Psychological and cultural insights - Essay Example

Critical Discussion Introduction This paper is focused on the consumer behaviour pertaining to the presupposition of the binary nature of eastern and western countries. It also includes the marketing strategies taken by the international companies and how that affects the bottom of the pyramid market. This paper has followed a critical and argumentative approach where different theories have been put forward to reach a conclusive statement regarding the topic of discussion. The author has also used several real life examples of market strategies of international companies and how they conduct their marketing activities in developing countries. Discussion The binary nature of the ethnic perception has created two distinct cultural segments “the east and the west”. The segments are not only geographically separated by political borders but are also diversified in terms of psychographic nature of the residing people ((Luo, 2008). On a geographical perspective, the western countries include the nations like the UK, USA, France, Germany, etc and on contrary the eastern countries encompasses Mainland China, India, UAE, Thailand, etc (World Atlas, 2015). Although the geographic distinction is quite apparent, however, that is not the only rationale for diversity of perception. According to The Hofstede Centre (2015), the cultural practices vary largely across national borders. The people bear different psychological profile and engage in different social practices, which is a clear reflection of psychographic diversity. Eng and Bogaert, (2010) mentioned that the psychographic profile of an individual largely influences his perception of a particular stimulus. To put it simply, two individuals belonging from different cultural background is most likely to react differently to a same stimulus. This theory stands corrected in the Watson and Wright’s (2000) study of ethnocentric consumer behaviour. A consumer’s perception of a particular brand or a product is largely influenced by his ethnicity. His country of origin and his cultural background plays a major role in deciding the perceived value of a brand. This is mostly because of the fact that an individual designs his perception based on his surroundings. From the study of the consumer behaviour, Kwok, Uncles and Huang (2006) have opined that the presupposition of the perceived brand value is clearly concurrent to the economic position of the brand’s home country. Although the traditional “east and west” diversity indicates towards an apparent segregation by political boundaries, however, from a broader perspective it can be stated that the differentiation is between the developed and the developing nations. Koubaa (2008) has circled out the possibility that the country of origin of a particular brand is highly responsible for its perceived values in a host country. This idea can be defended by the proposal given by Kaynak and Kara (2002) that the people in the developing countries have a strong perception that the products sourced from the developed countries are of higher quality owing to its high economic status and are capable of imparting high status symbol for the consumers. Koubaa (2008) further mentioned that this presupposition of perception diversity is not a new phenomenon. AdWeek (2011) contrasted that the influence of one’s ethnicity towards the brand perception is not globally standardized and can vary across nations. Counties belonging in the Middle East region bear a strong sense of morality when it comes to favouring the country of origin of a particular brand. The people belonging to these countries find it immoral to favour a foreign brand over the local ones. However, among the South Asian region the western brands are highly valued and the customers are ready to pay premium price for them. Kwok, Uncles and Huang (2006) have mentioned that Chinese consumers preferably give more priority to western brands than the local ones. The western countries have always been looked up by some of the eastern countries as the abode of high standardization, be it in terms of product quality or lifestyle. According to Husted (2003), the onset of globalization has merged several economies together and has made the global business market more open and accessible for the multinational firms. It has become easier for the firms belonging to the developed countries to enter into the developing ones owing to the reduced barriers of entry. The barriers of entry was used to be a significant issue for FDI activities and entry into the overseas market, but over the years they been eased off by the government to attract foreign firms. This as a result has allowed several western firms to ramify their business in several parts of the eastern world. The research conducted by Watson and Wright (2000) have shown that the consumers’ preference towards a western brand is somehow correlated with the availability of exactly matching products in the domestic market. This idea brings ambiguity to the proposal that consumer preference is solely driven by their perception of the country of origin of the brand. Kaynak and Kara (2002) contrasted that and explained that a consumer’s preference is largely driven by his cultural values. In countries with tendency to adhere to their domestic tradition, the consumers prioritize their domestic brands over that of the western. This fact can be justified by the Geert Hofstede’s model of cultural diversity which states that the countries with high uncertainty avoidance have the tendency to hold on to their traditional cultures and they are quite sceptical towards the new changes, be it change in social practice or entry of a western brand (The Hofstede Centre, 2015). Thus it can be stated that the psychographic profile of a nation dictates whether or not its people are attracted to western brands. Based on the reports of AdWeek (2011), it can be mentioned that there is a visible change in the trend of cultural practices among the countries preferring traditional cultures. AdWeek (2011) also mentioned that the rapid growth of globalization has brought several nations in close proximity thereby allowing cultural diffusion to take place. This as a result has gradually changed the cultural and social structure of several eastern countries and their westernization has been clearly identified in terms of consumption of product and service. There is an increasing trend in the traditional countries like UAE and Saudi Arabia towards adoption of certain western culture and preference of western brands. Czinkota (2009) have mentioned that some countries bear an inherent predisposition to prefer western culture and lifestyle is mainly because they perceive that the domestic brands and products are of substandard quality. This perception is further boosted by the fact that the people intuitively think that a country with a strong economic structure is only capable of producing higher quality products. On a factual level, whether it is true or not, hardly matters because this perception pattern determines the purchase behaviour of the consumers. Schimtt (2012) pointed out that the traditional “east and west” differentiation can be possibly ruled out and be replaced by the fact that the consumers of the developing countries show higher preference towards brands of the developed countries. Role of International Marketing This tendency of biased consumer preference is leveraged by the western firms. They design their marketing strategies and promotional activities in such a manner that further hyperventilates the perceived value of a western country of origin. Given the fact that the western brands are highly prioritized among the eastern countries, the western firms give more focus on pushing their product in the host countries by strengthening their brand equity. Apple Inc. poses a perfect example of consumer preference of western brands. According to Forbes (2015), Apple Inc is the most valued brand all over the globe and based on its price point it can be easily stated that the company targets the upper and upper middle section of the market. Despite the high price point, it has been evidenced that an extremely large number of consumers aspires to own an Apple product. This aspiration level is quite high among the eastern countries particularly in China (Doctoroff, 2012). Apple Inc. has always focused on developing its brand equity by highlighting the massive positive changes that an Apple product can bring in the lives of the consumers and how the Apple consumers possess a high standard of living (Mourdoukoutas, 2013). Thus highlighting the product quality and proposing value in terms of creating a status symbol has created a perception among the minds of the consumers in developing countries in favour of the western brands. Chernev (2010) have mentioned that the consumers are more inclined towards a brand if the risk of purchase is lower than that of the others. The perceived value of a particular brand determines the perception of risk of purchase. Therefore, if a consumer thinks that a particular western product is of higher brand value and of higher product quality then the risk of purchase is quite low. This idea is quite relevant in terms of food product consumption. The consumers always prefer to consume food products that are of high quality as they do not want to take any health risks. Coca Cola can be used as a good example as well. The company has a very strong brand preference in the eastern countries; strong enough to suppress the local soft drinks brand. Coca Cola has built up its brand equity by using extensive promotional activities (Bickle, 2011). This has been a viable option for the company owing to its extremely strong financial structure. Thus, it has been able to expand its business to several parts of the world. This strong financial dominance over the global market place has created a perception of the sturdy financial prowess of the western firms, thereby creating a preference towards the western culture and the products originated there. Apéria and Georgson (2011) have mentioned on a slightly different context that the consumer preference of a particular brand may not be always depending on the “east and west” perception. It may also depend on the brand equity of the company itself. This can be justified by the fact that Samsung being a South Korean company has been successful to build up a strong brand image in the global market place. According to the studies of Husted (2003), the knowledge of the country of origin may not be the only determining factor for consumers’ preference to a particular brand. Toyota being a Japanese company holds the highest market shares in the automotive industry, which also indicates that, the attribute of a company being “western or eastern” is not the primary determinant of the consumer behaviour. The customers are fascinated to a particular company if it has been able to create strong brand image in its target market. Koubaa (2008) have stated that popularity of a brand may be correlated with its country of origin, but it has hardly anything to do with being a “western” brand. This idea can be defended by stating that the rapid growth of globalization has allowed the multinational companies regardless of its country of origin to expand its business operations in different parts of the globe. Samsung, being a South Korean company is quite popular in the US and the company earns most of its sales revenue from outside its home country (Samsung, 2015). In the terms of brand perception, Apéria and Georgson (2011) have stated that some of the nations are best known for a particular comparative advantage or a particular competency exclusive to that nation. For example, Germany is known for its Automobile technology and quality, Japan is best known for its electronics devices, etc (GTAI, 2015). Thus, it can be pointed out that the brand preference may be correlated with the country of origin, but it is also dependent on the product category. Thus, it can be stated that a brand being western or eastern, has very little to do with its popularity in the global market place. Several western brands are highly popular in the east and a lot of eastern brands are also popular in the west. However, the statement that most of the popular brands belong to the developed countries cannot be ruled out by the fact that the concept of “western and eastern” differentiation is immaterial in terms of brand preference. It has been evidenced that the popular global brands may in fact belong to developed countries, which is more practical than the stating that only western brands are popular (Apéria and Georgson, 2011). The fact that a developed country can also belong to the eastern world has made the concept of “east and west” quite irrelevant. On a close review of the determining factors that build a popular brand, it can be underpinned that the birth of a strong brand is highly dependent on certain attributes of the nation. The developed countries have a quite stronger economic structure that can support and establish firms with strong infrastructure and financial strength (Husted, 2003). Owing to their financial prowess, these firms are capable of spending a huge capital on research and development, quality maintenance and overseas expansion. Thus they can create products and services with utmost possible quality. In the perspective of brand development, these firms are capable of spending extensively in promotional activities like television commercials, internet advertising, and print advertising. While entering in a particular host country, these firms ensure that their promotional activities are more effective than that of the local brands. This as a result helps them to build strong brand awareness among the consumers. Moreover, the high frequencies of their television commercials also create a perception among the viewers of that the products are of higher quality. This as a result also attracts a large number of customers towards the foreign brand (Fill and Hughes, 2009). Thus it is can be clearly stated that the companies belonging to the developed countries are more capable of developing a strong international brand due to their financial capacity. Since, most of the popular brands are from the developed countries, so the consumers of the developing countries has invariably developed a notion that the developed countries are always superior and they are the only ones capable of producing higher quality products and services. Impact on the bottom of the pyramid market According to Prahalad (2009), the consumer market can be visualized by as a pyramid where the niche customers with extremely high disposable income are positioned at the top, with fewer numbers and the consumers with the low disposable income are positioned at the bottom with higher numbers. The bottom of the pyramid clearly indicates towards the mass market population that are characterized by low affordability. This particular market segment owing to the low affordability are more attracted to the product segments that are low priced and are easily available. A company which develops a strong brand usually does so by targeting a particular market segment which is mostly the upper middle and upper class of the society. This segment has higher disposable income and is more worried about the brand image of the products which they consume. On contrary, the bottom of the pyramid market does not posses any particular brand inclination and often switches between products which are offered at the lower price. Thus it can be stated that the bottom of the pyramid market is least likely to get attracted to western brands, therefore, popular brands have very less influence on them. Conclusion The perception of brand among the consumers is determined by several factors. There presupposition of the binary nature of the eastern and western culture played a significant role in creating a popular brand. However, over the years owing to the changing global business market, this concept has changed. Previously the consumers perceived that the brands originating from the western countries are more valuable and their products are also of higher quality. However, owing to the globalization and the rapid development of the eastern countries, popular brands have also emerged from them. Thus the notion inherited from the past pertaining to the idea that western companies are superior and are prioritized over that of the eastern origin is quite irrelevant in the current global business market. Building a strong brand is mostly dependent on the marketing strategies of the company and its financial expenditure in terms of brand and product development. Although the country of origin may have some influence of the popularity of certain product categories, but that is insignificant when contrasted against the large number of popular brands from different countries irrespective of being western or eastern. However, there is a strong correlation between the economic structure of the country and popularity of the brand originating from it. This is mostly because the countries have the necessary economic condition and political structure to develop a robust organizational infrastructure that is capable of creating strong brand equity and develop high product quality. As a result, it creates a perception among the consumers that the brands from the developed countries are more valuable than that of the developing countries. Reference list AdWeek, 2011. Middle East Meets Western Brands. [online] Available at: [Accessed on 3 April 2015] Apéria, T. and Georgson, M., 2011. Strategic Brand Management: A European Perspective. 5th ed. 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