History Of Measuring Consumer Ethnocentrism Marketing Essay

History Of Measuring Consumer Ethnocentrism Marketing Essay For marketers it is essential to understand the importance of attitudes, motives, beliefs and attitude change in the study of Marketing and Consumer Behavior. Therefore, Consumer Behavior is about the perceptive of the consumers needs and what affect their purchase intention. Consumer behavior can be distinct as the study of individuals, groups or organizations and the processes they use to select, secure, use and dispose of products, services, experiences or ideas to satisfy needs and the impacts that these processes have on the consumer and society (Hawkins, 2001). It covers the field from psychology, sociology and economics. With the open-door-policy in 1979, China has improved its trade relations with the rest of the world. China benefited from foreign direct investments and its export expansion. Today, China is the second largest economy in the world. The rapid growth in China led to an increase in consumption. Chinese consumers nowadays have comprehensive choices in buying different kind of products. Due to the open-door-policy, many overseas companies have entered China and benefited from the increased consumer spending. Chinese consumers can choose from foreign goods that are imported from overseas or manufactured by foreign companies in China, or domestic goods. Due to the increased foreign investments, domestic companies face fierce competition in several markets. Markets are globalizing in China but Chinese consumers still keep buying local products. The globalization affects consumer behavior but China has a strong traditional culture which remains noticed in the countrys choice of product purch ase. According to Mooij (2011), globalization can also cause a strengthening of local identities. Studies have identified that consumers in developing countries have a different perception than consumers in developed countries towards local made products. The consumers in developing countries believe that foreign sourced goods are better than local made products. Belk (1996) identified that globalization can lead to motives to resist the globalization policies, such as localism, ethnogenesis and the neo-nationalism. Further research about this paradox can be an effective way for investors, entrepreneurs, companies and producers to develop and enhance their marketing strategy in China. There have been several studies about consumer ethnocentrism and its effect on consumer behavior and purchase intention. Most of the studies have their focus on the Western consumers. There has been little emphasis on the research of Chinese consumer purchasing behavior and evaluation towards consumer ethnocentrism, which leads to a scarce knowledge of the Chinese consumers. This study focuses at explaining the degree of consumer ethnocentrism and its assumptions on evaluation of several products. This research will focus on food products by Chinese consumers. To explain the relationship there has to be a literature review to issue the concepts in the research and analyzing existing studies on consumer ethnocentrism to understand the theoretical background. Secondly, a research question and the hypotheses will be described and after the methodology will be explained. To test the hypotheses, data will be collected. At last, after evaluation of the hypotheses, a conclusion can be drawn from the present study. 1.1 Problem statement Chinese consumers are shifting towards other consuming patterns as the economy grows faster than any other country in the World. The behavior of Chinese consumers has shown significant changes in the couple of years. In the 12th five-year plan, the Chinese government wants to boost its domestic consumption. The changes have led to a declining demand for foreign goods. An explanation can be that Chinese consumers are becoming more ethnocentric because of the favoring for domestic products. The central question in this research is therefore: Does Consumer Ethnocentrism (CE) apply for the Chinese consumer towards food products? Which moderators are influencing the relationship between CE and the outcomes of CE for Chinese consumers towards food products? 1.2 Research method A literature review is needed in order to answer the central question. A literature review is needed to gain insight about a suitable method to measure Consumer Ethnocentrism. It is important to set a theoretical background to gain insight about the factors that are influencing CE, the effects of CE and the moderators that are influencing the relationship between CE and the outcomes of CE. A conceptual framework can be developed after a literature review. In this framework, the factors that can be found that are influencing CE and also the outcomes and moderators that are influencing the relationship between CE and the outcomes, will be presented. The final conceptual model will be empirical tested. This research will be a quantitative research. A questionnaire will be developed and a convenience sample will be used to collect data. A total of 210 questionnaires will be delivered randomly to adult participants. 1.3 Thesis structure In Chapter 2, there will be an explanation how Consumer Ethnocentrism can be measured and if this is applicable in this research. In Chapter 3 there will be a brief description of the Chinese consumer market. In Chapter 4, the conceptual framework of Consumers Ethnocentrism will be developed and thereby its hypotheses. This framework will be the basis for the empirical research that will be described in Chapter 5. At last, the conclusions, limitations and recommendations will be discussed in Chapter 6. 2. Theoretical background 2.1 Ethnocentrism The concept ethnocentrism was first introduced by Sumner (1906). According to the author, ethnocentrism is the tendency to perceive that a particular ethnic or cultural group is being more significant than other groups. Individuals who tend to be more ethnocentric find their group better than others, who are seen as inferior. Ethnocentric individuals have developed an own perspective of how they see people or groups and they dont accept individuals who are different from them (Netemeyer et al., 1991; Shimp and Sharma, 1987). In the field of sociology Lewis (1976) argued that individuals tend to give their group members a privileged treatment than non-group members. Thus, ethnocentrism established the development of in-groups, which is the group of the individual as pride and on the other side a disfavor for out-groups (Levin Campbell, 1972). According to Lynn (1976) ethnocentrism is part of the human nature. Thus, the phenomenon can be used for large diversity of societal groups including the local community, regions and nations. In the study of Chryssochoidis et al (2007, p. 1518) he issued: ethnocentrism is based on the formation of we-group feelings, whereby the in-group is the focal point and all out-groups are judged in relation to it. Levinson (1950) also related ethnocentrism to cultural narrowness which explains behavioral tendencies of favoring the individuals with the same culture and excluding other cultures, who are not the same. 2.2 Consumer ethnocentrism Consumer ethnocentrism is derived from the psychological concept of ethnocentrism and particularly points out to ethnocentric perceptions held by consumers in one country, the so called in-group, towards products from a different country, the out-group (Shimp and Sharma, 1987; Shankarmahesh, 2004). Ethnocentrism is adapted in order to suit Consumer behavior, which is suitable for marketers. Ethnocentrism has already been discussed to the study of consumer behavior in the 1970s (Markin, 1974; Berkman et al, 1978). Shimp and Sharma (1987) defined the concept in order to suit the field of marketing. Sharma, Shimp Shin (1995) argue that the ethnocentric tendencies of consumers are influenced by social-psychological and demographic factors. The basic conceptual model of Sharma, Shimp Shin (1995) shows that Consumer Ethnocentric is the focal concept that is related to demographic variables (age, gender, education) and social physiological variables (openness to foreign cultures, patriotism, collectivism/individualism and conservatism). The result of Consumer ethnocentrism is overestimating the domestic products and underestimating the import products. Thus, Consumer Ethnocentrism is a significant factor towards import product attitude. In their model, there is also a moderating factor. The model issues that when products are perceived as not necessary, consumers will have stronger ethnocentric tendencies towards the attitude of import products. Sharma, Shimp Shin (1995) have tested this conceptual model in Korea. Results have shown that there is a negative correlation between openness to foreign cultures and Consumer ethnocentrism. This shows that people who are open to foreign cultures, are less ethnocentric. There is a positive correlation between patriotism and Consumer ethnocentrism. The demographic variable gender is also significant related to CE: women show more ethnocentric tendencies than men. The study also identified that higher education leads to less ethnocentric tendencies. The research did not find a negative correlation between age and CE. Consumer Ethnocentrism tendencies Antecedents Openness to foreign cultures Patriotism Conservatism Collectivism/individualism Attitude towards imports Moderators Perceived necessity Economic threat Demographics Age Gender Education Figure : Basic model Sharma, Shimp Shin (1995) Consumer ethnocentrism is about the perceived appropriateness and morality when buying foreign products and preferring domestic goods over foreign goods which can be seen as consumer loyalty (Shimp and Sharma, 1987). According to Shrimp and Sharma (1987) highly ethnocentric consumers tend to believe that purchasing foreign-produced goods will affect the countrys economy negatively and will cause unemployment. Conversely, non-ethnocentric consumers, who do not consider ethnocentric beliefs, have no bias where a product is produced. These consumers will consider their purchase based on evaluation of the merits of the products. Shimp and Sharma (1987) state: The family unit would be expected to be the primary socialization agent, but adult opinion leaders, peers and mass media would also influence a childs ethnocentric orientation during the prime period of early childhood socialization. This statement explains that an adults perception is created by what he or she has learned and exper ienced as a child. According to Lingquist (2001) the degree of ethnocentrism is influenced by the developed levels of different regions. In some studies there has been concluded that consumers in developing countries tend to perceive foreign sourced products as prestigious and of high quality while on the other side, developed countries tend to perceive domestic products as prestigious and of higher quality (Agbonifoh and Elimimian, 1999; Bow and Ford, 1993; Sklair, 1994; Wang et al., 2000). Sharma et al. (1995) assume that the less significant product categories lead to greater ethnocentric tendencies and behavior by consumers. Orth Firbasova (2003) and Dosen Krupka (2007) have researched the food industry, where it has been identified that ethnocentric consumers have more willingness to purchase domestic food products instead of foreign food products. To measure consumer ethnocentrism, Shimp and Sharma (1987) developed The Consumer Ethnocentric Tendencies Scale (CETSCALE). The CETSCALE is a 17-item predictor of consumer ethnocentrism (Lindquist et al. 2001). This measurement distinguishes consumers whether they are highly ethnocentric or not, thus consumers scoring high on this scale will tend to prefer domestic products over foreign ones. There are several researchers that use the CETSCALE with their own modification for aiming on employment impact, patriotism and economic impact in studies (Lindquist et al., 2001; Cleveland et al., 2009). The scale has been applied widely in different countries, such as Turkey, France and the Czech Republic (Klein et al., 2006). Herche (1992) identified that the CETSCALE is able to forecast consumers choices to buy domestic or foreign products. He argues that this measurement is even better than demographic and marketing mix variables. According to Balabanis (2001), the Customer ethnocentric mea sure of buying intentions differs from countries. Good and Huddleston (1995) agreed on this. They identified that Polish consumers find it significant to purchase foreign goods, contrary to Russian consumers. In a research study of Wei (2008) he issues that the Consumer ethnocentrism will decrease when brand sensitivity and product cues are taken in account. These factors will influence the purchase intention of the consumer. The CETSCALE will be further explained in paragraph 2.3. 2.3 CETSCALE The central question in this research is: Does Consumer Ethnocentrism apply for the Chinese consumer towards food products? This question can only be explored if there is a method to measure CE. There are different kinds of methods and tools to measure CE, but the Consumer Ethnocentric Tendencies Scale is the most common used. Shimp and Sharma (1987) have developed this scale to measure CE (see 3.1). Previous studies have tested this scale on its reliability and validity (see 3.2 and 3.3). At last there will be a conclusion if this CETSCALE is valid for measuring CE in this research. 2.3.1 Measuring Consumer-ethnocentrism The first study to measure CE was done by Shimp (1984). He came to a conclusion that measuring CE was being hindered by a suitable tool. Before Shimp developed the CETSCALE, there were other tools, such as the famous F- and E-scales of Adorno et al. (1950). These scales were able to measure ethnocentric tendencies but were useless because of the commonality and dated nature of the scales. Shimp (1984) used an open question to test CE empirically. He used the following sentence: Please describe your views of whether it is right and appropriate for American consumers to purchase products that are manufactured in foreign countries. The question is aimed on the perception of the respondent, questioning if buying foreign products is ethical. Shimp (1984) indicated that the choice for an open question is legitimate, given that the concept of CE is very complex and the relevant dimensions were not known at that moment. Shimp Sharma (1987) developed and validated a multi-item scale to measure the CE of individual consumers: the CETSCALE, which stands for Consumer Ethnocentric Tendencies Scale. The CETSCALE consist 17 items, with a 7-point Likert-scale ranged from Totally disagree (1) to Totally agree (7). The 17-item CETSCALE is validated and tested on its reliability in three studies, which are the four area study, Carolinas study and crafted-with-pride study. Shimp Sharma (1987) also developed a shortened version of the CETSCALE for the national consumer good study. This scale consists 10 items of the original 17-item scale. This is because the 17-item scale is often being used for commercial market research. For this subset scale Shimp Sharma (1987) use a five-point Likert-scale. In table 1, the 17-item and the subset 10-item scale is shown. 17-item CETSCALE 10-item CETSCALE 1 American people should always buy American-made products instead of imports. 2 Only those products that are unavailable in the U.S. should be imported. 1 Only those products that are unavailable in the U.S. should be imported. 3 Buy American-made products. Keep America working. 4 American products, first, last, and foremost 2 American products, first, last, and foremost 5 Purchasing foreign-made products is un-American 3 Purchasing foreign-made products is un-American 6 It is not right to purchase foreign products, because it puts Americans out of jobs. 4 It is not right to purchase foreign products, because it puts Americans out of jobs. 7 A real American should always buy American-made products. 5 A real American should always buy American-made products. 8 We should purchase products manufactured in America instead of letting other countries get rich off us. 6 We should purchase products manufactured in America instead of letting other countries get rich off us. 9 It is always best to purchase American products. 10 There should be very little trading or purchasing of goods from other countries unless out of necessity. 11 Americans should not buy foreign products, because this hurts American business and causes unemployment. 7 Americans should not buy foreign products, because this hurts American business and causes unemployment. 12 Curbs should be put on all imports. 13 It may cost me in the long-run but I prefer to support American products. 8 It may cost me in the long-run but I prefer to support American products 14 Foreigners should not be allowed to put their products on our markets. 15 Foreign products should be taxed heavily to reduce their entry into the U.S. 16 We should buy from foreign countries only those products that we cannot obtain within our own country. 9 We should buy from foreign countries only those products that we cannot obtain within our own country. 17 American consumers who purchase products made in other countries are responsible for putting their fellow Americans out of work. 10 American consumers who purchase products made in other countries are responsible for putting their fellow Americans out of work. Table 1: The CETSCALE of Shimp Sharma (1987) 2.3.2 International reliability The basic requirements of a scale, that can be used in several countries, is the reliability of a scale (Craig Douglas 2000). In case a scale is being used in a different country than where the scale is developed, there can be a measurement invariance. This refers to observing the construct in different conditions and studying constructs where the measurement does not always measure the same attribute. Linguistically or conceptual inequality of measuring instruments can cause variations in the reliability. This is a threat to the validity of conclusions. The focus on the study of the reliability is to obtain the same results when using the existing measuring instrument in a different context, different way or different point of time. These tools do not have to be reliable in every context, despite the attempt to develop tools that can be used in every culture (Craig Douglas 2000). Therefore, the CETSCALE does not have to be reliable everywhere. If the scale in the United states giv es a good reflection of the items that are measuring the CE in the United States, however this does not mean that these are the right items for a different country (Douglas Craig 2000, p.277). It is important to determine if the CETSCALE is international reliable and therefore suitable in other countries. The reliability of a scale can be identified in multiple ways. There are two parts of reliability of the CETSCALE that come up for discussion: The internal consistency and the dimensionality of the CETSCALE and the stability of the CETSCALE over time. The internal consistency is being measured with the Cronbachs Alpha. The Cronbachs alpha measures if the items of the CETSCALE truly measure one concept: Consumer Ethnocentrism. The internal consistency has to be large enough (alpha higher than 0.60) to measure CE with the CETSCALE. When this is the case, the items can be considered as reliable indicators of CE (Hair et al. 1998). When a low alpha occurs, the respondents do not have consistent image of the concept and in that case the measurement is not reliable. A requirement by measuring the internal consistency of a set of items, is that the items are one-dimensional (Hair et al. 1998). This means that the items have to be interdependent and combined they have to measure one concept (Hair et al. 1998). Factor analyses are important to measure the dimensionality of a set of items by determine several factors (Hair et al. 1988). For one-dimensionality all items of the CETSCALE have to load high on one single factor (Hair et al. 1998). The stability of the CETSCALE over time is being measured by a test/retest method. The consistency of the answers of a respondent is being measured at different moments. The objective of this method is to be sure that the answers do not vary over time, in order for the CETSCALE to be considered reliable at every moment (Hair et al. 1998). According to Hair et al. (1998) Cronbachs alpha is being defined as: Cronbachs Alpha is most widely used objective measure of reliability. It is used to measure the internal consistency of a test or scale. The measurement is expressed as number of 0 and 1, whereby the nearer Cronbachs Alpha coefficient is to 1, the better the internal consistency of the set of variables. Internal consistency and dimensionality of the CETSCALE Shimp Sharma (1987) were the first researchers that executed four distinctive studies to determine the reliability of the 17-item CETSCALE. These studies have shown that the internal consistency of the CETSCALE is very high; the Cronbachs alpha of the four studies varies from 0.94 to 0.96. The internal consistency and the dimensionality of the CETSCALE is identified in several studies and countries (Appendix 1). The alpha coefficients in the appendix show a consistency. That implies that the alpha in every study lies about 0.90 (with exception of the alpha for Hungary in the study of Lindquist et al. (2000)). In any other cases the internal consistency meets the minimum of 0.60.Orth Fibrasova (2003) have studied the role of CE towards the evaluation of food. They have found a high Cronbachs Alpha value for the CETSCALE and imply that the CETSCALE is internal consistent. There are different opinions about the amount of items of the scale that must be used. Shimp Sharma (1987) have used 10 items in the national consumer good study, because of the limited possibilities in the questionnaire. Lindquist et al. (2001) have studied the dimensionality of the shortened 10-item CETSCALE in Hungary, Czech and Poland. According to this research, the CETSCALE does not have a universal good fit in the central- and east-European countries. They assume that a scale that can be used in every country does not exist. Therefore, they suggest to use a part of the CETSCALE items and add some land specific or population specific items to effectively measure the CE. Another problem the authors have identified is the translation of the CETSCALE. The authors imply that the scale functions better in English then translated to their native languages in their research. The authors emphasize that the back-translation technique must be used to set up an accurate translation of the scale. Stability of the CETSCALE over time Shimp Sharma (1987) have used the test-/retest method by doing the research twice with a interim period of five weeks. These studies have found comparable alpha values. Shimp Sharma (1987) conclude that the CETSCALE is stable over time. Nielsen Spence (2001) have also researched the stability of the CETSCALE over time. They studied the stability in the United States over an eight week period during the summer of 1992. In this period they have found that the CETSCALE-scores are stable over time but by investigating different groups, the scores can vary over time. They conclude that a longer period of data collection, scores can vary more. 2.3.3 International validity The validity of a scale refers whether a scale or set of measurements measures the focal concept accurate (Hair et al. 1998). The three most accepted types of validity are convergent, discriminant and nomological validity. Convergent validity examines the degree to which the operationalization converges with other known measuring instruments of the concept. Discriminant validity assures that the scale differs enough of other similar concepts and nomological validity measures if the scale shows the relationship based on previous studies or theories. These types of validity are empirical tested by defining the correlation between theoretical defined sets of variables (Hair et al. 1998). Convergent validity This type of validity examines the correlation between two measurements that measure the same concept (Hair et al. 1998, p. 118). A researcher can look for this and find an alternative tool to measure CE and correlate this method with the CETSCALE. If the correlations are high, then the CETSCALE truly measures CE. Shimp Sharma (1987) have found a convergent validity in their study. The 17-item CETSCALE correlates with the open question of Shimp (1984). This correlation (r (=correlation coefficient) =0.54, n=388, p Discriminant validity Discriminant validity is the degree where two concepts are different. This type of validity examines the correlation between measurements. In this case, the CETSCALE is being correlated with a different conceptual measurement. The correlation has to be low, as it shows that the CETSCALE differs enough comparing to another measurement (Hair et al. 1998, p. 118). Shimp Sharma (1987) have found evidence for discriminant validity. Three constructs are being used in the studies (patriotism, politics, economic conservatism and dogmatism) that are related to Consumer Ethnocentrism. The researchers have used a test of Fornelll Larcker (1981). They assume that the average variance of the separated constructs is larger than the variance where the constructs are being combined. They have found that this is the case for the CETSCALE and the politic-economic conservatism-scale. The variance distinctive is 71% for the CETSCALE and 61% for the conservatism-scale, as the combined variance of the two constructs is 34%. Thus, Shimp and Sharma (1986) indicate that there is a discriminant validity. The study of Sharma, Shimp Shin (1995) also proves that there is a discriminant validity between CE and the product attitude towards foreign goods. They have found this through a factor analyses on the 17-item CETSCALE and the 10 attitude items. Findings have shown that the CETSCALE items and the attitude-items load on two different factors. A factor analyses have shown that the correlation between the two constructs (r = 0.568) differs significantly . Thus, these two constructs are not similar. Nomological validity Nomological validity examines how far the CETSCALE can give an accurate prediction for other concepts in a model that is based on theories. In this case, a research must identify theoretical supporting relationships from earlier studies, then he has to determine if the scale has comparable correlations (Hair et al. 1998, p.118). For the 17-item scale Shimp and Sharma (1987) have used the CETSCALES-scores of the respondents to determine the nomological validity. Shimp and Sharma (1987) applied different measuring instruments of Warshaw (1980), Fishbein Ajzen (1975) and Ajzen Fishbein (1980). These tools have been used two years before the development of the CETSCALE to investigate the purchase of a domestic or foreign car. The purchase of a foreign car is negative correlated with the CETSCALE score of the ethnocentric respondents of Shimp and Sharma (1987). Furthermore, the ethnocentric consumers have less favorable cognitive structures and attitudes regarding foreign cars than non-ethnocentric consumers. These results imply the nomological validity of the Consumer Ethnocentrism concept and measuring this concept with the CETSCALE. The 10-item scale is also tested on its nomological validity by Shimp and Sharma (1987). They have tested this by looking to the country origin of the manufactures. According to this study, the country of origin of the manufacturer is an important purchase consideration when the scores on the CETSCALE increase. Consumers with a higher score on the CETSCALE are likely to choose for American manufactures and have less preference for European and Asian manufactures. Predictive validity Herche (1992) has some remarkable notes about the predictive validity of the CETSCALE. He assumes that the predictive validity of the CETSCALE is product specific (the predictive validity for cars is higher than computers). Herche (1992) gives several explanations for this phenomena. First, when buying a more expensive product, people tend to have more ethnocentric tendencies because these transactions have a bigger economic impact. Another possibility is that if there are no acceptable domestic goods available, even ethnocentric consumers are being forced to purchase foreign goods. Also, the degree of involvement can be responsible for the difference between product categories. Purchases with a higher involvement can evoke emotional reactions about the country origin. However, this does not have to be true because the involvement of a purchase of a car does not has to be bigger than the purchase of a computer. Witkowski (1998) assumes that the predictive validity of the CETSCALE does not has to be product specific but also country specific. He has found this assumption in his study in Mexico and Hungary. Respondents in this study are asked to give nine durable products in the past three years. There was a significant negative relationship between the CETSCALE-scores and the purchase of a foreign car, television, video recorder and washer in Hungary. No significant relationship was found between CE and the purchases in Mexico. 2.3.4 CETSCALE in this research The internal consistency of the scale is high in most of the studies and meets the minimum requirements of the Cronbachs alpha value of 0.60. Orth Fibrasova (2003) have done studies of the role of CE regarding food products. To measure CE, they make use of the CETSCALE. In this research the shortened 10-item scale of Shimp Sharma (1987) will be used. The main reason the use the 10-item scale is because the length of the questionnaire has to be limited. In paragraph 3.3, sufficient evidence has found for the international validity of the CETSCALE. Thus, the CETSCALE is an useful scale to measure CE in China. 3. Chinas consumer market Due to the globalization of markets, there is an abundance of foreign goods in China. Domestic companies had to face strong competition of foreign companies during the last ten years. According to Cui (1999), the Chinese consumer market has the largest growth opportunity in the world. The market of 1.3 billion people, with an emerging spending power of the middle income class, is an enormous opportunity for producers of consumer goods. Each year 10 million new Chinese consumers enter the market. In 2010, Chinas consumer market was approximately worth $1.7 trillion. According to Forbes (2011) the domestic consumer market in China could grow to about $15 trillion within ten years. A.T. Kearney (2007) assumes that the middle class will increase its consumptions especially on food, the branded food product market supposed to increase from $150 billion to $650 billion by 2017. The statistics show that the mediocre