The Lahore Journal of Business

3 : 1 (Autumn 2014): pp. 37–53

Consumer Behavior Toward Nonlocal Brands

Sana Azar, Amina Talat, Feryal Khan, Anam Rana*

Abstract

This study explores consumer behavior toward nonlocal brands in

Pakistan. Specifically, it examines the extent to which (i) product quality, (ii)
country of origin, (iii) religiosity (in the context of Pakistan as a predominantly
Muslim country), (iv) social status, and (v) the unavailability of local substitutes
determine consumers’ purchasing decisions. Consumer ethnocentrism and the
desire to emulate economically developed country lifestyles serve as the study’s
moderating variables. The research data was collected through a questionnaire
survey conducted in Lahore among a sample of 200 people between the ages of 18
and 55. The questionnaires were distributed via Google Docs and employed a
convenience and snowball sample. A confirmatory factor analysis was carried out
to establish reliability and validity. The structured model was then used to assess
the relationships identified above.

Keywords: attitude toward nonlocal brands, quality, religious conviction,

economically developed country lifestyles, consumer
ethnocentrism.

JEL classification: M30, M31, M37.

1. Introduction

The number of farmers’ markets has grown fourfold since the 1970s;
this is attributed to consumers’ preference for and the rising popularity of
locally produced products (Williamson, 2014). A local example of such
markets is the Khalis Market recently established in Lahore, Pakistan.
Consumers’ definition of “local” is determined by the product’s proximity to
home (Adams & Adams, 2011). The literature also indicates, however, that
consumers tend to prefer foreign (nonlocal) products (Phau, 2014). Given
this contradiction, our study investigates the collective impact of different
factors that influence consumer behavior toward brand origin. These include
product quality, social status, the unavailability of local substitutes, religious
conviction, the desire to emulate economically developed country (EDC)
lifestyles, and consumer ethnocentrism.

* Senior teaching fellow, assistant professor, assistant professor, and research assistant,
respectively, at the Lahore School of Economics.
38 Sana Azar, Amina Talat, Feryal Khan, Anam Rana

Specifically, we aim to understand consumer perceptions and

attitudes toward nonlocal brands in an emerging economy and
predominantly Muslim country such as Pakistan. In this context, we
investigate whether the factors listed above affect consumers’ preference
for domestic over foreign products and vice versa. The research conducted
on consumer behavior in developed countries suggests that, when
consumers decide to purchase nonlocal products, their decision is based on
product quality and worth. Our study examines whether this applies with
reference to Pakistan.

2. Literature Review

The theoretical framework of this study is illustrated below and

discussed in detail in this section.

EDC lifestyle

Product
quality

Attitude to
nonlocal
products

Social
status
Consumer
ethno-centrism

Unavailability Religious
of local commitment
substitutes
Country of
origin

Schuiling and Kapferer (2004) argue that consumers are likely to be

more aware of—and prefer—local brands relative to nonlocal brands.
However, local brands are not as varied as their foreign equivalents and
firms cannot always employ effective marketing strategies for local
products in the global market, given that such products often cater to the
local culture (Belk, Devinney, & Eckhardt, 2005). Consumers classify and
 Consumer Behavior Toward Nonlocal Brands 39

evaluate nonlocal brands under three main heads: (i) “quality signal,” (ii)
“global myth,” and (iii) “social responsibility;” these factors determine
their purchase decisions (Holt, Quelch, & Taylor, 2004).

Johansson and Ronkainen (2005) find that consumers with a similar

level of product knowledge associate nonlocal brands with greater
prestige. Perceived product quality is defined as consumers’ evaluation of
brand dominance on the basis of intrinsic and extrinsic factors. Inherent
factors include presentation and durability while extrinsic factors include
brand name guarantee (Kirmani & Baumgartner, 2000). Consumers may
give more weight to nonlocal brands if they associate these with higher
quality and prestige (Nguyen, Barrett, & Miller, 2005; Steenkamp, Batra, &
Alden, 2003). Our first hypothesis (H1), therefore, is that product quality is
positively related to consumer attitudes toward nonlocal products.

Perceived prestige, however, influences purchase decisions only to

some degree as it varies with product type. Products that are visibly
consumed or used in public, for instance, may be associated with a
stronger consumer preference for nonlocal brands (Steenkamp & Ter
Hofstede, 2002). Steenkamp et al. (2003) argue that prestige is the second
most significant factor to influence consumers’ preference for nonlocal
products. Generally, the literature finds that consumers prefer nonlocal
brands that connote a higher social status (Schuiling & Kapferer, 2004;
Steenkamp et al., 2003; Shocker, Srivastava, & Ruekert, 1994). Our second
hypothesis (H2), therefore, is that consumers prefer nonlocal products
because they add to their social status.

In the case of nonlocal brands, the country of origin influences

consumer behavior and preferences because it is related to product quality
and social status and prestige (Kinra, 2006). Nonlocal brands may be
considered prestigious if they are more expensive and less easily accessible
than local brands or if they are associated with a certain desirable
consumer image. The particular country of origin also matters: one study
shows that Chinese consumers have a more positive perception of highly
industrialized countries than of newly industrialized countries (Ahmed &
d’Astous, 2002). Developing country consumers may desire products from
developed countries if they believe that these products are of better quality
and reflect higher social status (Batra et al., 2000).

The country-of-origin effect contributes to consumers’ impression

of a particular brand, eventually affecting their purchase decision. A strong
brand image may lead to rivalry, thereby increasing sales and directly
affecting consumers’ purchase decisions. Thus, both the brand producer
40 Sana Azar, Amina Talat, Feryal Khan, Anam Rana

and its country of origin can affect brand loyalty (Baldauf, Cravens,
Diamantopoulos, & Zeugner-Roth, 2009; Keller, 2003). Our third
hypothesis (H3), therefore, is that a foreign brand’s country of origin is
associated with a positive consumer attitude toward nonlocal products.

Consumer ethnocentrism focuses on the dependability and ethics of

purchasing foreign products along with the loyalty of consumers to locally
manufactured products (Watson & Wright, 2000; Shimp & Sharma, 1987).
Consumers tend to distinguish between local and nonlocal products and
may avoid purchasing the latter out of patriotism (Shankarmahesh, 2006).
The level of ethnocentrism varies from country to country. A study on Iran
shows that ethnocentric consumers are not heavily exposed to nonlocal
brands (Bahaee & Pisani, 2009). Another study conducted in Lucknow in
India reveals that, although consumers are highly ethnocentric, they are
not biased against nonlocal brands (Kinra, 2006).

Lantz and Loeb (1996) investigate the value that North American
consumers place on a given product (computer mouse pads) manufactured
in their own or another country. They find that highly ethnocentric
consumers are more likely to behave favorably toward products from
culturally similar countries. Our fourth hypothesis (H4) is that consumer
ethnocentrism moderates the relationship between (i) product quality, (ii)
social status, and (iii) the availability of local products and consumers’
attitude toward nonlocal products.

Religiosity can also influence consumer decision-making habits,

performance, lifestyle, attitudes, and awareness (Jusmaliani & Nasution,
2009). Religiosity is categorized as either intrapersonal or interpersonal,
both of which play a crucial role in the lifestyles of orthodox consumers
(Mokhlis & Spartks, 2007). The first dimension reflects internal religious
beliefs and character while the second includes external religious
affiliations and practices. The literature suggests that it is not just a
particular religion that affects consumer behavior, but also the strength of
an individual’s religion conviction (Mukhtar & Butt, 2012). Our fifth
hypothesis (H5) is that religious conviction is associated with negative
consumer attitudes toward nonlocal products.

A New Zealand study on the unavailability of local substitutes

suggests that, in such a situation, consumers prefer to buy products from
countries that are ethnically similar to their own. This makes it very
important for consumers to be aware of a product’s country of origin
(Watson & Wright, 2000). Our sixth hypothesis (H6) is that the unavailability
of local substitutes leads consumers to purchase nonlocal products.
 Consumer Behavior Toward Nonlocal Brands 41

In their study on India, Batra et al. (2000) show that the desire to
emulate EDC lifestyles may encourage consumers to buy brands produced
in developed countries in order to reflect their social position. Our seventh
hypothesis (H7) is that this desire to emulate a certain lifestyle moderates
the relationship between product quality, social status, the unavailability of
local products, and consumers’ attitude toward nonlocal products.

3. Methodology

We have used a deductive approach in this study, employing

empirical cross-sectional data to test the proposed theoretical framework.
A combination of self-selection sampling and snowball sampling was used
to reach a sufficient number of respondents. The survey questionnaire was
distributed using Google Docs to collect and code the data efficiently and
cost-effectively. The survey link was distributed via different social media.
The usable sample comprised 134 consumers between the ages of 18 and 55
from Lahore. A confirmatory factor analysis (CFA) was conducted to test
the model’s reliability, validity, and fit. The hypothesized relationships
were then tested using the structured model.

Eight latent variables were measured based on 29 questions, four of

which were demographical while the rest were measured on a five-point
Likert scale ranging from 1 (“strongly disagree”) to 5 (“strongly agree”).
The conceptual and operational definitions and composite reliability of
each variable is as follows:

 Country of origin (or manufacture) can have a positive or negative

influence on consumers’ decision-making or subsequent behavior (Elliott
& Cameron, 1994). This was measured using 11 items from Anwar,
Yasin, Iqbal, and Sajid (2013) with a composite reliability of 0.914.
 Consumers’ attitude toward nonlocal products is determined by
“quality signal, global myth and social responsibility” (Holt et al.,
2004) and was measured using two items from Ismail, Masood, and
Tawab (2012) with a composite reliability of 0.687.
 Religious conviction is defined as being “capable of influencing an
individual cognitively and behaviorally” (Mokhlis & Spartks, 2007).
This was measured using two items from Ilyas, Hussain, and Usman
(2011) with a composite reliability of 0.847.
 Product quality is defined as the “perceived quality” of a product,
based on “consumers’ judgment about an entity’s (service’s) overall
42 Sana Azar, Amina Talat, Feryal Khan, Anam Rana

excellence or superiority” (Zeithaml, 1988). This was measured using

two items from Batra et al. (2000) with a composite reliability of 0.782.
 Social status is defined as consumers’ preference for global brands
associated with greater prestige (Schuiling & Kapferer, 2004; Shocker
et al., 1994; Steenkamp et al., 2003). This was measured using two
items from Batra et al. (2000) with a composite reliability of 0.812.
 The unavailability of local substitutes relates to the context where
“country-of-origin information becomes advantageous in case of
unavailability of domestic substitutes for those who import from
culturally similar countries” (Watson & Wright, 2000). This was
measured using two items from Batra et al. (2000) with a composite
reliability of 0.953.
 Consumer ethnocentrism is defined as consumers’ beliefs concerning
“the correctness, indeed ethics, of shopping [for] foreign products”
(Shimp & Sharma, 1987). This was measured using three items from
Batra et al. (2000) with a composite reliability of 0.746.
 The desire to emulate EDC lifestyles arises when “consumers’
preferences are positively related to the economic development of the
country of origin“ and is based on the assumption that good quality
connotes economic development (Lumpkin & Crawford, 1985). This
was measured using one item from Batra et al. (2000).

4. Results and Analysis

Using CFA, we evaluate the model based on several criteria,

including uni-dimensionality, reliability, and convergent validity (Miller &
Luo, 2002; Anderson & Gerbing, 1988). All the item factor loadings were
greater than 0.4 on their corresponding constructs.

4.1. Assessment of Model Fit

The model’s p-value is significant although the chi-squared

statistics are susceptible to the size of the sample. The model is not,
therefore, rejected based on the chi-squared statistics alone (Bagozzi & Yi,
1988). The results in Table 1 indicate an adequate model fit.
 Consumer Behavior Toward Nonlocal Brands 43

Table 1: Model fit

P-value 0.000
CMIN/DF 1.900
Goodness of fit (GFI) 0.895
Adjusted goodness of fit (AGFI) 0.859
Tucker-Lewis index (TLI) 0.862
Comparative fit index (CFI) 0.892
Root mean-squared error of approximation (RMSEA) 0.082
Source: Authors’ calculations.

4.2. Reliability and Validity

Composite reliability (CR) represents the internal consistency of

each factor. All the variables meet the approximate 0.70 cutoff
recommended by Nunnally (1978). Table 2 shows that the CR values for
the constructs range from 0.953 (unavailability of local substitutes) to 0.687
(attitude toward nonlocal products). Fornell and Larcker (1981) suggest
that the average variance extracted (AVE) provides an indicator of the
overall convergent validity. In this case, the AVE for each scale is close to
or greater than the 0.50 threshold value (Rosenzweig & Roth, 2007).

Table 2: Reliability and validity

Variable CR AVE Items

Social status 0.812 0.707 2
Unavailability of local substitutes 0.953 0.927 2
Product quality 0.782 0.651 2
Country of origin 0.914 0.483 11
Religious conviction 0.847 0.734 2
Attitude toward nonlocal products 0.687 0.528 2
Consumer ethnocentrism 0.746 0.551 3
EDC lifestyle - - 1
Source: Authors’ calculations.

4.3. Path Analysis

In order to test the structural relationships discussed above, we

estimate their hypothesized causal paths; our findings support hypotheses
H1 to H4 (Table 3). The relationship between attitude toward nonlocal
44 Sana Azar, Amina Talat, Feryal Khan, Anam Rana

products and product quality is highly significant (0.000) with a beta

estimate of 0.469. This implies that a one-unit change in quality will lead to
a 0.469-unit change in consumer attitudes toward nonlocal products.
Additionally, a one-unit change in religious conviction leads to a
significant 0.39-unit change in attitudes toward nonlocal products.

Table 3: Path analysis

Attitude Variable Estimate SE CR P

Attitude toward  Religious conviction 0.039 0.068 0.576 0.021
nonlocal products
Attitude toward  Country of origin –0.105 0.077 1.353 0.176
nonlocal products
Attitude toward  Product quality 0.469 0.105 4.462 ***
nonlocal products
Attitude toward  Unavailability of 0.003 0.084 0.036 0.972
nonlocal products local substitutes
Attitude toward  Social status 0.129 0.179 0.723 0.469
nonlocal products
Source: Authors’ calculations.

Based on our dataset, Table 3 indicates that two factors, religious

conviction and product quality, determine attitudes toward nonlocal
products. Contrary to the literature, our findings fail to support the impact
of country of origin, the unavailability of local substitutes, and social status.

4.4. Moderation

In this section, we test the two moderating variables: (i) the desire
to emulate EDC lifestyles and (ii) consumer ethnocentrism. Table 4 shows
that higher levels of consumer ethnocentrism moderate the relationship
between product quality and attitudes toward nonlocal products. The
estimate of 0.704 is highly significant, with a p-value of less than 0.05,
which implies that a one-unit change in quality will have a 0.704-unit
change in attitudes toward nonlocal products. This finding underscores the
argument that consumers with a higher level of ethnocentrism tend to
avoid buying nonlocal products because they feel it is unpatriotic and may
create local unemployment (Shimp & Sharma, 1987).
 Consumer Behavior Toward Nonlocal Brands 45

Table 4: Moderator 1: Consumer ethnocentrism

Consumer Variable Estimate SE CR P

ethnocentrism
High level
Attitude toward  Product quality 0.704 0.159 4.428 ***
nonlocal products
Attitude toward  Unavailability of –0.083 0.117 –0.711 0.477
nonlocal products local substitutes
Attitude toward  Social status 0.165 0.254 0.649 0.516
nonlocal products
Low level
Attitude toward  Product quality 0.237 0.133 1.784 0.074
nonlocal products
Attitude toward  Unavailability of 0.003 0.116 0.023 0.982
nonlocal products local substitutes
Attitude toward  Social status 0.088 0.248 0.354 0.723
nonlocal products
Source: Authors’ calculations.

Table 5 shows that respondents with less desire to emulate EDC

lifestyles (“low desire for product”) significantly moderate the relationship
between brand quality and attitudes toward nonlocal brands. A unit
change in the quality of the product will lead to a 0.665-unit change in
consumer attitudes toward the product. The literature supports consumers’
preference for brands produced by economically advanced countries based
on the assumption that these products are of better quality (Lumpkin &
Crawford, 1985).

Table 5: Moderator 2: Desire for EDC lifestyle

Desire for product Variable Estimate SE CR P

Low
Attitude toward  Product quality 0.665 0.159 4.191 ***
nonlocal products
Attitude toward  Unavailability of –0.105 0.097 –1.085 0.278
nonlocal products local substitutes
Attitude toward  Social status –0.060 0.185 –0.324 0.746
nonlocal products
High
Attitude toward  Product quality 0.282 0.124 2.277 0.053
nonlocal products
46 Sana Azar, Amina Talat, Feryal Khan, Anam Rana

Desire for product Variable Estimate SE CR P

Attitude toward  Unavailability of 0.005 0.117 0.046 0.963
nonlocal products local substitutes
Attitude toward  Social status 0.002 0.316 0.006 0.995
nonlocal products
Source: Authors’ calculations.

5. Discussion and Conclusion

The aim of this study was to add to the existing literature on

consumer behavior in developing countries with respect to attitudes
toward nonlocal products. It has contributed to the literature on consumer
behavior toward nonlocal products in Pakistan by employing two
moderating variables: the desire to emulate EDC lifestyles and consumer
ethnocentrism.

We find that perceived quality has a significant and positive impact

on attitudes toward nonlocal products. This finding supports the literature:
consumers place a higher value on nonlocal brands because they assume
that these brands are of better quality and carry greater prestige (Nguyen
et al., 2005; Steenkamp et al., 2003). Social status does not appear to have a
significant impact on attitudes toward nonlocal products. This may be
because some consumers associate local products with greater prestige
than nonlocal products (de Mooij & Bovenberg, 1998). Local brands tend to
reflect local cultural values and represent genuineness and social standing
(Ger & Belk, 1999).

Our findings point to an inverse relationship between country of

origin and attitudes toward nonlocal products. A probable reason for this is
that cultural dimensions such as individualism and socialism also influence
the country-of-origin effect on attitudes toward nonlocal products
(Gürhan-Canli & Maheswaran, 2000), which we have not included in this
study. The negative relationship between religious conviction and attitudes
toward nonlocal products indicates that many consumers are likely to
avoid buying nonlocal brands out of a strong sense of religiosity.
Moreover, this will vary depending on the strength of the consumer’s
religious conviction (Mukhtar & Butt, 2012).

We find that consumers with a higher level of ethnocentrism

moderate the relationship between the quality of a product and attitudes
toward nonlocal products. The relationship is highly significant when
conducting the statistical analysis on AMOS. The literature supports this
 Consumer Behavior Toward Nonlocal Brands 47

finding based on the argument that ethnocentric consumers avoid buying

nonlocal products out of a sense of patriotism and the belief that such
products affect opportunities for local employment (Shimp & Sharma, 1987).

Consumers with less desire to emulate EDC lifestyles moderate the

relationship between the quality of a product and attitudes toward
nonlocal products. This relationship is highly significant and consistent
with studies that find that consumers prefer to buy products produced by
economically advanced countries because they feel such products are of
better quality (Lumpkin & Crawford, 1985).

Our findings are, however, limited by the representativeness of the

sample used. The study was conducted in Lahore using convenience and
snowball sampling methods, which implies that its findings cannot be
generalized across Pakistan. Future research on this subject could,
therefore, take into account not just the culture of the society being studied,
but also cross-cultural comparisons of consumer behavior. Additionally,
while we have employed cross-sectional data and examined causal factors
with hypotheses based on individuals’ self-reported opinions about their
consumption behavior, future research could use a combination of
different methodologies (quantitative and qualitative) and more objective
methods of data collection, such as experiments.

A key implication of this study is that multinational firms should

initiate cooperative ventures with domestic firms or set up overseas
subsidiaries to regulate the impact of ethnocentricity, which is important to
manage. Marketers in Pakistan should emphasize the quality of their
products in order to remain competitive in relation to global companies
operating in local markets. Managers and marketers should also be aware
of how strong a role religious conviction might play in consumer behavior
toward their products (see Mokhlis & Spartks, 2007; Khraim, 2010).
48 Sana Azar, Amina Talat, Feryal Khan, Anam Rana

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Appendix

Questionnaire

Items 5 to 28 were measured on a Likert scale of 1 (“strongly disagree”) to

5 (“strongly agree”).

1. Gender
2. Age
3. Level of education
4. Do you use international brand products?
5. If an international brand product and a national brand product cost
the same, would you prefer the international brand product?
6. People buy international brand products in order to be accepted by a
particular social group. Do you agree?
7. Do you buy foreign products in order to be accepted by a particular
social group?
8. Overall, how would you rate the quality of foreign brands?
9. Do you think foreign brands are of better quality than local brands?
10. Are all the brands you consume easily available for purchase?
11. Have you seen advertisements in Pakistan (magazines, radio, or TV)
for all the brands you consume?
12. Are you always aware of a product’s country of origin?
13. When many equivalent products (e.g., Sony, Panasonic) are available,
do you prioritize your purchases on the basis of country of origin?
14. Would you refuse to purchase a product without knowing its country
of origin?
15. When purchasing a product, do you believe that the country of origin
determines the product’s technological aspects?
16. Do you firmly believe that the country of origin determines the
quality of a product?
17. Country of origin reduces the search for products. Do you agree?
 Consumer Behavior Toward Nonlocal Brands 53

18. When purchasing a new product for which you do not have sufficient
information, do you purchase the product on the basis of its country
of origin?
19. When purchasing an automobile, do you always try and determine its
country of origin?
20. When purchasing a TV, do you always try and determine its country
of origin?
21. When purchasing a mobile telephone, do you always try and
determine its country of origin?
22. When purchasing cosmetics, do you always try and determine their
country of origin?
23. Do you feel pleasure and satisfaction in following Islamic teachings?
24. Do you feel pleasure in seeing others follow Islamic teachings?
25. To what extent do you admire the lifestyles of people living in
economically developed countries, such as the US or in Western
Europe?
26. Purchasing foreign products is un-Pakistani. Do you agree or
disagree?
27. Pakistanis should not buy foreign products because it hurts local
businesses and causes unemployment. A real Pakistani should always
buy Pakistani-made products. Do you agree or disagree?
28. It is not right to purchase foreign products. Do you agree or disagree?