A Comparative Analysis of Foreign and Local Brands in Emerging Markets

This report examines the consumer preference for foreign brands over local products in emerging markets. It reviews existing literature to understand the reasons behind this trend, including factors such as perceived quality, brand image, and social status. The report references studies conducted in developing countries like Vietnam, highlighting the influence of brand credibility, country image, and brand equity on consumer behavior. It also discusses the impact of globalization, technological advancements, and marketing strategies of multinational corporations on consumer choices. The analysis considers how foreign brands are often associated with higher social status and fashion, leading to a preference among emerging market consumers. The report concludes by summarizing the key findings and emphasizing the importance of brand perception and country of origin in consumer decision-making, contrasting this with the preferences in developed markets.

Foundations of Scholarship and Research

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
LITERATURE REVIEW................................................................................................................1
CONCLUSION................................................................................................................................4
REFERNCES...................................................................................................................................5

INTRODUCTION
There are many companies producing and selling their products in local, regional,
national and international markets as well (Why Consumers in Developing Countries Prefer
Foreign Brands: A Study of Japanese Brands in Vietnam, 2018). From the customers of
emerging market and developing country include that foreign products considered to as good
quality. Thus this will be influencing customer buying behaviour in emerging and developing
market on more foreign products than that of local products. This report will include critical
evaluation on reason behind the foreign products are better perceived by emerging market
consumer that local products.
LITERATURE REVIEW
As per the view of Thuy Hang Dao and von der Heidt, (2018) foreign product are those
which are produced outside the country and sold in various other nations in way of earing
revenue and profits. On the other hand domestic or local product means that product whose
country of origin is local market only. Emerging market is that country which is at urge of
growth and development within international market with help of their products and services.
Thus emerging market is mostly regarded to as those markets which are having potential to sell
international brands more than any other market. It is introduced that foreign products are more
perceived by emerging markets consumer than local product. This means that customers of
emerging market are more attracted towards international or foreign products than that of their
local product market.
According to view of Frimpong, (2011) in one of the study customers of Vietnam which
is developing country prefer Japanese product brands over their domestic brands (Why
Consumers in Developing Countries Prefer Foreign Brands: A Study of Japanese Brands in
Vietnam, 2018). This process of developing country consumer identified to as 3 main reason
which are that of consumer based brand credibility, consumer based country image and
consumer based brand equity. This finding was based on the above mentioned study conducted
on 400 Vietnamese consumer with 2 Japanese brands named Honda and Sony using structural
equation modelling (SEM). As per Bajaj, (2006) customers’ point of view brand is the credible
and familiar which they are getting to experience in their everyday life so brand will be indicator
for making decision in buying new products.
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In this increasing trend of globalisation and advance in technology into transportation and
communication consumers are more and more exposed to products of international market which
sometime they prefer more over their domestic products. As explained by Charter and Tischner,
(2017) this customer preference of international or foreign market products more on domestic
product is mainly due to they think that these products are more superior to domestic one in
quality. It was also included by Gereffi and Lee, (2016) that any customer of developed market
will generally prefer home product more over foreign product like an American customers
favour American product only. But on other hand customers of emerging or developing country
prefer foreign products that their domestic one due to their thinking that foreign products are
symbol of high social status and fashion as well. Like Indian preferring American product more
than domestic one.
As claimed by Jin, Parente and Purani, (2015) the brand’s importance is mainly seen in
impact on choice of customer and their loyalty with differentiating and identification of quality
and additional value as well. Most of the multinational companies which are of developed
countries earn from developing market only with delivering products to emerging retail targeted
market to higher income customers. There are number of foreign market products which are
operating into market of developing countries like that of India, China and Thailand. It is
included that there are number of reasons as why these developing country’s customer will prefer
foreign product like they think that these brands product conceive higher level of social status
and quality (Why Consumers in Developing Countries Prefer Foreign Brands: A Study of
Japanese Brands in Vietnam, 2018). Then there are higher numbers of young generation people
living in developing countries as compared to old people who place more importance to foreign
market products.
It was also included by Feldmann and Hamm, (2015) most of the customers of
developing market prefer products like that of accessories, apparel, household and technological
appliance in foreign name. Furthermore it is also included that alcoholic products, cosmetics and
automotive commodities are having higher demand in developed countries. Thinking that foreign
product will be having more higher and superior value, quality and status than that of domestic
product is the main reason behind their sale. In addition to this Xie, Batra and Peng, (2015)
stated that customers will use country of origin or production as a clue to decide over accepting
and purchasing product or not.
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This same behaviour of developing market customer are been noticed in each emerging
countries whether it is Turkey or India. According to famous newspaper The Economist it is
included that “People are pawn in hands of giant companies with huge advertising budgets and
global reach. Brands bring something that people think is better that what they feel.” (Jin,
Parente and Purani, 2015) This statement means that in this scenario where company and brands
are representing fascist state where all customers are preferring logo or symbol and having no
opportunity to criticise them as internet or Television are under control of these multinational
corporations. As included by Evans, (2018) that all local brands will be linked with tradition and
culture of country which is surely not seen in international or foreign brand products but they are
also not too much flexible for marketing than international product are.
As the customers will believe that foreign product is more globally recognised then local
product as marketing of international brands are more than that of locally produces good. It is
also very commonly seen that customers in emerging countries will seek western practice and
lifestyle more than the local one. Jin, Parente and Purani, (2015) also explained that these global
brands will link themselves with global events as well like that of Olympics or FIFA and with
international celebrities like David Beckham. All the global or foreign brands will be witnessed
to as luxury products by an average emerging country customers and this market will experience
to as higher growth as well. Other than this perceived service quality associated with foreign
branded products is also viewed to as means of customers distinguishing with other domestic
markets (Consumer Perceptions of Global and Local Brands in the Indian Retail Industry,
2018). Service quality is that measure of how well level of services delivered match expectation
level of customers.
There are many such studies which deal with why customers of developing or emerging
market mostly prefer international or global product more than their local products. Most of them
concluded that main reason of customers preferring foreign products more than that of local
product is their symbol of lifestyle and quality of product as well. As per the view of Thuy Hang
Dao and von der Heidt, (2018) emerging or developing countries are on total of 44% of total
global purchasing power parity which means that they are responsible for 2/3rd of world’s
economic growth. Most of the consumption of consumer goods will be concentrating in largest
developing economies only like that of India and China. There are many international companies
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like that of Coca-Cola, Nestle and Gillette which are having potential customers in emerging
markets by capturing 1/3rd of profits and revenue.
All these foreign brands are committed to emerging markets from several generations
with established leadership position in these markets. According to Gereffi and Lee, (2016) there
are many chance when within countries like that of Indonesia and Thailand foreign companies
are regarded to as local enterprise only. Like Nestle is having more that 80% of Chinese coffee
market, Unilever is having ½ of India’s detergent market and 75% of Brazilian toothpaste market
by Colgate Palmolive.
All these are also having very good growth rate in these countries like Coca-Cola is
having 30% growth rate in China while its growth rate in USA is only 10% (Consumer
Perceptions of Global and Local Brands in the Indian Retail Industry, 2018). However per capita
consumption in China is only 2% that of USA.
CONCLUSION
From the above literature review on foreign product better perceived by emerging market
consumer than local product it is concluded that customers of emerging market mostly prefer
foreign product over local one. While it is also found out that developed countries customer will
not be purchasing foreign products more that their local one. One of the major reason behind this
statement will be brand image, quality and higher style statement which arises from these
international branded products. The effect of consumer identification with nation on brand will
be that according to country of origin which is also of higher importance.
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REFERNCES
Books and Journals:
Online:
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