Consumer perception of global vs. local

Consumer Perception of Global vs. Local
Brands:

The Indian Car Industry

By

Shyamala Mathan Sankar

2006

A Dissertation presented in part consideration for the degree of MA Marketing.

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Consumer Perception of Global vs. Local Brands: The Indian Car Industry

Abstract

Key words: Consumer Perception, Global brands, Local brands, consumer

preference, Country-of-origin, foreign brand, globalness, Consumer ethnocentrism.

This study examines consumer perception of global brands vs. local brands in the

Indian car industry. Consumer brand perceptions have substantial implications in

Marketing. The study explores and understands consumer perceptions of global and

local car brands in India by accomplishing the secondary objectives. The secondary

objectives were achieved by highlighting the factors that effect consumer preference

for global brands; by examining the effects of country of origin on consumer

perceptions of global brands and local brands; and by studying the effects of

consumer ethnocentrism towards global brands.

For creating a deep understanding of consumers’ insights of global car brands against

local car brands, qualitative approach was adopted with an in-depth and semi-

structured interview process. Interviews as a qualitative tool helped the researcher to

uncover individual’s covert feelings and emotions towards perception of global

brands vs. local brands.

The findings of the study advised that the consumers who possessed global car

brands, preferred their car brands due to factors such as global presence, worldwide

reputation, and quality of being a foreign make. Prestige or status had a very little or

no influence in their preference for global car brands. Consumers made favorable

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perceptions of the country, wherein they tend to associate factors such as superior

quality, technical advancements, modernization, etc…to the country from which the

brand had taken its origin. Consumers who owned a local car brand evaluated the

local brand in a favorable manner, wherein they tend to associate the brand to India’s

strong automobile sector that makes quality and technically efficient cars. The study

found to have both non-ethnocentric consumers and consumers who were low on

CET. Most of the respondents perceive local brands to be good in India, but not as

good as the global ones in quality, technical expertise and designs of the cars.

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Table of Contents

Abstract……………………………………………………………………………… I

List of Figures……………..………………………………………………………..VI

List of Tables………………………………………..………………………………VI

Dedication………………………………………………………………………….VII

Acknowledgement…………...……………………………………………………VIII

Chapter One – Introduction………………………………………………………...1

1.1 Introduction……………………………………………………………....1

1.2 Objectives of the study…………………………………………………..2

1.3 Synopsis of Chapters…………………………………………………….2

Chapter Two - Literature Review…………………………………………………..5

2.1 Introduction………………………………………………………………5

2.2 Brands and Branding…………………………………………………......5

2.3 Local Brands and Global Brands…………………………………………8

2.4 Pros and Cons of Local brands and global brands……………………......9

2.5 Shifts from Local Brands to Global Brands……………………………..12

2.6 Basic factors that effect consumer preference for Global Brands….......13

2.7 Consumer Ethnocentrism and evaluation of global brands and

local brands by consumers…………………………………………….....17

2.8 Consumer Brand Knowledge………………………………………….....20

2.9 Effects of Country-of-Origin (COO), Culture-of-Brand Origin

(COBO) and consumer perception of global brands vs. local brands…...21

2.10 Conclusion………………………………………………………………28

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Chapter Three -Industry Overview……………..………………………………….30

3.1 Introduction…………………………………………………………….30

3.2 Indian automobile industry – an Overview……………………………..30

3.3 Advent of cars in India………………………………………………….34

3.4 Local Car Brands in India………………………………………………35

3.5 Global Car Brands in India……………………………………………..36

Chapter Four - Research Methodology…………………………………………...40

4.1. Introduction………………………………………………………….....40

4.2 Research purpose…………………………………………………….....41

4.3 Qualitative Research…………………………………………………....42

4.4 Why Qualitative Research?.......................................................................43

4.5. Interviews………………………………………………………………44

4.6. Sampling…………………………………………………………….....46

4.7. Telephone interview……………………………………………………46

4.8. Summary…………………………………………………………….....49

Chapter Five - Analysis and Findings…………………………………………......50

5.1 Introduction……………………………………………………………..50

5.2 Background of the respondents………………………………………....50

5.3 Analysis and Discussion of the interviews…………………………......51

5.4 Accomplishing objectives of the study………………………………....52

5.4.1. Objective one: Highlighting the factors that effect

consumer preference for global brands……………………………..52

5.4.2. Objective two: Examining the effects of country-of-origin on

consumer perceptions of global brands and local brands…………..57

5.4.3. Objective three: To study the effects of consumer ethnocentrism
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over global brands………………………………………………….62

5.4.4. Key Objective: To understand consumer perception of

Global brands vs. local brands……………………………………..66

5.5. Review of key Findings and Conclusion………………………………72

Chapter Six – Conclusion………………………………………………………….77

6.1 Conclusions of the study………………………………………………..77

6.2. Limitations of the study and recommendations

for future research……………………………………………………...82

References

Appendix One – Interview template

Appendix Two - Interview Transcripts

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TABLE OF FIGURES

Figure 1: Conceptual model of Perceived brand

Globalness................................................................................................ 14

Figure 2: Strong growing automotive sector in both domestic and global

markets.................................................................................................... .32

LIST OF TABLES

Table 1: A background of the respondents......................................... ……………51

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Dedication

I dedicate this work to my dearest grandpa with fond and everlasting memories of

him.

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Acknowledgements

I would like to convey my heartiest appreciation to Dr Heidi Winklhofer for intensifying my

learning curve. Without her guidance and persistent help, this dissertation would not have

been possible.

I also extended my gratitude to my Mom, Dad, and my Brothers for their unconditional love

and support throughout my work. Their steadfast support and encouragement accompanied

me throughout this journey.

Shyamala Mathan Sankar

VIII


Chapter One

1.1 Introduction

Brands are at the heart of marketing and business strategy (Doyle, 2002)

Advances in communications and information systems technology have shrunk

distances, thereby linking markets through flows of information across markets. These

trends enhance the management of global operations and drives up the need to deal

effectively with global competition. As firms enter international markets, branding

plays an important role in its marketing strategy. Many consumers use brands as clues

to indicate product performances, instead of engaging themselves in search for

information when deciding between competing brands. Consumers use brands as cues

to make decisions to purchase or try products (Ger et al., 1993). During the recent

years, there has been a great shift from local brands to global brands due to the

display of similar needs and preferences by the consumers.

As the world is shrinking in to a global marketplace, it is increasingly significant to

understand the consumers’ perception of global brands to 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 the brand. Thus

there is also a need to uncover the reasons for consumers’ preference for global

brands over local brands.

This study aims in understanding consumer perception of global brands vs. local

brands in the Indian car industry. The car industry in India is undertaken for the study
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for the simple reason being the strong growth of the automobile sector in India. The

car segment is specifically chosen as it is highly competitive with well established and

flourishing global and local brands. Moreover, consumers in India are now more

informed, sophisticated and demanding. Urban consumers have been especially

exposed to western lifestyles through overseas travel (IBEF, 2006). This served the

purpose for studying the Indian car industry.

1.2 Objectives of the study

The key objective of the study was to understand consumer perception of global

brands vs. local brands in the Indian car industry. The research explores and

comprehends consumers’ perceptions of global brand vs. local brands. The secondary

objectives of the study are to highlight the factors that effect consumer preference for

global brands; to examine the effects of country of origin on consumer perceptions of

global brands and local brands; and to study the effects of consumer ethnocentrism

towards global brands. The study originally achieves the secondary objectives in order

to accomplish the primary objective.

1.3 Synopsis of chapters

The outline of the chapters that are included in the study is depicted as follows;

Second chapter of the study reviews the literature which discusses, what is already

known of the main themes and issues. It covers past research and studies and articles

from relevant journals, books, newspapers, etc. It is a summary of what other people

have written and published around the theme of this particular research. The literature

review is of course critical. The chapter starts by explaining the basics of the study,
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being brands. Local brands and global brands are brought to light. The reasons for the

shift from local to global brands are then discussed. The factors that are believed to

effect consumer preference of global brands are also discussed. In order to examine

country-of- origin and culture of brand origin effects on consumer perception of

global brands and local brands, the literature regarding it is critically discussed. The

chapter then reviews effects of consumer ethnocentrism with regard to the evaluation

of global brands and local brands by consumers.

Third chapter of the study presents an overview of the chosen industry. The industry

overview starts with the purpose of choosing the Indian car industry for the study and

an overview of the respective industry is presented. This chapter also discusses the

advent of cars in India along with a brief description of the local and global car brands

on Indian roads. This would facilitate the reader to comprehend the study in an

enhanced way.

Fourth chapter of the study describes and evaluates the methods, techniques and

procedures used in the investigation. In this chapter, the methods used are also

justified for the reason it has been used. In order to create a deep understanding of

consumers’ insights of global brands against local brands, qualitative approach was

adopted with an in-depth and semi-structured interview process.

Fifth chapter of the study discusses and critically analyses the findings of the

qualitative data by tentatively examining the interviewees’ responses and beliefs. The

gathered qualitative data are analysed accordingly to accomplish the objectives of the

study. This was done by meticulously comparing the most relevant distinct responses
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by the interviewees. These distinct responses were also critically analysed with the

support of the past literature and also the researchers’ own personal view and

experience during the interviews. Thus the unique personal quotes of the respondents

remained as the rationale for the analysis of the study. This chapter begins with the

background information of the respondents who possess a car in India. The chapter is

then pursued to analysis and discussion of the findings from the interviews made,

wherein the responses are analysed and discussed with regard to the research

objectives of the study.

Lastly, the Sixth chapter of the study sketches out the conclusion of the study. The

chapter also presents the limitations of the study and provides recommendations for

future research.

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Chapter Two

2. Literature Review

2.1. Introduction

This chapter reviews concepts and theories by researchers that are highly related to

the area of study. The chapter provides a critical analysis of the views and insights of

various researchers on the subject area. The chapter starts by explaining the basics of

the study, being brands. Local brands and global brands are brought to light. The

reasons for the shift from local to global brands are then discussed. The factors that

are believed to effect consumer preference of global brands are also discussed. In

order to examine country-of- origin and culture of brand origin effects on consumer

perception of global brands and local brands, the literature regarding it is critically

discussed. The chapter then reviews effects of consumer ethnocentrism with regard to

the evaluation of global brands and local brands by consumers.

2.2. Brands and Branding

Branding is the art and cornerstone of marketing (Kotler, 2003).

A brand is defined as a specific name, symbol or design- or, more usually some

combination of these- that is used to distinguish a particular seller’s product (Doyle,

2002). Branding exists from the very early times to distinguish the goods of one

producer from those of another. The word ‘brand’ derives from the Old Norse word

‘brandr’ which means to burn and brands were, and still are, the means by which

owners of livestock marked their animals. From branding his livestock, early man

moved on to branding his wares- where a potter for example would identify his pots

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by putting a mark like a thumbprint into the wet clay on the bottom of the pot and the

potter would expect customers to seek out those products which carried his mark

(Interbrand,1990). Today with a considerable change over time, there is an increase in

modern and sophisticated branding of both tangibles and intangibles.

Aaker (1997) asserts that brand is a complex symbol and presents six levels of

meaning that convey it: Attributes: A brand brings to mind certain attributes; Benefits:

Attributes being translated into functional and emotional benefits; Values: The brand

also says something about the producer’s values; Culture: The brand may represent a

certain culture; Personality: The brand can project a certain personality; User: The

brand suggests the kind of consumer who buys or uses the product.

Brand names have become increasingly valuable assets for many multinational

companies. In a cluttered marketplace, brands stand up as the source of differentiation

for providers of products and services that can be quickly tracked with easy access to

technology and information (Lim and O’Cass, 2001). Many consumers use brands as

clues to indicate product performances, instead of engaging themselves in search for

information when deciding between competing brands. Consumers use brands as cues

to make decisions to purchase or try products (Ger et al., 1993). Monroe and Krishnan

(1985) define cue as all informational stimuli available to the consumer before

consumption, and can be intrinsic or extrinsic. Few examples of intrinsic cues are

taste and design, while extrinsic cues include COO, brand, and price (Rao and

Monroe, 1989). It is said that consumers tend to rely more on extrinsic cues (Jacoby et

al., 1977). Moreover, Han and Terpstra (1988) assert that consumers utilize extrinsic

cues in evaluating a brand because they often are unable to detect its true intrinsic
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quality. It is also said that country-of-origin is also found to be one of these extrinsic

cues to a greater extent as consumers tend to be less familiar with products of foreign

origin.

To a large extent, the brands also speak of familiarity and credibility (Fatt, 1997)

about the product. In developing economies, consumer choice is significantly

increasing. However, in the early stages of economic transformation, there is little

information available to the consumer. Thus, consumers in transitioning economies

rely on cues from brands by default (Reardon et al, 2005). In less-developed

countries, many brands are still desired and trusted for their functional values and in

these markets, for many people, it is often enough that a brand has a guaranteed origin

and a guaranteed consistency of quality (Interbrand, 1998). Brands are used as a

surrogate to inform the consumer about the product, including relative product quality

since direct experience with a product is not available (Rao, 1972).

Forty years ago, a British or American housewife might have performed all her

domestic cleaning chores with only three or four branded products, but now she may

have twenty or thirty specialist products for floors, baths, windows, stubborn stains,

tiles, fabrics, toilet bowls, even chandeliers. Brands provide consumers with a means

of shopping with confidence, even when faced with bewildering choice (Interbrand,

1990).

Doyle (2002) asserts that brands are bought by consumers for emotional as well as

functional reasons. It is also said that people use brands to show off their lifestyles,

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interests, values or wealth. Not only customers choose brands that they perceive as

meeting their ‘needs’, but also for gaining a sense of belonging, esteem, etc..

Brand attitudes are a central construct of marketing and have received wide attention

(Gardner and Houston, 1986). Both the short- and long-term health of a business are

dependent upon the brand image of a firm’s products, as brand equity can lead to

higher market share, increasing brand loyalty, and being able to charge premium

prices (Chaudhuri and Holbrook, 2001). It is increasingly significant to know what

local and global brands are and how they differ from each other before reviewing the

core concepts regarding the study.

2.3. Local Brands and Global Brands

Local brands are defined by Wolfe (1991) as brands that exist in one country or in a

limited geographical area. It is also noted by Schuiling et al (2004) that local brands

belong to a local, international, or global firm. Local brands provide a link between

the national economy and individual well-being. Levitt (1983) defines global brands

as brands that use the same marketing strategy and mix in all target markets.

Johansson and Ronkainen (2004) assert that global brands benefit from the scale and

scope of having presence in multiple markets. The researchers define global brand as

“a brand that is marketed under the same name in multiple countries with similar and

centrally coordinated marketing strategies.” However there are some selected global

brands that don’t have the same name but share some marketing program elements.

For example, “Mr. Clean” also sells under the “Mr. Proper” and “Maestro Limpio”

names, among others. Although global brands play a dominant role in today’s world,

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the advantages of the local brands are still stronger and this is reviewed in the

following part.

2.4. Pros and Cons of Local brands and global brands

An exploratory research on the Y&R (Young & Rubicam’s) database was conducted

by Schuiling et al (2004) across four largest European countries: the United Kingdom,

Germany, France, and Italy. The study affirms that local brands benefit from strong

brand equity and specifically, local brands benefit from higher consumer awareness

than international brands do, and they enjoy a strong brand image. Local brands

benefit not only 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 a sense of better value for the money (Schuiling et al, 2004).

According to the research by Schuiling et al, (2004), local brands are also perceived

as more “down to earth” than international brands, meaning that local brands offer a

more basic/no frills brand proposition. The study also indicates that local brands are

perceived as more traditional than international brands, because local brands are

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. It also indicated that

there is no significant difference between the perception of prestige for international

brands and that for local brands. Another significant finding was that consumers are

attracted to international brands but in reality, they prefer to purchase local brands

(Schuiling et al., 2004). In the words of Johansson and Ronkainen (2004), although
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global brands may have more success in high-profile, high-involvement categories,

consumers may still give local brands preference in purchasing every day products.

The advantages cherished by local brands can be dominated by the enormous

advantages enjoyed by global brands. Eckhardt (2005) avows that 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. Just as global brands need to conform to international marketing

dictums, local brands sometimes need to conform to deeply held preconceptions about

the product category in which they operate.

Johansson and Ronkainen (2004) assessed brand realities on the global - local

continuum using data from Young & Rubicam’s Brand Asset Valuator (BAV). This

database is considered to be the most exhaustive of its kind, covering 20,000 brands

across 40 countries. Data have been collected since 1993 across a wide range of

industry sectors to measure brand perceptions of more than 100,000 consumers. It was

noted that local brands exhibit higher familiarity among consumers, but when

familiarity levels are similar, global brands enjoy higher levels of esteem. Also that

Global brands were known for their perceived quality. 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 pros and cons of

local and global brands, it is necessary to comprehend the shifts that occurred due to

increased consumer preference from local brands to global brands.

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2.5. Shifts from Local Brands to Global Brands

During the recent years, a number of multinational companies are reducing their

brand portfolios to manageable sizes in favor of global brands. For example, both

Procter and Gamble (P&G) and Unilever have greatly pruned the number of brands

they market around the world, often disposing of those with limited global potential

(Pitcher, 1999). Massive presence of Global brands is fuelled by the increasing

similarity that consumers display in their consumption habits and preferences. It has

also been argued that Global brands, are perceived to be more value-added for the

consumer, either through better quality (as a function of worldwide acceptance) or by

enhancing the consumer’s self perception as being cosmopolitan, sophisticated and

modern (Johansson and Ronkainen, 2004). Consumers throughout the world are

becoming increasingly sophisticated and international brands offer a measure of

exclusivity or even eccentricity that are increasingly sought after and valued because

such appeals are universal (Interbrand, 1990). According to Schuiling et al (2004),

this trend has been occurring not only in fast moving consumer goods sector but also

in other industrial sector including services. Although global brands are becoming

more significant, it is asserted that there are many local brands than international

brands in Europe. As examples, in Germany’s oil industry, British Petroleum acquired

the local leader Aral and decided to retain the local brand name due to its strong brand

equity; In Belgium, Spa being the local leader in mineral water, has shares above

international leader Evian (Schuiling et al, 2004).

A number of reasons have been presented by various researchers for the moves

toward global brands. Out of which, the main reason would be the one given by

Hassan and Katsanis (1994), being meaningful segments of consumers around the
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world develop similar needs and tastes. According to Neff (1999), globalization

speeds up a brand’s time to market by reducing time- consuming local modifications.

Another important reason given by Shocker et al. (1994) for moves toward global

brands would be consumer preference for brands with ‘global image’ over local

competitors, even when quality and value are not ‘objectively’ superior. Conversely,

in the view of Terpstra (1987), consumer preference has not has not been the primary

reason for companies to decide to move to international and global brands. As an

example, P&G accelerated its development of global brands since the early 1990s and

its aim being to achieve competitive advantage in markets (Schuiling et al 2004).

As the world is shrinking in to a global marketplace, it is increasingly significant to

understand the consumers’ perception of global brands to local brands. There is also

need to uncover the reasons for consumers’ preference for global brands over local

brands.

Consumers become perceptive to global brands when consumers believe the brand is

marketed in multiple countries and is recognized as global in these countries

(Steenkamp, 2003). This perception occurs in two forms; consumers realize that the

same brand is found in other countries through media exposure, word of mouth, 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). In the words of Peterson and
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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). On the other hand, there exists

differences between the markets of different countries due to factors such as culture,

history, and geography; and also there exists difference between many regions of the

world in the way consumers perceive products and brands (Lim and O’Cass, 2001).

This shift from local brands to global brands can be reinforced by the following basic

factors that effect consumer preference for global brands.

2.6. Basic factors that effect consumer preference for Global Brands

Research shows that perceived brand globalness for global brands could create

consumer perceptions of brand superiority (Shocker et al., 1994). International and

global brands have been associated with high prestige or status, in addition to quality

(Batra et al., 2000). 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 “status and

esteem”.

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Steenkamp et al (2003) made a study on consumer preference for global brands to

local brands. The researchers framed three pathways through which perceived brand

globalness (PBG) influences consumers’ purchase likelihood were hypothesized. The

pathways were higher perceived quality, higher prestige, and the psychological

benefits of PBG. The hypotheses were tested in Korea and the United states, across

different product categories and brands.

Fig 1. Conceptual model of Perceived brand Globalness (Steenkamp et al., 2003)

The result of the study being PBG positively associated with both brand quality and

prestige. The researchers found that both in Korea and the U.S.A., PBG exerted its

strongest effect on purchase likelihood through perceptions of superior quality.

Although global brands were found to communicate higher prestige and status, quality

appears to be more heavily weighted by consumers. According to Han (1990), higher

perceived quality, higher prestige, and the psychological benefits of PBG are the

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pathways through which PBG can directly affect purchase likelihood and indirectly

affect through brand quality and brand prestige.

Bearden and Etzel (1982) state that, if global brands have higher prestige, it would

because of their relative scarcity and higher price compared with local brands.

Consumers develop prestige meanings for brands based upon interactions with people

(e.g., aspired and/or peer reference group), object properties (e.g., best features), and

hedonic values (e.g., sensory beauty) (Vigneron and Johnson 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 the product category is more conspicuous and its

ownership or consumption is more publicly visible. Furthermore Veblen (1899)

asserts that conspicuous consumption was used by consumers to signal wealth, power,

and status.

Despite exceptions (like Coca-Cola, Nestlé, etc...), evidence indicates that global

brands are typically more scarce and more expensive than local brands (Batra et al.,

2000). Global brands may also connote cosmopolitanism (Thompson and Tambyah,

1999). In the words of Friedman (1990), consumers are said to buy global brands to

enhance their self-image as being cosmopolitan, sophisticated, and modern.

The worldwide scale of global brands allows people to associate themselves with

globally recognized events (World Soccer Cup, Formula one, etc…) and celebrities

(Steffi Graf, Michael Schumacher, David Beckham, etc… for example). Through a

15


process of meaning transfer, the prestige attached to these events and celebrities may

be transferred to the sponsoring global brand (McCracken, 1986).

Brand name is a key indicator to quality (Rao and Monroe, 1989), and a global image

can arguably enhance the brand’s perceived quality (Steenkamp et al, 2003).

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 consumer’s evaluation of a brand’s overall

excellence based on intrinsic (e.g., performance, durability) and extrinsic cues (e.g.,

brand name, warranty).

Global brands often advertise their worldwide availability and acceptance (Alden et

al., 1999). There has been an enhanced appeal of global brands among certain

segments, such as teenagers and business people (Walker, 1996).

One of the other reasons for a global brand preference may be the globalness per se of

such brands, independent of any effects through prestige and quality. Perceived Brand

Globalness (PBG) by itself may also be an added value for consumers (Steenkamp et

al, 2003). Dawar and Parker (1994) asserted that 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. 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,
16


communicate membership in the global consumer community with all its positive

connotations (McCracken, 1986). Although this was being said some twenty years

back, this condition has grown eventually stronger.

Although there are numerous factors for consumer preference for global brands,

consumer ethnocentrism (CET) is considered to have moderating influence in

consumer perception of global brands.

2.7. Consumer Ethnocentrism and evaluation of global brands and local brands

by consumers

Although some consumers prefer global brands to local brands, Shimp and Sharma

(1987) have said that the phenomenon of consumer ethnocentrism (CET), wherein a

well- established bias exists among consumers in favor of home- grown products.

Zambuni (1993) believes that there is evidence that many consumers prefer brands

with strong local connections.

Consumer Ethnocentrism (CET) is defined as ‘the beliefs held by consumers about

the appropriateness, indeed morality, of purchasing foreign made products’ (Shimp

and Sharma, 1987). As defined by Kinra (2006), Consumer ethnocentrism is a

psychological construct representing how consumers view products made in their own

country markets as objects of pride and identity versus those from other country

markets. Ethnocentricity has substantial implications for consumer attitude formation

towards foreign products/brands, their purchase intentions and choice between

domestic versus foreign-made products (Reardon et al, 2005).

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According to Steenkamp et al (2003) ethnocentric consumers take pride in their

country’s brands, symbols, and culture. They are less open to foreign cultures, and are

less cosmopolitan. Purchasing foreign made products may be seen as immoral and

unpatriotic because it has an adverse impact on the domestic economy; hence,

consumers tend to purchase local products even if the quality is lower than that of

imports (Wall and Heslop, 1986).

CET is closely linked to economic nationalism (Baughn and Yapark, 1996).

According to Shimp and Sharma (1987), consumer characteristics such as nationalism

and domestic country preference have been known to have a moderating influence on

foreign brands. Kinra (2006), asserts that this moderating influence on foreign brands

is consistent with the fact that consumer ethnocentrism is contingent not only on the

domestic country culture that espouses it, but also the quality of domestic products

coming from it. According to Baughn and Yapark (1996), ethnocentric consumers

may even be willing to sacrifice ‘objective’ gain (higher quality, prestige, etc.) to

enjoy the psychological benefit of avoiding contact with the out-group (i.e., the global

culture) by purchasing local brands.

According to Vida and Fairhurst (1999), Consumer ethnocentric attitudes can be rated

on a continuum from highly ethnocentric to non-ethnocentric, whereby a consumer at

the high end of the spectrum believes that purchasing foreign-made products is

morally wrong. In contrast, highly non ethnocentric consumers may judge foreign

products based on their attributes and/or view them as better because they are not

produced in their own country. Consumers who are low on CET are more

cosmopolitan in outlook and have a higher degree of cultural openness. Supphellen
18


and Gronhaug (2003) state that, in transitional economies, low ethnocentric

consumers may have positive stereotypes of foreign brands, whereas high

ethnocentric viewers tend to reject brands merely because they are foreign. Batra et

al., (2000) asserts that ethnocentrism is unlikely to affect brand attitudes in the least

developed transitional economies due to the fact that foreign brands are perceived to

be measurably better than most locally produced brands.

Wang and Lamb (1980) found that consumers in developed countries tend to prefer

their own locally-produced goods first, followed by products from other developed

countries, and then products from less developed countries. In a detailed telephone

survey of 1,000 consumers across the region of United States, conducted just prior to

the war, the aim was to compare American brands to local brands and looking across

a whole host of categories. It was found that, the most established American brands in

the survey were in fact regarded as more global than American. They were more

likely to be better assimilated into the culture of the country and to be seen to have

that country's interests at heart than even some local brands. And they were more

likely to enjoy increased purchase intent in the future (Richard, 2003).

On the other hand, Baker and Michie (1995) examined British car drivers' perceptions

of, and attitudes towards, four makes of foreign cars: Honda, Hyundai, Proton, and

Toyota. A British car (Rover) was also added to the study in order to establish the

possible effects of ethnocentrism on intention to buy. A detailed description for each

model was provided in the exhibit; however, no reference was made to price or

country of origin. The study revealed that respondents preferred the most expensive

cars (Toyota and Rover) but some of them changed their decision when informed that
19


the prices of these two makes were 50 per cent higher than an available alternative.

The results also indicated that product country images and ethnocentrism had a

significant impact (both positive and negative) on the consumers' intention to buy.

Furthermore it was revealed ethnocentrism can be a strong source of competitive

advantage, especially when domestic products are equal to imported products on a

price-performance basis.

Previous studies on Eastern European countries namely, Russian (Johansson et al.,

1994), and Hungarian consumers (Papadoupoulos et al, 1993), has been found to

show that consumers prefer Western products because of superior quality, despite

consumer ethnocentric tendencies (Kinra, 2006). In a cross-cultural study by Vida and

Fairhurst (1999), in Central Europe, the study revealed significant differences in

consumer ethnocentrism across the four countries investigated. In studying

antecedents of consumer ethnocentrism, the researchers established a positive

relationship between consumer familiarity with and knowledge of international brands

and their ethnocentric attitudes across the four countries.

In order to study consumer perception, it is significant to review concepts of

consumer brand knowledge.

2.8. Consumer Brand Knowledge

There has been a plenty of research about consumer brand knowledge and its impacts

on consumer behavior. According to Keller (1993), consumer brand knowledge

determines how a consumer thinks about a brand. It also determines how the

consumer responds to different stimuli regarding a brand (Lim and O’Cass, 2001).
20


Rossiter and Percy (1987) assert that brand awareness is a major component of brand

knowledge that is reflected by a consumer’s ability to identify a brand under different

conditions and is related to the strength of the brand node or trace in memory.

Consumers 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 (Kinra, 2006). Country of Origin (COO) effects plays

a vital role in studying consumer perception of global brands vs. local brands.

2.9. Effects of Country-of-Origin (COO), Culture-of-Brand Origin (COBO) and

consumer perception of global brands vs. local brands

According to Al-Sulaiti and Baker (1998), among the many factors that are believed

to influence consumer perceptions of products in an age of international competition,

country-of-origin (COO) effects, remains the most researched. Kinra (2006) asserts

that COO is considered an important differentiating factor in consumer attitudes to

foreign and local brand names. COO has been defined as the country where the

corporate headquarters of the company marketing the product or brand is situated

(Johansson, J.K. et al, 1985). Lee and Schaninger (1996) define COO as the country-

of-manufacture or assembly. Research works have documented the importance of

country-of-origin (COO) image in consumer evaluation of foreign products and

brands and also favorable country perceptions are known to lead to favorable

perceptions of associated attributes such as product quality indicating thereby, that

consumer evaluations are governed by influences other than the quality of the product
21


(Peterson and Jolibert, 1995). According to Samiee (1994), one key drawback of

COO studies is the priori assumption that “customers were typically knowledgeable

or sought to acquire CO/M (country origin/manufacturing) information, and that CO

is a salient attribute in their decisions and that this assumption clearly biased the effect

size because all consumers are not the same with regard to the influence of COO. The

literature has clearly paid insufficient attention to this customer difference in their

awareness and perceived salience of COO”.

Ghauri and Cateora (2006) defines COO effect as any influence that the country of

manufacture has on consumer’s positive or negative perception of a product. The

researchers also assert that when the consumer is aware of the country of origin, there

is the possibility that the place of manufacture will affect product/ brand image. Iyer

and Kalita (1997) revealed from a study that COO has been found to reflect

consumers’ general perceptions about the quality of products made in a foreign

country, along with the nature of people from that country. In a study by Eroglu and

Machleit (1989) in the case with consumer durables, a product’s technical complexity

affects the importance given to consumer evaluations and that, the more complex the

product, the more relevant the COO cue.

Many brands use cues that are either implied in the brand name or in promotional

appeals in order to elicit perceived country of origin associations (Agarwal and

Kamakura, 1999). According to Thakor and Lavack (2003), these perceived origin

associations are a powerful source of brand appeal, as marketers have revealed

through focusing advertising on origin associations in many product categories. As

examples asserted by the researchers, Porsche ads often show a German test track, to
22


reinforce its German origin; Christian Dior uses the French word, “Parfum”, in its

advertising to reinforce its French origin association. Brand has been considered as a

purely extrinsic variable in country-of-origin effects and consumer perceptions of

origin have been manipulated almost solely through the “made in” label information

(Mohamad et al., 2000). Papadopoulos (1993) asserts that there are a variety of ways

in which origin information can be communicated, specifically through brand name.

According to Kinra (2006), foreign brand names are frequently associated with the

country-of-origin (COO) of the brand. Papadoupoulos et al. (1993) asserts that

consumer perceptions of a product’s COO are based on three components associated

with the standard attitude model, namely their “cognitions” which include knowledge

about specific products and brands, consumer “affect” or favorable/unfavorable

attitude towards the COO, and their “conative” behavior which is related to actual

purchase of a foreign brand. Leclerc et al. (1994) uses the term “foreign branding” to

describe the approach of spelling or pronouncing a brand name in a foreign language,

using brands such as Egoiste fragrance, Frusen Gladje ice cream, as examples.

Conversely, in the words of Kinra (2006), there are product categories not

distinctively associated with any COO image as in the case of the car industry, where

it has been less easy to market global brands such as “Mercedes”, “Audi”, “Toyota”,

“Jaguar” for which brand images have developed quite apart from their COO, and

which do not use their national COO association in their promotion and marketing

strategies. A study by Leclerc et al. (1994) revealed that perceptions of brand

nationality were manipulated through French/ English pronunciation. It was also

found that for hedonic products, the brand name was preferred when the French

pronunciation was used. Furthermore, the French pronunciation resulted in more
23


favorable brand attitudes. In another study made by Harris et al. (1994), it was

revealed that English brand names were preferred to French and German brand

names. Thakor and Lavack (2003) states that the studies conducted by Leclerc et al.

(1994) and Harris et al. (1994) suggest that brand origin associations play a

potentially powerful role in the formation of brand attitudes. Erickson, et al. (1984)

analysed the country of origin effects on the evaluation of automobile brands. Data

were collected from 96 MBA students at the University of Washington. Subjects were

asked about their beliefs and attitudes towards ten automobile models (e.g. four US,

two German and four Japanese models). The study revealed that country of origin

affects beliefs but not attitudes. It also indicated that the effect of image variables on

attitude was not direct; any influence they have appeared to be a secondary one acting

through beliefs.

According to Kinra (2006), previous studies on foreign brands reveal that foreign

brands serve as symbolic acquisitions communicative of social distinctions in

negotiating status and prestige and this incidence exists in country markets where

economic transition and income disparities are high and, social mobility magnifies the

tendency to claim differential status through the brands one consumes. Consumers

perceive foreign brand that it might have superior quality because of its developed

nation origin is certainly likely (Batra et al., 2000; Leclerc and Schmitt, 1994).

Conversely, Gaedeke (1973) found that CO information did not significantly affect

opinions regarding the quality of branded products.

According to Thakor and Lavack (2003), though COO studies rely heavily on the

“made in” information, such information is not expected to be the only factor in
24


determining brand origin perceptions. The researcher asserts that there are multiple

antecedents of brand origin (such as location of ownership, location of manufacture,

location of assembly, etc…) and from which consumers draw brand origin cues. And

these cues help consumers to formulate perceived brand origins, which they use to

devise more general perceptions, attitudes, expectations and intentions about the

brand.

Conversely, it is said that the view of COO effects is increasingly becoming

misleading or confusing in the modern marketplace as products are typically designed

in one country, manufactured in another, and assembled in another and this has

resulted in a hybrid of products (Chao, 1993). In the words of Lim and O’Cass (2001),

Country-of-origin research has revealed two crucial facts about how the origin of a

product influences consumer behaviour – people tend to prefer products from their

home country and have a more negative perception of brands from “emerging

economies”. In a study by Nes and Bilkey (1993), it was found that products from

developing and less developed countries were rated lower on quality and higher in

risk regardless of brand name.

Level of education is considered to be significant demographic variable (Al-Sulaiti

and Baker, 1998) influencing country of origin effect (Paswan and Sharma, 2004). As

education levels increase, consumers are likely to become more knowledgeable of

other countries and cultures, and more tolerant of things that are different. It has also

been posited to result in more favorable opinion towards foreign products (Good and

Huddleston, 1995; Sharma et al., 1995) and a reduction in consumer ethnocentrism

(Bailey and Pineres, 1997). Paswan and Sharma (2004) suggest that as a consumer’s
25


education level increases their awareness of brand and hence brand’s COO should

also increase.

Lim and O’Cass (2001) assert that The COO effects have been shifted from the

product level to the brand level in consumers’ product evaluations. It is also said that

specific country-of-origin information is becoming less relevant for the fact that it is

becoming increasingly difficult for consumers to extract the multiplicity of country

information. The researchers also state that in place of country-of-origin is the

culture-of-brand-origin (COBO), which is more readily available to the consumer as a

result of exposure to the marketing activities of the brand. It is also stated that COBO

is argued here to provide the next wave of understanding in how consumers perceive

and evaluate brands. Thakor and Kohli (1996) define brand origin as “the place,

region or country to which a brand is perceived to belong by its target consumers”.

They also advise that the origin of manufacture (country-of-origin) is no longer

significant to buying behaviour in the age of corporate globalisation, and that the

perceived origin of the brand is more suggestive as a demographic variable. For

example, many perfume labels bear the names of major cities: 'Paris Milan New York

Rome London' ... No one assumes that the perfume is actually made in any of the

cities, but their names carry the suggestion of quality and tradition. A bottle labelled

'Prague Helsinki Melbourne Moscow' would not carry the same sense of gravitas or

mystique, regardless of whether it might be of a better quality (Lindstrom, 2005). As

asserted by Lim and O’Cass (2001), consumers judge products by referring to the

brand and it is the national or cultural associations of that brand that matter rather than

the precise details of product manufacture and no consumer doubts that a Coca Cola is

an American brand but the bottling of the product takes place locally. Thus it is
26


asserted that the cultural associations of the brand that matters. Culture-of-brand-

origin could be the reason why consumers still attach certain cultural characteristics to

a brand when specific information about the foreign country is not available. For

example, consumers evaluated Volkswagon Fox favourably in a study because of its

image as a brand of exceptional engineering based on its German origins and only 8

percent of the respondents knew it was manufactured in Brazil (Ratliff, 1989). As

examples given by Thakor and Lavack (2003), Guinness does not become less Irish

for the average UK consumer by being made in London and those same consumers

still see Toyota as a Japanese car despite it being manufactured at Derby; BMW is by

itself a German brand regardless of whether the cars are made in Munich or

Manchester.

In a study made by Lim and O’Cass (2001), the researchers examined consumer’s

perception of brands as influenced by their origins and the differences in classification

ability between consumers’ knowledge levels. The results of the study indicate that

consumers can more easily identify the cultural origin of brands over the country-of-

origin. In the view of the researchers, the issue of consumer brand knowledge is

important in order to understand how consumers perceive information about origins

of a brand and ultimately perceive and evaluate brands and also that consumers are

believed to be able to classify culture-of-brand-origin better than country-of-brand-

origin.

There are few studies that have shown that consumers may prefer brands with local

connections, and few researchers have argued that there is no intrinsic preference for

global brands (De Mooij, 1998). Higher levels of domestic country bias have been
27


found in research on Western consumers where domestic products were found to

enjoy a generally more favourable evaluation than foreign made products (Bannister

and Saunders, 1978; Cattin et al., 1982). Han (1989) had asserted that consumers tend

to evaluate local products more highly than foreign products. Balabanis and

Diamantopoulos (2004) studied eight product categories with regard to consumer

preferences for domestic versus foreign brands and found that ethnocentrism was also

dependent to a large extent, on the nature of the product category.

2.10. Conclusion

The literature review has discussed concepts and theories regarding the basics of

global brands and local brands, the shifts from local brands to global brands and also

the factors leading to the shift. Country-of-Origin effects are reviewed in order to

examine its influence on consumer perception of global brands to local brands. It is

highly significant to highlight that studies on foreign brands by researchers (such as

Kinra, 2006) foreign brands serve as symbolic acquisitions communicative of social

distinctions in negotiating status and prestige and this incidence exists in country

markets where economic transition and income disparities are high and, social

mobility magnifies the tendency to claim differential status through the brands one

consumes. Consumers perceive foreign brand that it might have superior quality

because of its developed nation origin is certainly likely (Batra et al., 2000; Leclerc

and Schmitt, 1994). The literature review also appraises the effects of consumer

ethnocentrism in the purchase of global brands and local brands.

To proceed this study further, the next chapter talks about the car industry in India.

The reason for explaining the car industry in India is because this specific sector in
28


India is tremendously growing with both global players and local players in the

market. Further more, another reason for choosing the car industry is because people

(consumers) in the country like cars and they are more concerned about carefully

deciding and buying a car. They are considered to be among the high involvement

products. Thus, this would enforce the study as it is to study the consumer perception

on global brands vs. local brands.

29


Chapter Three

3. Industry Overview

3.1. Introduction

The car industry in India is chosen for studying consumer perception of global brands

vs. local brands for the simple reason being the strong growth of the automobile

sector in India. The car segment is specifically chosen as it is highly competitive with

well established and flourishing global and local brands.

3.2. Indian automobile industry – an Overview

India is emerging as one of the most attractive automotive markets in the world, and is

poised to become a key sourcing base for auto components. The Indian automotive

sector has a presence across all vehicle segments and key components. In terms of

volume, two wheelers dominate the sector, with nearly 80 per cent share, followed by

passenger vehicles with 13 per cent. Passenger vehicles consist of passenger cars and

utility vehicles. The industry had few players and was protected from global

competition till the 1990s. After government lifted licensing in 1993, 17 new ventures

have come up. At present, there are 12 manufacturers of passenger cars, 5

manufacturers of multi utility vehicles (MUVs), 9 manufacturers of commercial

vehicles, 12 of two wheelers and 4 of three wheelers, besides 5 manufacturers of

engines. With the arrival of global players, the sector has become highly competitive

(Automotive, 2006).

The growth curve of Indian automobile industry has been on an upswing for the past

few years. It is the 4th largest passenger vehicle market in Asia and has become the
30


fastest growing car market in the world in 2004, with a growth rate of 20 per cent.

Continuing the upswing, the sector posted an impressive 8.9 per cent growth in 2005-

06, says the Economic Survey 2005-06. The latest announcement by the Government

to cut excise duty on small cars will soon see India emerging as the world's largest

manufacturing hub for small or compact cars (IBEF, 2006).

Indian automobile companies are moving aggressively into foreign markets. As a

good example, Tata Motors Ltd., which is one of the largest private sector

commenced its distribution of Fiat cars across India as part of the new Tata-Fiat

dealer network, is also looking at tapping overseas markets through the partnership.

The company is gearing up to re-launch its best selling passenger car, Indica, in the

United Kingdom under its own brand. Indica had made its debut on the British roads

about two years ago as City Rover under Tata Motors' tie-up with the Birmingham-

based MG Rover (IBEF, 2006). With few such movements happening tremendously,

it wouldn’t be too long for India to have its brands on the international roads.

Apart from the automobile brands moving aggressively into the foreign markets, there

are huge foreign brands rolling on the roads of India. The year 2006 will see the entry

of many high-end brands into the country. The Indian automobile market will see at

least 30 new launches, spanning everything from affordable hatchbacks to mid-size

models to super luxury high-end cars and Sports Utility Vehicles (SUVs) (IBEF,

2006).

31


Fig 2. Strong growing automotive sector in both domestic and global markets

(IBEF, 2006)

Thus the Indian automobile industry has been performing well both in the domestic

and the international markets.

According to IBEF (India Brand Equity Foundation), India has several competitive

advantages in the automobile sector and they can be explained as following; India has

a growing workforce that is English-speaking, highly skilled and trained in designing

and machining skills required by the automotive and engineering industries. Many

Indian and global players are leveraging this advantage by increasingly outsourcing

activities like design and R&D to their Indian arms.

32


India offers a huge growth opportunity for the automobile sector – the domestic

market is large and has the potential to grow further in the future due to positive

demographic trends and the current low penetration levels. India has nearly 23 per

cent of the global population and is one of the most attractive consumer markets in the

world today. Income levels across population segments have been growing in India.

According to National Council of Applied Economic Research (NCAER) data, the

consuming class, with an annual income of US$ 980 or above, is growing and is

expected to constitute over 80 per cent of the population by 2009-10 (IBEF, 2006).

In addition, a large proportion of the Indian population is relatively young - in the age

group of 20-59 years. This is expected to further boost the automotive domestic

market as a younger population has a higher consumption index. The rise in income

levels of the Indians and the emergence of the consuming class that has higher

propensity to spend offers great opportunities for growth to companies across various

sectors. Furthermore, Consumers in India are now more informed, sophisticated and

demanding. Urban consumers have been especially exposed to western lifestyles

through overseas travel. For example, more than 5 million Indians traveled overseas

last year and this number is expected to increase by 15 per cent to 20 per cent per

annum. An increase in the number of working women and the prevalence of nuclear

double-income families, especially in urban areas, are other trends shaping lifestyles

(IBEF, 2006).

According to IBEF, large infrastructure development projects underway in India

combined with favorable government policies will also drive automotive growth in

33


the next few years. Easy availability of finance and moderate cost of financing

facilitated by double income families will also increase consumption.

3.3. Advent of cars in India

The advent of cars in India dates back to 1898 when the first motorcar rode down

India’s roads. From then till the First World War, about 4,000 cars were directly

imported to India from foreign manufacturers. During 1948, the first car was

manufactured in India. In 1993, with the winds of liberalization sweeping the Indian

car market, many multinationals like Daewoo, Peugeot, general Motors, Mercedes-

Benz and Fiat came into the Indian car market. Since the 80s, the Indian car Industry

has seen a major resurgence with the opening up of Indian shores to foreign

manufacturers and collaborators. The 90s became the melting point for the car

industry in India. The consumer being the king, was constantly wooed by both the

Indian and foreign manufacturers. Though sales had taken a dip in the first few

months of 1999, it is back to boom time (http://auto.indiamart.com/cars/birth-

car.html). High- end models are being launched rapidly and are flourishing.

As already said, Indian automobile industry is highly competitive with a large number

of players in each industry segment. Most of the global majors are present in the

passenger vehicle and two wheeler segments. The key players in passenger vehicles

segment in India are Tata Motors, Maruti Udyog, Honda Motors, Hyundai Motors,

Toyota, Skoda, Daimler Chrysler, and Hindustan Motors. Mercedes, BMW, Porsche,

Audi, Bentley and Rolls Royce are already here (IBEF, 2006).

34


Brief descriptions of both local and global car brands in India are presented below to

enhance the comprehension of the study. Local car brands in India are initially

described before pursuing to global car brands.

3.4. Local Car Brands in India

The local car brands found in India are;

Maruti Udyog Limited is the premier car company in India. Maruti Udyog Limited

(MUL) was established in Feb 1981. The company entered into collaboration with

Suzuki Motor Corporation of Japan to manufacture cars. Maruti is the highest volume

car manufacturer in Asia, outside Japan and Korea. Despite there being 11 companies

now in the passenger car market in India, Maruti holds about 60% of the total market

share. Maruti Udyog Limited has many unique Service advantages for the customers.

It has bagged the First Position in JD Power Customer Satisfaction Index for the

consecutive two years. The company has also ranked highest in the India Sales

Satisfaction Study. The models of Maruti Udyog Limited cars are Maruti 800, Maruti

Alto, Maruti Zen, Maruti Zen Classic, Maruti Esteem, Maruti Gypsy, Omni, Wagon

R, Versa, Baleno, Swift and Grand Vitara (www.auto.indiamart.com).

Hindustan Motors Limited (HML) is India's renowned automobile manufacturing

company. In 1942 this company was introduced in India by Mr. B.M. Birla of Birla

family (India's largest business groups). Since then, it has become a vast company,

manufacturing cars like Ambassador, Contessa, and in collaboration with Mitsubishi

of Japan now manufactures the new Mitsubishi Lancer (www.auto.indiamart.com).

35


Tata Motors Limited is India's largest automobile company, with large revenues. Its

name comes first in the category of commercial vehicles and the second largest in the

passenger vehicles, mid size car and utility vehicle segments. The company is the

world's fifth largest medium and heavy commercial vehicle manufacturer. Over 3.5

million Tata vehicles are moving on Indian roads, since 1954. The models of the

company are Tata Indigo, Tata Indica, Tata Sumo, Tata Safari and Tata Indigo Marina

(www.auto.indiamart.com).

3.5. Global Car Brands in India

Apart from local car brands, the global car brands present in India are;

Hyundai Motor India Limited (HMIL) was established in 1996 and is a wholly owned

subsidiary of South Korean multi national, Hyundai Motor Company. HMIL is the

fastest growing and the second largest car manufacturer in India and presently selling

30 variants of passenger cars in six segments. The Company has set up more than 70

dealer workshops that are equipped with the latest technology, machinery, and

international quality press, body and paint shops, across the country, thereby

providing a one-stop shop for a Hyundai customer. Hyundai also has a fleet of 78

emergency road service cars that can provide emergency service to all its customers

anytime, anywhere. The models of Hyundai are Santro, Getz, Accent, Elantra, Sonata,

Tucson, Terracan. The awaited models of Hyundai Motors are Verna, Getz next

generation and Santa Fe (www.auto.indiamart.com).

Honda Siel Cars India Ltd., (HSCI) was set up in December 1995 as a joint venture

between Honda Motor Co. Ltd., Japan and Siel Limited to manufacture passenger cars

in India. The company has brought about three models in India - Honda City, Honda
36


Accord, and Honda CR-V. Its first model was launched in 1997. Very recently Honda

Siel Cars has launched one more market friendly model, Honda Civic on 9th July

2006 in India (www.auto.indiamart.com).

Toyota Motor Corporation is the premium vehicle manufacturer in the world. Based

in Japan, the company manufactured its first vehicle in 1936. Toyota exported its first

Japanese-made passenger car to the United States in 1957. Today Toyota has global

presence and Toyota branded vehicles rank among the world's highest quality cars. In

India Toyota Motor Corporation has entered into a joint venture with Kirloskar Group

and the new entity is called Toyota Kirloskar Motor Private Limited (TKM). The

company aims to play a major role in the development of Indian automotive industry

(www.iloveindia.com).

Daewoo Motors is a South Korean company. General Motors took decision to take up

Daewoo Motors to form GM Daewoo. This brand entered the Indian market during

the year 2002 with its models such as Daewoo Matiz, Daewoo Cielo, and Daewoo

Nexia (www.auto.indiamart.com).

Ford Motor Company is the world's second largest automaker. The company's world

headquarters is in Dearborn, Michigan. Its automotive brands include Aston Martin,

Ford, Jaguar, Land Rover, Lincoln, Mazda, Mercury and Volvo. The brands on Indian

roads include Ford Icon, Ford Mondeo, Ford Fiesta, Ford Fusion, Ford Escort and

Ford Endeavor. The company is also waiting for Ford Focus to be launched in India

shortly (www.auto.indiamart.com).

37


Fiat, a make from Italy stepped in India during the year 1905 and later on joined

hands with Premium Automobiles which was a private company in India

(www.auto.indiamart.com).

General Motors Corporation was founded in 1908 and is the world's largest vehicle

manufacturer (www.iloveindia.com). General Motors enlisted its name for making

outstanding future performance in the field of automobile industry in India from the

year 1994. The models of General motors in India are Chevrolet Aveo, Chevrolet

Optra and Chevrolet Tavera, Opel Astra and Opel Corsa (www.auto.indiamart.com).

German based company Audi has spreaded its wings of success in the field of

automobile industry for its technical expertise and creativity. Audi has already started

leaving its footprint in India from July 2004. Audi has launched its bigger models A6

and A8 in the Indian market (www.auto.indiamart.com).

BMW (Bayerische Motoren Werke) was founded on March 7, 1916 and is now one of

the major automobile manufacturers in the international market. Its major brands

include BMW, MINI and Rolls-Royce Motor Cars. Although its cars are on Indian

roads, it has been announced that 2007 will be the year when BMW will start

manufacturing and selling cars in India (www.auto.indiamart.com).

Czech Republic based Skoda Auto Company is one of the popular brand name in the

field of automobile industry. It is a part of the international Volkswagen Group.

Skoda Auto introduced itself in Indian market in November 2001. The models of

38


Skoda cars on Indian roads are Skoda Octavia, Skoda Superb and Skoda Laura. The

awaited models are Skoda Fabia and Roomster (www.auto.indiamart.com).

Daimler Chrysler entered the Indian market and set up Mercedes-Benz India Ltd.

during 1994 with the aim to serve the customers in India with the latest products and

technological excellence from the Mercedes-Benz (www.auto.indiamart.com).

Rolls-Royce Motor Cars was introduced by Frederick Henry Royce and Charles

Stewart Rolls on May 4, 1904. Rolls-Royce model, Phantom is already in the roads of

India (www.auto.indiamart.com).

Porsche was established by Ferdinand Porsche. In 1931, Ferdinand Porsche founded

the Porsche Engineering Office in Stuttgart. Porsche started leaving its footprint in the

market of luxury and utility vehicle in India from 2003 (www.auto.indiamart.com).

Thus, these descriptions of the global and local car brands would enhance the reading

in a better manner. This also depicts India’s richness in automobiles and particularly

in cars. The study is prolonged by presenting the research methodology that has been

adopted for the study, in the next chapter.

39


Chapter Four

4. Research Methodology

4.1. Introduction

This chapter talks about the methods and techniques of data collection and selects the

most appropriate method for the study based on the strengths and weaknesses of each

method.

The data collection methods used in this research involves the search for both primary

and secondary data. According to Malhotra (2005), Primary data are originated by the

researcher for the specific purpose of addressing the problem at hand. Also that

obtaining primary data can be expensive and time consuming. Primary data, being the

most significant is gathered through depth interviews, focus groups, observations and

surveys. This particular study has used depth interviews as a means for obtaining

primary data.

Secondary data are data that are collected for some purpose other than the problem at

hand (Malhotra, 2005). Secondary data are usually collected from journals, existing

reports, and statistics by public and private authorities. The secondary data for this

particular study were collected through marketing journals and other existing reports

that were based on the topic. Secondary data helped the researcher to create better

comprehension of consumer perceptions. As a general rule stated by Malhotra (2005),

“Examination of available secondary data is a prerequisite to the collection of primary

data. Start with secondary data. Proceed to primary data only when the secondary data

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sources have been exhausted or yield managerial returns.” Thus the study conducted

and analysed primary data with the rationale of the secondary data.

Since the aim of the study was to understand consumers’ view of global brands vs.

local brands, qualitative research was preferred to quantitative research. In order to

create a deep understanding of consumers’ insights of global brand against local

brands, qualitative approach was adopted with an in-depth and semi- structured

interview process. Interviews as a qualitative tool helped the researcher to uncover

individual’s covert feelings and emotions towards perception of global brands vs.

local brands. As it was rightly said by Bate (1997) that qualitative research is about

digging into the everyday life of people. It is also that qualitative research produces a

quality in a research that no other method gives, and provides a unique way of

illustrating and explaining theoretical issues in everyday, experimental terms.

4.2. Research purpose

The purpose of this study is to understand consumers’ perception of global brands vs.

local brands in the Indian car industry. The secondary objectives of the study are to

highlight the factors that effect consumer preference for global brands; to examine the

effects of country of origin on consumer perceptions of global brands and local

brands; and to study the effects of consumer ethnocentrism towards global brands.

The study originally achieves the secondary objectives in order to accomplish the

primary objective.

The research explores consumers’ perceptions of global brand vs. local brands in the

Indian car industry. The study is conducted among the adult consumers in the age

group of 30-60 years old.
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The study undertakes exploratory research in order create a better understanding of

the consumers. According to Malhotra (2005), the objective of exploratory research is

to explore or search through a problem or situation to provide insights and

understanding. The research process of an exploratory research is flexible and

unstructured and the sample size is small and non-representative. The analysis of the

exploratory research is qualitative and the results are tentative in nature (Malhotra,

2005).

4.3. Qualitative Research

Qualitative research methodologies are oriented towards developing understanding

of the meaning and experience dimensions of human lives and their social worlds

(Fossey et al, 2002).

Qualitative research is chosen as the tool for research in order to explore the chosen

topic of the study. In the words of Denzin and Lincoln (1994) Qualitative research is

multi-method in focus, involving an interpretive, naturalistic approach to its subject

matter. This conveys that qualitative researchers study things in their natural settings,

attempting to make sense of or interpret phenomena in terms of the meanings that

people bring to them. Qualitative research involves the studied use and collection of a

variety of empirical materials; case study, personal experience, introspective, life

story interview, observational, historical, interactional, and visual texts that describe

routine and problematic moments and meaning in individuals' lives. “A qualitative

study is defined as an inquiry process of understanding a social or human problem,

based on building a complex, holistic picture, formed with words, reporting detailed

views of informants, and conducted in a natural setting” (Cresswell, 1994).
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Denzin and Lincoln (1994) assert that qualitative research tool is “the art of asking

questions and listening”. Qualitative research is unstructured, exploratory in nature,

based on small samples, and may utilize popular qualitative techniques such as focus

groups (group interviews), word association (asking respondents to indicate their first

responses to stimulus words), and in-depth interviews (one-on-one interviews that

probe the respondents’ thoughts in detail) (Malhotra, 2005). Qualitative research

interviews vary in methodological features such as length, style of questioning, and

participant numbers (group or individual), while most of them are carried out face-to-

face, and can also be carried out by telephone, or via the internet (Cassell and Symon,

2004). This study uses the mode of telephonic interviews as a qualitative research

tool.

4.4. Why Qualitative Research?

The reason for choosing qualitative research tool instead of quantitative research tool

can be justified in the words of Van Mannen (1991) as he asserted that “Unlike

quantitative data, raw qualitative data cannot be analysed statistically and hence

qualitative research is always concerned with questions that begin with, why? How?

In what way? Etc... Qualitative research is preferred because it is very difficult to

explain human behaviour in simply measurable terms like quantitative research

method. Measurements essentially tell us how many people behave in a certain way

but they do not adequately answer the question ‘why’? (Denzin and Lincoln, 1994).

Since the study focuses around consumers’ beliefs, opinions, and views, qualitative

approach is adopted. This can be inferred from the words of Silverman (1999) that

qualitative approach is favoured as it helps the researcher to gain insight into people’s
43


motivation, emotions and behaviours. Holliday (2002) asserts that qualitative research

is interpretative. Qualitative research carries deep insights into behaviour of people

within specific social setting rather than a broad population. According to baker

(1991), qualitative research is appropriate particularly to ‘elicit attitudinal and

motivational factors which influence behaviour’ and ‘to understand why people

behave the way they do’. Kaplan (1964) suggested that there is only one thing that

distinguishes human from natural world; it is our ability to talk, interact. This

‘interactive nature’ of qualitative research makes it possible to measure the reactions

of a great many people to a limited set of questions thus facilitating comparison and

statistical aggregation of data.

The qualitative research adopted in this study is flexible in nature. As said by Patton

(2000), In-depth interviews are flexible as it does not follow the rigid method to carry

out the interview. Semi-structured interviews are more suitable when the research area

is sensitive and requires the respondents to talk more personally of their experiences.

4.5. Interviews

In-depth interviews were carried out as a qualitative research tool for pursuing the

study. An interview has been defined as ‘a conversation directed to a definite purpose

other than satisfaction in the conversation itself’ (Chisnall, 1997). According to

Drever (1995), interviewing people is one of the commonest methods used in small-

scale educational research work. An interview is a purposeful conversation “used to

gather descriptive data in the subjects own words so that the researcher can develop

insights on how subjects interpret some piece of the world” (Bogdan & Biklen, 1998).

44


In-depth interviews were carried out for the study in order to uncover the beliefs,

attitudes, feelings and emotions of the respondents. In the words of (Cooper and

Schindler, 1999), in-depth interview encourages respondents to share as much

information as possible in an unconstrained environment.

Interview styles differ in structure. According to Seidman’s (1998) in-depth

interviewing utilizes open-ended questions that build upon and direct the probing of

participants’ responses and the goal of in-depth interviewing is “to have participants

reconstruct his or her experience within the topic under study”.

In the words of Drever (1995) semi-structured interviews are ‘that the interviewer sets

up a general structure by deciding in advance what ground is to be covered and what

questions are to be asked. This leaves the detailed structure to be worked out during

the interview. The person interviewed can answer at some length in his or her own

words, and the interviewer responds using prompts, probes, and follow-up questions

to get the interviewee to clarify or expand on the answers’.

One of the most significant techniques in good interviewing is the use of probes.

Probes were used in the study, during the interviews to obtain detailed substantiated

answers. The technique of stimulating respondents to answer more fully and

relevantly is termed probing (Cooper and Schindler, 1999). Patton (1990) identifies

three types of probes: detail-oriented probes, elaboration probes, and clarification

probes. This study uses the elaboration probes and according to Patton (1990)

elaboration probes is designed to encourage the interviewee to tell the researcher

more. Furthermore the researcher indicates his/her desire to know more by such
45


things as gently nodding his/her head as the respondent talks, softly voicing 'un-huh'

every so often, and sometimes by just remaining silent but attentive. The interview

used few questions such as ‘Could you tell me more about this?’, ‘Why do you think

so?’, ‘What else can you think about it?’, ‘What is the reason for your reason?’ etc…

4.6. Sampling

Qualitative researchers work with small samples of people, bound by specific

contexts, and studied in depth (Miles and Huberman, 1994). Nonprobability sampling

which is non-random and subjective (Cooper and Schindler, 1999) is applied in the

study to carry out the interviews. Nonprobability sampling allows interviewers to

choose sample members ‘at random’ (meaning ‘as they wish’ or ‘wherever they find

them’) which is not random sampling. Judgement sampling, a kind of nonprobability

sampling, was used in order to select the interviewees. Judgement sampling occurs

when a researcher selects sample members to conform to some criterion (Cooper and

Schindler, 1999). With the application of Judgement sampling, people who possess a

car in India were alone picked up as per the researcher’s choice from the general

public for the study. Thus the sampling frame for this study was the public in general

who own a car brand in India. As asserted by Malhotra (2005) “Qualitative research is

unstructured, exploratory in nature, based on small samples…”, the sample size for

this study is 10.

4.7. Telephone interview

Cooper and Schindler (1999) assert that telephone makes its greatest contribution in

survey work as a unique mode of communication to collect information from

respondents. Also that telephone can be helpful in arranging personal interviews and

46


screening large populations for unusual types of respondents. Despite telephonic

interviews being expensive than other modes of interviews, they helped the researcher

to converse with the respondents who are far beyond the reach. Telephonic interviews

are also less time consuming when the interviews are well scheduled through emails

before the interview is carried out.

The study consisted of 10 adult customers in the age group of 30-60 years old. All the

ten respondents were interviewed through telephone. The respondents were already

informed of the interviews and were scheduled through emails according to their

convenience. This helped the researcher to avoid lapse of time that results from

making repeated calls in order to check the availability of respondents. The

respondents were well informed of the purpose of the interview before the start of

each and every interview. Furthermore, the respondents were explained the subject

oriented terms such as ‘COO’, ‘COBO’, ‘globalness of the brand’, etc… The reason

for explaining these terms were to make the respondents feel more comfortable with

the topic to be interviewed. Each interview lasted for about 30-40 minutes.

The interviews were started with questions that were easy to answer such as ‘what

brand is you car?’, which made the respondents to feel free by answering the

questions. The respondents were then gradually asked questions that took a little time

for the respondents to answer such as ‘How do you perceive global brands (such as

Ford, BMW, Mercedes, Toyota, etc...)?’, ‘If in case the price of the local brand was

cheaper than the global brand, which brand would you choose? Why’, etc…The

interviews were thus started with easy questions and once the conversations got

47


smoother and friendly, it was then moved to questions where the respondents took

time to answer.

The main purpose of the interview was to understand consumer perception of global

brands vs. local brands of cars in India. The questions were framed in such a way that

the objectives of the study were addressed accordingly. For example, questions such

as ‘Do you know the brand origin of your car?’, ‘What makes you attached to the

country (of the brand origin)?’, ‘Do you think that Country of Origin of your brand

has a direct influence in your purchase?’ etc…facilitated the researcher to examine the

effects of country of origin on consumer perceptions of global and local car brands.

Furthermore questions such as ‘How do you perceive local brands (such as Tata,

Maruti etc...)?’, ‘How do you perceive global brands (such as Ford, BMW, Mercedes,

Toyota, etc...)?’, ‘What factors (such as quality, value, esteem, status, globalness per

se) influenced you to buy this brand?’ etc… facilitated the researcher to highlight the

factors that effect consumer preference for global car brands and also to understand

consumer perceptions of global vs. local car brands.

A pilot interview was conducted before interviewing the actual recruited respondents.

The purpose of the pilot interview was to test the framed questions for flaws. The

pilot interview helped the researcher to a great extent wherein a major error was

rectified. The initial idea of the study was to understand customers’ perception of

global vs. local car brands in UK. Thus the pilot study was conducted with a

respondent in UK. During the pilot interview, it was discovered by the researcher that

the UK car industry was very rich only in its global brands and hardly had any local

brands. Thus, in order to create a balance in the study and also to create a more
48


meaningful insight, the researcher had to pursue the same study in the Indian car

industry, which has a good mixture of global and local car brands.

4.8. Summary

The chapter has explained and substantiated the methods used for conducting the

study. With the application of qualitative research, the researcher was able to explain

things in a more descriptive manner. In order to create a deep understanding of

consumers’ insights of global brands against local brands, qualitative approach was

adopted with an in-depth and semi-structured interview process. Interviews as a

qualitative tool helped the researcher to uncover individual’s covert feelings and

emotions towards the perception of global and local car brands. Telephonic interviews

were adopted in order to reach the far-off customers. Although telephonic interviews

seem to be a little expensive, it was tremendously helpful when the interviews were

well scheduled through emails before the interview was carried out, thereby

consuming less time. The use of pilot study before the actual interviews, were of

enormous help to the researcher.

The next chapter will prolong the study to analysis and findings of the gathered data.

The data gathered through interviews are analysed and findings are divulged in the

chapter with the espousal of the literature review.

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