brands Compete, Harvard Business Review

success by the quality and quality of possessions

3.8Table: Concept Map of Factors leading Consumers to Purchase Global Brands

Consumers who believe in symbolic consumption Collectivist are Materialist

Consumers who believe in westernisation

Believe in society, status and image

Impact of Culture/ Acculturation

Lead to Country of Origin, Price,Brand Image are extrinsic cues

Global Brand Purchases

4.6 Discussion and Findings

2. Symbolic Consumption of Products

Gender Female Male Female Male Male Female Male

Company Future Group Raheja Group (Shoppers Stop)

Designation Managing Director of Future Group MD and Customer Relationship Manager

Gender Male Male

Jayani Anjani Casliwal

West side Reid and Taylor

Production Head (Mens Wear) Customer Relations Manager

What do u associate product and service quality to?

8. Do the Indian Consumers suffer from overseas shopping addiction?

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