Consumer Receptiveness To International Retail Market Entry: Ijrdm 38,3
Consumer Receptiveness To International Retail Market Entry: Ijrdm 38,3
Consumer Receptiveness To International Retail Market Entry: Ijrdm 38,3
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IJRDM
38,3 Consumer receptiveness to
international retail market entry
Nicholas Alexander
160 School of Management and Business, Centre for Research in Marketing,
Aberystwyth University, Aberystwyth, UK
Received December 2008 Anne Marie Doherty
Revised August 2009
Accepted October 2009
Glamorgan Business School, University of Glamorgan, Pontypridd, UK
Jason M. Carpenter
Department of Retailing, University of South Carolina, Columbia,
South Carolina, USA, and
Marguerite Moore
College of Textiles, North Carolina State University, Raleigh,
North Carolina, USA
Abstract
Purpose – The purpose of this paper is to provide a suggested framework for improving the
understanding of consumer receptiveness to incoming international retailers. The consumer
perception of country of origin against consumer receptiveness index (CRI) is proposed as a method to
explore the receptiveness of consumers in the host market to incoming international retailers.
Design/methodology/approach – This paper reviews the international retailing literature,
highlighting the need for specific knowledge regarding consumer receptiveness to incoming
international retailers. A method is proposed to explore how consumers in the host market respond to
incoming international retail firms.
Findings – The literature review indicates that the majority of the extant work investigates the
process from the perspective of the internationalising retailer, while consumer receptiveness to the
international retailer has not been fully considered.
Research limitations/implications – This paper does not present an empirical study.
The consumer perception of country of origin against CRI is presented as a means to suggest and
guide future research in the area.
Practical implications – The paper makes a practical contribution by suggesting a method to
explore how consumers in the host country receive incoming international retailers.
Originality/value – This paper is unique because previous research has provided limited
knowledge of consumer receptiveness to international retailers.
Keywords International trade, Consumer behaviour, Retail trade, Country of origin,
Competitive strategy
Paper type Conceptual paper
Discussion
The market or country of origin literature is vast in itself; however, the market of origin
literature is remarkably silent on the issue of consumer receptiveness to international
retailers as international retailers. This raises two questions.
First, do consumers know which retailers are international? As far as this question is
concerned, a number of observations may be made. Although, there is very limited
work on this question, the international retailing literature assumes consumers have
some perception and this perception is influential. McGoldrick (1998), as part of a wider
survey of retailer images in different markets, found French consumers strongly
associated the UK retailer Marks & Spencer with the UK and consumers in the retailer’s
domestic market also strongly associated the retailer with the UK. However, in contrast,
McGoldrick (1998) found C&A’s market of origin was not clearly recognised by the
same consumers; it was clear in both France and the UK that C&A was not a domestic
retailer. Similarly, McGoldrick (1998, p. 193) remarked that “Woolworths in the United
IJRDM Kingdom tended to be regarded as British by most consumers, even while still under
38,3 U.S. ownership” (Mitton, 1987). Therefore, McGoldrick’s research suggests
international retailers may be distinguished by market of origin in three ways:
international and from a correctly identified market, international and from
an incorrectly identified market and incorrectly identified as domestic in origin.
Second, does “international” or “market of origin” matter to consumers in the retail
164 context? Again the limited but available research would suggest that this does matter.
The work of Straughan and Albers-Miller (2001), considering data from Australia,
France, South Korea and the USA, is pivotal in this regard. For them, “culture is an
important indicator of domestic store loyalty” so that “high levels of risk aversion (high
UAI) or a strong collective (low IDV) will find consumers exhibiting greater opposition
in the form of home country loyalty” (Straughan and Albers-Miller, 2001, p. 533). In the
light of their findings it is worthy to note that one market where the literature
(Bianchi and Mena, 2004; Bianchi and Arnold, 2004) has recognised domestic retailers’
ability to resist international activity is Chile, where on Hofstede’s index the market has
a high UAI score of 86 and a low IDV score of 23. However, they approach the question
from a different perspective to the one under consideration here. Zarkada-Fraser and
Fraser’s (2002) findings also support the idea that market of origin does matter in the
retail consumer context. They examined store patronage for hypothetical foreign- and
domestic-owned supermarkets between Australian and Greek-Australian women
(25-40 years with young children). They found a higher support for a supermarket if
C-O-O is Australian not American (90 per cent against 77 per cent). They found only
32 per cent of their consumers were likely to recommend a foreign store to friends
compared with 96 per cent for the Australian supermarket. They explored ethnic
background and store patronage, conceptualising migrant consumers as hostile,
independent, obligated and empathetic with each type demonstrating different
approaches to the “foreign” retailer.
Research agenda
Research such as that by McGoldrick (1998) and Straughan and Albers-Miller (2001),
would suggest that both questions are important and that consumers know to varying
degrees which retailers are international and that, in some contexts, “international”
or “market of origin” does matter to consumers in the retail context. This in itself
generates further questions and a research agenda.
Country of origin
First, it is important to understand consumers’ perceptions of international retailers
with respect to their country of origin. That is building on McGoldrick’s (1998)
identification of different levels of recognition and Straughan and Albers-Miller’s
(2001) work which justifies an indexation of different markets’ receptiveness to
international retailers, it is possible to conceptualise consumer receptiveness along the
lines shown in Figure 1.
In Figure 1, the vertical axis describes consumers’ perception of the retailer’s
country of origin:
(a) international retailer’s country of origin distinct and recognizable;
(b) international retailer’s country of origin indistinct but international status
recognizable;
Perceived
International
C-O-O retail market
entry
7 8
a
International 165
b 5 6
3 4
c
Domestic
d 1 2
Figure 1.
Consumer perception of
Culture/socio- country of origin against
Firm influences Market influences CRI
economic influences
Consumer receptiveness
In developing the consumer receptiveness index (CRI), we can look to the potential of
Fishbein and Ajzen’s (1975) theory of reasoned action (TORA) for possible guidance.
The TORA model underpins a great majority of research into variables that affect
consumer behaviour including marketing stimuli (Vaidyanathan et al., 2000), brand
and product choice (Ozsomer and Altaras, 2008; Choo et al., 2004), channel choice
(Barkhi et al., 2008), advertising (Wiley et al., 2007) and other objects or events that
affect consumers and markets (Sheppard et al., 1988). The basic structure of the TORA
model presents four major components: beliefs, attitudes, behavioural intentions and
behaviour.
IJRDM The horizontal axis in Figure 1 represents consumer receptiveness that ranges from
38,3 low to high degrees of receptiveness towards international retailers among consumers
in the host market. Consumer receptiveness is an indicator of individual or group
response. That is, in this context, the willingness of the individual or group to accept
retailers based in other markets operating in the individual or group’s domestic
market. Consumer receptiveness is expressed in terms of beliefs, attitudes, knowledge
166 and behaviour. Low levels of consumer receptiveness are reflected by negative beliefs
and attitudes, knowledge gaps and negative behaviours including avoidance and
negative word-of-mouth towards the incoming retailer. High levels of consumer
receptiveness towards the incoming retailer are reflected by positive beliefs and
attitudes, accurate knowledge and positive behaviours including approach and
positive word-of-mouth.
The literature suggests that consumer receptiveness can be influenced by factors
related to the internationalizing firm and/or its product offering as well as factors in the
host market’s business environment including cultural/socio-economic conditions and
the degree of international market exposure. Each of these influences can impact
consumer beliefs, attitudes, knowledge levels and behaviours in different manners.
Together they provide the opportunity to develop a CRI. A CRI is therefore the sum of
the influences – consumer beliefs, attitudes, knowledge and behaviours – that make
individuals or societies more or less willing to accept international operations. Thus, if
consumers display high levels of CRI then they are willing to accept international
operations and indeed, in some circumstances, may seek them out. In such
circumstances incoming retailers may wish to adopt a market position that emphasises
an international market of origin. The following sections discuss the potential influence
of these factors in terms of the proposed model of consumer receptiveness.
Influence of the retail brand and product categories. It is important to understand
how different retailer characteristics affect consumers’ perceptions. For example, the
literature (Hollander, 1970; Alexander, 1989; Moore et al., 2000; Hutchinson et al., 2007)
would suggest that luxury goods retailers are well placed to benefit from international
associations and that an association with a particular market may be beneficial in
certain international markets. On this basis, in Figure 1 luxury goods retailers would
tend to be located in category (a) or, possibly, (b). Conversely, the observational
evidence would suggest that food retailers (Sainsbury and Carrefour) are vulnerable to
international associations, especially where interest groups are able to leverage
consumer opposition. Therefore, in the examples given above, Carrefour in China was
correctly identified by its market of origin and fell into category (a). Sainsbury’s market
of origin was incorrectly identified but its international status was recognised placing
the company in category (b) as far as some consumers in the Egyptian market were
concerned. There may be characteristics, such food and non-food merchandise ranges,
that fundamentally affect consumer receptiveness.
Retailers in category (c) are retailers that are international in origin but consumers
consider them to be of domestic provenance. As noted above, McGoldrick gives
Woolworths in the UK as a classic example of such an association. Retailers that fall
into this category may either not emphasise their country of origin or actively seek to
avoid associations with the market. Therefore, consumers may equally not have any
clear reason for associating the retailer with any market other than their own
environment either through familiarity or limited engagement with that aspect of the International
retailer’s brand message. retail market
Category (d) contains those retailers that are correctly identified as domestic in
origin and are therefore easily defined. However, domestic retailers raise an intriguing entry
question. That is, there may be some retailers that are domestic in origin that
consumers perceive to have international associations. These retailers may be seen to
fall into category (b); that is, they are seen to be international and are incorrectly 167
attributed to a country of origin. For example, individual UK consumers might have
associations with the Burberry brand that suggest it originates – albeit incorrectly –
in the USA. Conversely, the name Abercrombie & Fitch might create Scottish
resonance for UK consumers, who might consequently consider the brand to be
domestic in origin. Where a language is shared, or is part of a language group, this may
be a relatively common misperception. For example, Zara is based in Spain; however
the name might suggest Italian origins to some consumers. Likewise, a retailer may
have a name that suggests international associations because it looks or sounds as if it
originates in a market that uses a particular language, whereas in fact the company’s
origins are domestic. For example, the UK niche retailer of maternity and baby goods,
Jo Jo Maman Bébé might be thought to be a retailer originating in France on the basis
of the language resonances to be found in the brand name.
Cultural and socio-economic influences. It is also important to understand how the
socio-economic characteristics of a retailer’s customers affect general cultural
receptiveness levels. This may be particularly important in understanding the
sequence of international retailer market entry rates as retailers respond to changing
receptiveness within society. It may, for example, be more appropriate for a retailer to
acquire an indigenous operation where consumer market receptiveness is low and
hence occupy position 3 in Figure 1. Here, the international retailer utilises a domestic
fascia and/or brand to avoid negative consumer reception.
Influence of international market exposure. Related to the role of socio-economic
influences and receptiveness to foreign retail entrants, it is also important to
understand how exposure to international products and international retailers affects
willingness among consumers to accept or reject international retailers. This is clearly
a theme that emerges from Straughan and Albers-Miller’s (2001) research. Such
exposure may be defined by international trade between markets, the presence and
importance of internal brands in the market or travel by consumers in international
markets.
Consumer perspective. Given the increasing significance of emerging markets to
international retailers this is likely to become an increasingly important question.
Consumers who have been exposed to international products may seek out
international fascias and brands in their home market.
Overall, a fundamental question emerges that relates to the benefits derived by
consumers from international offerings in their domestic market and the competitive
gap that exists within the market. That is, where customers are willing to embrace
international innovation, irrespective of their perceptions of the retailer as originating
from another market. This may highlight important characteristics of the competitive
environment in the host market and the retail structural characteristics of the market.
Retail perspective. In this context, retailers with particular market associations and
strong luxury brands would tend to enter the market at position 8 in Figure 1.
IJRDM However, in emerging markets, incoming retailers that appeal to a mass market, and
38,3 by inference, customers less exposed to international products, may have to be
circumspect with respect to their international associations and thereby enter the
market at position 3; a decision that would have important implications for their
choice of entry methods.
In addition, it is also important to understand how and why retailers communicate
168 market of origin associations within their marketing communications. This raises
further questions regarding brand identity and by implication other issues such as
market entry strategy and market selection. Specifically, where retailers see limited
advantage in international market associations or positive benefits in avoiding such
associations, how does that affect market selection and choice of entry mode?
Research implications
Given the issues discussed above, a first stage research agenda emerges. Empirical
testing of research hypotheses is required in order to understand the proposed
relationships indicated above and the factors most important to the development
of a CRI.
First, an understanding of levels of consumer awareness of retailers’ markets of
origin is required. That is, do consumers recognise the international market of origin of
retailers and how do the characteristics of the retailer affect recognition levels? Second,
an integrated understanding of consumer perceptions of retailer country of origin are
also required in order to assess the relationship between retailer recognition and home
market evaluation. Third, consumer beliefs, attitudes, knowledge and behaviour need
to be considered with reference to the first and second points noted here. Fourth,
cultural factors need to be considered in order to ascertain the manner in which culture
may or may not fundamentally underpin and hence structure consumer response.
These four fundamental research considerations provide a focus for research
activity. Initially, using existing and adapted constructs, consumer awareness and
perceptions need to be considered. On the basis of the initial research hypotheses, and
the testing of those hypotheses, refinement of the constructs employed will be required
and further testing undertaken. Exploring consumer perceptions of retailers emanating
from a range of countries, as well as the collection of data from consumers based in a
range of countries, would provide rich data sets from which to advance current
understanding.
Conclusion
While there is reference in some of the international retailing literature to aspects of
consumer receptiveness, it is remarkably limited and in many cases reliant on media
coverage and observation rather than academic research findings. This paper has
sought to begin the process of redressing the balance in the literature in order to better
understand the way consumer markets embrace, or ultimately reject, international
retail operations. In this there is a research agenda that has remained an under
explored and elusive question that is implicit within research on international retail
activity since Hollander’s (1970) exploration of the fundamental characteristics of
international retailing.
Given the current state of the literature, the interaction between country of origin
perception and consumer receptiveness of the international retailer provides a starting
point for dissecting the process of consumer acceptance/rejection of the incoming International
retailer on the basis of the company’s home market. The conceptual model suggests retail market
that characteristics related to the internationalizing retailer and its products, as well as
socio-economic and market level factors can impact consumer receptiveness both along entry
with and above and beyond country of origin perceptions. The suggested model is
grounded in several different streams of literature and is intended to provide an
academic approach to understanding the concept of consumer receptiveness within the 169
context of country of origin. Owing to the developmental nature of the conceptual
model, it is entirely possible that additional factors influence consumer responsiveness
beyond country of origin and the macro and micro environment issues set forth in the
paper. In order to further approach these gaps, additional conceptual work and
empirical work is necessary.
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