06 m alixsm12

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 semistructured 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
III

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.

VII

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

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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

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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,
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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 countryof-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-brandorigin 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-oforigin. 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-brandorigin.

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 200506, 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 Birminghambased 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, MercedesBenz 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/birthcar.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


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

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

40

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.
41

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).
42

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-toface, 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 smallscale 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.

49

Chapter Five
5. Analysis and Findings
5.1. Introduction
This chapter 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 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 study 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.

5.2. Background of the respondents
The researcher interviewed 10 respondents in the age group of 30-60 who owned a car
in India.

50

Table 1 – A background of the respondents
Age Global

/

Local

car Name

of

the

car

Name of the Respondent
brand

brand

Mr. Arun

32

Local Brand

Maruti Zen

Mr. Sathish

35

Global brand

Ford Ikon

Mr. Sudharson

42

Local Brand

Tata Indica

Mr. Napoleon

51

Local Brand

Tata Safari

Mr. Arumugasamy

60

Global Brand

Hyundai Santro

Mr.Chakravarthi

56

Local Brand

Maruti Zen

Mr. Surendhran

33

Global Brand

Skoda Octavia

Mr. Rajendhran

59

Global Brand

Mercedes Benz

Mr. Ashok

49

Global Brand

Hyundai Accent

Mr. Lambodharan

38

Global Brand

Honda City

Thavamani

Among the 10 respondents interviewed, 4 individuals possessed a local brand and 6
individuals possessed a global brand. Most of the respondents who were interviewed
had a good knowledge about the cars in general, so it was expedient for the researcher
to obtain pragmatic and valuable answers in order to pursue the study.

5.3. Analysis and Discussion of the interviews
Qualitative analysis is a process of reviewing, synthesizing and interpreting data to
describe and explain the phenomena or social worlds being studied (Fossey et al,
2002). Thus the analysis part of this study provides insights into the understanding of
51

the beliefs and attitudes of the respondents and the perceptions they hold towards the
global and local car brands. Fossey et al (2002) assert that developing an
understanding of qualitative data requires conceptual level processes of exploring the
meanings, patterns or connections among data that involve the researcher’s own
thought, reflection and intuition.

The interview questions were framed in such a way that the respondents’ answers
could be interpreted meticulously in order to accomplish the desired objectives of the
study. The responses are analysed and discussed with regard to the research objectives
of the study. To begin with the analysis, the secondary objectives of the study are first
accomplished in order to achieve the key objective of the study.

5.4. Accomplishing objectives of the study
5.4.1. Objective one: Highlighting the factors that effect consumer preference for
global brands
Emphasizing the factors that effect consumer preference for global car brands assisted
the researcher to relate these factors to understand consumer perception of global vs.
local car brands. Under this category of discussion, it was convenient for the
researcher to analyze the responses from the individuals who possessed a global car
brand.

A respondent who had a Ford Ikon could immediately think of; “Its reputation as a
brand that has a world wide presence and its quality….I said reputation because;
many people all over the world fancy the brand….As a worldwide brand, Ford stands
for its quality.” And he bought the brand as he asserted that; “I would first tell its
52

word wide presence….ya its globalness as you said…then comes status and
quality…Ford brand is really good. All these factors add value to the car and
eventually made me to buy this brand.”- Sathish, 35.

As Steenkamp (2003) had asserted that Consumers become perceptive to global
brands when consumers believe the brand is marketed in multiple countries and is
recognized as global in these countries, the brand, Ford Ikon having a worldwide
presence has influenced the respondent to possess it. Also the respondent is
influenced by the brands’ world wide reputation and its quality and status of
possessing the brand.

Similarly, the factors that influenced a respondent to buy a Mercedes Benz asserted
that “worldwide presence was the foremost factor….this made me to trust the brand
and made me safe in possessing the brand…the quality of cars of the brand,
‘Mercedes Benz’ was also one of the reasons…and also its powerful engines and its
well-built cars make me admire the brand….and lastly, ‘esteem’ in possessing the
car…” and when he thinks of the brand he says, ‘Its poshness and its luxury…are the
ones that I think about the car brand….another important feature of the brand is its
comfortableness…But generally, “Mercedes” often conveys “poshness”….and also
its worldwide presence” – Rajendhran, 59.

Skoda Octavia was possessed by a respondent as he justified it as “I would just tell
esteem and globalness, which made me buy the brand... also because of the foreign
make and international presence that would boost up the reason…Skoda is good in
quality as well….but ‘esteem’ in possessing the car and ‘foreignness’ of the brand
53

were the major influencers that backed up my purchase…”and when the respondent
thinks of Skoda, he talks of “Its elegance…..and comfortness are the initial ones that
come to my mind immediately… Skoda cars also stand for their powerful engines and
luxury interiors….” – Surendhran, 33.

Apart from the respondents’ preference of the brand being present worldwide, they
also added factors such as trust, luxury, comfortness, esteem, quality of cars made by
the brand. One respondent (Rajendhran, 59) mentioned that he felt safe of possessing
Mercedes Benz as the brand is trusted worldwide. Another respondent who owns a
Skoda, revealed the ‘foreignness’ and esteem in possessing the brand (Surendhran,
33). The technological superiority of the global brand makes the respondents to
admire the brand. The technological superiority of the brand here is referred to the
powerful engines and the luxury interiors mentioned by the respondents. Mercedes,
being a global brand conveys poshness and worldwide presence to the respondents.
This anecdotes from the words of Batra et al (2000), who asserted that international
and global brands have been associated with prestige or status, in addition to quality.

Besides this, there are research works that 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
(Peterson and Jolibert, 1995).

54

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