CHAPTER 2
LITERATURE REVIEW
2.1 Brand
2.1.1 Brand Definition
Brand can be defined as “ name, term, sign, symbol, or design, or combination of them which is
intended to identify the goods and services of one seller or group of sellers and to differentiate
them from those of competitors” (Kotler 1991:442)
Individual brand components are called the “brand identities” and the totality is called “the
brand.”
Similar to this definition, Indonesia Legislative outlined brand as a sign in the form of picture,
name, word, alphabets, numbers, color structure or combinations of those aspects that have a
differential effect and can be used in goods or services transactions. This definition has the same
meaning to the definition of American Marketing Association that emphasized brand as an
identifier and differentiator. Based on these definitions, technically when a marketer creates a
new name, logo or symbol for a new product, he or she has created a brand.
2.1.2 Brand Elements
A brand has several elements or identity, both tangible and intangible (Tjiptono, 2005). In a
general sense, those elements can be outlined to be brand names, Uniform Resource Location
(URL), logo, symbol, character, spokespeople, slogan, jingles, packaging of signage (Keller,
2003).
Brand names can be based on various aspects (Paiva& Costa, 1993; Room 1998; Turley &
Moore, 1995), as follow:
a. Person’s name
Person’s name can be the name of the founder, owner, manager, business partner or other
people being associated to the product. Historically, person-based brand practice has
become a normal practice in business especially in legal, accountancy, consultancy and
medical industry.
b. Geographic brand names
Geographic brand names can be the place where the product is first found, developed or
sold.
c. Invented scientific names
These names are mostly in Greek or Latin.
d. Status names
For example: Crown Piano, Monarch Bicycles or Diamond Dies.
e. Good Association Names
Good association names are words that have positive association and directly related to a
sense of purity, softness and health.
f. Artificial names
Artificial names are words without specific meaning.
g. Descriptive names
Descriptive names are brand names that describe key benefits and aspects of the products.
h. Alpha-numeric brand names
Alpha-numeric brand names are brand names containing numerical elements, both in the
form of numerical digits and written.
The following table describes the brand elements:
Tabel 2.1 Brand Elements
No
Tangible and Visual Elements
Intangible Elements
Reference
1.
Symbol and slogan
Identity, corporate brand,
Aaker (1992)
integrated communication,
consumer relationship.
2.
Name, logo, color, brand-
-
mark, advertisement slogan.
3.
Names, commercial brand
Bailey & Schechter
(1994)
Positioning, brand
Biggar&Selame (1992)
communication
4
Functional capability, names,
Symbolic value, service,
legal protection
ownership status, shorthand
De Chernatony (1993)
notation.
5.
Functionality
Representativeness
De
Chernatony&McWillim
(1989)
6.
Presence and Performance
7.
Unique name, logo, graphic
Relevance, leading aspects,
Dyson, Farr & Hollis
special bond
(1996)
-
Grossman (1994)
Personality, relation, culture,
Kapferer (1997)
and physical design.
8.
Physical form
reflection, self image
9.
Functional value
Social and personal values
O’Malley (1991)
Source: Tjiptono (2005)
2.1.3 Brand Interpretation
“Brand” throughout the years of scientific research has been defined in a plethora of
interpretations. Chernatony (2001, 2003) identified 14 brand interpretations and classified them
into 3 categories: input-based interpretations (branding, which is viewed as manager’s ways to
allocate resources in convincing consumers), output-based interpretations (consumers
considerations and interpretations towards brand’s ability to produce added value for them), and
time-based interpretations (emphasize branding as a continuous process). These three categories
are further outlined to be 14 types of interpretations, such as brand as logo, legal instrument,
company, shorthand, risk reducer, positioning, personality, values, vision, value adding, identity,
image, relationship and evolving entity (refer to Table 2.2)
Table 2.2 Brand Interpretation
No.
INTERPRETATION
DESCRIPTION
A. Input Perspective
1.
Brand as a logo
Brand is defined as a “name, term, sign, symbol or
design, or combination of some of these aspects,
which is meant to identify goods and services from
one seller to another or between groups of sellers
and to differentiate the goods and services from
their competitors (American Marketing
Asscociation definition, taken from Kotler, et.al
2004, p. 407)
2.
Brand as a legal instrument
Brand reflects ownership rights under legal
protection.
3.
Brand as a company
Brand represents the company where corporate
values are implemented and spread into various
product categories.
4.
Brand as a shorthand
Brand facilitates and accelerates consumer
information processing.
5.
Brand as a risk reducer
Brand emphasizes consumer perception towards
risk (e.g. performance risk, financial risk, time risk,
social risk and psychological risk).
6.
Brand as a positioning
Brand is interpreted as a platform that allows the
owner to associate his or her offer with certain
functional benefits that are important, recognizable
and valued important by the consumers.
7.
Brand as a personality
Brand has emotional values or a personality that
can be aligned with consumer’s self image (both
actual, aspirational and situational self image).
Jennifer Aaker (1997) identified five brand
personality dimensions: sincerity, excitement,
competence, sophistication and ruggedness.
8.
Brand as a chain of value
Brand has a chain of values influencing brand
choice.
9.
Brand as a vision
Brand is the vision of senior management in the
purpose of making a better world. In other word,
brand reflects what to be made real and offered by
senior managers to the outside world.
10.
Brand as a value adder
Brand is the added value (functional and emotional)
added to core products or services and viewed
valuable by the consumers.
11.
Brand as an identity
Brand gives meaning to products and selects its
identity, both in space and time.
B. Output Perspective
12.
Brand as an image
Brand is a chain of associations perceived by
individuals all the time as a result of direct and
indirect experience for a brand.
13.
Brand as a relation
Due to the fact that brand can be personified;
consumers can build a relationship with it. Brands
help consumer’s legitimate views or thoughts about
him or herself.
C. Time Perspective
14.
Brand as an evolving entity
Brand grows along with consumer demand changes
and competition. However, the changing aspect is
the peripheral values while the core values seldom
change.
Source: Tjiptono (2005)
2.1.4 Brand Benefits
According to Keller (2003), brand has benefits for both consumers and producers. For producers,
brand has the importance of:
a. An identifying tool to ease up the process of handling or product identification for
companies, especially so for inventory organizing and accounting process.
b. A form of legal protection towards unique product features or aspects. Brand can earn
intellectual property protection. Brand names can be protected through registered
trademarks, manufacturing process can be protected through patented trademark and
packaging can be protected through copyrights and design. These intellectual property
rights serve as and assurance for the company to invest safely in the developed brands
and can earn profits from the valued asset.
c. A signal of quality levels for satisfied consumers such that they can easily choose and
repurchase other time. Such brand loyalty results in demand predictability and security
for company and creates a barrier of entry for other companies.
d. A platform to create associations and unique meanings that differentiate products from
other competitors.
e. A source of competitive advantage especially in legal protection, consumer loyalty and
unique image formed in the mind of the consumers.
f. A form of financial returns especially in relation to future income.
For consumers, brand gives an array of benefits defined differently by many researchers.
According to Vasquez, et al. (2002) the dimensions of brand benefits and utility are
classified into nine categories. Other researcher, Keller (2003) outlined 7 core benefits of
brand for consumers, that is as product source identification, a form of responsibility
towards manufacturer and distributor, risk reducer, internal and external search cost
cutter, special promise or bond with the producers, symbolic tools projecting self image
and a sign of quality. Other classification of benefits came from Kapferer (1997) that the
potential functions of a brand involve identification, practicality, guarantee, optimization,
characterization, continuity, hedonistic, and ethical function.
Table 2.3 Brand Benefits for Consumer
No.
FUNCTION
BENEFITS FOR CONSUMERS
1.
Identification
Ease of visibility, a sense of meaning for the
product, ease of product search.
2.
Practicality
Facilitating time and energysaving through
identical repurchase and loyalty.
3.
Guarantee
Giving guarantee for consumers that they can get
the same quality despite different purchasing time
and place.
4.
Optimization
Giving assurance that consumers can purchase the
best alternatives in certain product category and the
best choice for a specific purpose
5.
Characterization
Getting a confirmation of consumer’s self image or
an image to be displayed to other people.
6.
Continuity
Satisfaction gained through familiarity and
intimacy with a brand used or consumed by a
consumer for years.
7.
Hedonistic
Satisfaction related to brand, logo and
communication attraction.
8.
Ethical
Satisfaction related to responsible attitude of the
brand with regards to its relationship with the mass.
Source: Tjiptono (2005)
2.2 Brand Equity
2.2.1 Brand Equity Definition
Brand Equity, according to Yoo and Donthu(2001), is defined as the difference in consumer
choice between the focal branded product and an unbranded product. Brand Equity can also be
explained as the utility difference in terms of a positive marketing outcome that is created by a
branded product compared to that of the generic version of the same product. This incremental
utility or positive marketing outcome is viewed both from consumer and firm-based
perspectives. The consumer-based perspective focuses on “Consumer mindset” and is explained
with such constructs as attitudes, awareness, associations, attachments and loyalties (Keller &
Lehmann, 2001). The firm-based perspective uses “product –market outcomes” such as price
premium, market share, relative proce and “financial-market outcomes” such as brand’s purchase
price and discounted cash flow of licence fees and royalties (Ailawadi, Lehmann, & Neslin, 2003
; Keller & Lehmann, 2001).
Another concept of brand equity comes from Aaker (1991) and Keller (1993) which defined
brand equity as the incremental value added to a product by virtue of its brand. This definition
has been conceptualized by both Aaker and Keller but there is no single measure of brand equity
in the operationalized form.
As explained above, there are two principal and distinct perspectives that have been taken by
academics to study brand equity: Financial and Consumer Based. The first perspective of brand
equity is from a financial market’s point of view where the asset value of a brand is appraised
(Fasrquhar et al. 1991, Simon and Sullivan 1990). Consumer-based brand equity is evaluating
the consumer’s response to a brand name (Keller ,1993; Shocker et al., 1994).
The following table illustrates the diversity of existing definitions and concept of brand equity.
Table 2.4 Definitions and Concept of Brand Equity
Study
Description of the Concept
The Marketing Science Institute (Leuthesser
The set of associations and behaviours on the
1988)
part of brand’s consumer, channel members
and parent corporation that permits the brand
to earn greater volume or greater margins than
it would without the brand name and that gives
the brand a strong, sustainable and
differentiated advantage over competitors.
Aaker (1991)
The value consumers associate with a brand, as
reflected in the dimensions of brand awareness,
brand associations, perceived quality, brand
loyalty and other proprietary brand asset.
Swait et al (1993)
The consumer implicit valuation of the brand
in a market with differentiated brands relative
to a market with no brand differentiation.
Brands acr as a signal or cue regarding the
nature of product and service quality and
reliability and image/status.
Kamakura & Russel 1993 (Lassar et al. 1995)
Consumer-based brand equity occurs when the
consumer is familiar with the brand and holds
some favorable, strong and unique brnad
associations in the memory.
Keller 1993
The differential effect of brand knowledge on
consumer response to the marketing of the
brand. Brand knowledge is the full set of brand
associations linked to the brand in long-term
consumer memory.
Lassar et al. 1995
The consumer’s perception of the overall
superiority of the product carrying that brand
name when compared to other brands. Five
perceptual dimension of brand equity includes
performance, social image, value,
trustworthiness and attachment.
Aaker (1996)
Brand equity is:
(1) Loyalty (brand’s real or potential price
premium)
(2) loyalty (consumer satisfaction based)
(3) perceived comparative quality
(4) perceived brand leadership
(5) perceived brand value (brand’s functional
benefits)
(6) brand personality
(7) consumers perception of organization
(trusted, admired or credible)
(8) perceived differentiation to competing
brands
(9) brand awareness (recognition and recall)
(10) market position (market share), prices and
distribution coverage.
Source: Tjiptono (2005)
Keller (2002) identifies three main streams in the study of brand equity such as consumer
psychology (cognitive psychology), economic (signaling theory) and biology and sociology.
1. Psychological Basis
Based on psychological perspective, brand is viewed as a node in memory that is related
to various different associations and with varied power. Consumers understand brand as a
category that is always associated with specific attributes. There are two main model of
brand equity in modern psychology. The first model is conceptualized by David Aaker
(1991, 1995; Aaker&Joachimsthaler, 2000) and the other model came from Keller (1993,
2003). In Aaker’s model brand equity is formulated from managerial and corporate
strategic point of view although the main basis is consumer behavior. Aaker outlined
brand asset contributing to the creation of brand equity in four dimension: brand
awareness, perceived quality, brand associations and brand loyalty.
Figure 2.1 Consumer Based Brand Equity Dimensions
Source: Tjiptono (2005)
a. Brand Awareness
Brand awareness refers to the consumers’ ability to recognize and remember that a
brand is a part of certain product category.
b. Perceived Quality
Perceived quality is defined as consumers’ judgment towards product keunggulan or
superiority holistically. Due to this, perceived quality is based on consumer’s
subjective evaluation towards product quality.
c. Brand Associations
Brand association is everything associated with memory of a brand. Brand
associations have a strong relation to brand image which is defined as a string of
brand associated with certain meanings. Brand association has a specific power level
and will be stronger with additional consumption experience or exposure to specific
brand.
d. Brand loyalty
According to Aaker (1991, p. 39), brand loyalty is the attachment a consumer has to a
brand.
Keller’s model is more focused to consumer behavior perspective. The model is
developed based on consumer’s perspective or scientifically called Consumer-Based
Brand Equity (CBBE). Core assumption of this model that the power of a brand lies
on what is learnt, felt, seen and heard about the brand by consumers as a result of the
experience all the time (Keller, 2003). Based on this model, a brand is said to have
positive Consumer Based Brand Equity if the consumer reacted more positively
towards a product and how the product is marketed when the brand is identified,
compared with when the product’s brand is not identified. Key creation of brand
equity is brand knowledge, terdiridari brand awareness and brand image. Brand
equity is created when consumer has high awareness and familiarity towards a brand
and has strong, positive and unique brand association in memory.
Keller proposed a four-stepped model of brand building:
a. Establishing the proper brand identity (i.e. establishing breadth and depth of
brand awareness)
b. Creating the appropriate brand meaning through strong, favorable, and unique
brand associations
c. Eliciting positive, accessible brand responses
d. Forging brand relationships with consumers that are characterized by intense,
active loyalty.
Achieving these four steps involve establishing six brand-building blocks
which are brand salience, brand performance, brand imagery, brand
judgments, brand feelings and brand resonance.
These sequences of steps are assembled into a pyramid model where creation
of brand equity starts from the bottom of the pyramid until the pinnacle.
4. Relationships
Consumer
Brand
Resonance
Consumer
Judgements
Consumer
Feelings
Brand Performance
Positive,
Accessible
Responses
3. Responses
2. Meaning
Strong,
Favorable &
Unique Brand
Associations
1. Identity
Deep, Broad
Brand
Awareness
Brand Imagery
Brand Salience
Intense, Active
Relationships
Figure 2.2 Consumer Based Brand Equity Pyramid
Source: Keller (1993)
a. Brand Salience
Brand salience related to awareness aspects of a brand such as how often and how
easily a brand to be remembered and recognized in different situations. This
factor is related to how good a brand element executes its function as a product
identifier. Brand awareness is not only attached to how consumers know brands
and have seen them, but also to aspects associated to brands (name, logo, symbol
and so on).
b. Brand performance
Brand performance is related to product and service performance in fulfilling
consumers’ functional needs. In general, there are five core attributes and benefits
underlying brand performance:
(1) Primary element and supplemental features
(2) Product reliability, durability and serviceability
(3) Service effectivity, efficiency, and empathy
(4) Model and design
(5) Price
c. Brand imagery
Brand imagery refers to extrinsic properties of products and services, i.e. brand
performance in fulfilling psychological and social needs of consumers.
Brand imagery can be formed directly (through consumer experience and the
contact with products, brands, target market and usage situation) and indirectly
(through advertisements and word of mouth communication).
Four main categories of brand imagery are:
(1) User profile, both descriptive demography factors and abstract psychography.
(2) Buying situation
(3) Values and personality
(4) History, heritage and experiences.
d. Brand judgments
Brand judgments focuses on opinions and evaluation of consumer in a personal
way towards brands based on brand performance and image association being
perceived.
Brand judgment aspects involve:
(1) Brand Quality
(2) Brand Credibility
(3) Brand consideration
(4) Brand superiority
e. Brand Feelings
Brand feelings are responses and emotional reaction of consumers towards brand.
This reaction can be warmth, fun, excitement, security, social approval and selfrespect feelings.
f. Brand resonance
Brand resonance refers to relational characteristic experienced by consumers
towards a specific brand. Resonance is reflected in the intensity or power of the
psychological bond between consumer and brand as well as activity levels
generated from that loyalty. Specifically, resonance involves behavioural loyalty
(Share of Category Requirements), attitudinal loyalty, sense of community
(identification with brand community), and active involvement (serves as brand
evangelists and brand ambassadors).
2. Economical basis
Erdem&Swait (1998) used information economics perspective of value (or equity) that
consumers think is coming from the brands.
Based on signaling theory, imperfect and asymmetrical market information structure are
considered explicitly. The main focus is on credibility role as the main determinant of
consumer-based brand equity. In Erdem&Swait’s model, brand equity is defined as the
value of brand signal for consumers where brand signals include strategies and marketing
mix activity in the past and the present related to a specific brand.
3. Biological and sociological basis
McCracken (1993) focused on product and brand cultural meaning. Based on antroplogial
or cultural basis, brand is defined as a bundle or container of meanings. Brand has values
as brand adds values through adding meanings to product. Cultural meaning of a brand
can be gender meaning (maleness or femaleness), status meaning (social status), country
meaning (nationality), and multicultural meaning (ethnicity) and so on. Brand can also
reflect traditional, trustworthiness, excitement, country love, authenticity, purity, family,
nature and so on.
2.3 Global branding
2.3.1 Local brand
Kapferer (2002) claimed that strong local brands have a role to play in multinational’s
brand portfolios because they help finance globalization. They act as a bridgehead that
opens doors for the company and they help firm dominate the market.
Six factors that weigh in favor of local brands:
a. Structural factors
There are several important structural factors thatfoavor local brands.
First, one finds “nonfrequent purchase” where equity passed from one generation to
another through family traidition. In contrast, fast-moving categories people tend to
change brands much more as a result of the lower cost of trial.
Second, in sectors where the importance of advertising (versus prescription or
loyalty) is low, it is very difficult to change consumer’s loyalty towards older brands.
Local brands benefit more from word-of-mouth and transmission of reputation.
Third, in industries where the importance of salesforce is high, the relationship
between manufacturer and retailer tends to favor loval brands.
Fourth, when there are few economies of scale, the cost advantage of globalization is
reduced.
Fifth, if there is a need for local product or packaging adaptation, the manufacturer’s
market knowledge and capability to adapt also favor local brands.
Sixth, although concentrated buyers often prefer to be supplied by global and reliable
companies, if the buyers are fragmented, they will probably prefer to work with local
operators or brands that can take care of their particular needs.
Seventh, price accessibility will probably favor local brands. Global brands tend to be
constrained by their international price positioning, whereas local brands will adapt
completely to their local markets.
b. Brand Equity Factors
First, if the local brand has dominant consumer awareness, it already has a huge
advantage that should be exploited. Also, local brands with strong emotional ties to
the community and/or brands whose name has a local meaning have a considerable
advantage over global brands, which usually do benefit greatly from these types of
equity in foreign markets. Finally, local brands tend also to develop a high trust
relationship with consumers who favor them over global brands.
c. Competitive Factors
If a local brand has developed a strong leadership and/or a high level of profitability,
the company should take advantage of that equity. Local brands with low prices can
also help the form defend itself distributor’s own brands.
d. General strategy
Local brands can also play a role in facilitating, culturally as well as financially, the
introduction of new global brands into a market.
e. Organization
Decentralized companies are better at adapting to local cultures and markets.
f. Environment
Nationalistic sentiment, local norms, and local restrictions are frequently used to
create barriers to international global brands. Therefore, international companies can
use local brands, which are closely tied to local norms and familiar with local
restrictions, to penetrate these markets.
Batra et al (2000) claimed that there is an influence of the product origin or whether
the brand is local or nonlocal towards brand preference. In his study, Batra measures
localness/nonlocalness based on interval scale. In most developed countries, almost
all local origin brands are sold in domestic markets. Therefore, sold brands marketed
in domestic and nondomestic markets are labeled as nonlocal origin brands. Another
more accepted definition comes from Tjiptono& Craig Lees (2004) that defines a
simple typology of brands. The following figure displays four main categories of
local brand perspective:
ORIGIN
FOREIGN
O
W
NE
RS
HI
P
O
RI
GI
N
FO
REI
GN
LOCAL
Original Local
Acquired Local
Brands
Brands
Quasi Local
Foreign Brands
Brands
Figure 2.3 Local Brand Perspective
Source: Tjiptono (2003); Tjiptono& Craig Lees (2004)
1. Original Local brands
This category includes brands from local region and is owned by local
people/company.
2. Quasi Local brands
This category includes brands from local origin but owned by foreign company.
This category has two forms (Tjiptono& Craig Lees, 2004):
a. Original local brands, which are brands bought by multinational companies
but the local brand name stays the same.
b. Local brands developed and marketed specially for certain domestic markets
by multinational companies.
3. Acquired local brands.
This category involves brands from other countries but owned by local
people/company.
4. Foreign brands
This category is the opposite of original local brands. Foreign brands are
originated from other countries and owned by local people/company.
In later developments, Tjiptono (2005) solidified the local brand typology in
Table 2.5 by including the market coverage dimension (local market coverage
versus international market converage) and differentiates brand ownership types
into three categories (local ownership, foreign ownership and dual ownership). As
a result, local brand typology can be seen in table 2.5.
Table 2.5 Local Brand Typology
Ownership
ORIGIN AND MARKET COVERAGE
Local Origin
Local
Foreign Origin
Local
International Local
International
Market
Market
Market
Market
Original
Original
Acquired
Acquired
Local
local brands
local brands
local brands
Quasi local
Quasi local
Acquired
Acquires
brands
brands
local brands
local brands
Quasi local
Quasi local
Foreign/non- Foreign/non-
brands
brands
local brands
brands
Dual
Foreign
local brands
Source: Tjiptono (2005)
2.3.2 Local versus global brands
A number of empirical studies report that global brands are more preferable than
local brands, at least in some specific consumer segments
(Agbonifoh&Elimimian, 1999).In general, global brand preference is due to
superior image, winning actual and perceptual quality, the desire to mimic
developed countries’ lifestyle, preference towards symbolic status,
cosmopolitanism, worldmindedness and so on. Global brands study done by
Research International (USA) in 2002 reveals that consumers around the globe
associates global brands with three main dimensions in the basic purchase
decision making:
a. Quality signal (the assurance of good quality)
b. Global myth (global ideal identity symbol)
c. Social responsibilities (care to environment issues, workers’ rights, public
health and so on.
These three dimensions can explain the 64% brand preference variation in at
least 12 countries (USA, England, Brazil, RRC, Egypt, France, India,
Indonesia, Japan, Poland, South Africa and Turkey).
This study also identifies four segments of global consumers:
a. Global citizen
Global citizens include them who depend on the company’s global success
as the indicator of quality and innovation.
b. Global dreamers
Consumer groups who admire transnational companies. They think that
global brands are the reflection of high quality products and are willing to
purchase them.
c. Antiglobals
Skeptical people who think that transnational companies produce better
quality products. They dislike brands with American values and disbelieve
that global companies act responsibly. This segment of consumers is
relatively large in England and RRD, but small in South Africa and Egypt.
d. Global agnostics.
Consumer groups who decide not based on global attributes of a brand.
They evaluate global products using the same criteria used on local
brands. For this group of consumers, global characters of a brand are not
something worth of special consideration. This segment is largely found in
USA, South Africa, but of a smaller percentage in Japan, Indonesia, RRC
and Turkey.
2.4 Consumer Ethnocentrism
In modern times, consumer ethnocentrism has become an important strategic tools used by
domestic firms in the face of global competition.Consumer ethnocentrism has emerged from the
sociological phenomenon called “ethnocentrism” introduced by William G.Sumner in 1906.
According to Sumner (1906), ethnocentrism is the “technical name for the view of things in
which one’s own group is the centre of everything and all others are scaled and rated with
reference to it. In other words, ethnocentrism is a tendency of people to believe that their cultural
or ethnic group is important and the other groups are evaluated primarily from the perspective of
one’s own culture. It is further elaborated by Adorno, Frenkel-Brunswik, Levinson & Sanford
(1950) as “ethnic centeredness” and emphasizes this phenomenon as the rigidity in accepting the
culturally “alike”, while rejecting the culturally “unlike”. According to those definition, a strong
ethnocentric person may judge other groups in relation to the cultural dimensions of language,
behavior, customs and religion of his or her own group.
The term consumer ethnocentrism was coined for the first time in 1987 by Shimp and
Sharma. They developed and design a psychometrically sound scale to capture and measure the
concept of consumer ethnocentrism of which instrument was later called CETSCALE.
CETSCALE was developed and tested to measure consumer’s ethnocentric tendencies that are
related to the purchase of foreign and American-made products (Shimp and Sharma, 1987). They
characterized the scale as a measure of “tendency” instead of attitude”, whereby the former term
captures general notion of a disposition to act in certain consistent fashion towards foreign
products, while the latter term refers to consumer’s feeling towards a specific object.
Shimp and Sharma (1987) defined consumer ethnocentrism as consumer’s belief about
the appropriateness, indeed morality of purchasing foreign goods. The essence of consumer
ethnocentrism is that, it is wrong to purchase imported goods as it hurts local economy
Ethnocentric consumers tend to be proud with brands, symbols and culture of his or her
nationality (Steenkamp, et al., 2003). They believe that buying foreign brand is a wrongdoing as
it has negative impacts on domestic economy, causes unemployment proble and is non-patriotic
(Han, 1988; Netemeyer, et al., 1991; Shimp& Sharma, 1987). Researches show that consumer
ethnocentrism plays a very important role whenever products are presented as less important and
if consumers consider national or personal welfare are threatened with foreign products (Sharma
et al., 1995). For ethnocentric consumers, global brands tend to be perceived as “economic and
cultural threats” (Steenkamp, et al., 2003). Consumers with this perception are more ready to
sacrifice “objective” benefits (e.g. better quality, cheaper price, better service) for psychological
benefit from holding the nationalistic commitmentby buying local brand (Baughs&Yaprak,
1996).
On the contrary, non-ethnocentric consumers evaluate foreign brand more objectively
without specific consideration on country of origin factors. In many cases, non-ethnocentric
consumers like foreign brand even more, especially if the country of origins are USA, Germany,
Japan or other developed country. This phenomenon is found in many developing coutntries like
RRC, Vietnam, Nigeria, Congo, Zimbabwe, Rumania, Turkey, Ethiopia and Peru (Batra et al.,
2000).
In terms of ethnocentric consumers’ profiles, a number of empirical studies found that
they tend to be older, women, less educated, more conservative, and more patriotic (Good &
Huddleston, 1995). Similar study also reports that younger, better educated, paid higher and less
conservative males tend to be less ethnocentric.
Many researches on Country-of-origin (COO) found that consumers tend to like brands
and products made in their country (Hong &Wyer, 1989; Peterson &Jolibert, 1995). Consumer
ethnocentrism also concluded as a predictor for imported product buying behavior better than
any traditional marketing strategy, like demographic variables and marketing mix (Herche,
1994). Another research shows by Ang, et al. (2004) shows that the harder a country is hit by
economic crisis, the higher consumer ethnocentrism is. In this particular research, Indonesia is
the most ethnocentric towards American and Japanese products compared to South Korea,
Malaysia, Singapore and Thailand. About 40-65% Indonesian respondents claimed that they
would change their foreign product purchase and switch to local products.
Consumer ethnocentrism demonstrated direct and negative impact on
consumer’s attitude toward, purchase intention and support for foreign product (Shankarmahesh,
2006). These imply that high ethnocentric tendencies lead to unfavorable attitude toward, lower
purchase intention and less support for foreign product. Additionally, perceived equity, empathy,
perceived cost, responsibility, country of origin and product evaluation act as the mediator while
perceived product necessity, perceived economic threat and cultural similarity moderate the
relationship between consumer ethnocentrism and its outcomes. Subsequent studies done in the
west by Balabanis and Diamantopoulos (2004) and Chryssochoidis et al. (2007) highlighted that
the level of consumer ethnocentrism varied among product categories. Product type was found as
an important determinant that can influence the effect of consumer ethnocentrism among Greek
consumers. Similarly, Balabanis and Diamantopoulos (2004) found consumer ethnocentrism is
product category-specific. There are as well a number of studies that have been done in Asian
countries, such as China (Wont et al., 2008), Indonesia by Hamin and Elliot (2006), Malaysia by
Nazlida and Rzli (2004); Yeong et al., (2007) and Othman et al. (2008). Hamin and Elliot (2006)
found that Indonesians hold relatively high ethnocentric tendencies and they are more receptive
to “Buy Local” campaigns and messages. Moreover, in terms of antecedents of consumer
ethnocentrism, the studies that were conducted in Malaysia revealed Malay, married and female
tended to show higher ethnocentric tendencies as compared with male (Othman et al., 200).
Household income (Nazlida and Razli, 2004; Othman et al., 2008) were found negatively related
to consumer ethnocentrism; however some studies found no relationship. Nazlida and Razli
(2004) also found that Malaysians tended to show higher preference towards local food but tend
to show no preference towards domestic cars and personal computers. Most of the above
discussed studies tested consumer ethnocentrism by using uni-dimensional CETSCALE and
ignoring the multidimensionality of it.
Shimp and Sharma (1987) also elaborated on the specific properties of Consumer Ethnocentrism
(CET). First, as mentioned above, CET is a general tendency as opposed to specific attitude.
Second, it results from a perceived concern for one’s own country and harmful effects that
imports may bring to oneself and countrymen. Third, it has an ethical dimension in that buying
imported goods is regarded as being unpatriotic and indifferent to the plight of fellow
countrymen put out of work. Fourth, it is inelastic with respect to price or other product related
attributes. Fifth, it is assumed to be socialized during early childhood like other
behaviouralpatterns. Sixth, overall CET in a social system is considered to be an aggregation of
individual tendencies.
2.4.1 Consumer Ethnocentrism Scale (CETSCALE)
CETSCALE contains 17 items shown in the table below.
Table 2.6The Original CETSCALE
No.
Item
1.
American people should always buy American-made products instead of imports.
2.
Only those products that are unavailable in USA should be imported.
3.
Buy American-made products. Keep American working.
4.
American products, first, last and foremost.
5.
Purchasing foreign-made products is un-American.
6.
It is not right to purchase foreign products.
7.
A real American should buy American-made products.
8.
We should purchase products manufactured in America instead of letting other
countries get rich of us.
9.
It is always best to purchase American products.
10.
There should be very little trading or purchasing goods from other countries unless
out of necessity.
11.
Americans should not buy foreign products, because this hurts American business
and causes unemployment.
12.
Curbs should be put on all imports.
13.
It may cost me in the long-run but I prefer to support American products.
14.
Foreigners should not be allowed to put their products on our markets.
15.
Foreign products should be taxed heavily to reduce their entry into the USA.
16.
We should buy from foreign countries only those products that we cannot obtain
within our own country.
17.
American consumers who purchase products made in other countries are responsible
for putting their fellow Americans out of work.
Source: Shimp and Sharma (1987)
CETSCALE was developed to represent the beliefs held by American consumers about the
appropriateness to purchase foreign-made products. They found that CETSCALE is a predictor
of consumer’s beliefs, attitudes, purchase intentions and consumer choice. They characterized
the scale as a measure of “tendency” rather than attitude, as tendency captures the general notion
of a disposition to act, where attitude is referred to as consumers’ feelings towards a particular
object. Although there are also available other measures of consumer ethnocentrism that has
been introduced by previous researchers but CETSCALE has been the most popular. The table
below presents the comparison of the results of CETSCALE between some countries.
Table 2.7 Comparison results of CETSCALE mean and reliability by country.
Author
Country
Respondent
Mean
SD
α
Shimp and
USA
Students
51.92
16.37
Ranged from
Sharma (1987)
0.94 to 0.96
USA
General
68.58
25.96
(Detroit)
population
USA
General
(Carolinas)
population
USA
General
(Denver)
population
USA (Los
General
Angeles)
population
USA
General
(Carolinas)
Population
Dursula et al.
USA
(1997)
Good and
61.28
24.41
57.84
26.10
56.62
26.37
61.73
24.24
Students
51.92
16.37
USA
Students
53.39
16.52
USA
Students
50.24
22.95
Russia
Students
32.02
12.47
Poland
General
69.19
Huddleston
population
(1995)
Russia
General
51.68
population
Sharma et al.
Korea
(1995)
Caruana
85.07
0.91
Population
Malta
(1996)
Hult et al.
General
General
56.80
18.20
61.50
19.30
population
USA
Students
(1999)
Japan
General
41.10
17.30
38.40
18.50
28.70
9.21
30.29
9.47
37.84
7.39
population
Sweden
General
population
and students
Steenkamp and Belgium
General
Baumhartner
population
(1998)
Great Britain
General
population
Greece
General
population
Brodowsky
USA
(1998)
Acharya
General
61.68
population
Australia
Students
56.40
New Zealand
General
62.21
25.79
0.96
**25.92
8.41
0.90
**24.02
7.89
0.91
(1998)
Watson and
Wright (2000)
population
*Balabanis et
Czech
General
al. (2001)
Republic
population
Turkey
General
population
*Linquist et al.
Czech
(2001)
Republic
Nazlida and
Students
0.80
Hungary
Students
0.70
Poland
Students
0.92
Malaysia
Students’
0.89
Razli (2004)
Hamin and
parents
Indonesia
General
Elliot (2006)
population
Chryssochoidis Greece
General
et al. (2007)
population
Yoong et al.
Malaysia
(2007)
*Evanschitzky
German
1.05
General
0.95
General
0.90
population
Malaysia
(2008)
Wong et al.
65.45
population
et al. (2008)
*Othman et al.
74.50
General
37.20
11.70
0.90
56.25
14.60
0.88
population
China
Students
(2008)
Sources: Adopted from Hamin and Elliot (2006) and updated by (****) *=10 items measure of
CETSCALE, **=5 point Likert scale
According to Table 2.7, CETSCALE has been widely tested in different countries, encompassing
developed and developing countries Australia, Belgium, China, Czech Republic, German, Great
Britain, Greece, Hungary, Indonesia, Japan, Korea, Malaysia, Malta, New Zealand, Poland,
Russia, Sweden, Turkey and USA. The original CETSCALE is highly reliable where the
Cronbach’s alpha ranged from 0.88 to 0.96. In terms of mean scores, general population tended
to display higher consumer ethnocentric tendencies as compared to student sample (Teo et al.,
2011)
4.2 Logical Framework
This research has three analysis phases, i.e. Exploratory Factor Analysis, Cluster Analysis and
One-way Analysis of Variance (ANOVA). In order to achieve the Research Purposes in a
systematic way, this research is frame-worked by a logical framework displayed below.
PT Mustika Ratu Tbk.
-Problem
Phenomenon
-Interview
Research
Purposes
K-Means Cluster
Analysis
Clustering
Indonesian Youth
Female who are
exposed to strong
international
environment based
on ethnocentrism
One-way ANOVA
Reduce Factors of
CBBE for skin
moisturizer
Exploratory Factor
Analysis
CBBE Score from Indonesian Youth
Female who are exposed to strong
international environment based on
ethnocentrism
Recommendation
Figure 2.4 Research Logical FrameworkSource: Author (2013)