Consumer Ethnocentrism And Country Of Origin Effect Marketing Essay

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Andreea Iacob [1] and Lartey G. Lawson [2] 
Consumer ethnocentrism and Country of origin effect:
The brand perception of Romanian consumers concerning Danish beer products
Purpose of the article: The present study using the Consumer Ethnocentric Scale (CETSCALE) seeks to evaluate the level of consumer ethnocentrism (CE) and its implication on the consumers’ evaluation of a foreign beer brand. Furthermore it seeks to test whether a developed country of origin has a positive impact on the brand perception of Romanian beer consumers. It builds up on a previous study, undertaken by the authors, concerning the impact of consumer ethnocentrism on the general brand perception of the Romanian consumers, with the aim to test the ethnocentric level and country of origin effect on a specific foreign beer brand.
Design/methodology/approach: Data were collected using a questionnaire that was administered to 325 respondents using the mall intercept approach to select them (with 317 usable questionnaires after data editing). We used exploratory factor analysis in order to divide the sample into ethnocentric and non-ethnocentric consumers. Finally we conducted an Analysis of variance (ANOVA) to investigate the specified hypotheses.
Findings: The results showed that..
Originality/value: Although the research on consumer ethnocentrism and country of origin effect is quite substantial in the area of consumer research, yet the literature has focused almost exclusively on high involvement products. The current study seeks to fill this gap by undertaking research on a low involvement product in a developing market setting..
Keywords: Consumer ethnocentrism, country of origin, Romania, brand perception.
Paper type: Research paper
Introduction
International marketing research has long been concerned with examining whether consumers prefer domestic products, as opposed to foreign products and how the country of origin of the foreign product is perceived (Evanschitzky at al., 2007). Altintaş and Tokol (2007) present that one factor which may influence a consumer’s decision to buy a domestically-produced rather than a foreign-made product is the concept of consumer ethnocentrism (CE). Alongside CE, empirical studies on the effects of country of origin (COO) on brand perception shows that usually consumers perceive products made in developed countries to be of higher quality compared with products made in emerging markets (Pappu, Quester, and Cooksey, 2007; Josiassen and Harzing, 2008; Usunier and Cestre, 2008). In a study conducted by Hamin and Elliott (2006) in countries such as Mexico, the Philippines, Jordan and Nigeria, the consumers seem to rate products from more developed countries more highly than domestic products. These authors also note that alongside the generalized preference for products originating from developed countries, there is also evidence to suggest that some consumers will always prefer to buy products manufactured in their home country (Beverland, 2001; Pecotich and Rosenthal, 2001; Dmitrovic, Vida and Reardon, 2009). When a consumer makes a reference to the country of origin of a product the perception is automatically drawn by the quality of the product, thus it can be called country-specific (Balabanis and Diamantopoulos, 2004; Lantz and Loeb, 1996), while the extent to which the effect depends on the product category, is called product-specific (Balabanis and Diamantopoulos, 2004; Watson and Wright, 2000; Sharma et al., 1995, in Piron, 2000; Smith, 1993; Cordell, 1992).
In spite of the extensive research about COO effects and CE on consumers in developed markets to a greater extent than in emerging markets, some inconclusive findings arise: some studies show a negative effect of consumer ethnocentrism (CET) on the evaluation of foreign products by consumers in emerging markets (Klein et al., 2006), whereas others show either no significant effect (Huddleston et al., 2001), or different effects based on product type (Hamin, 2006), perceptions about domestic products and conspicuous consumption tendencies (Wang & Chen, 2004), and attitudes towards brands and advertising (Reardon et al., 2005). Thus there is no consensus on the role of CE in COO effects for consumers in emerging markets.
When it comes to COO effects, there are two issues that need to be addressed. Firstly, most studies have focused on high involvement products where consumers look for other cues such as price or design when making their purchase decision. To date, there have been few studies on the impact of consumers’ COO perceptions on low-involvement products. For example, one study conducted by Chryssochoidis et al. (2006) on Greek consumers, showed that ethnocentrism affects not only consumer beliefs, but also how the quality of domestic and foreign products are evaluated, thus making the appearance of the COO effect more obvious at the level of the product type (product-specific). Thus, there are mixed results on what role COO plays in shaping consumers’ brand perception of low involvement foreign goods or whether its effect is the same for low-involvement products as for high-involvement products (Ahmed et al. (2002).
Second, the majority of COO studies have been conducted in developed countries. Some studies which were conducted in developing countries are: Zhang (1996)Piron (2000), Kaynak and Hyder (2000), Kaynak and Kara (2002), Wang and Chen (2004), Ahmed and d’Astous (2007); Pecotich and Ward (2007). COO research in developing or non-western countries, especially Eastern European markets remains less explored.
Taking the above into consideration, this study examines the level of consumer ethnocentrism (CE) and its implication on the consumers’ evaluation of a foreign brand. Furthermore it seeks to test whether country of origin matters for in connection to the consumers’ brand perception. It builds up on a previous study, undertaken by the authors, concerning the impact of consumer ethnocentrism on the general brand perception of the Romanian consumers, with the aim to test the ethnocentric level and country of origin effect on a specific foreign beer brand.
The rest of the paper is structured as follows. In section 2, we shortly reviewed the extant literature on consumer ethnocentrism, country of origin and brand perception and formulate hypotheses for the empirical investigation in section 3. Here, a presentation of the methodological approaches used for the empirical investigation is presented and the results of the empirical analyses are reported. Finally section 4 discusses the findings and provides conclusions.
Literature review and hypothesis development
The Country-of-origin effect on brand perception
Over the last decade, marketing scholars exerted a great focus on the researching country of origin effects on foreign and domestic brands (Klein et al., 1998; Balabanis and Diamantopoulus, 2004; Liu and Johnson, 2005; Verlegh et al., 2005; Hong and Kang, 2006; Maheswaran and Chen 2006; Pappu et al., 2007). According to Han and Terpstra (1988) country-of-origin (COO) is defined as "the country of manufacture or assembly" identified by "made in" or "manufactured in" labels. But due to the growth of multi-national companies into trans-national companies and the emergence of hybrid products coming from different countries, the image of the made-in label has been blurred (Baker and Michie, 1995; Ahmed et al., 2005). According to Johansson (1996), the country of origin effect can be observed in two ways: halo effect and summary construct. Halo effect comes into play when consumers are not familiar with the products of a country, then the country image acts as a "halo" that directly affects consumers’ beliefs about these products. This means that stereotypes about that specific country come into the consumer’s mind. A general understanding provided by the extant literature is that economic, social, and cultural systems of countries as well as their relative stage of economic development are used by consumers as stereotypical cues in their evaluation of products and choice behaviour (Bilkey and Nes, 1982; Tse and Gorn, 1993). On the other hand, when consumers are familiar with a country’s products, the summary construct model operates in which consumers infer a country’s image from its product information, which then indirectly influences brand attitudes (Han, 1989).
From an information-processing perspective it is argued that consumers evaluate a product based on both intrinsic cues (e.g., taste, design, and other product features) and extrinsic cues (price, brand, and warranty) (Ahmed & d’Astous, 2008). As an extrinsic attribute, COO is used by consumers in the absence of information about tangible attributes (Han, 1989; Han and Terpstra, 1988). Some previous studies have shown that consumers typically view products made in developing countries less favourably than the ones manufactured in developed countries (Cordell, 1992; Lin and Sternquist, 1994; Kinra, 2006; Hu et al., 2008; Wang and Yang, 2008).
When reviewing the literature on COO effects, one can acknowledge that there exists a huge body of empirical research. Schooler (1965) was the first to conduct an empirical study about COO and proved that consumers rate identical products based on their country-of-origin. Previous research depicted that COO has an impact on brand/product perceptions (Etzel and Walker, 1974; Han and Terpstra, 1988; Leonidou et al., 1999; Paswan and Sharma, 2004), beliefs and attitudes (Lee and Ganesh, 1999; Knight and Calantone, 2000), perceived quality (White and Cundiff, 1978; Han and Terpstra, 1988; Teas and Agarwal, 2000; Balduaf et al., 2009) and evaluations (Hong and Wyer, 1989; Roth and Romeo, 1992; Verlegh et al., 2005), and that certain aspects interact to moderate the COO effect on product evaluation (Gürhan-Canli and Maheswaran, 2000). COO has also been shown to influence consumer preferences (Knight and Calantone, 2000) and purchase intentions (Roth and Romeo, 1992; Nebenzahl and Jaffe, 1996; Ghalandari and Norouzi, 2012).
Based on the discussions above, we propose the following hypothesis:
H1: A developed country of origin has a positive impact on brand perception.
Consumer ethnocentrism and brand perception
Previous research on the COO effect on consumer behavior introduced also the term of consumer ethnocentrism as being the cause of its appearing, thus presenting a close relationship between the two terminologies (Chryssochoidis et al., 2006).
CE represents an individual tendency to view the purchasing of imported products as wrong as it hurts the domestic economy and is not congruent with their in-group feelings of patriotism and belongingness to their societies (Shimp and Sharma, 1987; Granzin, Olsen, 1998). It may lead to overestimating the quality of locally made products while underestimating the quality of foreign-made products (Huddleston et al., 2001; Suh and Kwon, 2002; Erdogan and Uzkurt, 2010). These perceptions tend to be guided by rational, emotional and even moral considerations. Watson and Wright (2000) believe that in connection with the country of origin effect these perceptions represent consumer behavior not only towards local and foreign products in general but more specifically brands.
Wang and Chen (2004) state, that consumers from a developed country have a tendency to evaluate domestic products more favorably than imported ones, thus increasing the impact of ethnocentricity when it comes to buying the local brand or product over the foreign one. When looking at consumers from developing countries this phenomenon is reversed, they tend to perceive foreign products, especially the ones coming from Western countries, as more superior in quality than local products. Furthermore, Balabanis and Diamantopoulos (2004) argue that CE is a more of a "consistent predictor" of preferences for locally made products rather than foreign products, thus presenting that consumer ethnocentrism leads to the preference of domestic products but not necessarily to the rejection of foreign ones.
One of the predominant factors which affect CE is the type of product. The less important the product category is, the higher the ethnocentric tendency of the consumer (Sharma et. al, 1995; Balabanis and Diamantopoulos, 2004; Smyczek, 2006). Previous research explored the ethnocentric tendency of consumers concerning food products (Sajdakowska, 2003), financial services (Smyczek, 2006) or clothing (O’Cass and Lim, 2002). While emerging economies are becoming more and more of interest for marketing scholars in terms of CE, the focus in recent years towards – Eastern Europe (Parts, 2007 in the Baltic States; Vida and Damjan, 2000 in Slovenia; Cumberland et al., 2010 in Poland), India (Bawa, 2004; Khan and Rizvi, 2008), Turkey (Dedeoglu et al., 2005), Russia (Puzakova et al., 2010), and China (Hsu, Nien, 2008). Although Romania is the second largest Eastern European country and a valuable emerging market, it did not receive as much attention as the rest of the Eastern European countries. This paper intends to fill in this gap and choose Romania as the object of the research.
Based on the above, we thus hypothesize:
H2: The more ethnocentric Romanian consumers are the more likely it is that they will have a negative perception of foreign brands.
The Romanian beer market
With a population of 21.5 million people, Romania is one of the bigger former communist countries in Eastern Europe that joined the European Union in 2007. The GDP per capita is around 8300 USD, which is only 47% of the average EU-27 income. During the first years of the financial crisis, 2008-2009 the national GDP dropped 9.4%, but the World Bank predicts an annual average growth of 2.5% since 2011. The unemployment rate is lower than in the EU-27 countries with 6.7%.
The beer consumption in Romania has become very popular in the last years. Between 1996 and 2001, beer consumption per capita increased from 37.4 liters to 56.9 liters, but still slightly below the average Eastern European consumer consumption of 60.6 liters (Larimo et al., 2006). In 2009 beer sales amounted to 87.4 liters and are expected to rise to 110 liters in 2016 (Business Monitor International, 2012). Concerning the value sales, in 2010 the total value of the market was approximately 916.15 million USD, while in 2016 the market is expected to reach a volume size of 1977 liters and a value size of approximately 1.4 billion USD (Business Monitor International, 2012).
The key players on the Romanian market are: SABMiller (South Africa) with 26% market share, Heineken (Netherlands) with 24% market share, Anheuser-Busch InBev (USA) with 14% market share, Carlsberg (Denmark) with 12% market share, and European Drinks (Romania) with 5% market share. While only one main player in the market is Romanian, other big international brands buy local brands, like Ursus acquired by SABMiller, or Bergenbier acquired by InBev. The only foreign beer company that did not acquire a local brand is Carlsberg, which entered the market through a license agreement, with popular beer brands such as Tuborg, Carlsberg and Skol.
Methodology
This paper is the third in a series of three papers. The first paper is titled, Brand Perception, Ideology and Ethnocentrism: How strong are the links in Post-Communist Romania. The paper focused on identifying and quantifying the relationships between Ideological preferences and ethnocentrism as well as between Ideological preferences with ethnocentrism and perception of branding. The second paper investigated the impact of demographic factors on the perception of branded products after accounting for Consumer Ethnocentric tendencies and ideological preferences.
While the first two papers focused on the general perception of the consumers towards brands, this third paper is more specific in choosing a particular Western brand. The aim is to examine the effect a developed country of origin, like Denmark, has on a low involvement product, the Tuborg beer brand, and how ethnocentric tendencies affect the consumers’ perception of the brand.
Data Collection Process
The questionnaire was first written in English and then translated into Romanian by one of the authors (who is a Romanian by birth) and then back-translated by another Romanian fluent in both English in Romanian to make sure that all idioms and Romanian expressions were correct. It was then pretested on Romanian students studying at Aalborg University, to check for any misunderstandings. The questionnaire was then administered to 325 respondents in Bucharest, Cluj-Napoca and Sibiu – three major cities in Romania, using the mall intercept method. Data editing was performed in order to identify omissions and errors in responses, leaving a number of 317 questionnaires for the final analysis.
Survey Instrument
The questionnaire was developed containing three major sections. The first section covers the demographic data, specifically age, gender, education and household income. The second section contains questions relating to the beer brand Tuborg. Each of the items was evaluated using a 5 item Likert-type scale. Responses to the Likert scale ranged from strongly disagree (coded 1) to strongly agree (coded 5). The third section of the questionnaire consists of questions related to consumer ethnocentrism. CETSCALE (Consumer Ethnocentric Tendencies Scale), a 17-item questionnaire, developed by Shimp and Sharma (1987) to measure consumer ethnocentrism which is based on the same 5 ranged Likert-type scale as described earlier. This instrument has been used previously in various cultural and cross-cultural settings such as: the USA, France, Germany, Korea, and Japan, but also CEE countries (Huddleston et al., 2001, Lindquist et al., 2001). High CETSCALE scores indicate a high level of ethnocentrism, while low CETSCALE scores indicate a low level of ethnocentrism.
The table below shows the demographical distribution of the respondents.
Table 1. The percentage distribution of the socio-demographic profile of the 317 respondents
Demographic characteristics
%
Gender
Female
57.4
Male
42.6
Age in years
< 26
33.1
26 - 45
42.9
> 45
24.0
Education
Primary
6.3
Secondary
28.1
University
46.4
Post University
19.2
Occupation
Students
26.2
Unemployed
16.1
Employee
11.0
Employed with Higher Education
34.1
Employer
12.6
Monthly income a
Zero
20.2
< 1501
38.8
1501- 2500
23.3
> 2500
17.7
Note:a in RON; 1 RON = 4.4 EUR
Data Analysis
The Analysis of the data was done using the statistical analysis from the SPSS version 19. First, we did a descriptive analysis to get firstly an overview of how the respondents perceive the Tuborg beer brand, and secondly what kind of impact the country of origin, Denmark, has on the respondents. Then the principal component analysis CETSCALE was done in order to reduce the data and to find factors among observed variables. Finally we conducted an Analysis of variance (ANOVA) to investigate the specified hypotheses, i.e. H1: A developed country of origin has a positive impact on brand perception, and H2: The more ethnocentric Romanian consumers are the more likely it is that they will have a negative perception of foreign brands.
Results
Consumers’ perception towards the brand Tuborg and COO effect
Three characteristics for the perception of the Tuborg brand have been evaluated by the Romanian consumers (see Table 2). A total of 51.7% of the respondents agree with the fact that they trust the quality of the brand, while 48.9% believe that the Tuborg brand is attentive with their needs. It further shows that 33.4% of the respondents would choose Tuborg instead of other beer brands, compared to 18.8 who disagree with this statement.
Table 2. Percentage distribution of respondents scores and mean scores for the Tuborg brand perception (n = 317)
Instrument items a
Totally
disagree
Rather
disagree
Neither agree nor disagree
Rather
agree
Totally
agree
Mean
Std
1. I trust the quality of the products of this brand
.9
4.1
43.2
27.4
24.3
3.70
.915
2. I think that this brand is always looking to improve its products to better satisfy consumers’ needs.
1.3
2.2
47.6
30.9
18.0
3.62
.847
3. I prefer this brand over other brands in the same product category.
7.9
10.7
47.9
20.2
13.2
3.20
1.057
Note: a The response format is a five-point Likert-type scale (1= strongly disagree, 5= strongly agree.)
The country of origin effect is further on presented in the table below, showing that 36 % of the respondents have a positive opinion about the fact that Tuborg is a Danish brand while 26.8% feel that the country of origin has a negative effect on them.
Table 3. Percentage distribution of respondents scores and mean scores for the country of origin effect (n = 317)
Instrument items
Positive effect
Negative effect
No effect
Mean
Std
The beer brand Tuborg is from Denmark. How does this information affect your opinion of the brand?
36
26.8
37.2
2.01
.856
Degree of Ethnocentrism among Romanian Consumers
The 17 items of the CETSCALE were estimated using an exploratory factor analysis with principle component analysis and varimax rotation (see table 4). So that factor analysis can be used, the sample must be 100 or greater (Hair et al., 1998, Tabachnick & Fidell, 2007), which in this case is of 317. Firstly, it was observed that the factor loadings were at least .5, suggesting a high factorability. Secondly, the Kaiser-Meyer-Olkin measure of sampling adequacy was .864, above the commonly recommended value of .7, and Bartlett’s test of sphericity was significant (2 = 4335.8, p < 0.000). Therefore, it was considered appropriate to factor analyze the data. However, the rotated varimax solution (with Kaiser normalization) suggested that items 6, 7, 8, 9, 10, 11, 13, 16 loaded on two components. Therefore we decided to do two sets of principal component analysis for the two groups of items; one for items 1, 2, 3, 4, 5, 12, 14, 15, 17, and another for items 6, 7, 8, 9, 10, 11, 13, 16. While previous research on the CETSCALE found only two factors, results of our analysis produced 3 factor components, labeled: "taxing imports", "buy Romanian products" and "support Romanian products" (for more details see: Iacob et al., …). The table below shows the results of the principal component analysis of the CESTCALE.
Table 4. PCA and 3 component factor loadings for the 17-items measuring "consumer ethnocentrism" based on CETSCALE (n = 317)
Number and instrument items
Rotated loading a for component1:
"Taxing imports"
Rotated loading a for component 2:
"Buy Romanian products"
Rotated loading a for component 3:
"support Romanian products"
Romanian people should always buy Romanian- made products instead of imports.
.809
Only those products that are unavailable in Romania should be imported.
.690
Buy Romanian-made products. Keep Romania working.
.752
Romanian products, first, last and foremost.
.721
Purchasing foreign made products is un-Romanian.
.636
It is not right to purchase foreign products, because it puts Romanians out of work.
.739
A real Romanian should always buy Romanian-made products..
.855
We should purchase products manufactured in Romania instead of letting other countries get rich of us
.821
It is always best to purchase Romanian products.
.834
There should be very little trading or purchasing of goods from other countries unless out of necessity.
.831
Romanian people should not buy foreign products, because this hurts Romanian business and causes unemployment.
.834
Restrictions should be put on all imports.
.840
It may cost me in the long run but I prefer to support Romanian products.
.754
Foreigners should not be allowed to put their products on our markets.
.896
Foreign products should be taxed heavily to reduce their entry into Romania.
.716
We should buy from foreign countries only those products that we cannot obtain within our own country
.785
17. Romanian consumers who purchase products made in other countries are responsible for putting their fellow Romanians out of work
.812
Note: a Only loadings with a value of greater than 0.5 are of main relevance.
Results of the Analysis of Variance (ANOVA)
As mentioned earlier, we used ANOVA models to investigate firstly whether a developed country of origin, in this case Denmark has a positive outcome on how Romanian consumers perceive the brand and secondly on whether a high ethnocentric tendency brings out a negative perception towards a foreign brand.
The estimated functional form for our model is as follows:
i represents an individual respondent; Y is a vector of 2 component factor scores for product assessment and brand perception. The α0, is the mean of the referenced category of the cohort groups, αj are the parameter estimates of the rest of the categories in the group X, and εij the error term assumed to be normally distributed N(0,σ2).
The estimated model ANOVA results for country of origin were significant (p<0.05), which show that the developed country of origin, Denmark, exhibits a positive effect on the Tuborg brand perception (see table 5). The size for the unique R2 for the relationship between the country of origin effect and the respondents’ brand perception are %. These results imply that H1 is accepted, thus, a developed country of origin has a positive impact on brand perception.
When looking at the ethnocentric tendency, the results are not significant and the size for the unique R2 for the relationship between the consumers’ ethnocentric tendencies and the respondents’ brand perception are %. These results imply there is no relationship between ethnocentric level of the Romanian consumers and their brand perception, thus H2 is rejected.
The mean component factor score and test differences are presented in Table 5.
Table 5. Distribution of respondents and mean estimates of Brand perceptions by COO and CE
 
Respon-dents
 
"Trust the quality of the brand"
"The Tuborg brand is attentive with consumers’ needs"
Prefer Tuborg over other brands
%
Mean
SE
Mean
SE
Mean
SE
Total
317
100
0
.090
0
.087
0
.115
COO effect  
positive effect
114
36
1.234a
.143
1.126a
.138
1,032a
.182
Negative effect
85
26.8
-.553c
.160
-.558c
.154
-.015
.203
No effect
118
37.2
.681b
.167
.568b
.161
1.017a
.213
Ethnocentric Tendencies (CE)
Tax on Imports, component 1
Low-CE
263
83
.223
.120
.086
.115
.171
.152
High-CE
54
17
-.223
.138
-.086
.133
-.171
.175
Buy Romanian Products, component 2
Low-CE
265
83.6
.137
.117
.117
.113
0.55
.149
High-CE
52
16.4
-.137
.141
-.17
.136
-.055
.179
Support Romanian Products, component 3
Low-CE
257
81.1
.026
.083
-.052
.080
-.202
.105
.080ivec = Country of origin questionHigh-CE
60
18.9
-.026
.150
.052
.144
.202
.190
a,b,c = significance level at .05
Conclusions and Discussions

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