The Asian Journal of Business Research Vol 3 No. 1

AJBR ISSN 1178-8933

Volume 3 Number 1 2013

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AJBR ISSN 1178-­8933

Volume 3 Number 1 2013

Asian

Journal of Business Research

Copyright Š 2013 Asia Business Research Corporation Limited

All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopy, recording or any information storage and retrieval system, without permission in writing from the publisher.

The work published is the sole responsibility of the author/s.

Professor Kim-Shyan Fam, Victoria University of Wellington,

Founding Editor

:

Editor

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Professor Zhilin Yang, City University of Hong Kong,

Managing Editor

:

Professor Ernest Cyril de Run, Universiti Malaysia Sarawak,

New Zealand Hong Kong

Malaysia

Published by Asia Business Research Corporation (ABRC) Limited PO Box 5257, Lambton Quay, Wellington 6145, New Zealand

Volume 3 Number 1, 2013 ISSN 1178-8933 Â

First published in 2011 Printed in Malaysia

Editorial Board

Founding Editor Professor Kim-Shyan Fam Victoria University of Wellington, New Zealand Editor Professor Zhilin Yang City University of Hong Kong, Hong Kong Managing Editor Professor Ernest Cyril de Run Universiti Malaysia Sarawak, Malaysia

Editorial Advisory Board Professor Russell Belk York University, Canada

Professor Susan Hart University of Strathclyde, UK

Professor John Dawson University of Stirling, UK

Professor Leslie de Chernatony University of Birmingham, UK

Professor Michael Hyman New Mexico State University, USA

Professor Phil Harris University of Chester, UK

Professor Lรกszlรณ Jรณzsa Szechenyi Istvan University, Hungary

Professor Zuohao Hu Tsinghua University, China

Professor Jรณzsef Berรกcs Corvinus University of Budapest, Hungary

Professor Kara Chan Hong Kong Baptist University, Hong Kong

Professor Samsinar Md. Sidin Universiti Putra Malaysia, Malaysia

Professor Datuk Md Zabid Abdul Rashid Universiti Tun Abdul Razak, Malaysia

Editorial Review Board Professor Ashish Sinha University of New South Wales, Australia

Dr. Mohd Faisal Syam b Abdol Hazis Universiti Malaysia Sarawak, Malaysia

Assistant Professor Amy Na Wen City University of Hong Kong, Hong Kong

Dr Mark Davies Herriot-Watt University, Scotland

Dr David Waller University of Technology Sydney, Australia

Associate Professor Dr Azizah Omar Universiti Sains Malaysia, Malaysia

Dr. Muhammad Mohsin Butt Nottingham University Malaysia Campus

Dr Fang Liu University of Western Australia, Australia

Dr Song Yang University of South Australia, Australia

Professor Sanjay K. Jain University of Delhi, India

Associate Professor Joanna Scott-Kennel Waikato University, New Zealand

Associate Professor Palanisamy Ganesan VIT University, India

Professor Kenneth Alan Grossberg Waseda University, Japan

Dr. Lucy Sebli Seidelson Universiti Malaysia Sarawak, Malaysia

Professor Yong Ki Lee Sejong University, Korea

Professor Badar Iqbal Aligarh Muslim University, India

Dr Pedro Brito Universidade do Porto, Portugal

Professor Ernest Cyril de Run Universiti Malaysia Sarawak, Malaysia

Professor José Luis Vázquez-Burguete Universidad de León, Spain

Professor HS Cheema CEO & Dean, IFEEL, India

Assistant Professor Andreas Petrou Cyprus International Institute of Management, Cyprus

Dr. Jamal Adbul Nasir Universiti Malaysia Sarawak, Malaysia

Associate Professor Tho Nguyen University of Economics, HCM City, Vietnam

Associate Professor Dr Voon Boo Ho Universiti Teknologi MARA Sarawak, Malaysia

Professor Syed Anwar Hamdan Bin Mohammed University, UAE

Associate Professor Dr. Ricardo Baba Universiti Malaysia Sarawak, Malaysia

Dr Paurav Shukla University of Brighton, UK

Professor Yang Xue North China University of Water Conservancy and Electric Power, China

Assistant Professor Fiona Sussan George Mason University, USA

Professor Wang Yangron North China University of Water Conservancy and Electric Power, China

Asian

Journal of Business Research Volume 3

Number 1

2013

Editorial Kim-Shyan Fam, Zhilin Yang and Ernest Cyril de Run

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Consumer Ethnocentrism and Its Antecedents: An Exploratory Study of Consumers in India Sanjay K. Jain, Reetika Jain

1

Interdependency in the Relationship of Project Partners: How Can It Work?

Zoltán Veres, József Hack-Handa

19

Factors Defining Shopping Experience: An Analytical Study of Dubai Harvinder Singh, Sanjeev Prashar

36

Impact of Customer Orientation, Service Orientation, Service Quality, Service Encounter Quality and Perceived Value towards Customers Satisfaction and Behavioural Intention: In Retail Context Lau Wee Ming, Hosea Lim Vui Chung, Diana Atton ak Paul

54

Marketing Barriers and Export Performance: A Strategy Categorization Approach in the Vietnamese Seafood Industry Ho Huy Tuu, Svein Ottar Olsen

66

Negative Political Advertising: It’s Impact on Voters Ernest Cyril de Run, Jee Teck Weng, Lau Wee Ming

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Television Product Placement Strategy in Thailand and the UK Amy Rungpaka Hackley, Chris Hackley

97

Editorial Editorial

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The Editorial Board Members of the Marketing in Asia Group (MAG) wishes all its members a Happy and Prosperous Chinese New Year and may the Year of the Snake brings good luck, fortune, prosperity and good health to all of you.

AJBR is now in its third year of publication. The journal made its debut in 2011 and has continued to publish research work from scholars within Asia and elsewhere relating to business issues in Asia and Asia with the rest of the world. This continuation of publication could not have happened without the support of MAG’s members, interest from worldwide scholars, the reviewers, and of course, scholars who have submitted their papers to be considered for publication in AJBR. We appreciate this and look forward to your continuous support in this Year of the Snake and in coming years.

The Marketing in Asia Group (MAG Scholar) will host the third MAG Scholar Global Business, Marketing and Tourism Conference in Dubai this year. Selected papers from the conference will be considered for possible publication in AJBR. We look forward to receiving high-quality research based papers from all of you.

In this edition we have several high quality papers from various Asian nations. Sanjay K. Jain and Reetika Jain examined consumer ethnocentrism antecedents in India. They found their respondents to be only moderately ethnocentric, and yet significant differences are discernible in their ethnocentric tendency across socio-psychological and demographic characteristics.

From India we travel to Budapest to review the interdependency in relationships of project partners by Zoltán Veres and József Hack-Handa. Harvinder Singh and Sanjeev Prashar looked at the shopping experience in Dubai. They found that mall shopping experience in Dubai as a blend of five factors; ambience, physical infrastructure, marketing focus, convenience, and safety and security. Shoppers assigned different weights to these factors.

Lau Wee Ming, Hosea Lim Vui Chung, and Diana Atton ak Paul looked into customer orientation, service orientation, service quality, service encounter quality and perceived value in the retail context in Malaysia. They found that these variables have a positive relationship with customer satisfaction and behaviorial intention.

Next, we travel to Vietnam to look at the marketing barriers and export performance in the Vietnamese seafood industry by Ho Huy Tuu and Svein Ottar Olsen. They found that barriers of product, price, distribution, and logistics have a significant negative impact on export performance. The next paper examined negative political advertising and the findings showed that negative advertising did not change voters’ choice but that advertisement believability had an impact on action. This research was carried out in Batang Ai, Sarawak, Malaysia by Ernest Cyril de Run, Jee Teck Weng, and Lau Wee Ming. The last paper looks at Television Product Placement Strategy in Thailand and the UK. This paper by Amy Rungpaka Hackley and Chris Hackley involved secondary research and depth interviews that suggest that there are important differences arising from the very different regulatory, media and consumer environments.

We do hope that you will enjoy reading the journal and benefit from the knowledge shared.

Our gratitude and thanks to all our contributors and reviewers without whom this journal will never be possible. The editorial team at the Asian Journal of Business Research encourages academic and industry-based researchers to submit their research papers and case studies to this international double blind peer-reviewed journal for review and possible publication.

Happy Chinese New Year!

Kim-Shyan Fam Zhilin Yang Ernest Cyril de Run ii

Asian Journal of Business Research

ISSN1178-8933

Volume 3

Number 1

2013

Consumer Ethnocentrism and Its Antecedents: An Exploratory Study of Consumers in India Sanjay K. Jain University of Delhi Reetika Jain University of Delhi

Abstract With dismantling of trade barriers as part of liberalisation and globalisation processes initiated during the last two decades, it is no longer a daunting task for the foreign firms to make an entry into international markets. However, what still continues to remain a major challenge is gaining consumer acceptance of foreign products.

International marketing literature posits consumer ethnocentrism as a key factor affecting adversely consumer evaluation and purchase of foreign products. Present study is an attempt to investigate consumer ethnocentrism and its antecedents in the Indian context. Though the surveyed consumers in overall terms are found to be only moderately ethnocentric, significant differences are discernible in their ethnocentric tendency across socio-psychological and demographic characteristics. Based on study findings, the paper spells out strategy implications to the international marketers in gaining acceptance of their products among different consumer segments and provides directions for future researches.

Keywords: International Marketing, Antecedents, Indian Market

Consumer

Ethnocentrism,

CETSCALE,

Introduction Accelerated pace of liberalisation and globalisation witnessed during the last two decades have paved way to opening up of markets all over the world. With dismantling of tariff and non-tariff trade barriers, firms have started increasingly evincing interest in foreign markets. Especially the newly emerging markets have surfaced as a vanguard of multinational activities. A number of multinational corporations have already set up their production and marketing bases in these economies and many others have plans on the anvil for making forays into these markets.

Since 1991 when the process of liberalisation and globalisation was initiated in the country, the Indian market has undergone a substantial metamorphosis. It is fast emerging as a potential market for a variety of consumer and industrial products (Jain, 1 1

2011). Having attained a growth rate of over 9 per cent during last couple of years, India today enjoys the privileged position of being one of the fastest growing nations in the world. It ranks as the third largest nation in terms of purchasing power parity based GDP and eleventh largest country in terms of nominal GDP (World Bank, 2010). India also holds the distinct position of having the second fastest growing population of high net worth individuals in the Asia-Pacific region (IBEF, 2008).

According to a study by Mckinsey Global Institute (MGI), India is likely to emerge as the fifth largest consumer market in the world by 2025 (IBEF, 2008).

Rapid growth of Indian market has drawn considerable attention of multinational corporations. While many have already made an entry, many others have plans afoot to soon enter the Indian market. As per IBEF’s (2005) estimate, more than 200 of the top 500 multinational firms have operations in India. While the market has seen entry of a number of foreign brands, there has also been a deluge of large number of domestically manufactured products on the retail shelves (Jain, 2011). Competition in the market has hot up considerably and foreign products today face a tough challenge gaining consumer acceptance. Too high a craze for the foreign products that existed in the country till eighties has waned. Even the early nineties (i.e., the period just after the commencement of liberalisation era in the country), Jain and Sindhwani (1994) found Indian consumers not having lofty obsession with foreign products.

In the present day competitive markets in India and elsewhere, international marketers need to keep in mind that focus on quality, price and other objective considerations alone would not be able to guarantee success in gaining consumer acceptance of their products. They need to understand consumer behaviour at the affective front too.

Substantial body of international marketing literature has come up to establish that consumers in their product evaluations and purchase decisions are guided not only by objective factors, but also by patriotic and nationalistic feelings that cast a sort of moral obligation on the consumers to hold their own country’s products in high esteem, and patronise domestic industry and workers by buying domestic rather than foreign products (Han, 1988).

Consumer ethnocentrism or consumer ethnocentric tendency (CET), as it has come to be known, refers to the appropriateness and morality of purchasing foreign goods and maintaining loyalty to domestically produced goods (Shimp and Sharma, 1987).

Several past studies have found consumer ethnocentrism as an important determinant of consumers’ preference and purchase of domestic vis a vis foreign products (Shimp and Sharma, 1987; Sharma et al., 1995; Rawwas et al., 1996; Watson and Wright, 2000; Suh and Kwon, 2002; Balabanis and Diamantopoulos, 2004). Because of patriotic and sympathetic feelings towards their fellow men and artefacts, consumers with ethnocentrism tend to emphasise positive aspects of their own country’s products and discount virtues of foreign products. Less ethnocentric consumers, on the other hand, tend to rely more on objective product attributes and, hence, do not tend to be inherently biased against imported products.

The literature, however, suggests that all the consumers do not tend to be equally ethnocentric. A number of socio-psychological factor (such as patriotism, conservatism, collectivism, cultural openness, animosity and world-mindedness) and demographic factors (such as gender, age, education and income) act as antecedents to consumer ethnocentrism (Shankarmahesh, 2006; Jain and Jain, 2010). Knowledge of 2 2

ethnocentric tendency present among consumers and variations therein across different types of consumers can be helpful to the international marketers in identifying market segments relevant to their products and evolving marketing strategies as appropriate for the selected segments.

Though a number of studies have been undertaken in both the developed and developing countries to investigate incidence of consumer ethnocentrism and its antecedents, it is unfortunate that very little research work has been done in Indian context. Studies undertaken in the country, moreover, suffer from the drawback that either the CET-antecedent relationship has not been examined (e.g., Jain and Sindhwani, 1994) or else only a select demographic antecedents have been investigated (e.g., Bawa, 2004). The present study is an attempt to fill the literature gap. More specifically, the paper aims at analysing ethnocentric tendency present among the Indian consumers and examining influence of various socio-psychological and demographic variables that in the international marketing literature have been posited as antecedents of consumer ethnocentrism.

Consumer Ethnocentrism and Its Operationalisation Consumer ethnocentrism is a construct that has been derived from the basic psychosociological term ethnocentrism. Ethnocentrism refers to a tendency among persons to differentiate amongst various groups and look at one’s own group as a focal group (e.g., Sharma et al., 1995; Jain and Jain, 2010). More specifically, ethnocentric persons view economic, political and social events from the perspective of their own group, consider their own way of life as superior to those of all other groups, believe other groups as being inferior, weak and dishonest, and suspect and disdain members and artefacts of other groups (Sharma et al., 1995). Such an attitude when exhibited by persons in the context of consumption related activities is referred to as consumer ethnocentrism. Shimp and Sharma (1987) have defined consumer ethnocentrism as a “belief held by consumer about the appropriateness, indeed morality of purchasing foreign-made products”. Consumers high in ethnocentrism consider purchase of foreign products as an unpatriotic and amoral act because it hurts the domestic economy and causes loss of jobs to fellow workers (Shimp and Sharma, 1987; Klein and Ettenson, 1999). Non-ethnocentric consumers, on the other hand, do not hold such a bias. They rather feel that foreign products be “evaluated on their own merit (such as price, quality and other desired features) without consideration for where they are made” (Shimp and Sharma, 1987).

Until mid-eighties, no specific scale existed for measuring ethnocentric sentiments as relevant to the domain of consumer behaviour and marketing phenomena (e.g., Sharma and Shimp, 1987, Luque-Martinez et al. 2000). A few instruments that existed at that time were too generic to be of use to measure ethnocentric tendency prevalent among consumers. Shimp and Sharma (1987) made the pioneering attempt by developing a multi-item scale for measuring consumer ethnocentric tendency. Termed as CETSCALE, it is a 17-item scale which has been widely used in several past studies across countries (e.g., United States: Shimp and Sharma, 1987; Korea: Sharma et al., 1995; Austria: Rawwas et al., 1996; Turkey and Czech: Balabanis et al., 2001; United Kingdom: Bannister and Saunders, 1978; Japan, Nishina, 1990; China: Klein et al., 1998; United States, France and Mexico, Clarke et al., 2000; Malta: Caruana and Magni, 1996; Poland and Russia, Good and Huddleston, 1995; Durvasula et al., 3 3

1997; Canada: Bruning, 1997; Singapore: Piron, 2002; Australia: Zarkada-fraser and Fraser, 2002, Hong Kong: Yu and Albaum, 2002; New Zealand: Watson and Wright, 2000; India: Bawa, 2004). The scale in its original as well as shortened form has been psychometrically found as a reliable and valid measure of consumer ethnocentrism (e.g., Shimp and Sharma, 1987; Netemeyer and Durvasula, 1991; Hersche, 1994; Sharma et al., 1995; Good and Huddleston, 1995; Durvasula et al., 1997; Hult and Keillor, 1999; Klein et al., 1998; Klein and Ettenson, 1999; Watson and Wright, 2000; Balabanis et al., 2001; Suh and Kwon, 2002; Kaynak and Kara, 2002; Zarkada-Fraser and Fraser, 2002; Steenkamp et al., 2003; Klein et al., 2006; Vida and Obadia, 2008).

Antecedents of Consumer Ethnocentrism and Research Hypotheses All the consumers are not equally ethnocentric. Consumers differ in their ethnocentrism due to a variety of socio-psychological and demographic factors. Major socio-psychological and demographic antecedents investigated empirically in the past studies and their effect on consumer ethnocentrism are listed schematically in Figure I and discussed in the succeeding paragraphs.

Socio-psychological factors: - Patriotism (+) - Conservatism (+) - Collectivism (+) - Salience (+) - Animosity (+) - Ethnic pride (+) - Openness to foreign culture (-) - World-mindedness (-)

Consumer ethnocentrism

Demographic factors - Gender (+) - Age (+) - Education (-) - Income (-) - Foreign travel (-)

Figure I: Antecedents and Their Effects on Consumer Ethnocentrism: A Framework Source: Adapted from Shankarmahesh (2006), Jain and Jain (2010) Socio-Psychological Antecedents Patriotism: Patriotism is defined as “strong feelings of attachment and loyalty to one’s own country, but without corresponding hostility towards other nations” (Balabanis et al., 2001). Because of love for and devotion to their country, patriotic persons tend to favour their own country’s artefacts and products. Past studies do point to a positive correlation between patriotism and consumer ethnocentrism (e.g., Han, 1988; Sharma et al., 1995; Klein and Ettenson, 1999). Han (1988), for instance, found consumer choice of products to be depending more on patriotism (an affective factor) than on cognitive factors such as quality perception and product serviceability. Based on their empirical findings, Good and Huddleston (1995, p.45) observed that if a country has a history of being an oppressed, occupied and conquered nation; then its people would 4 4

tend to have stronger patriotic emotions and preferences for the domestic products.

According to Balabanis et al. (2001), though patriotism exerts impact on consumer ethnocentric tendencies, magnitude of its influence differs across cultures. Hence, it is hypothesised that: H1: A positive relationship exists between patriotism and consumer ethnocentric tendency.

Conservatism: It is a tendency among people to follow and cherish existing patterns, traditions and social institutions that have survived the test of time. Conservative people show a great resistance to change, and a strong feeling of conservatism gets manifested in forms such as religious intolerance, adherence to strict rules, punishment and anti-hedonic outlook (Sharma et al., 1995; Shankarmahesh, 2006).

Past studies show a positive correlation between conservatism and negative attitudes towards foreign products (Anderson and Cunningham, 1972; Wang, 1978; Javalgi and Khare, 2005). In view of a high correlation observed between patriotism and conservatism, Sharma et al. (1995) combined the two variables into one variable and found this newly formed variable to be having a significantly high positive correlation with consumer ethnocentrism. In view of the above discussion, the hypotheses taken up for empirical testing in the study is: H2: A positive relationship exists between conservatism and consumer ethnocentric tendency.

Collectivism: A collectivist is a person who subordinates his/her personal goals to the goals of group he/she belongs to and considers effects of his/her action on the larger group or society. An individualist, on the other hand, tends to be more open-minded and sees society as a means to achieve his/her personal goals (Sharma et al., 1995).

Since collectivists, like the ethnocentric persons, consider gross effect of their behaviour on the society and feel themselves to be responsible for other’s social conditions, they tend to depict a higher degree of ethnocentric tendency in their consumption behaviour (Sharma et al, 1995; Shankarmahesh, 2006). Studies by Nishina (1990) and Sharma et al. (1995) provide empirical support in favour of a positive relationship between collectivism and consumer ethnocentrism.

H3: A positive relationship exists between collectivism and consumer ethnocentric tendency.

Salience: In the context of consumer ethnocentrism, salience is defined as perceived threat from foreign competition/ imports to the domestic industry and fellow workers.

Perceived threat increases the sense of morality among people of a nation to support domestic industries and workers, thus giving rise to a higher level of ethnocentrism (Rosenblatt, 1964). Olsen et al. (1993) found a positive relationship between salience and consumer ethnocentric tendency. Sharma et al. (1995), on the other hand, investigated perceived threat as a moderating variable and found it to be strongly and positively moderating the relationship between consumer ethnocentricity and attitude towards imports. Viewing salience as a direct antecedent of consumer ethnocentric tendency, it is postulated that:

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H4: A positive relationship exists between salience and consumer ethnocentric tendency.

Animosity: According to Klein et al. (1998), animosity is the “remnants of antipathy related to previous or ongoing military, political or economic events”. Such a feeling can have potentially an adverse effect on consumer purchase of foreign products.

Though the effect of animosity on consumer choice of foreign products is similar to that of consumer ethnocentrism, it differs from ethnocentrism in the sense that while the feeling of animosity is country specific, ethnocentric tendency is not country specific and is characterised by negative sentiments among the consumers in general against the imported products (Klein, 2002; Shankarmahesh, 2006). In view of a positive relationship observed in past studies between animosity and consumer ethnocentrism (Nijssen and Douglas, 2004), it is hypothesised that: H5: A positive relationship exists between animosity and consumer ethnocentric tendency.

Ethnic pride: In countries with multi-cultural groups, people belonging to different cultural groups have been posited to be differing in their ethnocentric behaviour (Ouellet, 2007). Because of feelings of solidarity and cohesiveness with ethnic ingroup, persons with high ethnic feeling tend to be more ethnocentric in their consumption pattern. Empirical evidence in respect of ethnic groups, however, is inconclusive. While Piron (2002) and Klein and Ettenson (1999) have found no significant relationship of race to CET, study by Zarkada-Fraser and Fraser (2002) reports people belonging to majority ethnic groups to be having greater ethnocentric proclivity. In order to investigate the impact of ethnicity on consumer ethnocentrism, it is proposed that: H6: A positive relationship exists between ethnic pride and consumer ethnocentric tendency.

Openness to foreign culture: Cultural openness is defined as willingness of people belonging to particular culture to interact with people from other culture(s) and experience their values and artefacts (Sharma et al., 1995; Shankarmahesh, 2006).

Cultural openness can arise as a result of overseas travels and/or interactions with foreigners in one’s own country. Such exposures and interactions broaden one’s mind and tend to reduce prejudice against people and artefacts from other cultures. A few past empirical studies point to a negative relationship between cultural openness and consumer ethnocentrism (e.g., Howard, 1989; Sharma et al., 1995). It is, therefore, proposed that: H7: A negative relationship exists between cultural openness and consumer ethnocentric tendency.

World-mindedness: World-mindedness refers to a state of mind wherein humankind is used as a primary reference group as opposed to one’s own nation (Rawwas et al, 1996; Shankarmahesh, 2006). World-mindedness is characterized by a number of features such as consumers’ interest in and knowledge of international affairs, reverence for “world spirit” and consensus development (Gomberg, 1994; Rawwas et al., 1996). World-mindedness is closer to the philosophy of geocentrism, i.e., looking 6 6

at the world as a global village, but it differs from the term ‘cultural openness’ in the sense that it possible for a person to be world-minded without being culturally open at the same time (Shankarmahesh, 2006). Empirical support is available to demonstrate that world-minded people are less ethnocentric (Rawwas et al., 1996) and not biased against purchase of foreign products (Crawford and Lamb, 1982). The study by Balabanis et al. (2001), however, did not find internationalism (a construct closely related to world-mindedness) to be relating in any significant way to consumer ethnocentrism. In view of dominant thinking that world-minded persons tend to be less ethnocentric, it is proposed that: H8: A negative relationship exists between world-mindedness and consumer ethnocentric tendency.

Demographic Antecedents Gender: Past studies report women being more ethnocentric than men (Bruning, 1997; Sharma et al., 1995; Kucukemiroglu, 1999), probably due to the reason that females are more caring, conservative and patriotic and feel more concerned about the impact of their actions on others, preserving social harmony and maintaining group cohesiveness (Sharma et al., 1995; Jain and Kaur, 2006, p.112). It is, therefore, hypothesised that: H9: Women are more ethnocentric than men.

Age: In general, elderly persons tend to be more patriotic and possess greater national pride (Klein and Ettenson, 1999). The younger people, on the other hand, tend to be more cosmopolitan and modern in their outlook, and do not possess that high feeling of national pride and attachment to their own country’s products as the older people do (Sharma et al., 1995; Shankarmahesh, 2006). Majority of past studies do lend support to the theoretical proposition that age is positively related to consumer ethnocentrism (Schooler, 1971; Klein and Ettenson 1999; Caruana 1996).

H10: A positive relationship exists between age and consumer ethnocentric tendency.

Education: Education widens mental horizons of people and brings them out of shallow confines of their thinking and living. A recurring theme of findings of past studies is that educated people are less conservative and less ethnic in their prejudice against artefacts and members of out-group (Sharma et al., 1995), and they are also less averse to imports (Klein and Ettenson 1999; Caruana 1996; Ray 1990).

H11: A negative relationship exists between level of education and consumer ethnocentric tendency.

Income: Most research studies have found income as a factor negatively affecting consumer ethnocentrism (Sharma et al., 1995; Bruning, 1997). Because of greater incidence of foreign travel, interactions with people from other cultures and exposure to foreign media; people with higher income in general tend to be relatively less ethnocentric (Sharma et al., 1995).

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H12: A negative relationship exists between income level and consumer ethnocentric tendency.

Frequency of overseas travel: It is expected that persons travelling abroad frequently are likely to be more liberal and outward, and, hence, less ethnocentric. No doubt an important antecedent, the influence of this variable on consumer ethnocentrism has not been investigated directly in the past studies (Jain and Jain, 2010). The present study, therefore, proposes that: H13: People with foreign travel experience are less ethnocentric.

Data Collection Present study is based on primary data collected through a survey of consumers in India. Though stratified random sampling would have been methodologically a better choice, quota sampling method was used in the study because of lack of complete and up-to-date sampling list of the target population. In view of exploratory nature of the study, the survey was confined to 400 consumers living in Delhi and the national capital region (NCR). Delhi is a metropolitan city and people living here hail from different geographic regions of the country and belongs to various socio-cultural groups, thus sufficiently representing country’s urban population.

The respondents were contacted personally (face to face) and administered the questionnaire. In case the respondents expressed inability to fill up the questionnaire completely at the time of contact, they were allowed to fill it up later on and return it back to the researchers. A total of 400 questionnaires were distributed, but only 320 were received back. Eighty respondents did not return the questionnaire even after repeated follow ups. Of a total of 320 questionnaires received back, only 304 were found usable in the study.

Table I provides a demographic profile the surveyed respondents. Almost an equal number of male and female respondents are present in the sample. In terms of age and education, the sample is found skewed towards younger (more than 80 per cent) and more educated (more than 95 per cent) people. Income-wise, sample is comprised of respondents almost uniformly from various strata.

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Table I: Demographic Profile of Respondents (n=304) Characteristics Percentage of respondents Gender Male 51.6 Female 48.4 15-19 44.9 Age (years) 20-29 37.3 30-39 5.0 40-49 8.6 50-59 3.0 60 & above 1.3 Education Secondary 4.7 Senior Secondary 35.7 Graduate 39.3 Post-graduate 11.0 Professional qualification 9.3 Monthly family income Less than Rs. 10,000 7.0 Rs. 10,000 - Rs. 20,000 15.0 Rs. 20,001 - Rs. 30,000 21.6 Rs. 30,001. - Rs. 50,000 29.2 Rs. 50,000 & above 27.2 Measurements A ‘structured and non-disguised’ questionnaire was used for collecting the necessary information from the respondents. The information regarding various sociopsychological variables was gathered through multi-item scales employed in the past studies. A brief discussion of the scales used in the study is as follows.

Consumer ethnocentrism has been measured through a shortened version of the 17item CETSCALE developed by Shimp and Sharma (1987). Rawwas et al.’s (1996) six-item scale has been employed for assessing respondents’ patriotism. During the scale purification stage, however, two items were dropped due to their poor item-tototal correlations.

Conservatism and collectivism constructs have been operationalised through five and eight items scales adapted respectively from the work of Sharma et al. (1995). Three items from the collectivism scale had to be dropped during the scale purification stage. Salience, referring to a moral obligation on consumers to buy domestic products for avoiding threat to domestic workers, is measured through a two-item scale adapted from a study by Olsen et al. (1993). Seven items from a study by Klein et al. (1998) were adapted for measuring animosity prevalent amongst the Indians against the Chinese people and their products since the time of Indo-Sino war.

The antecedent ‘ethnic pride’ in the present study has been investigated through seven items adapted from study by Ouellet (2007). Since the respondents in the present study were found having difficulty in understanding the term ‘ethnic’ and were rather interpreting it as referring to their culture based identity groups, the adjective ‘ethnic’ was replaced by the word ‘cultural’ in the scale items. Finally, the variable ‘openness 9 9

to foreign culture’ has been operationalised through seven statements adapted from the work of Sharma et al. (1995).

A total of five demographic antecedents, viz., gender, age, education, income and foreign travel, have been used in the study. Multiple choice questions were employed for soliciting the information from the respondents.

Draft questionnaire was pre-tested with select consumers. Based on their comments and suggestions, the questionnaire was modified in terms of its language and context.

The modified questionnaire was once again pre-tested on another sample of 20 respondents and retained (with minor modifications) for use in the final survey.

Consumer responses to all the multi-item scales have been obtained on a 5-point Likert scale, ranging from “1 = Strongly disagree’ to ‘5 = Strongly agree). Responses to the negative statements were reverse coded.

Reliability of various scales used in the study has been assessed through Cronbach alpha (α) coefficient (see Table II). Baring the case of ‘patriotism’ and ‘collectivism’ scales that have alpha values of 0.59 and 0.54 respectively, all other multi-item scales have reliability coefficients equal to or above 0.60 value, thus meeting the minimum acceptable criteria of 0.60 reliability level prescribed for exploratory studies (Nunnally, 1978).

Table II: Measurement Instrument: Reliability Analysis Scale No. of items Cronbach alpha (α) Consumer ethnocentrism (CET) 9 0.83 Patriotism 4 0.59 Conservatism 5 0.60 Collectivism 5 0.54 Salience 2 0.62 Animosity 7 0.82 Ethnic pride 4 0.73 Openness to foreign culture 7 0.83 World-mindedness 4 0.60

Results and Analysis Consumer Ethnocentrism: Mean Score Theoretically, the shortened 9-item version of the 17-item CETSCALE is expected to have mean scores in the range of 9 to 45. The computed mean score of 26.03 in the present study is only slightly lower than the theoretically expected mean score of 27, thus implying an average degree of ethnocentrism prevalent among the surveyed consumers. But a standard deviation of 6.16 and individual respondents having means scores in the range of 9.0 to 44.0 imply that consumers are not uniformly ethnocentric. Role of various antecedents as contributory factors to these variations is examined next.

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Table III: Mean Consumer Ethnocentrism Score1, 2 Computed score S.D. Mean Minimum Maximum CET - 9 26.03 9.00 44.00 6.16 Notes: 1. A reduced (9-item) version of 17-item CETSCALE as developed by Sharma andShimp (1987) was used for computing consumer ethnocentrism.

2. Consumer responses to each of the scale item were obtained on a 5-point Likert scale, ranging from 1=strongly disagree to 5=strongly agree.

Consumer Ethnocentrism and Socio-psychological Antecedents With a view to examine covariation between consumer ethnocentrism and various socio-psychological antecedents, Karl Pearson’s coefficients of correlations were computed. The results are presented in Table IV. Excepting variables ethnic pride and world-mindedness, the rest of six out of eight socio-psychological variables bear significant relationship with consumer ethnocentrism, and in the hypothesised directions. Salience is the antecedent that is most strongly correlating with consumer ethnocentrism (r = 0.61; p ≤ 0.01), followed by patriotism (r = 0.34; p ≤ 0.01), animosity (r = 0.31; p ≤ 0.01), conservatism (r = 0.23; p ≤ 0.01), openness to foreign culture (r = -0.19; p ≤ 0.01), and collectivism (r = 0.18; p ≤ 0.01), and in that order.

Significant correlations of consumer ethnocentrism with patriotism, conservatism, collectivism, salience, animosity and openness to culture in the hypothesised directions lend support to hypotheses H1 to H5 and H7. Ethnic pride and world mindedness are the two variables which do not bear significant relationship with consumer ethnocentrism, thus leading to rejection of hypotheses H6 as well as H8.

Table IV: Consumer Ethnocentrism and Socio-Psychological Antecedents: Correlation Coefficients Correlation p-value Variables coefficient (one tail test) Patriotism 0.34 0.00* Conservatism 0.23 0.00* Collectivism 0.18 0.00* Salience 0.61 0.00* Animosity 0.31 0.00* Ethnic pride 0.03 0.33 Openness to foreign culture - 0.19 0.00* World-mindedness - 0.06 0.19 Note: * p ≤ 0.01 Consumer Ethnocentrism and Demographic Antecedents International marketing literature posits consumers to be differing in their ethnocentrism across demographics. ANOVA analysis was performed to ascertain whether consumers differ in their ethnocentrism across five demographic characteristics (see Table V). Age is the lone demographic variable that emerges as a significant covariate of consumer ethnocentrism (F-value = 3.96; p ≤ 0.01), with older people being more ethnocentric than younger persons. The results thus provide 11 11

support to only one hypothesis, i.e., H10. Lack of significant relationship of consumer ethnocentrism with rest of four demographic variables (viz., gender, education, monthly income and foreign travel) imply absence of support in favour of the hypotheses H9, H11, H12, and H13.

Table V: Consumer Ethnocentrism and Demographic Antecedents: ANAOVA Results Demographic characteristics Mean F-value p-value Gender Male 26.55 Female 25.52 Total 26.03 1.83 0.18 Age (years) 15-19 25.17 20-29 26.08 30-39 23.92 40-49 29.29 50 & above 30.09 Total 26.04 3.96 0.00* Secondary 26.43 Education Senior Secondary 26.12 Graduate 25.29 Post-graduate 26.93 Professional qualification 27.17 Total 26.00 0.74 0.56 Monthly family income Less than Rs. 10,000 28.24 Rs. 10,000 - Rs. 20,000 26.97 Rs. 20,001 - Rs. 30,000 26.36 Rs. 30,001. - Rs. 50,000 24.72 Rs. 50,000 & above 25.82 Total 25.97 1.66 0.16 Foreign travel Never 26.16 Once 26.28 2-4 times 24.87 5-10 times 28.33 Often 25.83 Total 26.06 5.18 0.72 Note: * p ≤ 0.01 Multiple Regression Analysis A multiple regression analysis was performed in order to assess relative importance of various antecedents examined in juxtaposition. Consumer ethnocentrism was regressed on seven antecedents (six socio-psychological factors and one demographic factor) that were earlier in the bivariate analyses were found significantly related to consumer ethnocentrism. The results are presented in Table VI. Taken together, seven independent variables can be seen to be accounting for 42.0 per cent of variance in consumer ethnocentrism (F = 20.99, p ≤ 0.00). Of the six sociopsychological variables that were earlier found significant (see Table IV), only four variables are now found significantly related to consumer ethnocentrism.

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Conservatism and collectivism do not emerge as significant explanatory variables.

Amongst the demographic variables, age continues to remain as a significant antecedent. In terms of relative importance, salience is the key determinant (β = 0.44; p ≤ 0.01), followed by animosity (β = 0.15; p ≤ 0.01), age (β = 0.13; p ≤ 0.05), patriotism (β = 0.12; p ≤ 0.10), and openness to foreign culture (β = -0.10; p ≤ 0.10), and in that order.

Table VI: Consumer Ethnocentrism and Antecedents: Regression Results b β t-statistic p-value Dependent variable: CET Constant 4.96 Independent variables Socio-psychological factors: Patriotism 0.24 0.12 1.81 0.07*** Conservatism 0.18 0.08 1.24 0.22 Collectivism 0.14 0.06 0.92 0.36 Salience 1.55 0.44 6.93 0.00* Animosity 0.19 0.15 2.61 0.01** Openness to foreign culture - 0.14 - 0.10 - 1.66 0.10*** Demographic factors Age 0.69 0.13 2.19 0.03** Model statistics Adjusted R2 = 0.42; F = 20.99, p = 0.00* Note: * p ≤ 0.01, ** p ≤ 0.05, *** p ≤ 0.10

Discussion and Research Implications The present study was undertaken with two fold objectives: (i) assessing level of consumer ethnocentrism prevailing among consumers in India, and (ii) examining influence of socio-psychological and demographic variables on consumer ethnocentric tendency. A shortened (9-item) version of the 17-item CETSCALE proposed by Shimp and Sharma (1987) was used to ascertain the extent of ethnocentric tendency prevailing among the Indian consumers. Based on literature review and theoretical reasoning, a total of eight socio-psychological and five demographic variables were employed as antecedents of consumer ethnocentrism in the present study.

The analysis in the study finds Indian consumers as being only moderately ethnocentric. This finding is similar to that of Bawa (2004) who too found consumers in India to be having slightly lower than theoretically expected ethnocentric mean score1. The fact that Indian consumers are do not totally or highly averse to purchase of imported products augurs well for the international marketers.

1

. Since Bawa (2004) employed a 17-item CETSCALE with responses sought on a 7-point Likert scale (1= Stronglydisagree to 7=Strongly agree), the theoretically expected mean in her study is 68.0. She computed mean consumer ethnocentrism scores for three different groups of respondents and reported them in her paper. As she did not provide information about the overall mean score value, we computed overall weighted mean score for her study by multiplying each of the group mean scores by the respective number of respondents in each group. The weighted mean score turns out to be 66.70 which is only slightly lower than the theoretically expected mean of 68.0 in her study.

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The study also finds considerable variations present among consumers in their ethnocentrism. Though international marketing literature posits a number of personal characteristics as factors responsible for such variations, the present study finds only four socio-psychological variables and one demographic factor to be significantly impacting consumers’ ethnocentric tendency in India.

Among the sociopsychological variables, salience is the most important antecedent. Animosity, patriotism and openness to foreign culture are the three other explanatory variables that follow it and in that order. While the variable ‘openness to foreign culture’ bears a negative relationship, the rest of three socio-psychological variables relate positively with consumer ethnocentrism. Results of the present study are similar to those of past studies which too have found these four variables to be significantly affecting consumer ethnocentrism (e.g., Han, 1988; Howard, 1989; Olsen et al., 1993; Sharma et al., 1995; Klein and Ettenson, 1999; Nijssen and Douglas, 2004). The obvious inference of this finding is that with increase in global outlook and positive attitudes towards foreign cultures, consumers tend to become less ethnocentric. The other four variables (viz., conservatism, collectivism, ethnic pride and world-mindedness), however, are not found bearing significant relationship with ethnocentrism prevalent among the surveyed consumers.

Age is the only demographic variable which is significantly and positively correlating with consumer ethnocentrism. This is in line with the findings of previous studies which too reveal relatively a higher level of consumer ethnocentrism present among the older people (Schooler, 1971; Klein and Ettenson, 1999; Caruana, 1996). Other demographic factors such as gender, income and education do not turn out to be significant antecedents. Surprisingly, even the antecedent ‘foreign travel’ does not emerge as a significant determinant of consumer ethnocentrism.

Findings of the study entail important strategy implications for the business firms, especially the multinational ones. Firms interested in operating in the consumer goods market in India, for instance, can bifurcate the Indian consumers into two broad segments: one comprising of consumers who are ethnocentric and opposed to the consumption of foreign products, and the other one comprising of less or nonethnocentric consumers who are not inherently biased against imported products. As the present study reveals, ethnocentric market segment is likely to be comprised of people who are older, less open to foreign culture and have relatively higher levels of patriotism, salience (i.e., feeling of threat to domestic workers from imports) and animosity (i.e., having sentiments against foreign countries and their artefacts). The non-ethnocentric market segment, on the other hand, is likely to be represented by consumers who are relatively younger in age, more open to learn about foreign culture and have relatively lower levels of patriotic, salience and animosity feelings amongst them.

Insights about the background characteristics of consumers in these two market segments can be helpful to the marketers in deciding about their target market segments and evolving appropriate positioning and marketing mix strategies.

Marketers of domestic products might find it beneficial to focus upon less ethnocentric consumers as their target market. From a communication perspective, campaigns capable of stirring nationalistic and patriotic feelings can be employed for inducing such consumers to buy their own country’s products and enjoy a feeling of 14 14

pride by having safeguarded the interests of domestic industries and fellow workers against foreign competition.

In contrast, it will be prudent for the international marketers and retail stores intending to sell foreign products in India to initially focus upon consumers who are less ethnocentric. Campaigns with punch lines built around the themes such as ‘consumers desirous of leading a successful life go for world famous brands’ or ‘purchase of high quality foreign made products help people raise their production efficiency and standards of living’ can act as catalyst in winning consumer patronage in favour of foreign products. More ethnocentric consumers, on the other hand, can be reached and influenced by the international marketers at a later stage by toning down the foreignness of their products and promotion campaigns. Furthermore, instead of resorting to direct exporting method, use of other entry modes such as joint ventures or setting up wholly owned subsidiaries in the host country can go a long way in allaying fears of threats to the domestic industry present in the minds of ethnocentric consumers.

Although the present study constitutes a major step in filling the void in international marketing literature in the context of a large and fast emerging market in the developing world, it will not be out of place to draw attention to its certain limitations.

These limitations point to areas and issues that need to be taken care of in future researches. First, the study has been conducted in Delhi. Being a metropolitan city, a higher incidence of cosmopolitanism and modern outlook present among its people vis a vis their counterparts from the non-metropolitan areas might have attenuated the influence of some of the socio-psychological and demographic variables on the ethnocentric tendency prevalent among the consumers. As such the results of the study do not seem generalisable to the country’s population as a whole. Studies drawing upon samples from non-metropolitan cities and various geographical parts of the countries including those from rural areas are called for to arrive at more valid inferences. The sample in the present study is, moreover, skewed towards younger and more educated people. Future studies need to have samples with relatively larger representation of elderly and less educated persons so as to improve the generalisatibility of results.

Secondly, the present study is based on research work of Shimp and Sharma (1987) who proposed CETSCALE as a uni-dimensional construct. Multi-dimensionality of CETSCALE can possibly be a focus area of researches in future. It is possible that some of the variables that have not been found significantly related to overall consumer ethnocentrism construct might emerge as significant antecedents to some of the individual dimensions of the construct. Thirdly, the present study has investigated only eight antecedent variables. Economic and political factors, materialism, dogmatism, value orientation, nationalism and consumer life styles are some other factors that have been investigated as correlates of consumer ethnocentric tendency in the past studies and these need to be examined in the Indian context as well in future studies.

Lastly, it may not be out of place to mention here that reliability of multi-items scales used in the study for operationalising certain socio-psychological constructs such as patriotism, conservatism, salience, world-mindedness and collectivism `is either lacking or just conforming to minimum required Cronbach alpha threshold. Use of 15 15

psychometrically more reliable scales can substantially help in arriving at more valid and generalisable inferences about the relationship of these antecedents with consumer ethnocentrism in future studies.

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Asian Journal of Business Research

ISSN1178-8933

Volume 3

Number 1

2013

Interdependency in the Relationship of Project Partners: How Can It Work?

ZoltánVeres Budapest Business School, Budapest, Hungary József Hack-Handa Budapest Business School, Budapest, Hungary

Abstract Success of a project transaction is uncertain until it is completed. Information on a particular project supplier’s competence profile reduces the buyers’ uncertainty. In the first phase we used expert mini focus groups to explore general views of project buyers and suppliers on project characteristics and their expectations and risk perception throughout the project. In the second phase structured in-depth interviews with project managers were undertaken. In the last step we had taken a larger sample that permitted us to apply multivariate statistical methods. The results of our qualitative research and quantitative analyses revealed that there are areas that both buyers and suppliers pay attention to, which means that these are considered as risk factors by managers. Findings from the qualitative interviews helped us understand the pattern of competences and activities that most likely to have an impact on risk and/or value perception. The quantitative research could also uncover the activities of which impact is resistant to contradiction. As a next step of our study we aim to test the impact of the presence or absence of the most important competences.

Keywords: Projects, Competences, Risk

Introduction Firms build and leverage their competences in order to develop long-term relationships, achieve a better market performance, and thus, a sustainable competitive advantage. While the economics, supply chain management literature have long been investigating the factors influencing supplier selection, besides a heavy focus on pricing, it is not clear why certain companies in the project industry succeed (Cova and Holstius, 1993) and are better at closing a deal with a project buyer, than others. We argue the answer can be found in the perceived competence of actors.

Business-to-business projectscan have tangible (eg. hardware, buildings) and intangible (eg. software, engineering, consulting, production know-how) components.

This research aims to investigate the competences the supplier should invest in, in 19 19

order to influence the buyer’s risk and value perception. In particular, this study investigates the following research question: What competences are important from a buyer’s versus supplier’s perspective?

Literature review The following literature review reveals the research that has been undertaken in this area by discussing the domain of competences on the buyer’s risk and value perception in a project environment.

Competences in Projects In the areas of management and marketing, the resource-based view of the firm has been used to explain how firms create a sustainable competitive advantage (eg.

Barney, 1991) by leveraging their tangible (e.g. hardware, buildings) or intangible (e.g. technology, reputation, alliance, know-how, relationship) assets (e.g. Bharadway, Varadarajan and Fahy, 1993; Sirdeshmukh, Singh and Sabol, 2002; Srivastava, Shervani and Fahey, 1998). Some of these competences draw on the company’s past, such as previous project successes of the supplier, references, buyer-supplier relationship, and reputation (epistemic competences) (Veres, Sajtos and Hack-Handa, 2012), whereas others represent a promise for a reliable and successful outcome (heuristic competences) (c.f. Cova and Salle, 2007; Grant, 1995; Lapierre, 2000; Möller, 2006). These competences are also context-dependent on one hand; for instance, a construction company’s most important competence lies in the execution of complex tasks, whereas a consulting company’s main competence revolves around its employees and their relationships with their clients (Sveiby, 1997), and time-bound on the other hand (Cova, Ghauri and Salle, 2002). Beyond the possession of these competences, Golfetto and Gibbert(2006) emphasize the utilization, promotion and “selling” of these competences in business-to-business contexts (Gibbert, Golfetto and Zerbini, 2006). Therefore, this study aims to explore the relevant competences influencing the buyer’s risk and value perception (Nador, 2012; Veres, 2012). It is to mention that the studied phenomenon is culture-specific to some extent as we found it in a comparative research (Sajtos, Veres, Hack-Handa and Greve, 2012).

Perceived Competences and their Impact on Risk and Value Perception Overall, the success of a project transaction is uncertain until it is completed.Risk is referred to as the subjective assessment of uncertainty and is associated with situations with potential negative consequences (Dhalakia, 2001) in comparison to alternatives (Aqueveque, 2006), and thus, risk serves as an inhibitor to purchase intention (Pavlou, Liang and Xue, 2007). As project buyer lacks the required knowledge to complete the project, the buyer’s major risk is related to the supplier’s expected performance, which is driven by the presumed weaknesses of the supplier (Veres, 2009). Information on a particular supplier’s competence profile reduces the buyers’ market uncertainty (in the pre-transaction phase) (Golfetto and Gibbert, 2006), and their transaction uncertainty (in the implementation phase) (Ford, 2002).

Therefore, at the outset of the project a large emphasis is placed on the perceived competences and promises of the expected benefits (Page and Siemplenski, 1983; Veres and Sajtos, 2012).

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Suppliers might not feel confident – at the start and during the project – in their ability to successfully deliver on what they have promised to the project buyer. However, as the project progresses this risk component reduces and it might be replaced by the risk of the buyer not paying or not accepting the project as delivered. Similarly, the buyer’s risk might remain constant due to the uncertainty in the supplier’s ability to successfully deliver the outcome of the project. These risks can be managed through targeted acts and communication – especially under the condition of bounded rationality (Singh and Sirdeshmukh, 2000) – that can help the buyer distinguish between ‘high’ and ‘low’ quality providers (separating equilibrium) (e.g. Spence, 1974).

Methodology Qualitative data was collected in two phases. In the first phase we used on-site, expert mini focus group interviews in various contexts, such as market-research, construction, IT consulting and web design, advertising, etc. The objective of these interviews was to explore general views of project buyers and suppliers on project characteristics and stages and their expectations and risk perception throughout the project. A total of 90 buyer- and 90 supplier interviews were undertaken by using a standard interview guide and each focus group consisted of two-three people of decision makers, such as project experts and business marketers.

In the second phase 129 (49 hard-type and 80 soft-type projects) structured in-depth interviews with project managers were undertaken. Construction, manufacturing and property development were categorised as hard-type, whereas IT or other types of consulting, advertising, media and market research were considered as soft-type projects. We asked middle managers of companies who participated in both, the preparatory and implementation phase of the project. The objective of this phase was to identify factors that make projects successful where respondents had to categorise competences according to their importance in terms of their effect impacting risk perception. The interview guideline can be seen in the Appendix.

In the last step of our research project we had taken a larger sample that permitted us to apply multivariate statistical methods. The judgmental sampling procedure was used in our survey to ensure that each of the relevant project types is represented in the sample. As target population, this study considered all Hungarian companies, who mainly undertake projects and targeted the CEO of the company as the primary respondent to the survey. We chose face-to-face interviewing techniques, which resulted in a final sample size of 392. Half of the firms surveyed were typically in a seller/supplier position in their project activities (n=197), the other half of them were buyers/procurers (n=195).

Findings from the Qualitative Phase According to a project supplier: “we do not sell physical things, but rather a future promise… therefore, we have to provide some evidence to the client that we are able to implement the project, and hence, the client becomes more efficient or will save some money”. This represents a view that suppliers need to demonstrate that they possess the capability to successfully cooperate and finish the project. In order to do that they need to provide manifestations (diagnostic cues) to influence (but not bias) 21 21

the buyer’s decision, and thus manage his future expectations. Diagnostic cues can be the presence of a quality control system (for instance, ISO), references, company size, and in particular, activities that buyers are aware of about the supplier. While in certain contexts (eg. event management) if the stakes are high, the history of the relationship outweighs any other factors; this research aims to focus on projects where client and supplier had no prior history, and hence buyers/suppliers have to rely on information received through various channels. The idea of selling future promises is also closely related to information asymmetry, where the client’s subject knowledge usually outweighs that of the supplier; however, suppliers draw on their wide range of experience and system thinking competences. Furthermore, interviews revealed that (perceived) information asymmetry varies across contexts; it is likely to be high in finance and low in the training industry and business tourism.

We found differences in the type of information that buyers and suppliers look for about the other party before they meet the potential buyer or supplier. Suppliers usually look for “official” financial information (profit and loss statement, balance sheet, stock prices, etc.) about buyers, whereas buyers usually consider past projectrelated information, such as references, recommendation, evidence of expertise or samples of current work. After the initial information search, the first meeting provides an opportunity to have a first impression about the other party. In particular, the supplier aims to uncover the capability of the buyer (commitment), whereas the buyer explores the supplier’s expertise and his personality.

Managing the buyer’s risk perception is vital throughout the entire project and beyond. High risk perception of projects is also attributed to the interdependency between buyers and sellers, which means “if a project is abandoned then its outcome is destroyed”. Most respondents agreed that “the client’s risk is larger than the cost of the project as the client’s business is at stake”. At the start of the project “…it seems like a public relations exercise that we inform the clients about certain risk factors... in the name of self-defence.”, which also reassures clients not to follow unrealistic objectives. The interviews revealed that solely communicating the risk factors will increase the level of perceived risk; thus, risks always have to be presented with the solution in order to decrease the buyer’s risk perception. According to a project supplier “...buyers do not want standardized answers... but they expect us to find a solution for them…therefore, suppliers, instead of developing highly standardized offers, they need to have the ability to divide complex problems into smaller (modular) tasks in order to reduce the buyer’s risk perception”. Suppliers, who provide a range of solutions rather than a standardized one, and further, who (communicate that they) understand the challenges of coordinating across various departments (within the company) are more likely to develop positive attitudes (i.e. trust) in the project buyer. During the project, companies consciously aim at reducing risk through standard procedures, such as, continuous project monitoring, milestone meetings (regular visits) and plan updates. Buyers revealed that the frequency of visits and the introduction of support contracts are very effective tools in reassuring the buyer about the supplier’s intention; hence they are assumed to reduce risk and increase his trust. However, at the same time these processes make the buyers more knowledgeable and involved in the project, which on the other hand, increases his/her risk perception.

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With regard to the role of competences (second phase of qualitative research), both, buyers and sellers collectively agreed on communication skills, expertise, and credibility to be the most important competences, whereas the very same competences were not mentioned in the ‘least important’ category (see Table 1). Besides similarities, the main difference is that while suppliers are concerned about buyer’s financial stability, their ability to explicitly articulate their needs and their problemsolving skill, buyers emphasized suppliers’ expertise, licences, professional staff and amount of experience. Our qualitative interviews further revealed that suppliers, who show leadership and proactive behaviour, are valued by project buyers. The factors listed previously should be clearly distinguished from other tangible evidences (eg.

ISO, references), as the former ones are more likely to increase perceived trust and or image, whereas the latter ones are more likely to reduce risk in the project buyer, but not necessarily influence customer value. Finally, risks always have to be communicated with a solution to project buyers in order to decrease their risk perception.

23 23

Table 1: Categorisation of Perceived Competences from Most to Least Important An Overlook Perceived by Buyers Perceived by suppliers Most Least Most Least Neither Neither important important important important 74* 21 0 57 34 Credibility Expertise 74 21 0 64 25 Quality of staff 67 21 7 55 30 Comm. skills 65 30 0 66 27 Project 60 26 7 54 36 management skills Ethical behaviour 54 35 7 50 43 Innovation 53 19 19 34 34 capability Licences 47 28 12 52 21 Conflict 46 42 7 46 41 management skills Financial 44 32 16 79 13 stability/reliability Financial assets 39 33 19 57 30 Corporate 32 46 18 18 38 reputation Relationship man.

30 42 21 36 50 Materials used 26 35 26 23 23 Recognising own 23 49 19 36 46 constraints Foreign language 18 28 46 14 36 skills Responsibility 16 44 33 20 43 delegation Instruments used 14 42 30 20 25 The supplier’s 9 40 42 13 23 network *numbers represent percentages based on a sample size of n=57 (buyers) n=56 (suppliers)

5 7 11 4 5 4 27 14 7 5 2 36 11 48 13 43 29 50 55

Quantitative analyses Quantitative findings from data of the qualitative phase After the qualitative phase of our research some quantitative analyses were carried out using the same 129 structured in-depth interviews. We started our analysis by presenting descriptive findings on the evaluations of the capabilities of an imaginary project partner. The respondents were asked to put cards with a capability into one of 24 24

three piles. They could put a card (a capability) into the pile of outstanding important factors, of average importance factors, or into that of least important factors.

Three different types of capabilities can be identified according to the answers of the respondents (as seen in Table 2). The first group of capability includes the most important factors, namely “expertise (know-how)”, “communication” and “trustworthiness”. At least two-thirds of the respondents valuated these capabilities as factors of outstanding importance, while only 2 to 5 percent of them considered that these were factors of smaller significance. In the opposite group there are the least important factors, namely the own network, the instruments, devices used and the (foreign) language communication. Less than 20 percent of the respondents classified these capabilities as factors of outstanding importance, while more than 40 percent of them chose these cards to the group C, i.e. to the factors of smaller significance.

We identified another type of capabilities as well. These factors’ common characteristic is that almost as many respondents found them very important as less significant. There are only two capabilities in this group: the corporate reputation and the delegation of responsibility and competence. We called these capabilities divisive.

The other factors are not in our focus point in this section.

Table 2: Classification of Capabilities by the Distributions of Respondents’ Evaluations Groups of factors Capabilities - expertise (know-how) the most important factors - communication - trustworthiness - own network - instruments, devices used the least important factors - (foreign) language communication - corporate reputation the divisive factors - delegation of responsibility and competence After we had identified these groups of factors, we studied first the bivariate relationships between the evaluations of the factors and the position in the partner relation by analyzing contingency tables. We signed the statistically significant differences with the grey colour of the cells. We used adjusted standardized residuals to test the significance of the relationships by cells. The results are shown in Table 3.

The following conclusion can be drawn from the data: the buyers think more important the trustworthiness, the expertise and the instruments, devices used than the suppliers. We can see another interesting result: there are only significant differences between the opinions of suppliers and buyers in the evaluations of most important and the least important factors.

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Table 3: The Relationship of the Position in the Partner-relation (Buyer or Supplier) to the Evaluation of the Most Important, the Least Important and the Divisive Capabilities of Project-partners (in percentage) position A– B– C– factors in the a factor of a factor of a factor of not Total (capabilities) partner- outstanding average smaller class % relation importance importance sign. the most important factors supplier 57% 33% 6% 3% 100 trustworthiness buyer 74% 21% 0% 5% 100 supplier 70% 24% 3% 3% 100 communication buyer 67% 29% 0% 5% 100 expertise supplier 60% 25% 10% 5% 100 (know-how) buyer 77% 18% 0% 5% 100 the least important factors own network supplier 11% 27% 52% 10% 100 buyer 9% 38% 42% 11% 100 (foreign) supplier 16% 33% 44% 6% 100 language 18% 26% 47% 9% 100 buyer communication instruments, supplier 19% 24% 51% 6% 100 devices used buyer 14% 39% 33% 14% 100 the divisive factors corporate supplier 19% 38% 35% 8% 100 reputation buyer 27% 45% 21% 6% 100 delegation of supplier 24% 40% 29% 8% 100 responsibility 18% 44% 29% 9% 100 buyer and competence The results of these cross-tabulation analyses are affirmed by Kruskal-Wallis tests.

Findings from the quantitative research module Weaskedrespondentstoevaluate the importance of 40 competence-based features of firms involved in a project cooperation.Inthequestionnairea7pointscalewasapplied,where1meant “notat all”, 7meant “ highlydetermining”.

Keeping deadlines, informing a partner of a change in deadline and keeping an oral agreement were the features that best determined of a good project partner according to the respondents’ evaluation. The mean value given by the respondents was more than 6 point in our 7-point scale in these attributes. The foreign nationality of a partner was considered to be the least important feature.

We conducted a factor analysis (with maximum likelihood method and varimax rotation) to reveal any patterns among the competences both in supplier companies and buyer companies.We identified four factors (see Table 4). The emerging factors explain 41% of the total variance. The KMO value is 0.77, Bartlett’s test came out as significant, which indicates that our variables were suitable for a factor analysis. The results are based on only 14 questions because the other items were eliminated due to a lack of communalities, or difficulty in the interpretation of factors.The factor 26 26

analysis produced the following factors that characterize the importance of special features of project cooperation: Table 4: Factor structure of competences Items discuss problems/risks with us honestly make the limitations/boundaries of their competencies clear to us open to clarify problems react quickly to emerging issues adapt quickly to new business partners apply the most up-to-date methods quality assured (eg. ISO) have both theoretical knowledge and business experience good at nurturing our business relationship even if we do not have a joint project have a great personal relationship with them their credibility is supported by their personal connections do not have outstanding debts meet their financial obligations according to the contract (KMO=.77; total variance explained =41%)

Factor loading

Factor label (expl. variance %)

0.70 0.58 0.49 0.49 0.46 0.67 0.64 0.44 0.72 0.54 0.45 0.65 0.60

Correctness (13.3%)

Verified competence (9.8%) Personal contact (9.1%) Financial reliability (7.5%)

After finishing factor analysis on the total sample of Hungarian project participants we analyzed the subsamples of suppliers and buyers separately. The basis and the reason of these separate factor analyses was that we had found evidences of a link between the buyer/supplier position and the evaluation of a project partner’s expected competences in the previous stages of our research project. From the beginning of this research project we had a general assumption about the influence of the position of the participants (buyer or supplier) on the expectations of the partner’s competences in a project cooperation, but we did not want to make special statements about the matter or the direction of this influence and henceforth about the differences between the expected competences of the two sides without empirical data. We followed this direction in this phase of our research, too, and we could get evidence about the assumed correlation, although we need further research to help us understanding and interpreting the quantitative findings.

Although we could identify four factors from the factor analysis on the total sample, using the same procedure for suppliers and buyers separately we could identify only three factors for both groups. Result of our survey suggests that there are differences related to the expected project competences between buyer and supplier companies.

Another important finding of our research is that the same or similar factor that we can label with the same expression (i.e. correctness) can have more or less different meaning in different participants of project cooperation.

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For supplier companies the factor analysis produced the following factors that characterize the importance of special features of project cooperation: Table 5: Factor Structure of Competences (Supplier Companies’ Expectations) Items Factor Factor label loading (expl. variance %) react quickly to emerging issues 0,67 can clearly formulate the business problem (pre-contract Correctness phase) 0,63 (16.9%) discuss problems/risks with us honestly 0,53 notify us of changes on time (eg. delays) 0,51 have both theoretical knowledge and business experience 0,66 Expertise find the right solution when it is needed 0,61 (13.5%) tasks and responsibilities are well defined in their project teams 0,51 Verified have good reputation in the business community 0,66 competence quality assured (eg. ISO) 0,63 (11%) (KMO=.74; total variance explained =41%) It has to be mentioned that the third factor above was selected by the analysis due to the correlation of its items and not because of their outstanding importance. In fact these items belong to the less important ones of an average of 4,7/7 and 4,0/7, respectively. The item “have good reputation in the business community” takes the 34th place while “quality assured” the 39th in the importance ranking of the 40 items.

For buyer companies the factor analysis produced three factors – correctness, financial reliability and keeping contract - that characterize the importance of special features of project cooperation (see Table 6).

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Table 6: Factor Structure of Competences (Buyer Companies’ Expectations) Factor Factor label Items loading (expl. variance %) when they have got insufficient expertise they reach out for external help 0.67 Correctness tasks and responsibilities are well defined in their project (15.2%) teams 0.62 do not take advantage of our lack of expertise 0.58 have sufficient financial background to finance the Financial project 0.62 reliability meet their financial obligations according to the contract 0.54 (11%) do not have outstanding debts 0.54 do not ask for things that are not specifically included in Keeping the contract 0.70 contract do not change the conditions during the course of the (9.2%) project 0.50 (KMO=.71; total variance explained =41%)

Conclusions and Further Research On interdependencies To present the explored interdependencies let us start from equally important features on both sides. Equal importance can be found by independent samples t-test for equality of means. Results are presented in Table 7. The items show those capabilities where opinions of both sides can be considered as equal on a significance level of 0.05, while between the items marked with grey shading there is basically no difference at all. Items selected by factor analyses have been marked by *.

The results of our qualitative research and quantitative analyses revealed that there are areas that both buyers and suppliers pay attention to, which not only means that these are the relevant areas, but also that these are considered as risk factors by managers.

Therefore, as a next step of our study we aim to test the impact of the presence or absence of the most important competences – mentioned by buyers and sellers - on risk and value perception. The benefit of this is – besides confirming the differential (positive) effect of the presence of various competences, – to demonstrate the negative, damaging impact of the absence of a particular competence on how a buyer sees a potential supplier & vice versa.

In summary, findings from the qualitative interviews helped us understand the pattern of competences and activities that most likely to have an impact on risk and/or value perception of the buyer. This research aims to learn about how suppliers are perceived through their positive and negative activities by their potential buyers and how these activities impact buyer’s risk and value perception before selecting a potential project partner. Similarly, suppliers will also be able to understand the impact of certain negative and positive information about the company, and further, how negative information can be counteracted or overcome. Finally, the quantitative research could 29 29

also uncover the activities of which impact is resistant to contradiction. This is not only relevant from a managerial perspective (Veres, 2009), but it also represents a very fruitful domain for cross-disciplinary research.

30 30

31

make the limitations/boundaries of their competences clear adapt quickly to new business partners sufficient empathy towards us react quickly to emerging issues tasks and responsibilities are well defined in their teams having insufficient expertise they reach out for ext. help notify us of changes on time (eg. delays) their credibility is supported by their personal connections do not take advantage of our lack of expertise do not have outstanding debts good at selecting project participants do not ask for things that are not included in the contract willing to come to a consensus open to clarify problems their project leaders are authorized to make decisions on upcoming problems good at nurturing our business relationship even if we do not have a joint project discuss problems/risks with us honestly keep to their word meet their financial obligations according to the contract can clearly formulate the business problem do not change the conditions during the project

Table 7: Independent Samples Test

*

*

*

* *

belong to supplier factors

31

*

*

*

* *

* *

belong to buyer factors

0,14 0,64 0,11 0,96 0,00 0,77 0,00

0,21 2,63 0,00 8,32 0,08 8,11

0,95 0,50 0,43 0,36 0,69 0,94 0,05 0,03 0,28 0,85 0,12 0,19 0,11 0,84

Sign.

2,16

0,00 0,46 0,62 0,85 0,16 0,01 3,94 4,98 1,15 0,04 2,38 1,70 2,60 0,04

Levene's Test for Equality of Variances (F)

1,42 -1,49 -1,60 1,72 1,87 -1,88

1,39

-0,06 0,07 -0,26 -0,40 0,56 -0,63 -0,79 -1,03 -1,05 1,15 -1,18 1,20 -1,25 1,35

t-test for Equality of Means

388,00 390,00 389,00 367,16 387,00 380,02

386,00

390,00 386,16 389,00 387,00 388,00 386,00 371,53 380,66 385,00 384,00 390,00 388,00 388,00 390,00

df

0,16 0,14 0,11 0,09 0,06 0,06

0,17

0,95 0,94 0,79 0,69 0,58 0,53 0,43 0,30 0,29 0,25 0,24 0,23 0,21 0,18

0,24 -0,19 -0,17 0,25 0,24 -0,24

0,18

-0,01 0,01 -0,04 -0,04 0,08 -0,09 -0,09 -0,16 -0,17 0,21 -0,15 0,18 -0,14 0,15

Sig. (2tailed) Mean Diff.

Acknowledgement The research is supported by National Fund for Scientific Research (No. OTKA 81565 K) of Hungarian Academy of Sciences.

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Appendix Expert interview guideline Research aim: To explore the organizational capabilities of the actors in project transactions Operationalization: Project transaction = to realize a unique task as a business service Research target groups: Specialists of companies / institutions, who are making decisions in the preparation and the execution of project transactions (Make an effort to ask suppliers and buyers collaborating in the same project.)

The business areas, involved in the research: a/ (hard) projects, realized with a considerable physical content – construction industry, infrastructure development etc. b/ (soft) projects, realized with a limited or negligible physical content – ad hoc market research, consulting projects, (ad) campaign organization, the setup of IT software systems etc.

Respondents' profile: Identical number of sellers and buyers in a position of (possibly) middle managers with a higher qualification.

It is necessary to record the following data without the firm’s name: respondent's gender; estimated age group and professional profile; firm's scope of activity; and its estimated size (for example: employees' number).

Interview: First part (20 minutes): • • • • •

What are your expectations in connection with the prospective partner at the time of preparation of a project transaction? From among these, which ones insure the successful outcome of the project?

From what can you judge, that the partner will meet these requirements? What kind of information do you check on? What is that, in which you rely on the partner?

In what way do you manage to get information from the partner’s real capabilities?

If you should make a choice, in judging the partner's suitability on only three factors, then which three would you select?

Which three features would you be cautious with? From what can you judge them?

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Instruction: When moderating the interviews, make an effort to achieve that the respondents support their statements with particular project episodes.

Second part (20 minutes): 1. Tell me, please, the procession of the latest important project, in which you took part personally.

Instruction: The interviewer has to observe what kind of episodes the respondent mentions.

Ask the respondents to characterize the pre-story of the partnership (its length in time, the frequency of transactions...) briefly!

2. Tell me, please, a case that remained so in your memory, that it had confirmed you on the later success of the project.

3. Tell me, please, a case that remained so in your memory, that had made youuncertain regarding the later successfulness of the project.

Third part (20 minutes): (Hand over the cards to the respondent!)

Please, classify these capabilities (on the cards) of an imaginary project partner into the following three groups: A/ factors of outstanding importance B/ factors of average importance C/ factors of smaller significance Instruction: We solve the classification by making piles. Respondent may assign at most 10 into a group! Before making groups, ask him to interpret the factors in a few words. To the ,,other:� card, he may write a factor about which he thinks it was missing from the list. The factors mentioned in a spontaneous manner in the first part can be a basis to this.

CARDS: communication; innovational capability; relationship management; project management skills; trustworthiness; HR profile; conflict solving capability; competence to act (for example: permission); material inputs used; financial resources; (foreign)language communication; expertise (know-how); financial reliability; delegation of responsibility and competence; recognition of the limits of own competence; own network; extension of own competence; ethical behavior; corporate reputation; instruments, devices used; other

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Asian Journal of Business Research

ISSN1178-8933

Volume 3

Number 1

2013

Factors Defining Shopping Experience: An Analytical Study of Dubai Harvinder Singh Institute of Management Technology, Ghaziabad Sanjeev Prashar Indian Institute of Management, Raipur

Abstract This paper explains the composition of shopping experience for mall shoppers of Dubai. The study assumes significance because Dubai is a prominent destination attracting shoppers from all over the globe. An attempt has been made to portray shopper’s expectations from shopping malls. The research uses data reduction with the help of Exploratory Factor Analysis (EFA) on a sample of 200 respondents from city of Dubai and condenses a set of twenty-two mall attributes into a list of five comprehensible factors. Results of the study shows that mall shoppers of Dubai view shopping experience as blend of five factors: ambience, physical infrastructure, marketing focus, convenience, and safety and security.

Shoppers assign differential weightage to these factors. Composition of these factors in terms of its constituents reveals distinct patterns. Findings of this research may be used as guidelines for development and management of shopping malls in Dubai. Shopping malls making appropriate use of these insights are more likely to attract and sustain a higher level of footfalls. Capital intensive projects like shopping malls cannot afford to fail. This application-oriented study proposes new benchmarks for mall development and management and reduces the probability of taking wrong decisions. This paper is also a significant addition to the body of knowledge in the area of mall management and consumer behaviour in Dubai.

Keywords: Retail, Shopping malls, Shopping experience, Mall management, Factor analysis, Consumer behaviour.

Introduction Dubai is the biggest tourism-cum-retail destination in the Gulf Cooperation Council (GCC) region. Traditionally these two sectors have been very closely interlinked and with over millions of tourists visiting the Emirate every year Dubai has been rightly regarded as the “Shopping capital of the Middle East� (Anwar and Sohail, 2004). While tourism is considered to be one of the most important factors in stimulating the growth in retail industry, increasing urbanization is also fostering this remarkable growth (Bagaeen, 2007).

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The UAE retail sector is expected to grow from an estimated $31 billion in 2011 by 33% to $41.22 billion in 2015. Successful marketing campaigns promoting Dubai as a global shopping hub and leisure destination had driven the developmental activities (Ahmad and Murshed, 2010). The UAE boasts of a cosmopolitan population comprising of people from across the globe (Masad, 2008). Of the total UAE population, Emiratis (the natives) account for only 20% while the rest are from South Asia and Europe. A large proportion of these expatriates are employed in aviation, commerce, construction and tourism that enjoy comparatively high net worth. The consumer segment is fuelling retail sales and encouraging new market players for more developments. Average spending power of a UAE household stands at $14,400 per annum. Emirati households contribute significantly to this with an average of $23,000 per annum while Asian households spend $10,000 per annum on an average (Gissing and Wallace, 2008).

World class shopping malls located in Dubai are playing a major role in promoting Dubai as a popular shopping destination. The new generations of shopping malls have established Dubai’s dominance in the GCC retail industry. Shopping malls account for nearly 70% of the total retail Gross Lease Area (GLA) of Dubai. These malls also generate decent footfalls.

Mall of the Emirates records nearly 2 million footfalls, Deira City Centre registers 1.5 million visitors and IbnBatuta Mall hosts just less than 1 million visitors per month.

Concept of shopping mall gets modified to meet the expectations of target market (Singh and Bose, 2008). Shopping Malls in Dubai face a unique challenge of attracting a diverse set of shoppers that include Emirati customers, Non-Emirati residents of the UAE and tourist shoppers from different parts of the world. In a way malls in Dubai not only compete with each other but also with shopping malls situated in prominent shopping-cum-tourist destinations across the globe. Since shopping malls have long gestation period, it is important for them to remain competitive over a longer period of time during their life-cycle (Singh et al. 2010). For fending –off competition malls in Dubai need to understand what excites shopper beyond the core act of shopping. A probable answer to this question is shopping experience.

Research Objective Dubai is known for luring its tourists mainly for shopping. The city has more than 70 shopping centres including the seventh largest in the world, The Dubai Mall. Regarded as the shopping capital of Middle East there definitely existed a need to understand and study the shopping behaviour of mall shoppers in Dubai.

Since all major brands of the world are present in the malls of Dubai, it is difficult for shoppers to distinguish between two malls purely on the basis of merchandise and brands. In such cases shopping experience turns out to be an appropriate distinguishing factor as shoppers prefer a mall offering comparable merchandise but superior shopping experience (Singh and Sahay, 2012). Shopping experience is more significant for malls in Dubai as these attract shoppers from higher socio-economic strata who expect higher standards of service and experience as compared to shoppers who visit malls in many developing countries.

Superior shopping experience can be created in malls if their management philosophy and practices are perfectly aligned with the expectations of shoppers. For doing so it is necessary to understand the meaning and composition of shopping experience. Present research aims at identifying the factors defining shopping experience of mall shoppers in Dubai. This research has following objectives: 37 37

1. Identification of factors defining shopping experience in malls of Dubai.

2. Identifying relative significance of these factors.

3. Suggesting strategies for improving shopping experience in Dubai malls.

Literature Review The act of shopping goes beyond product acquisition because consumers also shop for experiential and emotional reasons, in addition to buying goods and services. This aspect of shopping is explored by many researchers (Jones, 1999). Bellenger and Korgaonkar (1980) empirically established that a large proportion of retail shoppers are recreational shoppers who look for recreation as the key take-away. Hence retailers and mall developers should attempt to make shopping an entertaining experience to differentiate them from the competition (Talmadge, 1995; Kim et al, 2005). Csaba and Askergaard (1999) emphasised orchestration of shopping experience in light of evolution of shopping malls in America.

Positive shopping experience leads to increased store liking, more time spent in store, larger ticket-size and higher incidence of unplanned purchase (Babin et al, 1994). Therefore it is crucial to add elements that improve experience quotient of shopping.

Composition of shopping experience has also been explored in past by different researchers.

Holbrook & Hirschman (1982) proposed that it goes beyond mare information processing and they added experiential perspective to it. Their model accommodated experiential view that focused on the symbolic, hedonic, and aesthetic nature of consumption. Kim et al (2005) also came up with classification as Utilitarian and Hedonic factors.

Components of Shopping Experience Customers need entertainment and shopping malls do so by accommodating retailers offering entertainment services but this is not the only way to create entertaining experience.

Shopping malls can improve shopping experience by engaging customers in an enjoyable manner while carrying out shopping. For ensuring this it is important to understand what makes shopping experience appealing. Different studies have suggested different sets of attributes as constituents of shopping experience. It is confirmed that mall shopping is a relative choice phenomenon (LeHew and Fairhurst, 2000; Lowry, 1997; Stoltman, 1991).

While exploring shopper’s excitement and desire to stay at a mall, Wakefield and Baker (1998) identified four factors: ambient factors, design factors, layout and variety. Each factor was composed of multiple attributes represented by different statements. Some of the attributes covered in their study included architecture and overall design, temperature control, variety of stores, music, ease in locating stores and lighting. These attributes influence the desire to stay at a mall. In an experimentation study Matilla and Wirtz (2001) studied the impact of music and scent. Their study estimated impact of these attributes in isolation and in combination with each other.

Significance of convenience was studied by Reimers and Clulow (2009). They established its eminence irrespective of format (shopping mall or shopping strip). While doing so they considered spatial convenience, temporal convenience, car convenience, hedonic attributes and shopping services as its elements. Distance and travel time are other dimension of convenience studied in detail by Huff and Rust (1984). Their retail gravity model predicted mall patronage based on the principle of cost (accessibility) versus utility (size). They proposed retail patronage as a function of store size and distance from the consumer.

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In another study Wakefield and Baker (1998) discussed tenant-mix as variety. A more detailed and dedicated research on tenant-mix was conducted by Kirkup and Rafiq (1994).

They studied tenant-mix and its relation with excitement. While studying tenant-mix in new shopping centres in UK they concluded that strong, distinctive and consistent tenant-mix is crucial for success of a shopping centre. Other studies point out that shoppers prefer malls with rich and diverse tenant-mix. A diverse tenant-mix also infuses sense of excitement in a mall. These results are supported by recent studies (Brito, 2009) which indicate that store selection and tenant-mix are key attributes shaping mall image and influencing patronage decisions.

In context of Dubai malls, El-Adly (2007) identified six factors determining mall attractiveness from shopper’s perspective. These were comfort, entertainment, diversity, mall essence, convenience, and luxury. In Indian context an Indian study by Venkateswarulu and Uniyal (2007) proposed a set of attributes for shopping malls in the city of Mumbai (India).

They found that attractiveness of a mall depends on appeal and convenience, amenities and atmospherics, ambience, personnel, parking and seating. They also suggested some new attributes like restrooms (utilities), smell (odour), parking, security and size of stores.

Marketing activities and marketing focus of shopping malls was studied by Chattopadhyaya and Sengupta (2006) while studying shopping malls in Kolkata. They found that distinctive positioning of shopping malls is attributable to appropriate marketing strategies and these also resulted in increased customer patronage.

Research Methodology It is a cross-sectional study involving observation of a representative sample of the population all at the same time. This research was conducted in two phases. First phase was exploratory in nature involving analysis of secondary data and personal interactions with select industry professionals, researchers/academicians and mall shoppers. It helped in defining the problem and generating a structured questionnaire. Second phase was conclusive (descriptive) and involved collection of data from respondents.

Review of literature provided the initial list of attributes affecting shopping experience. It was shared with a panel comprising of researchers and practioners. Panel examined all the variables in terms of their suitability for present research. Final instrument comprised of twenty two mall attributes. It was designed to measure respondent’s level of agreement or disagreement with statements regarding significance of each attribute. Five-point Likert’s scale was used to record the responses. In this scale a rating of ‘1’ indicates strong disagreement whereas a rating of ‘5’ represents strong agreement. Research instrument was pre-tested to check its validity and reliability. Research instrument also included questions on key demographic attributes of respondents.

During descriptive phase of research, research instrument was administered to respondents.

Number of cases should be atleast five times the number of variables (attributes) if factor analysis is to be applied successfully (Bryant and Yarnold, 1995; Hair et al, 2006). Since this study involved examining twenty two variables, minimum sample required was 110. Sample size for this study was kept at 200 to rule-out any deficiency on this count.

Population for the research was defined as people who actually carry out shopping in malls.

Sampling element was individual shopper. Sampling unit was shopping malls from where the 39 39

elements were drawn. Extent to which people are included in sample is defined in terms of a criterion (preferably objective) that defines elements. In this research, extent was expressed as persons carrying minimum of one shopping bag in their hands while coming out of a mall.

Data for this study was collected from four malls – The Dubai Mall, Mall of the Emirates, Deira City Centre and Mirdiff City Centre. These malls were selected since these registered maximum foot fall among all the malls in Dubai during 2010 and were likely to provide a representative sample of the shoppers visiting malls in Dubai. These malls cover all major locations as well as customer strata of target population. The Dubai Mall with Gross Leasable Area of 3.77 million square feet is situated on Doha Road in close vicinity of BurjKhalifa, world’s tallest free-standing building. The 2.4 million square feet large Mall of the Emirates is situated in Al Barsha district of Dubai. Deira City centre measures 1.3 million square feet and is situated in Port Saeed locality of Dubai. Mirdiff City Centre is situated in Mirdiff area of Dubai and measures nearly 2 million square feet.

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Table I: Summary Information on Shopping Malls The Dubai Mall Mall of Deira City Mirdif City Emirates Centre Centre Starting year

2008

2005

1995

2010

Developer

EMAAR Properties

MAF Properties

Majid Al Futtaim Properties

Majid Al Futtaim Properties

Location

Doha Road

Al-Bashra District

Port Saeed

Mirdiff

Gross Leasable Area (in million Number of Square feet) outlets Prominent Tenants

3.77

2.4

1.3

2

1200

520

370

350

Bloomingdale’s Debenhams Marks & Spencer Virgin Megastore Reel Cinemas Dubai Ice Rink Dubai Aquarium

Debenhams Marks & Spencer Virgin Megastore Carrefour Vox Cinemas Ski Dubai Centrepoint

Debenhams Marks & Spencer Woolworths Carrefour Vox Cinemas Bowling City Magic Planet

Debenhams Carrefour Home Centre Emax Vox Cinemas Playnation Aquaplay

Non-probability quota sampling was used in this research. It is a multi-stage restricted judgmental sampling in which first stage consists of developing control categories or quota of population elements while subsequent stages involves selection of sample elements based on convenience or judgment (Malhotra, 2004). First stage resulted in development of control categories or quotas in the form of four malls in Dubai. Second stage involved selecting respondents on the basis of convenience and judgment. Fifty respondents were selected from each mall. Malls were selected in a manner that these represent all major shopping areas and population strata of Dubai. Mall intercept method was chosen to approach shoppers.

The Dubai Mall and Mall of the Emirates cater predominantly to upscale populace besides being a major attraction for tourists. Management of these malls understands role of entertainment and location in evolving retail mix strategy that would eventually provide competitive advantage in the retail environment. The other two malls are popular among Emiratis and mid-income segment of expatriate population for shopping. On the whole sample of respondents from these four malls provide an understanding of the requirements of tourists, natives and expatriates from upper and mid-income segments.

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Data Analysis & Interpretation Demographic information collected with the help of questionnaire was used to develop a profile of mall shoppers in Dubai using simple numbers and percentages. Data relating to mall attributes was subjected to data reduction with help of factor analysis using SPSS. Profile of respondents Sample depicted composition of working population in Dubai as it comprised predominantly of males. 88% of respondents were in economically productive age group 20 years – 50 years with majority (59.5%) being in prime of their youth i.e. 20 years – 35 years. More than half the population was married (but not necessarily accompanied by the spouse during data collection). Half the respondents were graduates. 29% of respondents were either postgraduates or having a higher qualification. Respondents with only school education or professional education constituted a minor fraction of the total sample with 7.5% and 13.5% respectively. Understandably more than half the sample (54.5) was employed with private sector while remaining proportion of sample was divided between four occupations Sample was evenly spread in terms of income distribution with all income categories contributing a significant proportion to the sample.

Demographic Group Age Group

Gender Marital Status Education Level

Occupation

Monthly Income

All Data

Table II: Profile of Respondents Demographic categories Number 13-19 years 12 20-35 years 119 36-50 years 57 51-65 years 12 Male 140 Female 60 Unmarried 79 Married 113 Widow(er)/Divorcee 8 Schooling 15 Graduation 100 PG & above 58 Professional 27 Government Service 15 Private Service 109 Professional 27 Business 14 Student 35 Less than $ 2000 54 $ 2000-4000 72 $4000-6000 42 More than $ 6000 32 200

42 42

Percentage 6.0 59.5 28.5 6.0 70 30 39.5 56.5 4.0 7.5 50 29 13.5 7.5 54.5 13.5 7.0 17.5 27 36 21 16 100

Factor Output: Data was checked for suitability for factor analysis with help of correlation analysis, KMO test of sampling adequacy and Bartlett’s test of sphericity (Boyd et al, 2002; Malhotra, 2004).

Most variables had significant correlation between them. Both KMO Test of Sampling Adequacy value and Bartlett’s Test of Sphericity value were found adequate (Table II).

However when data was subjected to Principal Component Analysis (PCA), communality value of some of the variables was less than 0.5. Those variables also had insignificant factor loadings. For refining result variables with lesser communality values were deleted following an iterative procedure. After three iterations resulting in deletion of three variables optimum output was obtained. This data set was checked for suitability for factor analysis.

Table III: KMO & Bartlett’s Test of Sphericity Kaiser-Meyer-Olkin Measure of Sampling Adequacy.

Bartlett's Test of Sphericity Approx. Chi-Square Df Sig.

.809 1909.430 171 .000

Data set was then subjected to another round of Principal Component Analysis and Varimax rotation. Communalities for all nineteen variables were higher than 0.5 (Annexure I) indicating it to be an optimum solution. Final solution explained 69.775% of total variance associated with the problem (Annexure II). Factor output comprised of five factors based on nineteen variables (Annexure III). Relevant factor loadings for each variable indicated that all the variables wre adequately explained by derived factors.

Factor output comprised of five factors representing specific forces shaping shopping experience in Dubai malls. These are presented in the table given below.

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Table IV: Consolidated Factor Output& Allied Information Factor Title Variables Factor Cronbach’s Average Factor included loading Alpha score/ Ranking (Av. Score) Loading factor

Factor No. (Variance explained) F1 Ambience 23.635%

F2 14.087%

F3 13.698%

F4 9.394%

F5 8.961%

Illumination (3.225) Temperature control (3.14) Background music (3.205) General hygiene (3.215) Ambient Odour (3.125) Landscaping (3.250) Convenience Utilities (2.065) Distance of mall from home (1.73) Lifts & Escalators (1.885) Floor Plan (1.855) Physical Size of the mall Infrastructure (3.05) Parking space (2.7) Open space (3.25) Size of Atrium (2.94) Marketing Promotional Focus events (4.05) Mall façade (3.31) Tenant-mix (4.53) Safety & Compliance Security with construction laws (1.235) Security against acts of terror (1.39)

.926 .904 .851 .840

0.928

3.19

II

0.815

1.88

IV

0.804

2.985

III

0.622

3.96

I

0.796

1.3125

V

.807 .797 .888 .823 .719 .664 .815 .791 .783 .720 .800 .728 .671 .900

.894

44 44

(a) Factor 1

This factor explained maximum variance (23.635) and comprised of six variables namely illumination, temperature control, background music, general hygiene, ambient odour and landscaping. All these variables contribute to soft or hedonic aspects of shopping. Past researchers labelled similar bundles of variables as ‘ambience’ since affirmative action of these fronts improve ambience of a retail unit. All six variables had very high factor loadings on factor one. It ranged from 0.926 (for illumination) to 0.797 (for landscaping). However average score for factor 1 was 3.19 (second-highest out of five extracted factors) indicating that shoppers did consider ambience significant for shopping experience but urge for the same was not so intense. Probably it was due to refined profile and higher expectations of Dubai shoppers as compared to shoppers in developing countries. Since all the variables constituting this factor have similar scores (ranging from 3.125 to 3.250) it may be safely assumed that all variables were equally significant for shoppers. (b) Factor 2

Second factor extracted in this research explained 14.087% of variance. It comprised of four variables; utilities, distance of mall from home/place of stay, lifts and escalators and floor plan. These aspects add to comfort and convenience while shopping by making it easier for shoppers to reach and navigate through mall. Therefore this factor was labelled as ‘convenience’. Factor loadings for all four variables were significant ranging between 0.888 and 0.664. Average score per facto for factor two was 1.88 making it one of the least significant factors adding to shopping experience. Across variables, average score didn’t show much divergence except for utilities for which average score was above 2 (2.065).

Probably it was due to the fact that Dubai is a compact city with world-class infrastructure and connectivity where convenience does not figure at all in the list of expectations that shoppers have from shopping malls. (c) Factor 3

Third factor explained 13.698% of variance. Four variables comprising it were size of the mall, parking space, open Space and size of atrium. These variables represent physical attributes of a shopping mall hence this factor was labelled as ‘physical infrastructure’. Factor loading for these four variables ranged from 0.815 to 0.720. Average score per factor for this factor turned out to be 2.985 indicating neutral attitude of shoppers towards physical infrastructure. However constituent variables carry varied significance. Parking space with average score of 2.7 is least significant whereas open space with average score of 3.25 is most important. It seemed that mall shoppers of Dubai were not over-awed by superior dimensions of malls in Dubai. It could be that they find all the malls offering equal physical infrastructure. (d) Factor 4

Fourth factor extracted in this study explained 9.394% of variance. It contained variables like promotional events, mall facade and tenant-mix. These variables seemingly relate to activities covered under different functions. For instance promotional events relate to marketing, designing a mall facade is a part of mall architecture and tenant-mix is a part of commercial leasing activity. However all these variables underline a common theme: attempt to attract customers to a mall. Promotional activities are directed towards shoppers, facade makes a mall more attractive to people who see it and a balanced tenant-mix makes it more attractive to shoppers. So it was apt to label it as ‘marketing focus’. Average score per factor for factor four was 3.96, the highest among all five factors. It indicated that customers were more interested in marketing focus of the malls they patronize. A deeper peep into the scores 45 45

revealed that tenant-mix was the strongest component with average score of 4.53, the highest score for any variable in this study. (e) Factor 5

The last factor explained 8.961% of total variance associated with the problem. It had only two variables in it namely ‘safety from crimes’ and ‘security against acts of terror’. Both the variance point towards ‘safety and security’ aspects of malls hence labelled the same. It turned out to be the least significant factor with lowest average score per factor (1.3125).

Both statements had average score close to 1 (1.235 & 1.390 respectively) indicating that safety and security was not an intense concern for mall shoppers in Dubai. Root of this believe could stem from the fact that UAE did not experience any act of terror or crime in shopping malls in past.

Ranking of factors: Relative significance of factors is judged by ranking of factors which in turn is assessed calculating average score per factor. Results presented in Table III indicate that marketing focus was the most desirable factor (average score 3.96). Another factor very relevant to shoppers was ‘ambience’ (average score 3.19), ‘physical infrastructure’ and ‘convenience’ were ranked third and fourth though their average score was less than 3 and 2 respectively.

‘Safety and security’ was the least significant factor with score of just 1.3125.

Validity& Reliability of Factor Output Validity & reliability of factor output was checked statistically. Reliability was established by estimating Cronbach’s Alpha for each factor (Table III). Alpha value for all the factors was greater than 0.6 indicating the output to be reliable.

Convergent validity for a factor indicates that all variables constituting a single factor actually converge into it i.e. they share a high proportion of variance in common. Convergent validity was checked with the help of ‘Variance Extracted (VE)’. VE is calculated by adding squared factor loadings for all variables constituting a factor and then dividing it by number of variables.

S. No

Table V: Variance Extracted By Each Factor Factor No. & Label Variance Extracted (VE)

1 2

F1 (Ambience) F2 (Convenience)

0.732 0.606

3

F3 (Physical Infrastructure)

0.605

4

F4 (Marketing Focus)

0.540

5

F5 (Safety & Security)

0.805

Table IV show that Variance Extracted for each of the five factors was higher than 0.5.

Discriminant validity establishes that the factors extracted are truly distinct from each other.

It is established by observing factor loading for each variable under all factors. Final factor output showed that there was complete absence of cross loading.

46 46

Discussion on Results Results of this study validate the notion that shopping experience is interplay of a number of factors. For providing superior shopping experience one should take an integrated view of the situations and work on multi-pronged strategies. These strategies may be designed in light of following observations made in this research: 1. Composition of shopping experience: This study revealed that shopping experience comprise of five factors: ambience, convenience, physical infrastructure, marketing focus and safety and security.

Shopping experience offered by a mall is cumulative impact of service(s) offered under each factor. It means that shopping malls can offer unique and differentiated shopping experience to their shoppers by carefully selecting facilities and services under each factor. This selection would depend upon customer preferences and competitive environment.

2. Differential Impact of factors: Though shopping experience comprises of five factors, all of them do not contribute equally to it. Average score per factor is a good indicator of significance attached by shoppers to each of these factors. In this study, average score per factor ranged from 3.96 to 1.3125. It means mall developers and managers need not emphasise all the factors simultaneously. It is important to know this as each decision aimed at improving experience related to a factor would require commitment of resources.

Since resources carry cost it is important to identify activities/decisions related to the most relevant factor so that resources can be optimally allocated.

3. Relative Significance of factors: Present study reflected that marketing focus is the most significant factor for shoppers in terms of shopping experience. It was followed by ambience, physical infrastructure, convenience and safety & security. It is not a big surprise that marketing focus merged as the number one factor since Dubai has been actively and effectively attracting shoppers from all over the globe. Ambience was the only other factor evoking warm response from shoppers. All other factors had average scores less than three.

4. Composition of factors: Another interesting insight from this research is the internal composition of each factor. For instance ‘ambience’ comprised of six factors. It is natural to have variables like illumination, temperature control, ambient odour, music and landscaping under ambience. But inclusion of general hygiene under ambience is an eye-opener. It meant that mall shoppers in Dubai do not consider general hygiene’ as a routine function of housekeeping that is more of a ‘hygiene’ function (taking a cue from the two factor theory of motivation). Rather, it is a motivational factor adding to ambience of the place.

47 47

Results of this study should be viewed as a blending of general theory of consumer behaviour viewed through the looking glass of population of Dubai. Like shoppers in any other part of the world, shoppers of Dubai also view shopping experience interplay of a number of factors.

When compared with similar studies conducted in different parts of the world, number and labelling of factors was expected to be more or less similar as core human needs are common across geographies and cultures. However similarity ends here only. Different cultures, economies and geographies might select different means or solutions to gratify same core need. In this context it is very important to look into composition of individual factors (in terms of its constituent variables) and also weightage assigned to these factors and/or variables. Since target population comprises of high-income, widely travelled individuals (Emirati, expatriates and tourists) and most of them are high on education, awareness and connectivity with the world, they are expected to have a higher level of expectations from shopping malls. It is because they have global benchmarks to compare with.

A similar study in context of shopping malls of Delhi NCR in India by Singh &Sahay (2012) indicated that Indian shoppers consider ambience to be the most important factor whereas marketing focus is the foremost factor for Dubai shoppers. Indian inferences are quite similar to those observed in studies conducted in many developed countries (Babin et al, 1994; Wakefield & Baker, 1998; Jones, 1999; Kim et al, 2005). Difference in response might be attributable to different attributes of shoppers (domestic versus visitors/tourists). This notion is justified by some studies where domestic shoppers and tourists evaluated same products/services differently (Yuksel, 2004).

Marketing focus is the foremost factor defining shopping experience for shoppers in Dubai and it goes in line with positioning of Dubai as a shopping destination. Government of Dubai has been actively promoting UAE as a business-cum-shopping destination. People who visit these malls (especially expatriates and tourists) are attracted by this proposition. A close look at average score per variable indicates that tenant-mix is the most significant variable under ‘marketing focus’. Mall shoppers in Dubai feel excited when they see a rich tenant-mix. It is important for mall developers and managers to ensure their selection of brands is such that shoppers feel excited about visiting their malls. A significant aspect of it is that Dubai malls need to communicate to audience spread over a much wider geography as compared to malls elsewhere in the world as catchment area of Dubai malls is not confined to the city of Dubai.

Limitations of this Study This research is cross-sectional in nature and results are prone to impact of time. A longitudinal research with a series of data sets collected after a regular interval would insulate the impact of time. Size of the sample is sufficient to overcome the statistical objections but is still very small as compared to total population. Another limitation of this study is that results are based on the assumption that the sample is a monolith whereas different segments within it may exhibit different preferences. It was not done division of this sample into subsamples (age-wise, gender-wise, income-wise) would have further reduced number of observations (respondents) under each sub-segment. However it is possible to address this issue with a larger sample and/or adopting quota sampling. It would be interesting to identify similarities/dissimilarities between genders, age-groups and income segments.

48 48

Directions for Future Research Looking beyond composition of shopping experience for a single geographic or cultural market, it would be useful to collect a sample cutting across geographic or cultural boundaries. Such a study would help in highlighting differences between two markets and also point at possible sources/reasons for such differences. For single-market studies, deeper insight can be obtained by studying differences along demographic parameters of respondents like age, gender, income, occupation etc. Such a study would help practitioners in devising segment specific strategies.

Conclusion Results of study reveal interesting patterns in terms of composition of shopping experience.

Results can be used by mall developers and mall managers to make sure that they are able to provide superior shopping experience to their shoppers. It is all the more important for Dubai as it attracts shoppers from all across the globe. However as time progresses, more and more countries shall have world-class malls. In that scenario some of the shoppers may satisfy their urge by visiting newly constructed world-class malls in their own countries or they may prefer some other shopping destination. So Dubai malls need to re-invent themselves in terms of elements of shopping experience so as to keep themselves relevant in the eyes of their target group.

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on

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accessed on May 23, 2012.

51 51

ANNEXURE I: Communality Values Initial Distance of mall from home 1.000 Mall faรงade 1.000 Temperature control 1.000 General hygiene 1.000

Extraction .682 .559 .834 .719

Size of Atrium Floor Plan Tenant-mix Parking space Ambient Odour

1.000 1.000 1.000 1.000 1.000

.611 .514 .520 .685 .683

Promotional events

1.000

.693

Utilities Security against acts of terror Background music

1.000 1.000 1.000

.826 .815 .747

Illumination Size of the mall Lifts & Escalators

1.000 1.000 1.000

.872 .683 .637

Open space Landscaping Compliance with construction laws Extraction Method: Principal Component Analysis.

1.000 1.000 1.000

.700 .651 .826

ANNEXURE II: Total Variance Explained For Nineteen Variable Problem Total Variance Explained Extraction Sums of Squared Rotation Sums of Squared Initial Eigen values Loadings Loadings % of % of % of Comp Total Variance Cum.% Total Variance Cum.% Total Variance Cum.% 1 4.985 26.235 26.235 4.985 26.235 26.235 4.491 23.635 23.635 2 3.376 17.767 44.001 3.376 17.767 44.001 2.677 14.087 37.722 3 1.969 10.363 54.365 1.969 10.363 54.365 2.603 13.698 51.420 4 1.515 7.972 62.336 1.515 7.972 62.336 1.785 9.394 60.814 5 1.413 7.439 69.775 1.413 7.439 69.775 1.703 8.961 69.775 Extraction Method: Principal Component Analysis.

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ANNEXURE III: Rotated Component Matrix for Nineteen Variable Problem Component Illumination

1 .926

2 .075

3 .035

4 .036

5 .077

Temperature control

.904

.120

-.011

.044

-.005

Background music

.851

.092

-.113

.039

-.024

General hygiene

.840

.072

.021

.009

.091

Ambient Odour

.807

.135

-.072

.081

.033

Landscaping

.797

-.002

.112

-.022

.053

Utilities

.086

.888

.120

.121

.039

Distance of mall from home

.029

.823

-.022

.047

.037

Lifts & Escalators

.133

.719

.268

.166

.049

Floor Plan

.172

.664

.174

.101

.056

Size of the mall

.052

-.070

.815

.103

-.020

Parking space

-.081

.139

.791

-.180

-.016

Open space

-.010

.203

.783

.211

.032

Size of Atrium

.001

.271

.720

.086

-.110

Promotional events

.146

.150

-.032

.800

.092

Mall faรงade

-.036

.041

.059

.728

-.152

Tenant-mix

.019

.167

.143

.671

.142

Compliance with construction laws Security against acts of terror

.094

.052

-.015

.055

.900

.050

.087

-.076

.003

.894

Extraction Method: Principal Component Analysis.

Rotation Method: Varimax with Kaiser Normalization. a. Rotation converged in 6 iterations.

53 53

Asian Journal of Business Research

ISSN1178-8933

Volume 3

Number 1

2013

Impact of Customer Orientation, Service Orientation, Service Quality, Service Encounter Quality and Perceived Value towards Customers Satisfaction and Behavioural Intention: In Retail Context Lau Wee Ming SEGi College Sarawak Hosea Lim Vui Chung SEGi College Sarawak Diana Atton ak Paul SEGi College Sarawak

Abstract Does customer satisfaction and behavioural intention directly influence by customer orientation, service orientation, service quality, service encounter quality, perceived value towards? In order to address this question, a survey was conducted in different grocery stores across the city. At the same time, this research also tends to examine whether the western oriented service evaluation model is applicable in non-western country. This study also proposed to examine the direct relationship without the existence of customer satisfaction and service quality as mediator. The outcomes of the analyses were used to determine the acceptance or rejection of the proposed hypotheses. With the positive relationship between the independent variables and dependent variables, all the generated hypotheses proposed in this research were accepted and approved.

Keywords: Customer Orientation, Service Orientation, Service Quality, Service Encounter Quality, Perceived Value, Customer Satisfaction, Behavioral Intention, Retail

Introduction In today’s business world, the awareness of service quality and customer satisfaction can be observe in multiple industries as these elements had been identified as one of the contributor in developing or sustaining the company’s competitive advantages (Schlesinger & Heskett, 1991). Nevertheless, these components have also become one of the essential fundamentals for retail industry in pursuing higher competitive advantages (Kandampully, 2010). There are lots of researches had been done by the researchers previously to examine and understand the relationship between customer satisfaction and perceived value (Fornell et al., 1996), perceived service quality and customer satisfaction (Cronin and Taylor, 1992; Andreassen

54 54

and Lindestad, 1998) as well as the relationship between customer satisfaction and behavioural intentions (Bagozzi, 1992).

Basically, this research paper comprises of ten different research objectives which aim to examine a cluster of variables that impacts the customers’ service evaluation process. The research objectives are as follow: 1. To determine the relationship between customer orientation (CO) and customer satisfaction.

2. To determine the relationship between customer orientation (CO) and behaviour intentions (BI).

3. To determine the relationship between service orientation (SO) and customer satisfaction.

4. To determine the relationship between service orientation (SO) and behaviour intentions (BI).

5. To determine the relationship between service quality (SQ) and customer satisfaction.

6. To determine the relationship between service quality (SQ) and behaviours intentions (BI).

7. To determine the relationship between service encounter quality (SEQ) and customer satisfaction.

8. To determine the relationship between service encounter quality (SEQ) and behaviour intentions (BI).

9. To determine the relationship between perceived value (VAL) and customer satisfaction.

10. To determine the relationship between perceived value (VAL) and behaviours intentions (BI).

Conceptual Framework

Figure 1: Conceptual Framework for Independent Variables and Dependent Variables

55 55

Literature Review Every organisation has its own preferable business orientation such as goal orientation, customer orientation, marketing orientation and so on. All the mentioned orientation served the same purpose; that is to generate more sales, more profit and help the company to develop or sustain their competitive advantages. The term “service orientation” had received much discussion due to the contrast in defining it by the scholars. Lytle and Timmerman (2006) had defined service orientation as “an organisation-wide embracement of a basic set of relatively enduring organisational policies, practices, and procedures intended to support and reward service-giving behaviours that create and deliver service excellence”. Lytle and Timmerman’s definition wassupported by others researchers too, with the statement claiming that organisation with service oriented policy will do their best in satisfying customers, create and deliver customer value (Heskett et al., 1997; Hennig-Thurau et al., 2002).

Nowadays, the level of delivered service quality had been seen as part of the essential strategy if an organisation wishes to outperform the others (Dawkins and Reichheld, 1990; Reichheld and Sasser; 1990; Zeithaml et al., 1990). Service sector has grown dramatically over the years and it is one of the major contributors in world GNP. Service sectors such as aviation industry and retailing industry are completely affected by the dynamic environment factors. These factors are: government rules and regulation, changes in public’s interests, business trends, internationalization, and advances in technology (Hoffman et al., 1995; Rust and Oliver, 1994). Due to the deregulated and competitive markets, delivering quality services had become service marketers’ primary concern (Fisher, 1991).

Nowadays, customer values have become one of the most important elements in building an organisation’s competitive advantage (Woodruff, 1997) and as a reference for predicting the customers’ purchasing behaviour (Chen and Dubinsky, 2003). Moreover, Ravald and Grönroos (1996) also viewed value as a significant part in relationship marketing.

The importance of evaluating and managing customer satisfaction has been recognized widely either in general or in the sphere of services (Tikkanen et al., 2000). Customer satisfaction has become one of the issues that awoke most interest in the marketing literature because it plays a key role in a successful business strategy (Gómez et al., 2004). Increased in price competition and reduced loyalty has become very common as the markets are getting increasingly competitive (Patterson, 2004).

Research Methodology In this research, descriptive research had been selected as the only research design which means this is a single-stage study. According to Churchill and Iacobucci (2009), descriptive study is more firm and structured.

Population and Sampling Method Since this research aim to understand the perceptions of customers’ evaluation process in Malaysia, the city central of Kuching is selected. Kuching is one of the cities located in Sarawak, Malaysia. The central city of Kuching has approximately population of 277,100 people (DBKU, 2011). By applying the formula presented by Luck et al. (1987), the minimum sample size for the data collection in this city is 288. On the other hand, 56 56

convenience sampling technique has been selected as the method for distributing the questionnaires. Saunders et al. (2003) defined convenience or haphazard sampling as a technique that select the cases randomly. This technique also had been identified as the easiest technique.

Instrument for Questionnaire The distributed questionnaire consists of two parts: Part A (demographic factors) and Part B (multiple questions for the measurement of customer orientation, service orientation, service quality, service encounter quality, perceived value, customer orientation and behavioural intentions).

Data Analysis Descriptive Analyses Pelosi et al. (2000) and Kassim (2001) defined descriptive analysis as a tool to transform the raw data into a form that can be understand and interpret easily. Descriptive statistics encompass of measurement for central tendency, confidence intervals and measurements for dispersion (Brace et al., 2006).

Pearson Correlation Pearson correlation was employed to measure the strength and orientation relationship that exists between two variables (Laerd Statistics, n.d.). The symbol r is denoted the correlation value. With the obtained r value after the analysis, the value can be group under 5 categories: no relationship (r=0.0 ~ 0.2), slight relationship (r=0.2 ~ 0.4), substantial relationship (r=0.4 ~ 0.6), strong relationship (r=0.6 ~ 0.8) and very strong relationship (r= 0.8 ~ 1.0).

Linear Regression Linear regression is the next step and final stages for data analysis in this research. Linear regression was conducted in this research to determine the main factors among independent variables (Sekaran and Bougie, 2010).

Research Findings Respondent Profile The table shown below presents the respondents’ profile of this research with frequency and percentage.

Table I: Demographic Factors

Gender Age

Marital Status

Demographic Parameter Male Female 18-28 29-38 39-48 49-58 59 and above Single Married Divorced

57 57

Frequency 147 141 135 84 50 16 3 159 115 11

Percent 51.0% 49.0% 46.9% 29.2% 17.4% 5.6% 1.0% 55.3% 39.9% 3.8%

Education Level

Race

Gross Income

Widowed SPM STPM Diploma Degree Master Others Malay Chinese Indian Others Below RM 1,000 RM 1,001 – RM 2,000 RM 2,001 – RM 3,000 RM 3,001 – RM 4,000 RM 4,001 – RM 5,000 RM 5,001 and above

3 35 37 94 98 19 5 63 152 32 41 98 57 69 47 11 6

1.0% 12.2% 12.8% 32.6% 34.0% 6.6% 1.7% 21.9% 52.8% 11.1% 14.2% 34.0% 19.8% 24.0% 16.3% 3.8% 2.1%

Means and Standard Deviation Means and standard deviation for all the variables in this study are presented in the table below.

Table II: Mean and Standard Deviation for All Variables.

Mean Std. Deviation Customer Orientation 4.02 1.22 Service Orientation 4.04 1.25 Service Quality 4.05 1.18 Service Encounter Quality 4.05 1.18 Perceived Value 4.14 1.24 Customer Satisfaction 4.10 1.24 Behavioural Intention 4.05 1.30

Pearson Correlation The results of Pearson correlation for all the variables are shown in the table below.

Table III: Pearson Correlation for all variables Variables Customer Satisfaction Behavioural Intention Customer Orientation .842** .839** Service Orientation .801** .802** Service Quality .840** .855** Service Encounter Quality .860** .840** Perceived Value .838** .804** **. Correlation is significant at the 0.01 level (2-tailed).

58 58

Linear Regression The tables below show the results of regression for all the relationship between independent variables and dependent variables.

Table IV: Linear Regression for Customer Orientation towards Customer Satisfaction Customer Orientation Variables B Customer Orientation 0.842** R 0.842 R Square 0.708 Adjusted R Square 0.707 Durbin Watson 1.780

** Significant at least at p < 0.05

Table V: Linear Regression for Service Orientation towards Customer Satisfaction Customer Orientation Variables B Service Orientation 0.801** R 0.801 R Square 0.642 Adjusted R Square 0.641 Durbin Watson 1.908

** Significant at least at p < 0.05

Table VI: Linear Regression for Service Quality towards Customer Satisfaction Customer Orientation Variables B Service Quality 0.840** R 0.840 R Square 0.705 Adjusted R Square 0.704 Durbin Watson 1.784 ** Significant at least at p < 0.05 Table VII: Linear Regression for Service Encounter Quality towards Customer Satisfaction Customer Satisfaction Variables B Service Encounter Quality 0.860** R 0.860 R Square 0.740 Adjusted R Square 0.739 Durbin Watson 1.839 ** Significant at least at p < 0.05

59 59

Table VIII: Linear Regression for Perceived Value towards Customer Satisfaction Customer Satisfaction Variables B Perceived Value 0.838** R 0.838 R Square 0.703 Adjusted R Square 0.702 Durbin Watson 1.893 ** Significant at least at p < 0.05 Table IX: Linear Regression for Customer Orientation towards Behavioural Intentions Behavioural Intentions Variables B Customer Orientation 0.839** R 0.839 R Square 0.705 Adjusted R Square 0.704 Durbin Watson 2.007 ** Significant at least at p < 0.05 Table X: Linear Regression for Service Orientation towards Behavioural Intentions Behavioural Intentions Variables B Service Orientation 0.802** R 0.802 R Square 0.642 Adjusted R Square 0.641 Durbin Watson 1.956 ** Significant at least at p < 0.05 Table XI: Linear Regression for Service Quality towards Behavioural Intentions Behavioural Intentions Variables B Service Quality 0.855** R 0.855 R Square 0.730 Adjusted R Square 0.730 Durbin Watson 1.903 ** Significant at least at p < 0.05 Table XII: Linear Regression for Service Encounter Quality towards Behavioural Intentions Behavioural Intentions Variables B Service Encounter Quality 0.840** R 0.840 R Square 0.706 Adjusted R Square 0.705 Durbin Watson 1.893 ** Significant at least at p < 0.05 60 60

Table XIII: Linear Regression for Customer Orientation towards Behavioural Intentions Behavioural Intentions Variables B Perceived Value 0.804** R 0.804 R Square 0.646 Adjusted R Square 0.645 Durbin Watson 1.851 ** Significant at least at p < 0.05

Summary on Hypotheses Testing With the results obtained from linear regression analysis, the researcher had confirmed and summarised that all the hypotheses proposed in this research are approved and accepted. The hypotheses are as follows: H1: CO is positively related to customer satisfaction.

H2: CO is positively related to BI. H3: SO is positively related to customer satisfaction.

H4: SO is positively related to BI. H5: SQ is positively related to customer satisfaction.

H6: SQ is positively related to BI. H7: SEQ is positively related to customer satisfaction.

H8: SEQ is positively related to BI. H9: VAL is positively related to customer satisfaction.

H10: VAL is positively related to BI.

Discussion Ultimately, all the objectives and hypotheses in this research which aimed to examine the direct relationship between the independent and dependent variables had been met and achieve. With the positive Beta value and p value less than 0.05 obtained from the results of analyses, all the proposed hypotheses were accepted. Furthermore, with the R square value gained from previous chapter, the customer satisfaction and behavioural intention are highly depend on customer orientation and service orientation. H1 and H3 had illustrate that CO and SO is positively related to the customer orientation which means highly customer and service oriented service provider will result in great customer satisfaction and vice versa. This is because when employees are customer and service oriented, they will do their best in satisfying the customersâ&#x20AC;&#x2122; needs and always ensure that the services provided by them are in high quality. The positive impact of CO directly towards customer satisfaction had been proved by previous study (Stock and Hoyer, 2005). However, the direct influence of SO towards customer satisfaction without mediator is less tested in previous study.

With the approval of the H2 and H4, customer orientation and service orientation also held the key towards positive customersâ&#x20AC;&#x2122; behavioural intention. This behavioural intention basically consists of three dimensions: word-of-mouth, repurchase intention or revisit intention and feedback to the service provider. Same as customer satisfaction, if a customer is serve by a single or group of highly customer and service oriented retailer employees, the customer definitely will have positive word-of-mouth spreading among his/her friends and 61 61

family. Besides that, the enjoyment and warm feeling felt by the customer will encourage them to repurchase and revisit the grocery stores frequently. Moreover, positive feedback will be given by the customer to the service provider too. Sadly, the testing on direct impact of CO and SO towards behavioural intention is less develops because scholars tend to add in other variables such as customer satisfaction as mediator in their research (Jayawardhena and Farrell, 2011).

As a conclusion, the approval and acceptance of H7 and H8 are unquestionable. Last but not least, perceived value had been identified to have positive impact towards customer satisfaction and behavioural intention in this study because the result from the linear regression analysis show a positive Beta value and p<0.05. Hence, H9 and H10 are accepted.

Besides the evidence from this study, previous study also proved that customer satisfaction is affected by the perceived value of pre-purchase and post-purchase (Eggert and Ulaga, 2002).

This is because if the perceived value of the goods and services evaluated before and after purchasing are inadequate, undoubtedly the customer will feel dissatisfy. On the other hand, if the customers had a positive view of ‘I get what I pay for’ towards the grocery stores, they will definitely repurchase and revisit the stores again while at the same time forwarding their positive experiences to their friends and family (Eggert and Ulaga, 2002). What more to say provide positive feedback to their service provider. These findings were also supported by Cronin et al. (2000) where customer satisfaction and behavioural intention are predicted by perceived value.

Managerial Application This research is very useful especially for the marketers of physical stores to understand the importance of providing good services to their customers and maybe to their potential customers too. Moreover, the positive relationship of customer orientation and service orientation towards the customer satisfaction and behavioural intentions had proved to the retail managers that they should not rely upon certain groups of employees that can perform well, but they should also emphasis on the individual-level of CO and SO. Besides that, due to the importance of CO and SO, these constructs are recommended to be included as one of the requirements during the recruitment and selection process for retail employees and managers (Cran, 1994).

Conclusion The purpose of this research was to explore and investigate the impacts of customer orientation, service orientation, service quality, service encounter quality, perceived value towards customer satisfaction and behavioural intention in retailing industry. Undeniable, managers and marketers in retailing industry are getting more aware of the customer satisfaction and customers’ behavioural intention as the market is becoming more competitive. This situation not only happens to retailing industry but also to the entire services sector. As the matters of fact, customer satisfaction and behavioural intention had turn out to be scholars’ favourite research topic.

62 62

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Bagozzi, R.P. (1992). The self-regulation of attitudes, intentions, and behaviour”, Social Psychology Quarterly55(1), pp. 178-204.

Brace, N., Kemp, R. &Snelgar, R. (2006) SPSS for Psychologists (3rd edition). Basingstoke: Lawrence Erlbaum Associates.

Chen, Z. & Dubinsky, AJ. (2003).A conceptual model of perceived customer value in Ecommerce: a preliminary investigation. Psychol Mark, 20(4), pp. 323–347.

Churchill, G.A. &Iacobucci, D. (2009).Marketing Research: Methodological Foundations, South-Western Cengage Learning, USA. CIA, (2011), Country Comparison: GDP – Per Capita (PPP), Viewed 12th April 2012, <https://www.cia.gov/library/publications/the-worldfactbook/rankorder/2004rank.html>.

Cran, D.J. (1994). Towards Validation of the Service Orientation Construct.Service Industries Journal, 14(1), pp. 34-44.

Cronin, J.J. & Taylor, S.A. (1992). Measuring service quality: a re-examination and extension.Journal of Marketing.56(3), pp. 55-68.

Cronin, J.J., Brady, M.K., &Hult, G.T. (2000).Assessing the effects of quality, value, customer satisfaction on consumer behavioral intentions in service environments.Journal of Retailing, 76(2), pp. 193–218.

Dawkins, P. &Reichheld, F. (1990).Customer retention as a competitive weapon.Directors and Boards, 14(1), pp. 42-47.

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Eggert, A., &Ulaga, W. (2002). Customer perceived value: A substitute for satisfaction in business markets? Journal of Business & Industrial Marketing, 17(2/3), pp. 107– 118.

Fisher, R.J. (1991). Durable differentiation strategies for services.Journal of Services Marketing, 5(1), pp. 19−28.

Fornell, C., Johnson, M., Anderson, E. W., Cha, J. &Everitt Bryant, B. (1996) The American customer satisfaction index: nature, purpose, and findings, Journal of Marketing, 60(October), pp. 7–18.

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Gómez, M.I., McLaughlin, E.W., &Wittink, D. R. (2004). Customer satisfaction and retail sales performance: an empirical investigation. Journal of Retailing, 80(1), pp. 265278.

Hennig-Thurau, T. (2004), Customer-orientation of service employees: its impact on customer satisfaction, commitment, and retention, International Journal of Service Industry Management, 15(5), pp. 460-478.

Heskett, J.L., Sasser, W.E. & Schlesinger, L.A. (1997). The Service Profit Chain: How Leading Companies Link Profit and Growth to Loyalty, Satisfaction, and Value. The Free Press, New York, NY. Hoffman, K.D., Kelley, S.W., &Rotalsky, H.M. (1995).Tracking service failures and employee recovery efforts.Journal of Services Marketing, 9(2), pp. 49−62.

Jayawardhena, C. & Farrell, A.M. (2011). Effects of retail employees’ behaviours on customers’ service evaluation. International Journal of Retail & Distribution Management, 39(2), pp. 203-217.

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Lytle, R., & Timmerman, J. (2006). Service orientation and performance: an organizational perspective. Journal of Services Marketing, 20(2), 136-147.

Patterson, P.G. (2004). A contingency model of behavioural intentions in a services context.European Journal of Marketing, 38(9), pp. 1304 – 1315.

Pelosi, M.K., Sandifer, T.M. &Sekaran, U. (2000).Research and Evaluation for Business.

John Wiley and Son Inc., New York.

Rust, R.T. & Oliver, R.L. (1994). Service quality: insights and managerial implications from the frontier. In: Rust, R.T., Oliver, R.L. (Eds.), Service Quality: New Directions in Theory and Practice. Sage Publications, London, pp.1–19.

Ravald, A. &Grönroos, C. (1996).The value concept and relationship.European Journal of Marketing, 30(2), pp. 19–30.

Reichheld, FF. & Sasser, W.L. (1990). Zero defections: quality comes to services. Harvard Business Review, 68, pp. 105-111.

Saunders, M.N.K., Lewis, P. &Thornhill, A. (2003) Research methods for business students (3rd Ed). Harlow: FT Prentice Hall.

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Schlesinger, L. A., & Heskett, J. L., (1991). The Service-Driven Service Company. Harvard Business Review, pp. 77-81.

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Woodruff, R.B. (1997) Customer value: the next source for competitive advantage. Journal Academic Marketing Science, 25(2), pp. 139â&#x20AC;&#x201C;153.

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65 65

Asian Journal of Business Research

ISSN1178-8933

Volume 3

Number 1

2013

Marketing Barriers and Export Performance: A Strategy Categorization Approach in the Vietnamese Seafood Industry Ho Huy Tuu Economics Faculty, Nhatrang University, Vietnam Svein Ottar Olsen Tromsø University Business School, University of Tromsø, Norway

Abstract This study tests the combined effect of five marketing barriers (product, price, distribution, logistics, and promotion) on the export performance of Vietnamese seafood companies.

Representative cross-sectional data on business managers of seafood companies in the Mekong Delta, Vietnam, are used to validate construct measures and test hypotheses. The results indicate that, except for the promotion barrier, the barriers of product, price, distribution, and logistics have a significant negative impact on export performance. Based on the relative importance of the different marketing barriers, seafood firms should firstly focus on quality improvements in order to improve their export performance.

Keywords: Marketing barriers, Export performance, Seafood industry, Vietnam

Introduction The determinants of the export performance of small and medium-sized firms are of vital importance for policy makers, firm managers, and researchers (Baldaufet al., 2000; Katsikeaset al., 2000; Sousa et al., 2008). In particular, marketing barriers, such as product, price, distribution, promotion, and logistics, occupy an important position because they often cause financial losses and negative attitudes towards international activities (Leonidou, 1995; Balabanis, 2000). Most previous studies investigate the effect of marketing barriers across industries (Leonidou, 2000; Morgan et al., 2004; Ogunmokun and Ng, 2004; Brouthers and Nakos, 2005; Solomon and Shaver, 2005) and only a few studies explore the effect of several kinds of marketing barriers within a specific industry, such as paper, wine, or logistics services (Sullivan and Bauerschmidt, 1989: Yeung, 2006; Karelakiset al., 2008). The focus on one industry is expected to provide a more accurate assessment of the relative role of the marketing barriers because this research context is more homogeneous than across industries (Leonidou, 2004).

The Vietnamese seafood industry has developed strongly in the last decade, with its export revenue increasing from about 1 billion USD in 2000 to about 5 billion USD2 in 2010. It has continuously improved its position in the top ten seafood exporters in the world in recent 2

The report of the Head Department of Vietnamese Customs in 2010.

66 66

years. This result comes from exploiting opportunities in new foreign markets, improving the production technology and management, and enhancing the ability to resist trade and legal barriers from foreign importers.3 However, because most seafood companies in Vietnam are small and medium-sized firms, they often face difficulties in exploiting their potential fully due to the lack of appropriate marketing strategies.1 Thus, this study aims to contribute to the literature by exploring the combined effect of the five most important kinds of marketing barriers – product, price, distribution, logistics, and promotion (Leonidou, 2004) – on the export performance of the Vietnamese seafood industry at the individual firm level (Yeung, 2006; Karelakiset al., 2008). This study uses a multiple regression method based on a representative cross-sectional data set of managers from seafood companies in the Mekong Delta, Vietnam, to test the proposed hypotheses. The next parts of this study will present the theoretical framework, test the hypotheses, and discuss the results.

Literature Review Export Performance Different approaches are used to access the construct of export performance, such as measure types (e.g., economic or behavioural; effectiveness or efficiency), the referent frame (e.g., absolute or relative competitors), or the time frame (e.g., static or dynamic) (Carneiroet al., 2006). The nature of export performance also varies according to the analytical unit (e.g., a firm or a strategic business unit), assessment approach (e.g., objective or subjective), or scale type (e.g., single or multiple) (Aulakhet al., 2000; Carneiroet al., 2006). This study defines and operationalizes export performance as subjective overall evaluations of small and medium-sized firms’ managers regarding the economic success of selling products to foreign countries (Shoham, 1998; Carneiroet al., 2006).

Marketing Barriers across Strategy Categories Marketing barriers refer to obstacles in the firm’s overseas activities, such as product quality, price, distribution, logistics, and promotion (Karelakiset al., 2008; Sousa and Bradley, 2008).

The overall review in Table 1 shows a comprehensive picture of the effects of those marketing barriers on export performance.

3

The development strategy of the Vietnamese seafood industry to 2020.

67 67

Table I: The Literature Review of the Effect of Marketing Barriers on Export Performance Literature review

Industrial sector

Product barrier

Price barrier

Distribution barrier

Promotion barrier

Logistics barrier

X

X

X

Kaynak and Kothari (1980)

M

X

Czinkota and Ursic (1983)

M

X

Barrett and Wilkinson (1985)

M

X

X

Kedia and Chhokar (1986)

M

X

X

Cheong and Chong (1988)

M

X

Keng and Juian (1989)

M

X

Sullivan and Bauerschmidt (1989) Bauerschmidtet al. (1985)

O

X X

X

X X

X

X

X

X

X

O

X

X

Dichtlet al. (1990)

M

X

X

Howard and Borgia (1990)

M

X

X

Kaleka and Katsikeas (1995)

M

X

Leonidou (1995)

M

X

Moini (1997)

M

Leonidou (2000)

M

Morgan et al. (2004)

M

Ogunmokun and Ng (2004)

M

Brouthers and Nakos (2005)

M

Solomon and Shaver (2005)

M

Yeung (2006)

O

Karelakiset al. (2008)

O

Sousa and Bradley (2008)

M

X X X

X X

X

X

X

X

X

X X X* X* X X

X X

Source: Literature reviewed by the authors Notes: * Reversed scale; M: multiple industries; O: one industry.

Generally, marketing barriers have been found to affect export performance negatively in most previous studies. However, empirical evidence has often been found using data from multiple industries and investigating mostly one, two, or three kinds of marketing barriers.

The studies have also failed to determine the relative importance of those barriers and assess the difficulties firms have encountered regarding those factors in the export performance across industries (Kedia and Chhokar, 1986; Moini, 1997).

The product barrier occurs in developing new products for foreign markets, meeting exportproduct quality standards, adapting export product design/styles, and providing an after-sales service (Howard and Borgia, 1990; Kaleka and Katsikeas, 1995; Leonidou, 2000,2004).

Small and medium-sized firms often lack managerial expertise, research skills, R&D competence, and financial resources, thus limiting the firmsâ&#x20AC;&#x2122; fulfillment of the high-quality standards for products required by foreign markets (McConnel, 1979; Leonidou, 2004).

Different facets of the product barrier have been found to impact differently on export 68 68

performance. Some facets have a very low impact (e.g., developing new products for foreign markets), while others have a low (e.g., meeting export product quality standards) to moderate influence (e.g., providing a technical/after-sales service) on export performance (see Leonidou, 2004 for a review). Generally, the relative role of product barriers is the weakest among the marketing barriers to the export performance of small and medium-sized firms across industries (Leonidou, 2004).

The price barrier involves offering satisfactory prices to customers and the difficulty in matching competitorsâ&#x20AC;&#x2122; prices and granting credit facilities to foreign customers (Kedia and Chhokar, 1986; Moini, 1997; Leonidou, 2004). Small and medium-sized firms often suffer high costs due to the lack of economies of scale, causing them to face difficulties in controlling their exporting operations (Terpstra and Sarathy, 2000). The aspects of the price barrier are documented to have a high to very high impact on export performance across industries, and among the marketing barriers, it is the strongest predictor of export performance (Leonidou, 2004).

The distribution barrier refers to complex foreign distribution channels, accessing export distribution channels, obtaining reliable foreign representation and maintaining control over foreign middlemen, and facing difficulties in supplying inventory abroad (Bauerschmidtet al., 1985; Keng and Jiuan, 1989; Leonidou, 1995; 2004). The complexity and length of foreign distribution channels makes it difficult for firms to enter international markets (Terpstra and Sarathy, 2000; Czinkota and Ronkainen, 2001). Small and medium-sized firms face a very low to a high impact of the different facets of the distribution barrier on their export performance. For example, while accessing export distribution channels and obtaining reliable foreign representation have a high influence, maintaining control over foreign middlemen has only a very small effect on export performance (Leonidou, 2004).

The logistics barrier is considered as an extensive dimension of the distribution barrier (Kaleka and Katsikeas, 1995; Yeung, 2006). The logistics barrier reflects the difficulties in supplying inventory in overseas markets, unavailable foreign warehousing facilities, and excessive transportation and insurance costs (Kaynak and Kothari, 1984; Barrett and Wilkinson, 1985). The lack of financial and human resources and a large geographical distance generate many problems for the firms in delivering products on time as well as maintaining the reasonable storage of products abroad (Cateora and Graham, 2001). Most small and medium-sized firms feel that the excessive transportation/insurance costs are a major problem, while supplying inventory and warehousing facilities abroad is popular but relatively weak (Leonidou, 2004).

The promotion barrier, finally, deals with adjusting export promotional activities to individual foreign market requirements in relation to the variations in buying motives, consumption patterns, and government regulations (Sullivan and Bauerschmidt, 1989; Howard and Borgia, 1990; Leonidou, 2004). The lack of resources and geographical distance also generate difficulties in adjusting export promotional activities (Cateora and Graham, 2001). However, the effect of the promotion barrier on export performance for small and medium-sized firms is at a moderate level (Leonidou, 2004).

Based on the above discussions, this study explores whether different categories of marketing barriers (product, price, distribution, logistics, and promotion) influence export performance simultaneously in the context of one industry. Because different industries have different success factors and drivers of export performance (Leonidou, 2004), a comparison within one 69 69

specific industry can be more reliable for the firms or managers within this industry. The following hypotheses are suggested: H1:

The product barrier has a negative effect on export performance.

H2:

The price barrier has a negative effect on export performance.

H3:

The distribution barrier has a negative effect on export performance.

H4:

The logistics barrier has a negative effect on export performance.

H5:

The promotion barrier has a negative effect on export performance.

In order to prioritize the different categories of marketing strategies, it is important to gain an insight into the relative role of those marketing barriers in export performance for a specific industry (Leonidou, 2004). This study expects that the price barrier has the strongest impact, then distribution, logistics, promotion, and finally the product barrier with the weakest impact on export performance.

Methodology Data Collection Among the exporting industries in Vietnam, the seafood industry has to suffer the largest number of regulations on the control of safety product quality as well as antidumping laws from importing countries, such as the US, Japan, or Europe. These regulations cause the companies more difficulties in building exporting marketing strategies. Thus, focusing on this industry is expected to generate a comprehensive view of the role of marketing barriers in export performance in Vietnam. Seafood companies operate along all the coastal provinces in Vietnam with exporting markets covering over 100 nations and geographical areas. In preparation for this study, we focused on three key exported products: pangasius, shrimp, and surimi. About 150 seafood companies fulfilled the criteria and operate mainly in the Mekong Delta, in the south of Vietnam.

A survey questionnaire was sent by e-mail to the business managers of 102 seafood companies with labour numbers over 30. We decided to ignore about 50 companies with fewer than 30 employees, as their sizes are too small to contribute significantly to the export activities, especially due to the labour intensity of the industry. In order to increase the response ratio, the firmsâ&#x20AC;&#x2122; managers were contacted by phone to confirm their participation in the survey. A total of 82 questionnaires were returned. The mean number of full-time employees for the sample is 670. The mean export revenue as a percentage of the total revenue is 50.3%. The average number of years for which the companies have participated in export activity is 9.2, and the average age of the managers is 30. The average number of exporting markets is 15.

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Measures of the Variables Export performance was measured by three items on a seven-point semantic scale from 1 = lower to 7 = higher in the form: “Compared with domestic business, export performance contributes to (1) the growth of the company is …; (2) the market share of the company is…; and (3) the profitability of the company is…”. These three items were adapted from previous studies (e.g., Zouet al., 1998).

The product barrier was measured by four items on a seven-point Likert scale in the form: “We do not have enough competence to: (1) …develop and produce new products for foreign markets; (2)…meet the strict quality standards for export products; (3)… adapt export product design/styles; and (4) provide an after-sales service (Howard and Borgia, 1990; Kaleka and Katsikeas, 1995; Leonidou, 2000, 2004).

Three items were used to measure the price barrier on a seven-point Likert scale as follows: “We find it difficult to: (1)…offer satisfactory prices to customers; (2)…match competitors’ prices; and (3)… grant credit facilities to foreign customers (Barrett and Wilkinson, 1985; Kedia and Chhokar, 1986; Keng and Jiuan, 1989; Moini, 1997; Leonidou, 2004).

The distribution barrier was assessed according to four general statements on a seven-point Likert scale: (1) “The complexity of foreign distribution channels is out of our reach”; (2) “Accessing, maintaining and controlling export distribution channels is difficult”; (3) “Obtaining reliable foreign representation is problematic”; and (4) “Maintaining control over foreign middlemen is not easy” (Bauerschmidtet al., 1985; Keng and Juian, 1989; Leonidou, 1995, 2004).

The logistics barrier was measured using four items on a seven-point Likert scale: (1) “We don’t have the availability of warehousing facilities abroad”; (2) “We are faced with excessive transportation costs”; (3) “We are faced with very high insurance fees”; and (4) “We are faced with difficultyin renting suitable transportation means” (Kaynak and Kothari, 1984; Barrett and Wilkinson, 1985; Leonidou, 2004).

The promotion barrier was measured on a seven-point Likert scale using three items: “We do not have enough ability and financial resources (1) to conduct a promotion programme in foreign countries; (2) to justify promotional activities in foreign markets; and (3) to conduct an international advertisement programme” (Sullivan and Bauerschmidt, 1989; Howard and Borgia, 1990; Leonidou, 2004).

Analytical Procedures The first goal is to explore whether each measure taps facets of the intended constructs (convergent validity) and whether the constructs are distinct from each other (discriminant validity). The constructs are then assessed in regard to their reliability by Cronbach’s alpha.

To do so, an exploratory factor analysis (EFA) was conducted (Malhotra and Birks, 2003).

The second stage of the analysis uses a multiple regression technique to test the relationships between the constructs.

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Analysis and Results Reliability and Validity The results of the EFA, summarized in Table 2, indicate that six factors are extracted, corresponding to six intended constructs, which explain 76.6% of the variance of the data.

For example, Factor 1 is formed by the first three items corresponding to the product barrier, which explains 6.8% of the variance, and Factor 3 with the next three items corresponding to the price barrier, explaining 9.7% of the variance. The EFA results fit well with the data (Kaiser–Meyer–Olkin measure of sampling adequacy = 0.75 > 0.50; chi-squared = 976.2, df = 231, p < 0.001). This means that the sample size is sufficiently large that it does not seriously influence the reliability of the factor analysis (Field, 2000). It is worth noting that only one item of the product barrier is rejected out of the data –“We do not have enough competence to provide an after-sales service”. In addition, most of the reliability exceeds the minimum value of 0.70 (Malhotra and Birks, 2003). The individual item loadings on the constructs are all high, with values ranging from 0.60 to 0.92, which primarily show that the convergent validity and reliability of the constructs are acceptable.

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Table II: Constructs, Factor Loadings, and Reliability (EFA) Constructs/Items

Factor loadings 1

Product barrier Developing and producing new products Meeting the strict quality standards

0.84 0.73

Adapting export product design/styles

0.66

2

3

4

5

6

Price barrier Matching competitorsâ&#x20AC;&#x2122; prices

0.83 0.81 0.60

Offering satisfactory prices to customers Granting credit facilities Distribution barrier Complexity of foreign distribution

0.92 0.91 0.81 0.72

Accessing, maintaining, and controlling Obtaining reliable foreign representation Control over foreign middlemen Logistics barrier High insurance fees

0.88

Availability of warehousing facilities

0.85

Excessive transportation costs

0.85

Renting suitable transportation means

0.82

Promotion barrier Conducting international advertisement Conducting promotion programme

0.83 0.82

Justifying promotion activities

0.72

Export performance Profitability of the company

-0.86

Revenue growth of the company

-0.84

Market share of the company

-0.84

Variance (%) = 76.65% Cronbachâ&#x20AC;&#x2122;s alpha

6.82 0.71

9.67 0.67

16.81 0.91

16.12 0.88

11.78 0.86

15.46 0.94

Source: Investigated by the authors Notes: KMO measure of sampling adequacy = 0.75; chi-squared = 976.2 (231), p < 0.001; rotation method: principal components; rotation method: varimax with Kaiser normalization.

As shown in Table 3, all the correlations are less than 0.55. Except for the promotion barrier, the rest of the marketing barriers correlate relatively highly with export performance. The results are important for the next step, multiple regression analysis.

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Table III: Construct Means, Standard Deviations, and Correlations Constructs Mean S.D 1 2 3 4 1. Export performance 5.08 1.49 –

5

6

2. Product barrier

3.48

1.29

–0.51

–

3. Price barrier

4.15

1.45

–0.30

0.22

–

4. Distribution barrier

4.32

1.91

–0.45

0.44

0.19

–

5. Logistics barrier

3.52

1.39

–0.33

–0.13

0.24

0.04

–

4.70 2.09 –0.11 0.49 Source: Investigated by the authors Notes: Correlations in bold are significant at p < 0.05.

–0.32

0.54

0.05

6. Promotion barrier

–

Regression Analysis The estimated results of the multiple regression model indicate a good fit with the data (F = 7.24, p < 0.001; R2 = 38.9%; all VIF < 2.0). The results of testing the effects of marketing on export performance are shown in Table 4. This study expected that the product, price, distribution, logistics, and promotion barriers, irrespectively, affect export performance negatively.

Table IV: The Effects of Marketing Barriers on Export Performance Std Independent Unstd Coefficients t-values variable Coefficients (β) Constant 9.24 11.31** Product barrier –0.43 –0.41 –3.27**

Sig. (2-tails) 0.00 0.00

Price barrier

–0.26

–0.25

–2.18*

0.03

Distribution barrier

–0.20

–0.26

–2.04*

0.04

Logistics barrier

–0.25

–0.24

–2.12*

0.04

Promotion barrier

ns

0.07 0.08 0.62 0.54 Source: Investigated by the authors Notes: * p < 0.05; ** p < 0.01; ns: non-significant; all VIF < 2.0; R2 (export performance) = 38.9%; F = 7.42, p < 0.001.

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The results in Table 4 indicate that while the barriers of product (β = –0.41, t = –3.27, p < 0.01), price (β = –0.25, t = –2.18, p < 0.05), distribution (β = –0.26, t = –2.04, p < 0.05), and logistics (β = –0.24, t = –2.12, p < 0.05) have a significantly negative effect on export performance, the promotion barrier has no significant influence on export performance (β = promotion barrierp>has no significant influence exportHypotheses performance (β 3,= and 0.08,4, tbut = 0.62, 0.08, t = 0.62, 0.10).

Therefore, the resultson support 1, 2, do notp> 0.10).

Therefore, the results support Hypotheses 1, 2, 3, and 4, but do not support Hypothesis 5. support Hypothesis 5.

Regarding the product product barrier barrierhas hasthe thestrongest strongest Regardingthe therelative relativeimportance importance of of marketing marketing barriers, the effect export performance.

The distribution, price, andand logistics barriers occupy the the nextnext most effectonon export performance.

The distribution, price, logistics barriers occupy important positions with relatively similar effects.

Finally, the promotion barrier is the least most important positions with relatively similar effects. Finally, the promotion barrier is the important, withoutwithout a significant impactimpact on export performance.

The estimated resultsresults are shown least important, a significant on export performance.

The estimated are inshown Figurein1.Figure 1.

Product Produc barrier t barrier Price Price barrier barrie r

–0.43 –0.43(–3.27**) (– 3.27**) –0.26 –0.26(–2.18*) (– 2.18*) –0.20 –0.20(–2.04*) (– 2.04*) –0.25 –0.25(–2.12*) (– 2.12*)

Distribution Distributio barrier n barrier Logistics Logistic barrier s barrier

R2R=2 =38.9% 38.9%

Export Export performance performanc e

ns.ns .

FitFitstatistics: F statistics: = 7.42 p<F0.001 = 7.42 p< 0.001

Promotion Promotio barrier n barrier

Figure 1: The Effects of Marketing Barriers on Export Performance

Discussions Research Objectives The present study has three main objectives. First, it tests the combined effect of five marketing barriers (product, price, distribution, logistics, and promotion) on export performance. Second, it 75 75 75

Discussions Research Objectives The present study has three main objectives. First, it tests the combined effect of five marketing barriers (product, price, distribution, logistics, and promotion) on export performance. Second, it investigates the relative role of those marketing barriers in export performance. Finally, this study aims to suggest some managerial implications based on the findings.

Theoretical Implications This study extends the previous studies (Kaynak and Kothari, 1984; Leonidou, 2000; Brouthers and Nakos, 2005; Solomon and Shaver, 2005; Yeung; 2006; Karelakiset al., 2008; Sousa and Bradley, 2008) by combining and evaluating simultaneously the effects of the product, price, distribution, logistics, and promotion barriers on export performance within one industry with relatively homogenous marketing, distribution, and production environments. Using data from the Vietnamese seafood industry, it extends the previous research, which was mostly performed in Western countries. The results confirm a negative relationship between product barrier and export performance (β = –0.41, t = –3.27, p < 0.01).

This result is consistent with most previous studies (Kaleka and Katsikeas, 1995; Leonidou, 1995, 2000; Brouthers and Nakos, 2005; Karelakiset al., 2008). However, while most previous studies in the context of developed countries show that the relative importance of the product barrier is the weakest (Kedia and Chhokar, 1986; Keng and Juian, 1989; Moini, 1997; Leonidou, 2004), this study confirms the product barrier to be the most important predictor of export performance of seafood firms in Vietnam.Most seafood companies in Vietnam only export a few product lines, such as shrimp, fish, or crab, as frozen raw products. In particular, most products are sold through foreign middlemen, and not to the ultimate consumers. This limits the ability to develop new products for a specific foreign market’s needs and wants, regardless of the diversity of consumer preferences across countries. In addition, although the production of high-value-added products is encouraged and aided by the Government, many firms seem to be afraid of the risks due to the lack of international market understanding.4 More importantly, while most companies consider Japan, Europe, and the US as target markets, fulfilling the special legislation of those countries regarding quality standards is always problematic. Furthermore, the inefficiency of the origin tracing system and the lack of public control of food quality lead to many cases in which a large number of batches of goods are returned due to their failure to fulfil the quality standards of overseas markets, especially health and safety regulations. In addition, we only know of a very few companies (e.g., Bianfishco, Agrifish) that selltheir products with their own brands. This reflects a weak status in building and developing seafood product brands, so the penetration in overseas markets is problematic.

The findings show a negative effect of the price barrier on export performance (β = –0.25, t = –2.18, p < 0.05). This result is similar to those of most previous studies (Moini, 1997; Leonidou, 2000; Karelakiset al., 2008; Sousa and Bradley, 2008). The price barrier is also found to be the second most important predictor of export performance in the industry.

Although most seafood firms in Vietnam take advantage of the low labour cost, the price barrier is becoming more serious due to increasingly scarce materials and a polluted 4

The report of the Head Department of Vietnamese Customs in 2010.

76 76

environment. In recent years, the competition for input materials has also become more severe because Chinese enterprises are willing to raise their price to gather all the raw materials. In addition, most firms lack the ability to compete in price, resulting from dumping legal proceedings and host countries’ policies to subsidize the local industry. Furthermore, the firms face additional costs incurred by modifying the product, higher administrative, operational, and transportation expenses connected with exporting, and extra taxes, tariffs, and fees imposed when entering the host country (Tersptra and Sarathy, 2000).

The present results also confirm a negative relationship between the distribution barrier and export performance (β = –0.26, t = –2.04, p < 0.05). This result is consistent with most previous studies (Sullivan and Bauerschmidt, 1989; Leonidou, 1995; Moini, 1997). Although the distribution barrier’s impact on export performance is weaker than that of the product and price barriers in the industry, the magnitude of its effect is relatively strong. In fact, most export markets in the seafood industry are in developed countries. Therefore, the firms have to face distribution channels consisting of many layers, direct distribution systems, and the diversity of the services required by distribution members across countries (Terpstra and Sarathy, 2000). This complexity of the distribution systems creates serious difficulties for the firms. Actually, we only know of a few Vietnamese firms that have overseas agents who are responsible for introducing and showing their products, while most firms export their products indirectly through foreign middlemen.5 Furthermore, the firms encounter difficulties in obtaining reliable representation abroad (Leonidou, 2004). Therefore, the seafood exporters are limited in their access to overseas distribution channels. This is very common because some distribution channels have already been occupied by their competitors, or the length of the channel is too costly to manage (Czinkota and Ronkainen, 2001).

The findings also reveal a negative effect of the logistics barrier on export performance (β = – 0.24, t = –2.12, p < 0.05). This result is consistent with most previous studies (Kaleka and Katsikeas, 1995; Leonidou, 1995, 2000; Yeung, 2006). Although the export revenue has continuously increased in recent years, the export markets of the firms focus mainly on the US, the EU, and Japan; the great geographical distance increases the transportation costs as well as limiting the ability to supply adequately. In addition, most firms have no warehousing facilities abroad. Thus, the flow of products to the host markets is not constant and is sometimes delayed. The characteristics of seafood products, which require special storage and faster transportation means, force the firms to pay extra costs. In most cases, the firms have to cover additional insurance, which increases the price of the products for the endusers. As a result, the logistics barrier can decrease the firms’ competitiveness in international markets.

Finally, the results do not support a negative relationship between the promotion barrier and export performance (β = 0.08, t = 0.62, p> 0.10). This result is inconsistent with most previous studies (Keng and Juian, 1989; Sullivan and Bauerschmidt, 1989; Howard and Borgia, 1990). However, it is worth noticing that although the effect of the promotion barrier on export performance is not significant, the promotion barrier correlates highly with other marketing barriers (see Table 2). Thus, its effect on export performance may occur indirectly through other barriers, such as product, price, or distribution. As a result, it would be a mistake to ignore the role of the promotion barrier in export performance. In fact, not many seafood firms in Vietnam can carry out their promotion strategy abroad effectively. What we can observe is that only a few firms introduce their products at expo exhibitions, some have a 5

The report of the Head Department of Vietnamese Customs in 2010.

77 77

website to advertise and provide limited information about their products, while most firms have no advertising activities in overseas markets due to high costs. These shortcomings generate risks for the firms when their export revenue is mainly based on a certain amount of familiar customers.

Implications for Business Marketing Practice This study has some implications for managers and marketers in the industry. First, seafood firms should pay attention to the different marketing barriers based on their relative importance in reducing or improving export performance. Although the importance of each category of those barriers differs, as well as that of each facet of each category, most marketing barriers and their facets play a certain role in export performance in a combined effect. This means that managers and marketers should take a comprehensive view of the limitations in the firmâ&#x20AC;&#x2122;s marketing mix strategy and make an effort to generate a better strategy. However, for such a strategy, the firms should ignore the domestic competition and direct their attention to competitors abroad. A strict association between consistent activities of the firmsâ&#x20AC;&#x2122; members and building a mechanism to share information and use common resources may be a good solution to overcome the limitations of marketing barriers.

According to this study of the Vietnamese seafood export industry, firms should focus firstly on the product, then price, distribution, logistics, and lastly promotion barrier. More importantly, for each kind of marketing barrier, firms should determine the causes of the problem. For example, a lack of knowledge and information about consumer attitudes, preferences, and habits may be the cause of producing products that do not fulfil their consumersâ&#x20AC;&#x2122; needs and wants. As such, a consumer investigation in the target markets may help to solve the problem.

Finally, as mentioned in the introduction, the seafood industry plays an extremely important role in the economy, especially in providing jobs and bringing a large amount of foreign currency to the country. Thus, the policy makers in the industry need to aid the firms to decrease the negative impacts of marketing barriers. They should hold workshops or lectures or produce documents to educate the firms on how to improve their marketing mix strategy.

They can also help the firms by providing information about safety food standards, potential customers or ways to enter a new foreign market and the like. Export encouragement tools, such as financial assistance or expert consultation, should be used to help the firms (Bauerschmidtet al., 1985; Karelakiset al., 2008).

Suggestions and Recommendations Despite the above contributions, this study has several limitations. Different export barriers exist in the literature (Leonidou, 2004). This study only focuses on five marketing barriers.

Thus, future studies would benefit from exploring other barriers (e.g., procedural, informational, or environmental) that affect export performance. The results presented here are based on self-reported measures of export performance relating to the Vietnamese seafood industry. Objective measures of export performance (Aulakhet al., 2000; Carneiroet al., 2006) could be used to increase the generalizability of the study.

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Asian Journal of Business Research

ISSN1178-8933

Volume 3

Number 1

2013

Negative Political Advertising: Itâ&#x20AC;&#x2122;s Impact on Voters Ernest Cyril de Run Universiti Malaysia Sarawak Jee Teck Weng Swinburne University of Technology Sarawak Lau Wee Ming SEGi College Sarawak

Abstract This study looks at a one of the many use of a direct negative advertisement in Malaysian politics. Negative advertising has been constantly used by political parties in Malaysia. This paper looks specifically at one of such advertisements and its effect on voters where it was specifically aimed at (Batang Ai, Sarawak). The study measures attitude towards the advertisement, advertisement likeability, advertisement believability, positive emotional quotient towards the advertisement and its affect on actual behavior. Response was obtained from Batang Ai voters and divided into two groups, Barisan Nasional and non-Barisan Nasional voters. A total of 150 respondents were used in this study and the data were analyzed using descriptive analysis, Independent Sample t-test, Correlation and Regression.

The findings indicate significant difference between Barisan Nasional and non-Barisan Nasional for all variables except for attitude towards the advertisement. It also shows that advertising believability is the only variable that impacts actual behavior.

Keywords: Political Advertising, Advertisement, Malaysia

Introduction Social and political advertisements studies have increased over the years (Greening & Gray, 1994). Much of such studies were mainly developed and carried out in the United States and some parts of Europe (Jasanoff, 2005). However, little attention has been placed on the development of political advertisements studies, especially negative political advertisements in Malaysia. This may be due to the fact that most political advertisements in Malaysia were about a particular candidate or the political party aspirations and promises. There were some indirect negative advertisements too. Hence, the focus here is the use of a direct political advertisement in the previous by-election in Malaysia, particularly the Batang Ai by-election.

The 2008 general election have shown a tremendous transformation in Malaysiaâ&#x20AC;&#x2122;s political and governing policies. It has brought about significant changes to the Malaysian political landscape, such as governance innovations and transformations (Ramesh & Fritzen, 2009).

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Such transformation was especially evident due to the stronger and larger uprising of the middle class as compared to the 1999 election. The middle class had emerged as a force in Malaysian politics since the 1999 election (Loh & Saravanamuttu, 2003a, 2003b) and were now more evident in the political landscape. The 2008 general election also saw the rise of a coalition opposition party, Pakatan Rakyat (PR). Pakatan Rakyat is a political coalition between three parties, Democratic Action Party (DAP), Parti Keadilan Rakyat (PKR) and Parti Islam Semalaysia (PAS) against the political agenda being pushed by the ruling party (Barisan National). In 2008, the Barisan National (BN) did not lose the election, but the opposition won an impressive five states (Kelantan, Kedah, Penang, Perak and Selangor) (Mohamad, 2008).

The opposition parties and the middle class utilized the Internet (blogs initially and now social media such as Facebook and Twitter), independent newspapers, online news, radio, or alternative media to spread their political agenda and views (George, 2007). What was highlighted was mainly the malpractices and corruption in the nation. On the other hand, the Barisan Nasional (BN), through the federal government, mainly used the main stream media such as those owned by Media Prima (TV3, NTV7, TV9) and main newspaper agencies (Utusan, The Star). The existing media channel such as TV1 and TV2 (owned by national broadcaster, Radio Television Malaysia or RTM in short) and Bernama news agency are clearly seen as the mouthpiece of the government and hence that of Barisan Nasional (George, 2007).

In the recent by-election held at Batang Ai, Sarawak, East Malaysia, two of the political parties (Barisan Nasional and Pakatan Rakyat) was vociferous in their debate. The political competition based on a variety of issues that were employed by both parties was common in Malaysia, until a particular advertisement (refer to Figure 1) appeared in the local newspapers. The advertisement showed a photo of a portion of Permatang Pauh (a town in West Malaysia) which is the Parliamentary seat for the opposition leader Datuk Seri Anwar Ibrahim. The advertisement shows that Permatang Pauh looks undeveloped, and asks the voters in Batang Ai â&#x20AC;&#x153;can the person who manage this place create change for Batang Ai?â&#x20AC;?

This was a deviation from the norm of political advertisements in Sarawak, where a direct negative accusation to a person in the opposition is used, instead of the norm of the party or ideologies. Nevertheless, this is not the first time the BN employed negative advertisement.

In the 1999 election, the ruling party aggressively used negative advertisements to discredit the opposition (Kaid & Holtz-Bacha, 2006; Moten, 2000). The same thing happened in the 1990â&#x20AC;&#x2122;s election. This strategy had also been used in other elections prior to 1990 (Moten, 2000).

The research will look into the perception of voters in Batang Ai on the above stated political advertisement, dividing respondents into Barisan Nasional and Opposition supporters. The advertisements will be tested for recognition among these respondents (how much do they recognize the message brought up in the advertisement). Other factors looked into are voters attitude towards the advertisement, voters affect (feelings) towards the advertisement, and decision making in order to determine the impact of the advertisement on both Barisan Nasional as well as the Opposition supporters. The rest of the paper is organized as follows: first discussion of the relevant literature is presented; then methodology and findings; followed by discussion of the findings and conclusions including academic and managerial implications, limitations, and areas for future research are discussed. As negative political advertisements have been used widely in the past, it is pertinent to note its effect on voters, be it supporters of the party that placed the advertisement or the other parties. This would allow 83 83

for justification for such use or for it not to be used and further recommendations as to the best way to advertise in order to gain votes.

Literature Review Political advertisements The use of political advertisement in Malaysia has been extensive over the past years, particularly as elections beckons. Nevertheless, in the past, such intense uses of political advertisement were mainly to serve as a mean of a communication tool for a party. It has been intensively used by various political parties and electoral candidates for the past two decades (Moten, 2009). Previous research done shows that the uses of political advertising assists candidates to be better known through establishing popularity, enable the candidate to connect with a particular demographic groups, attract new supporters, stimulate voters participation in the campaign, raising fund for the candidate and party involved, and ultimately attacking the opponent (Munira, 2012). Nevertheless, such intense uses of political advertisement have created a considerable negative effect of its uses in politics.

The first use of political advertisements date back decades ago. The first country that used such form of political campaign was the United States of America (Valentino, Hutchings, & Williams, 2004). The advertisements were shown in 1952 in the “Eisenhower Answers America” advertising campaign which addresses more evidence of the relationship between politics and television in the United States. Such use of political advertisement was identified by political and social studies scholars not only as an effective communication tool in promoting a candidates, but also enable to reshape the image of the competing candidate in any election (McGinnis, 1969; Valentino, et al., 2004).

Nevertheless, there are also scholars that have pointed out the ineffectiveness of political advertisements towards cultivating public trust towards such advertisement as a source of useful information (West, 1997). This as such uses of political advertisement have created a substantial “negativity” effects, not predominantly on the candidates, but from the voters perspective. Past studies have found that the uses of negativity in political advertisement will raise cynicism among voters (Ansolabehere & Iyengar, 1995; Cappella & Jamieson, 1997), hence discourage voters to participate in politics. This then demobilize them in being involved politics, which is not what politicians want and need (they need voters to vote for them) (Valentino, et al., 2004). Studies done by Goldstein and Freedman (2002) on the other hand found that as the negativity in a political advertisement rises, voters turnout also rises.

This indicated that negativity had a strong and positive impact on voter turnout. But this does not necessary mean that it will definite effect voter voting decision when they cast their votes.

Nevertheless, the argument that says whether political advertisements are effective or not still rages on and is mostly concentrated on the US congress and presidency electoral campaign (Holbert, Benoit, Hansen, & Wen, 2002; Johnson-Cartee & Copeland, 1989; Valentino, et al., 2004; Watternberg & Brians, 1999). Most of such studies were focused on the impact of negative political advertising (television news use, and newspapers) on voter’s knowledge during the election campaign (Holbert, et al., 2002; Watternberg & Brians, 1999). Such advertisements were mainly used by political parties to attack their rivals through the issues of which their rivals stand and the party their rivals are affiliated to (Surlin & Gordon, 1977).

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Hence, the interest of this study is to look at the impact of such political advertisement within a Malaysian context.

Political advertisement in Malaysia Political advertisements had been used in Malaysia for some time (since the 60â&#x20AC;&#x2122;s), but the recent development during 11th general election campaign in Malaysia has witness changes in political campaigns and the use of advertisements in television, newspapers and other media (Kaid & Holtz-Bacha, 2006). Nevertheless, such changes in Malaysia political arena dated back in 1969 election, where it was the turning point in changing political campaigns in Malaysia (the uses of media such as newspaper to disseminate information to voters) (Ratnam & Milne, 1970). Nevertheless, the contemporary political campaigns in Malaysia now mainly have evolve from mainly relying on the use video tapes, banners, and flyers to advertise their agenda to using mainstream media (electronic and printed) and the world wide web (Kaid & Holtz-Bacha, 2006). During the 10th general election, the ruling party (Barisan Nasional) mainly used mass media such as television and newspapers to promote their party and aggressively attack the opposition party and its candidates. This is not surprisingly to know as the BN had been using the mainstream media to as their mean to campaign since its existence in Malaysia (Kuppuswamy, 1999). Such use of mainstream media by BN even for negative campaigning in Malaysia is not exceptional.

Negative campaign in Malaysia has been the mainstay of Malaysian politics for a long time.

In 1990, the BN attacked the then opposition coalition leader, Tengku Razaleigh, by posting his picture wearing a Kadazan Dusun headgear with a cross emblem on the newspapers. Such negative campaigning had been used so often in the past, where such aggressive move by the ruling party was strongly criticized by the voters and international onlookers (Lim & Har, 2008). Hence the Prime Minister of Malaysia at that time, Tun Abdullah Badawi amended the Malaysian political advertising code and ethics (through Malaysia Communication and Multimedia Commission and Malaysia Election Committee) during the 11th general election to a friendlier one. Such a move was mainly meant to promote his image as a tolerant leader rather than attacking the opposition and independent candidate (Kaid & Holtz-Bacha, 2006).

The use of advertisement bacalum or negative advertisement by the ruling coalition (Lim & Har, 2008) has created fear of voting and supporting of the opposition parties and candidates among the voters during the last 11th national general. The issues that been raised in such bacalum advertisements, were derived from the idea of creating an Islamic state by the opposition, especially Parti Islam se-Malaysia (PAS). Similar approaches were also implied by the ruling part during the 12th general election and various by-election (Bukit Gantang, Permatang Pauh, Bangan Pinang, etc), where the ruling parties were trying to create fear of inability by the opposition coalition to develop the nation, if the parliamentary and state seat won by the opposition (Lim & Har, 2008).

Batang Ai By-Election Scenario In order to understand the situation in Batang Ai, the reader should be aware of its political history. Batang Ai is a district in Sri Aman division. Sri Aman was previously known as Simanggang but later changed to Sri Aman after the Deklarasi Sri Aman. Simanggang was a military base for the Brooke administration to fight the local Iban rebels from Ulu Batang Ai such as in the Ekspedisi Ulu Ai Pertama (Oktober 1875), Ekspedisi Ulu Ai Kedua (Disember 1875), Ekspendisi Kolera, Delok (9 Jun 1902), Ekspedisi Menyebat dan Engkari (4 Oktober 85 85

1902), Ekspendisi Ulu Ai, Pau (8 November 1902), Ekspedisi Menentang Delok (1 September 1908) and Ekspedisi Ke Delok & Jengin (2 November 1915). These Iban rebels were quelled after some bloody fighting but the situation in Batang Ai is very closely linked to the Ibans. Batang Ai later became settled and peaceful with the Brookes in 1920 when Perjanjian Damai Dayak was signed on the 4th of August 1920. After World War II, Sarawak became a colony of Britain and on 16 September 1963, Sarawak joined Malaya, creating Malaysia.

Batang Ai is now part of Sri Aman Division which is located within the Lubok Antu parliamentary seat. Lubok Antu District still has a heavy concentration of Ibans, making up about 95% of the total population (Jali et al., 2012), accounting for 2,338 square kilometer of total land. Batang Ai at the other hand is 1,341 square kilometer with a population of about 22000, also mainly made up of the Ibans. Most of these Ibans still residing in longhouses by the riverbanks and Batang Ai hydroelectric dam. The people in Batang Ai relies heavily on jungle and river produce as their source of food and income. Some of the people in Batang Ai are still residing deep in the jungle bordering with Kalimantan and having little access to the modernize world. However, most of the Ibans have been relocated to the new resettlement just outside of the Batang Ai hydroelectric dam after the hydroelectric dam was commissioned on August 21, 1985 (Sim, 2011).

On 7th April 2009, Batang Ai held a by-election when its assemblyman, Datuk Dublin Unting, passed away on 24th February 2009. The state seat in the Lubok Antu parliamentary constituency is known as N.29 Batang Ai. This by-election was held simultaneously with the Bukit Gantang by-election in Perak. In the 2006 state election, Datuk Dublin Unting defeated Nicholas Bawin Anggat from the Sarawak National Party (SNAP) with 804 majority votes.

In this predominantly Iban seat, the BN named Malcolm Mussen anak Lamoh as its candidate. The opposition party, Parti Keadilan Rakyat (PKR) which is led by Malaysia’s former deputy Prime Minister, Datuk Seri Anwar Ibrahim named former Lubok Antu Member of Parliament, Jawah Gerang, as their candidate.

One of the issue’s that was used by both political parties in the Batang Ai by-election was the native land issue. The Ibans are considered natives in Malaysia because they are “son of the soil” of Sarawak. The Ibans and many other natives are unhappy with the Native Customary Land (NCL) or Native Customary Reserve (NCR) laws on ownership of land, where arguments have broken up between state development agencies and private consortiums on issues such as logging, oil palm plantations and hydroelectric dam construction (Sim, 2011).

This issue has a strong influence on the natives of Sarawak, where various political parties uses this NCL or NCR issues to gain support from the natives. Nevertheless, this issue is apparently not strong enough to swing the vote of the natives from BN to PR as the BN politics of development still has a strong root among the voters in Sarawak as a whole (Jali, et al., 2012).

Politics of development here encompass the NCL or NCR land issues. What the BN promise to bring in to Sarawak, in this case the people of Batang Ai constituency is the promises of bringing in more development projects into the area, that in return will enhance Batang Ai people socio-economic status (Jali, et al., 2012). Two of the favorite promises by the vast rural people of Sarawak, especially the natives are communication and transportation development (Aeria, 1997). These issues has been successfully addressed by the BN, hence leading to their gaining of more votes from the natives as compare to their counterpart in the urban area of Sarawak.

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Other issues of concern by the people in Batang Ai, and generally Sarawakian, include better road condition, availability of schools, churches and more government kindergardens for the future generation (Jali, et al., 2012). These issues nevertheless do have its own grips on some votes from the natives if it is successfully being grasped by any political party. This is evident in Batang Ai by-election where the candidate of the BN successfully and widely used, alongside the promises of communication and transportation development to win the heart of the vast rural people in Batang Ai, hence transpire into more majority votes in the last Batang Ai by-election in 2009.

Prospect Theory and the Elaboration Likelihood Model (ELM) It is noted that Prospect Theory and the Elaboration Likelihood Model (ELM) has been used in order to understand and describe the emotional effects of advertisements (Parker, 2009).

One of the difficulties encountered when trying to understand consumer reactions to external market sources of information, is that this information will be viewed with varying degrees of ambiguity or uncertainty. Prospect theory has shown that assumptions of rationality do not accurately reflect consumers' behavior in the face of uncertainty (Kahneman & Tversky, 1979). This is certainly true with respect to political adverts. The ELM states that consumers make decisions based on cognition or peripheral attributes. Persuasion based on peripheral decision is based on emotive cues without deep processing of information (Petty, Cacioppo, & Schumann, 1983). This is especially true when the information source is seen as uncertain and ambiguous. As past studies have indicated that when there is a negative political advertisement, cynicism will increase and it will affect votersâ&#x20AC;&#x2122; participation and support towards the party that employed negative advertising (Ansolabehere & Iyengar, 1995; Cappella & Jamieson, 1997; Valentino, et al., 2004). Hence the purpose of this study to look at the emotional quotient arising from the use of negative political advertising and its impact on the attitude and behavior of voters, from both sides (Barisan Nasional and Pakatan Rakyat). Thus the following hypothesis: H1:

H2 :

There will be difference between Barisan Nasional and non Barisan Nasional stalwarts Attitude (favorable or unfavorable evaluation) towards the Advertisement, Like the Advertisement, Advertisement Believability, Emotional Quotient and Voting Behaviour.

There will be difference in relationship and impact of factors such as Attitude (favorable or unfavorable evaluation) towards the Advertisement, Like the Advertisement, Advertisement Believability, Emotional Quotient and Voting Behaviour for Barisan Nasional and non Barisan Nasional stalwarts.

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Methodology Respondents were selected using purposive sampling technique. A pre-established criterion for individual participant selection was determined before visiting Batang Ai. These criteria are: 1. Respondent must be of voting age and 2. Respondent must be a registered voter in the constituency. The researchers visited Batang Ai at two separate instances, for a period of four days each. Enumerators were hired to collect data at the various longhouses. Respondents were selected with the help and consent of relevant Tuai Rumah (Village Headman).

Respondents were also selected from the town of Batang Ai itself.

A total of 196 respondents were obtained in this study. The sample size calculation was based on a single stage pseudo-experimental design. The authors uses a 2 (type of voter [BN and PR]) x 1 (advertisement) was utilized. Considering a requirement of at least 50 respondents per cell, the minimum number of respondents was calculated at 100 respondents. Sekaran (2003) suggest that a sample size of between 30 to 500 samples would be sufficient for most studies.

Data Collection Instrument The data collection instrument was divided into four sections: Section one comprises of items relating to individual demographics. Section two was the depiction of the advertisement (as in Figure 1). The use of only 1 advertisement (Figure 1) in this study is mainly based on the wide availability of the advertisement in the local newspaper during the Batang Ai byelection campaigning period. At the other hand, the message in the advertisement is clearly addressing the development issue in Permatang Pauh and questioning the ability of the opposition party to bring changes to Batang Ai. This hence raised the decision to use only the advertisement from Figure 1 as the point of research in this study.

Section three includes items relating to involvement, emotional quotient, voting choice, voting choice when knowing the advertisement was offensive, attitude towards the advertisement, advertisement likeability, and advertisement believability (Beltramini, 1988).

Respondents were asked to respond to a Likert type scale (level of agreement on a scale of 1 to 6 with 6 being strongly agree). This is in order to force answer that is not median based (Chang, 1994). Section four gauged the respondentsâ&#x20AC;&#x2122; views on the advertisement.

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Figure 1: Advertisement Used in the Study Data from the voting choice was used to categorize respondents into two groups. Those that scored high (5 to 6) to the question â&#x20AC;&#x153;If I had voted, I would have voted for the political party that made this advertisement (Barisan Nasional),â&#x20AC;? were coded as Barisan Nasional voters.

Those that scored between 1 to 2 to the same question were coded as non-Barisan Nasional voters as they clearly disagree with the question. Similar methods have been used in previous research in advertising (De Run, 2005). This study only looked at the views of Barisan Nasional and non-Barisan Nasional voters. A total of 70 respondents from Barisan National voters and 80 respondents from non-Barisan Nasional voters were used. The data was then analyzed using Means and difference test (Independent Sample t-test) to test the difference for the observed variables in this study. A correlation and simple regression was also carried out.

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Findings Respondents profile is depicted in Table 1.

Table 1: Respondents Profile

*BN

Variable Gender

Freq Male 33 Female 35 Age Scale 20s 24 30s 16 40s 11 50s 8 60 and older 11 Education No formal education 22 Primary 5 Secondary 39 Diploma 3 Graduate 1 Ethnicity Iban 67 Malay 1 Chinese 2 *BN = Barisan Nasional, **Non-BN = Non-Barisan Nasional

% 47.1 50.0 34.3 22.9 15.7 11.4 15.7 31.4 7.1 55.7 4.3 1.4 95.7 1.4 2.9

**Non-BN Freq % 40 50.0 40 50.0 25 31.3 21 26.3 13 16.3 10 12.5 11 13.8 13 16.3 15 18.8 44 55.0 7 8.8 77 96.3 1 1.3 1 1.3

The means and t-test for the variables observed by each voterâ&#x20AC;&#x2122;s preference (Barisan Nasional or Non-Barisan Nasional) are depicted in Table 2. It is clear that there are differences in liking the advertisement, advertisement believability, emotional quotient (see Table 2), and voting preferences.

Table 2: Means and t-test of Responses by Voting Preference *BN **Non-BN # Variable Mean S.D Mean S.D# Attitude towards the Advertisement 4.17 1.05 4.07 1.20 (t=-0.524, Sig=.601) Like the Advertisement 4.53 1.88 3.56 2.10 (t=-2.982, Sig=.003) Advertisement Believability 4.31 1.08 3.78 0.99 (t=-3.097, Sig=.002) Positive Emotional Quotient 4.04 0.65 3.66 0.95 (t=-2.806, Sig=.006) Vote BN 5.69 0.47 1.31 0.47 (t=-57.22, Sig=.000) *BN = Barisan Nasional, **Non-BN = Non-Barisan Nasional # Standard Deviation

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Table 3 depicts the correlation for the variables observed by each voterâ&#x20AC;&#x2122;s preference (Barisan Nasional or Non-Barisan Nasional). It is clear that there is a correlation between vote BN and advertisement believability for both voting preference.

Table 3: Pearson Correlation Test by Voting Preference

Vote BN

0.047 (0.708)

-0.039 (0.748)

0.216 (0.080)

0.142 (0.245)

-0.158 (0.175)

-0.130 (0.255)

-0.191 (0.093)

Positive Emotional Quotient

Advertisement Believability

Like the Advertisement

Attitude towards the Advertisement

Positive Emotional Quotient

**Non-BN Advertisement Believability

Like the Advertisement

*BN Attitude towards the Advertisement

Variables

-0.092 (0.436)

*BN = Barisan Nasional, **Non-BN = Non-Barisan Nasional Standard Regression was then performed in order to understand the effect of voting preference on respondentsâ&#x20AC;&#x2122; attitude towards the advertisement, liking the advertisement, advertisement believability, emotional quotient. The findings show that there is a significant relationship between advertisement believability and vote BN for BN voters. Refer to Table 4.

Table 4: Multiple Regression Analysis between Voting Preferences and Respondentsâ&#x20AC;&#x2122; Attitude towards the Advertisement, Liking the Advertisement, Advertisement Believability, Emotional Quotient.

Independent Variable Standardize Beta Standard Beta *BN **Non-BN Attitude towards the Advertisement 0.121(0.403) -0.164(0.254) Like the Advertisement -0.109(0.427) -0.104(0.465) Advertisement Believability 0.347( 0.010) -0.114(0.387) Positive Emotional Quotient 0.083(0.535) 0.062(0.668) Constant 4.676 1.733 R 0.369 0.258 2 R 0.136 0.066 Adjusted R2 0.076 0.008 F Value 2.282(0.071) 1.138(0.347) *BN = Barisan Nasional, **Non-BN = Non-Barisan Nasional

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Discussion The findings show that voters who are BN voters as having a high score on all the variables being measured. This shows a strong level of support towards Barisan Nasional candidate by the Barisan Nasional supporters (Jali, et al., 2012). One must remember that the advertisement is rather negative of the opposition, and directly at that, nevertheless the response to such a negative advertisement was positive by those who preferred to vote for BN. On the other hand, non-Barisan Nasional supporters seem to have a middle of the line response to all variables measured. The only similarity of non-Barisan Nasional voters with Barisan Nasional voters are their overall attitude towards the advertisement, which leans to a more positive level. This finding is in support of past studies that evaluation of the message depends on their motivation to process the advertisement and the message (Maheswaran & Sternthal, 1990), in this case how the voters see the party, the candidate and the opposition.

Hence, Barisan Nasional voters will see such messages as good while non-Barisan Nasional voters will have the opposite reaction.

The findings from this study show that the Barisan Nasional voters like the advertisement (the way the message was packaged). See Table 2. There is a strong and significant difference between BN and non-BN voters, where BN voters liked the advertisement more.

This indicates a positive emotional response to such an advertisement that is more than that of the non-BN voters. It is obvious that non-BN voters would not like such an advertisement.

The likability of the ad can be seen in the measurement of positive emotional quotient, where BN voters are significantly different from non-BN voters. They have a positive emotional quotient towards the advertisement as shown in this study. Definitely it might not have an effect on their voting choice if they have a low emotional quotient (see Table 2). The findings are also in line with the Elaboration Likelihood Model that explains ambiguity and uncertainty in advertisements used to understand and describe the emotional effects of advertisements (Parker, 2009). When respondents are uncertain of an advertisement, they utilize emotional cues that occur without deep processing of the information being presented in the advertisement (Petty, et al., 1983). They do not really believe and are uncertain of the message in the advertisement. This mainly happen as most of the voters in Batang Ai have never gone to or do not even knows about Permatang Pauh. At the same time, there is no actual rebuttal ability by the Pakatan Rakyat voters against the ruling government, so there is no actual credence towards the advertisement.

The advertisement in the end did not achieve any changes in behavior from the non-Barisan Nasional voters and there was no indication that it strengthened the Barisan Nasional votersâ&#x20AC;&#x2122; choice either (See Table 2). This as the findings indicated that the non-Barisan Nasional voters are having a marginal attitude, likeability and believability of the advertisement, and positive emotional quotient. Thus this advertisement did not do much to pull more votes towards the Barisan Nasional candidate, except alienate the other voters more (especially the strong PR supporters). This is especially true when looking at influencing the strong partisan voters (voters who have strong attachment to a political party) to be influenced by the election campaigns. These types of voters would vote for the party of their choice regardless of the kind of campaigns and message that the other parties run and disseminate. Issues such as accessibility by various voters towards such advertisement are also of a concern. Batang Ai DUN constituency is a vast rural area where less information on the current political phenomenon in Malaysia are reaching them. Hence, the advertisers should also look into other communication mediums such as the radio and television to connect with the voters.

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Other than that, the issue of illiterate in reading might also dampen the dissemination of information by the advertisers to the voters.

Further analysis indicated that only advertisement believability had a positive correlation with actual behavior (Vote for BN) (see table 3). It was obvious that there was a positive relationship between advertisement believability and voting for BN for BN voters and a negative relationship for non-BN Voters. Further analysis using regression confirmed this (see Table 4). This suggest that for voters, advertisement believability is crucial in transforming voters into action, but this is still limited to predisposed beliefs and amount of information available.

Political parties must also be very clear as to why they use various political advertisements (including negative political advertising) as past studies carried out found out that the uses of negative political advertisement will only raises more cynicism among the voters (Ansolabehere & Iyengar, 1995; Cappella & Jamieson, 1997), and further discourages voters to participate in politics (Valentino, et al., 2004). Rather than using negative political advertisement in political parties campaigns, the advertisement can be created in a way that it help to disseminate information that is vital to the people such as communication and transportation developments that is relevant to the voters of Sarawak.

Conclusion Respondents of this study were Barisan Nasional and non-Barisan Nasional party voters. The findings justify that that this ad bacalum or negative advertisement created a significant different emotional response yet did not change voting decision for the non-Barisan voters.

The non-Barisan Nasional voters responses were still quite marginal on their attitude, likeability, believability, emotional quotient and behavior while Barisan Nasional voters were very strong in their response. Only the belief in the facts of the advertisement had an impact on actual behavior.

Limitation and future study The respondents in this study were mainly from the native Iban communities residing in Batang Ai under the state seat in the Lubok Antu parliamentary constituency (N29). Most of the voters in this area were from the native Iban communities. Future study can integrate other races such as Malay and Chinese into their study to resemble a better representation of the demographic factors in this area. Future studies could use a larger sample and measure the relationship between these variables. Future studies could also compare positive and negative advertisements to see if there is any difference.

It is noted that the time when the data collection done was on the day of the by-election and after the by-election. There is a possibility that these two different time frames may limit the reliability of the responses gathered. Future study could start the data collection process couple of weeks before any future by-election or totally after the fact. Other studies can look at the situation from before, during and after an election. This will minimize the risk of influence by the competing candidates and parties, thus providing a more accurate and reliable responses from the potential voters towards the advertisement effect alone.

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Other than that, the method to categorize the Barisan Nasional and non-Barisan Nasional voters is weak. Hence future study should clearly identify the voters (either to be Barisan Nasional voters, non-Barisan Nasional voters, Pakatan Rakyat voter, or even independent party candidate voters) clearly. Previous study assesses party attachment prior to the election.

In the pre-election period, the respondents should be asked which party they intend to vote.

This will allow the author to identify the party attachment of his/her respondents. Then only the author can ask the respondents whether they had come across the Figure 1 advertisement and to capture the respondentsâ&#x20AC;&#x2122; perceptions towards the advertisement.

Recommendation Sarawak Iban voters indicate that there are many other underlying issues such as native land, resettlement, employment, security, education, school, basic amenities and transportation that should be the main concentration in a political communication effort (Jali, et al., 2012). The use of negative advertisement is clearly not justified, especially if itâ&#x20AC;&#x2122;s a one off advertisement. Nevertheless, it is notable that there are also various other type of electoral campaign such as the radio and television, other than newspaper advertisement that various political parties can use to disseminate their propaganda and information to the rural folks.

Hence, those political parties (Barisan Nasional, Pakatan Rakyat or Independent) should be considering those other mediums disseminating their rhetoric and information to the vast rural area people of Sarawak. What is more important is the believability of the advertisement in inducing action rather than the negativity portrayed.

Acknowledgement This research was supported by the Universiti Malaysia Sarawak Small Grant Scheme to Ernest Cyril de Run. Jee Teck Weng is a lecturer at Faculty of Business and Design, Swinburne University of Technology Sarawak Campus. Lau Wee Ming is a Lecturer at Segi College Sarawak as well as a Masters student at the Faculty of Economics and Business, UNIMAS and is supported by Zamalah Unimas.

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Asian Journal of Business ResearchISSN1178-8933

Volume 3

Number 1

2013

Television Product Placement Strategy in Thailand and the UK Amy Rungpaka Hackley Queen Mary, University of London Chris Hackley Royal Holloway University of London Abstract This paper discusses the implications for international brand communications management of a qualitative cross-national research study on television product placement in the United Kingdom and Thailand. The study involved secondary research into the respective media environments and depth interviews with leading agency practitioners in each country. The research suggests that, while television product placement practice may be superficially similar in Asia and the UK, there are important differences arising from the very different regulatory, media and consumer environments. As a consequence, detailed local knowledge is essential for successful product placement strategy which crosses cultural borders. The paper explains key differences in regulation and practice and explores implications for brand communications practice and research.

Keywords: Television product placement, Asia, UK

Introduction Product placement, also sometimes known as brand placement or entertainment marketing (Hudson and Hudson, 2006: Lehu, 2007) has been a tool of marketing communications for more than 100 years (van Reijmersdal et al 2010) and a topic of academic research for almost 30 years (Karrh et al, 2003). Worldwide promotional spend on brand placement has been on an upward trajectory, standing at an estimated at US$4.4 billion in 2007 (Smit et al, 2009). In spite of this level of interest, there is still relatively little academic research into best practice which focuses on television product placement, especially in cross-cultural contexts where brands are seeking exposure across national boundaries. Placements are common in syndicated (usually US) TV shows which air in different countries, but are expensive to procure and are culturally located in the country of origin. Alternatively, placements in locally produced programming offer a relatively low-cost route to prime time television exposure, within a localized cultural context. However, the different media environments, consumer cultures and regulations in Asia and the West present major problems for brand owners seeking to manage television product placement as an aspect of their international brand communications strategy. This paper seeks to engage with this research gap by exploring expert practitionersâ&#x20AC;&#x2122; views in two countries which offer some enlightening contrasts of practice and environment; Thailand and the UK. 97 97

Paid-for product placement is common practice in Thailand and has been so for some time. In the UK, paid-for product placement was first permitted under new regulations in 2011, but the new paid-for market has seen slow growth (Hackley and Hackley, in press). However, it is common to see brands on UK TV through the ‘free prop supply’ system (Tiwsakul and Hackley, 2009), explained later in the paper. In both countries, TV viewership is high and the respective marketing communication industries are well-developed. There is increasing awareness of Thai products in the UK and many UK brands carry great prestige in Thailand, yet there are relatively few published studies of television product placement practice in either country. This paper outlines previous research in the field before exploring the respective media environments in each country. It then discusses some of the key findings from leading practitioners interviewed in Bangkok and London. Finally, common practices and differences are discussed.

Product Placement Research Research and practitioner interest in product placement has grown (Reijmersdal et al, 2010; Gupta and Lord, 1998; Karrh, 1998; Chang et al, 2009) as television companies seek new revenue streams to supplement declining advertising revenue, movie studios and computer games makers demand verisimilitude in TV drama, and brand marketing organisations look for greater reach and consumer engagement from their brand communications programmes (Lehu, 2007; Karrh et al, 2003). From a brand management perspective, product placement is conventionally used in integrated campaigns to increase brand awareness and to have a positive impact on consumer brand preference and purchase intention (Nelson, 2002; d’Astous and Chartier, 2000). It is also thought to reinforce consumer brand awareness and brand loyalty (Nozar, 2001) via trademark and logo exposure in dramatic entertainment.

Research studies have explored various definitions of product placement to capture the ‘hybrid’ character of the practice (Smit et al, 2009; Balasubramanian, 1994) in terms of its commonalities with sponsorship, advertising, publicity and celebrity endorsement (Baker and Crawford, 1995: Pardun and McKee, 1999). Other studies have categorized product placement practices in terms of, for example, implicit or explicit placement (d’Astous and Seguin, 1999) or the location of brand references in scene, plot or script (Russell, 1998; see also Shapiro, 1993; and Wenner, 2004). The focus on brand rather than product has led some researchers to suggest that the term ‘brand placement’ is more appropriate (Karrh, 1998; Babin and Carder, 1996; Morton and Friedman, 2002) while others have used the broader term ‘entertainment marketing’ to stand for all forms of branded content (Lehu, 2007; Hackley and Tiwsakul, 2007). The term ‘product placement’ remains in common usage in both industry and academic literature.

Many definitions of product placement (e.g. those of Balasubramanian, 1994; Ford, 1993; Karrh, 1998) have a limitation in that they do not account for the different media contexts and regulatory environments in different countries. For example, some focus on movies and television shows (e.g. Gupta and Gould, 1997) although it is also common to see brands placed in computer games, books, stage plays and popular music (e.g. Delattre and Colovic, 2009). Moreover, most extant definitions emphasise that placements are ‘paid for’ by the advertiser but this ignores two important issues. One is that many media vehicles use brands as scene props or scripted references for dramatic realism. TV producers and directors need brands to make dramas appear realistic to viewers, hence the benefit is two-way. The other is that, even in well-developed TV product placement markets such as the USA, some 4 out of 98 98

5 brands appearing on TV are not paid for, yet may still yield benefits for the manufacturer (Hackley and Hackley, in press). In the UK, for example, the majority of brands appearing on TV, even on the non-commercial BBC, are there through the free prop supply system. The brand manufacturer pays nothing, and the TV studio receives nothing. Consequently, defining product placements only in terms of ‘paid for’ and contracted placements ignores the majority of placement incidents.

These ‘serendipitous’ placements (Chang et al, 2009) that are not paid for or contracted are there because of the needs of the producer for dramatic verisimilitude. They need a mobile phone, or a can of beer, or a car, and they source the easiest or nearest item. In many countries, there are thousands of hours domestic TV programming produced per year, and it is not possible to make contracts for every incident of brand appearance. It must be acknowledged also that the high number of non-contracted brand appearances in TV shows does present a potential risk to brand owners and has resulted in the phenomenon of ‘product displacement’ where brand owners insist that TV producers obscure brand logos. Leaving aside for the moment the risks that unplanned media exposure might result in negative publicity for a brand, it is clear that payment is not a necessary condition for brand placement to take place. In the UK, for example, well-established product placement agencies place their clients’ brands with television, movie or computer games manufacturers as ‘free’ props, taking a fee from the client for so doing. The media vehicle using the brand may pay nothing, but this does not mean that the exposure was not sought, paid for, and potentially very beneficial to, the brand.

Leading UK product placement agency the New Media Group (NMG) define product placement as “the technique by which brand name products, packages, signs, services and corporate names are intentionally positioned in feature films, television programmes and computer games” (NMG, 2005). Placements that are not paid for may nonetheless be present as a result of negotiation between the product placement agency and the studio prop buyers.

In Thailand, product placements are not usually negotiated by a specialist agency but by the media arm of advertising agencies. In many cases these are separately negotiated and paid-for arrangements, but in many other cases they are unpaid add-ons negotiated to add value to the spot advertising. The common research definition of product as ‘paid for’ therefore ignores the largest category of placements, those that are there apparently serendipitously but within a tacit framework of negotiation and supply.

The scope of product placement research to date has generally focused on movies rather than other media vehicles, typically in a US national context (Tiwsakul et al, 2005) although there is a recent movement in Europe toward more research into placements in TV and other media (e.g. Smit et al, 2009; van Reijmersdal, 2010). Many quantitative studies have revealed generally positive consumer attitudes toward product placement, but there is a relative shortage of managerial studies which ask how the practice might be best managed (see Gupta et al, 2000; Russell and Belch, 2005, for exceptions). A need for more research has been highlighted to elucidate product placement management practices, strategies and consumer responses in different cultural contexts and from new theoretical perspectives (Hackley and Tiwsakul, 2006).

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Background: The Media Environment in Thailand and the UK In Thailand, although economic development is very uneven, television access is high with more than 80% of Thai households owning a television set (Siriyuvasak, 2001). Thailand has 6 national terrestrial television channels, some of which are informative rather than commercial. There is wide access to most international subscription channels. Thailand has an advanced media and advertising industry catering for a vibrant consumer culture, especially in the major urban centres. Television advertising expenditure is substantial (Punyapiroje et al, 2002), taking the largest share of an overall adspend of some 73 billion Thai baht in 2005 according to AC Neilson Media Research Thailand. Standards of production and creativity are high in Thai advertising and television production, and Thai advertising in particular is known for its creativity, humour and visually spectacular (Sherer, 1995). Product placement is well-established as an industry in Thailand and a common part of promotional campaigns.

In the UK, most citizens have access to a TV set. There is one non-commercial broadcaster, the BBC, and one commercial television network, the ITV group, consisting of five terrestrial broadcasters, and numerous commercial cable and satellite channels. The UK is known for its advanced media production and infrastructure but, as we note above, there is only a very recent and limited tradition of ‘paid for’ product placement. Nonetheless, placements are common as ‘free prop supply’, while syndicated international shows shown on UK TV carry numerous placements, for which the UK channels receive no payment. In the UK, Ofcom, the Office of Communication, is the main media regulator monitoring the voluntary compliance with its codes of practice. In Thailand, there is no code of practice for product placement specifically but, rather, a code of media practice which includes restrictions on television exposure for certain categories of product such as weapons, alcohol and tobacco. The Thai authorities (primarily the Food and Drug Administration or FDA) rule on whether placement or sponsorship agreements are permissible on a case-by-case basis.

The respective media cultures have some commonality. In each country, soap operas, syndicated US shows and international movies shown on terrestrial and subscription TV are very popular. UK advertising is known for its ‘soft sell’ approach, high standards of creativity and production and use of humour. Thai advertising, similarly, is also known for its humour and high production standards as well as the pre-eminence of emotion and relationships as creative themes (Punyapiroje, 2002). Owning Western brands has been considered a mark of prestige in Thailand since the period of King Rama IV (1851-1868) and King Rama V (1868-1910), when Western technologies and knowledge first came to Thailand and Western brands were associated with wealth, power and prestige (The Office of the Prime Minister, 1991; Tirakhunkovit, 1980).

International products often appear in locally produced Thai TV shows, as they do in the UK.

Method In this study a secondary review of product placement practice and research was undertaken, followed by a review of the respective media environments in the UK and Thailand. Tapes were recorded of product placement incidents on UK and Thai TV, in order to gain a general understanding of the kinds of placement practices which are preeminent. Following this, leading agency practitioners were identified in each country and interviewed. Sampling proceeded on a purposive basis (Lincoln and Guba, 1985). The main criterion was whether the participants had suitable seniority and experience to answer the key questions of the 100 100

study. Those practitioners agreeing to be interviewed included senior practitioners from the top two ranked UK product placement agencies, and from the Bangkok branches of three leading advertising agency groups. Interviews of up to one hour with ten leading practitioners were conducted on the practitioners’ premises. Interviews were conducted in English, with translation assistance where necessary from the bi-lingual first author, and fully transcribed.

Transcriptions were coded and re-analysed to generate key themes, drawing on influences from interpretive qualitative research (Thompson et al, 1994, 1989; Spiggle, 1994; Hirschman and Holbrook, 1992; Miles and Huberman, 1994: Belk et al, 1988) and framed by a contextual understanding of the surrounding culture and environment. Previous findings from the research have focused on consumer cultural issues (e.g. Tiwsakul and Hackley, 2009) while the present paper focuses on managerial issues. Developments in practice and regulation in the years since the data were gathered have been incorporated into the analysis.

Findings Accounts of Product Placement Practice In Thai, the phrase ‘product placement’ cannot be directly translated. The phrase ‘kod-sa-nafaeng’, however, is widely understood. It translates as ‘implicit advertising’, which suggests the nature of this practice in Thailand, that is, it is mostly in the commercial interest. On Thai television, product placement and sponsorship are regarded dimensions of the same broad category of promotion. The phrase ‘sa-nub-sa-nun-deow’ is used when television programmes are sponsored by particular brands. In Thai game shows and talk shows, presenters might announce the names of the sponsors during the shows and there could be some visual placements of logos or products. The sponsors’ names are also shown in the credits at the end of the programmes. Similarly, in Thai soap operas and sitcoms, brands placed in the shows are also named in the credits at the end of the show.

In UK television, a small P logo appears briefly in the corner of the screen to announce that paid-for placements are included in the show. Unpaid, serendipitous placements or those supplied by ‘free props’ agencies are not announced. Under Ofcom regulations there are strict limits on how a brand may appear: it cannot be unduly prominent, and it must be editorially justified. Sponsored television programmes in the UK are not allowed to prominently feature the sponsor’s brands, although under the new regulations it is now possible for sponsored shows to feature placed brands. Sponsorships are announced with an ‘ident’ or other form of announcement at the beginning, end and in each commercial break. No paid for placements are allowed in news, documentaries or children’s programming, and there are bans on paid for placements for alcohol, cigarettes, drugs and guns. The BBC is not allowed to engage in any revenue-earning promotional activities whatsoever.

In Thailand, in contrast, a TV show can, within the general guidelines on placements of particular product categories, negotiate any degree of brand exposure with a brand owner without having to make an explicit announcement about a sponsorship arrangement. It is common for TV presenters in certain genres of Thai TV show to mention brands, as in “Thank you to XXX for supplying these wonderful clothes”. This would not normally happen in reality shows, since they are not usually scripted. There is a genre of TV show in Thai TV which is effectively a brand vehicle in which the brand is not explicitly mentioned but is placed prominently throughout. In such a show the brand might or might not be mentioned in the script, but it would be listed in the credits at the end of the show.

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So, both the language and the concept of product placement differ in the UK and Thai TV industries. The Thai concept covers a broader range of brand exposure in TV since the rules on explicit announcements about brand arrangements with TV programming are less stringent than in the UK. Therefore, the categories product placement and sponsorship merge in Thai TV, while in the UK they are distinct.

Product Placement Industry Actors The actors involved in the product placement process are identified from the accounts of practitioner research participants. In each country the main actors involved in the process include account handlers from advertising, product placement or media agencies: brand client representatives; television executives, studio officials and prop buyers. ‘Invisible actors’ included regulators, clients, and consumers/viewers.

The present study does not include interviews with brand clients. One reason is pragmaticthey will not generally discuss their product placement strategies and do not normally reveal the contractual arrangements undertaken in product placement deals. This was confirmed by several agency-based respondents. A second is that clients tend to be at arms length in the process. Some clients, as noted below, simply are not aware of product placement strategies and leave it to the intermediaries to get that kind of exposure if they can. Product placement is treated as an ‘add-on’ to leverage a higher order of brand recognition from the advertising.

Other, more sophisticated clients, particularly the major global brand marketing organizations, have in-depth knowledge of placement strategies with regard to their own brands but do not normally negotiate or design placements themselves but through the agencies.

In the UK, product placement campaigns are created by media and specialist product placement agencies, whereas in Thailand product placement services are provided by general advertising and media agencies. At the time of writing, we are not aware of any specialist product placement agency in Thailand. As N., a Strategy Director at a leading international media agency located in Bangkok, Thailand commented: “[There is] no specialist. It’s not on its own right. It’s an extension of the media buying agencies, part of media buying.”

Specialist product placement agencies are increasingly well-established in the UK. As noted, such agencies in the UK gather fees from clients for placing the brand with the studio. They maintain some control over the context through their informal contacts with studio personnel including prop buyers, producers and script writers. Respondents claimed that in Thailand, most product placements on Thai TV are paid for, though there is no way to verify this claim.

Contracts are confidential and there are no public data available. In contrast, in the UK most legitimate television product placements are assumed to be unpaid, under the ‘free prop supply’ system. UK product placement agencies can quantify the amount of exposure the placed brand gets through their ‘free prop supply’ arrangement by using software which scours TV programming and adds up the number of exposures each brand gets in nonadvertising programming. These data are used to show that brands that are clients of the placement agencies get substantially more airtime exposure than non-client brands. Since 2011 a parallel paid-for market has emerged, although the rules governing paid for placements are so stringent that the market remains very small (Hackley and Hackley, in press).

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Fee Structures in Television Product Placement According to most advertising and media professionals interviewed, product placement services provided to clients could be classified into two main categories; implicit and explicit product placement. One leading UK product placement specialist categorised three main types: television, film and tactical (e.g. game shows and makeover programmes). These distinctions did not seem to fit into set fee categories in Thai TV placements. A Strategy Director at a Thai media agency revealed that “We don’t have a set price for product placement and we negotiate as hard as we can to try to get it for free but the reality is we have to pay.” Other respondents implied that sometimes it is possible to get free placements when the agency can use the leverage of a large spot advertising contract.

It is well known that some product placement deals operate on a barter agreement, where, for example, cars are provided as scene props for a movie free of cost to the producers. In general, the Thai situation seemed to be that the price for each deal is negotiable separately, though there are probably implicit norms known within the industry. In the UK the situation is different as we have noted. For roughly £30-£60,000 per year a brand client can get up to sixty seconds of aggregated TV exposure through the ‘free prop supply’ system, but may be asked for far more than that for just one, ten second ‘paid–for’ and contracted deal. The advantage of the paid-for deal is that it is guaranteed, but the volume of programme making so far exceeds the capacity of the industry to negotiate paid for deals that clients working through free prop supply are seldom disappointed. There are about 12 major product placement agencies in the UK dealing in free prop supply, and many of these are also involved in negotiating paid-for deals. The fee for a free prop supply deal covers establishing target audiences and appropriate strategy; vetting and script analysis; creative and design guidance; ordering and ‘personal shopping’ (organising logistics); ‘damage control’; and reports including quarterly updates.

Product Placement Strategy Brands in UK television are there primarily to enhance the verisimilitude of scenes, at the discretion of directors. In general, success is equated to exposure without regard for the relevance or impact of the precise context. UK agency practitioners may be able to choose the media vehicles in which clients’ brands appear through their industry contacts. As one UK practitioner argued, “We confirm which television programmes we feel are pertinent to each brand”. However, the way the brand might be used in the show cannot be guaranteed.

The UK practitioner went on, “...the key is to keep in touch with those prop buyers…communicate with them what you’re doing and of course you will be there first…[they] make decisions on which brands are actually in sets…so that’s an advantage we have over those product placement, so called product placement companies that are part of a media agency or part of an ad agency or part of PR.” Links with studio personnel are clearly important in both countries: a TV Director of an international media agency in Bangkok had a “good link” with all TV producers, TV channels and prop buyers. Generally, in Thailand, in spite of the absence of specialist agencies, the process seemed more precise and strategic than in the UK. A Thai-based Media Strategy Director explained the process involved in generating a product placement for a client: “The target audiences are matched up, the environment is correct and we can talk to the programme producers and they agree to allow product placement … and from that we go ahead with the placement.” He added, “We sign a contract…to say this is what would like to 103 103

happen….We have some control and they have to do [placements] for us because we pay.”

This agency provides a guideline to the production team stating, for instance, which scenes its clients’ products should be seen or used in, and whether in the background or explicitly used by main characters. Even in Thailand, though, agencies do not have full editorial control over the programme content and clients have to accept a degree of risk.

Product Placement Effectiveness In both countries, practitioners agreed that television product placement worked best as a “soft sell”, although what is regarded as soft sell in Thailand may be very different to the UK. Most advertising and media practitioners in Thailand referred to it several times during their interviews. In the UK, this soft sell element was taken-for-granted since the brand is seen as merely a scene prop. In Thailand and the UK some practitioners complained that clients held a naïve view, wanting their brand to be featured as prominently as possible without regard to editorial context. In some cases this kind of prominent placement seemed to be possible on Thai TV, with, for example, lingering tight-focus close-up shots of hotel brands, phones or wrist watches in daytime soap operas. But industry professionals were keen to emphasise that the strength of placement was in a ‘soft sell’ approach. This could mean no explicit mention but might include highly prominent brand visibility.

As one Thai practitioner noted, “We have to be careful that we’re not doing too much hard sell because it doesn’t look good for our clients...placements should not be too commercialised”. Placements were seen as ways to ‘reinforce the brands’ or ‘add value’ as part of an overall ‘brand platform’. One Thai practitioner argued that, “Due to media and audience fragmentation, placing brands in television programmes could be seen as an evolution of a different way to reach consumers…It looks natural and could be viewed as an art”. Another added that “People are sensible enough. They’re smart enough to know when they’ve been sold to and if they know that advertising is tricky, that might turn them off … I think they understand if they watch commercial TV, they’re going to see commercial messages. If those come through in the way of product placement …it may be beneficial, they will go haha that’s quite clever. That may make them feel more positive towards the brands.

If we get it wrong and the consumers look at it and go urgh, don’t sell it to me, then it’s ineffective.” This was raised as a key issue by Thai practitioners. Thai consumers, too, tire of crudely designed placements and much prefer subtlety (Tiwsakul and Hackley, 2009). The agency practitioners know that if the audience objects to their favourite show being dominated by brand placements it will mean less benefit for the client in the long term.

Clients, for their part, know that recall scores are higher for prominent and incongruous placements. However, there is no indication that recall translates to positive brand equity.

Evaluation of placements is sophisticated in each country. According to a Thai Account Management Director, it was not only the placements themselves that should be evaluated, but also overall communications of the brands. Clients would use sales figures, retail and audit data along with measures of consumer attitudes and TV show audience figures. In the UK, the more sophisticated specialist placement agencies used exposure tracking software which monitored all TV programmes for brand appearances, evaluating each exposure by size of the audience, quality (from ‘wallpaper’ to in-hand or consumption), and length and timing of the placement. Important variables include CPH (cost per hundred consumers reached), TVR (television rating) and ‘Daypart’, (whether it broadcasts in daytime, early peak, late peak or late night).

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Discussion This research has begun to address a significant research gap concerning differences of practice and strategy in television product placement in Asia and The West. While previous researchers have studies the managerial perspective in the US (Russell and Belch, 2005) with some applicability to product placement strategy elsewhere, there are few studies which focus on comparative practice in cross-cultural contexts. The UK and Thailand represent interesting contrasts for comparison, since the UK is a relatively under-developed and heavily regulated environment for television product placement while Thailand has a mature though relatively un-regulated product placement industry. The sample of respondents was relatively small but they were all senior practitioners with a wealth of expertise and long experience of this field in their respective countries and beyond. The sample was purposive and the participantsâ&#x20AC;&#x2122; views authoritative, in-keeping with the topic of inquiry (Lincoln and Guba, 1995).

Previous research has generated many insights about product placement, largely from an audience perspective, and typically focusing on Western cultural contexts (overview in Lehu, 2007). In a consumer-focused study, Tiwsakul and Hackley (2006) found that Thai consumers were acutely aware of and engaged with product placement on their favourite television shows. The regularity of viewing weekly or daily soap operas and news shows, and the intimate quasi-relationship between television consumers and their favourite stars, made television a particularly resonant medium for product placement (Tiwsakul and Hackley, 2009). Practitioners in each country were well aware of the power brands in TV shows hold for TV viewing consumers as a means of elaborating on the brand meaning, reinforcing the consciousness of brands and adding prestige through usage by much-loved TV characters and actors. Television is an especially influential medium since it locates brands within dramatic scenarios with which consumers closely identify and valorize (PeĂąaloza, 2001; Russell, 2002; Chang and Roth, 2000; Russell and Stern, 2006). What is more, the increasing international mobility of young, affluent consumers means that they are faced with a challenge in negotiating their sense of identity across two or more cultures (Tiwsakul and Hackley, 2012).

Television programmes offer a fitting resource for this task given their international availability.

From the present study it was apparent that, while there are some commonalities of practice between the UK and Thailand, significant local knowledge is clearly required for the effective international management of brand communications. For example, in Thailand the client can negotiate considerable creative control over how the brand will be portrayed in the TV show. The danger of this is that clientâ&#x20AC;&#x2122;s economic power can distort the dramatic integrity of TV shows by pushing for contrived and incongruous placements, which tend to be resisted by viewers (Tiwsakul and Hackley, 2006). Indeed, editorial integrity, along with consumer ethics, are primary concerns of the UK Government media regulator Ofcom in designing the product placement code of practice (Hackley et al, 2008). One lesson to be learned from television product placement in Thailand is that if clients are allowed to dictate editorial content through their economic power, they will do so, even though agency practitioners are convinced that subtle placements are best for brand equity in the long term. Increasingly, successful TV shows are seen as media brands in their own right, and it would seem wise to manage product placements for the mutual benefit of TV show and brand client. A show that is known to be merely a promotional vehicle has limited source credibility as a vehicle for brands.

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International promotion strategy incorporating television product placement needs to be informed by knowledge of the very different industry infrastructure that obtains internationally. For example, there are no specialist product placement agencies in Thailand so clients have to deal with media and advertising agencies in order to access the necessary contacts and expertise. In the UK, product placement can be conducted through specialist agencies dealing in free prop supply, or through major TV channels that have created their own product placement sales teams since the new regulations allowing paid-for placements came into force. The costs of product placement through free prop supply are relatively low in the UK, but there is little control possible over the context of placement because there is no contract with the TV studio. The cost of contracted, paid-for placements is currently prohibitively high, but as the market develops this may change. In Thailand, unlike the UK, clients can negotiate detailed contracts directly with programme executives to specify the nature and timing of the brand exposure to a high degree. Furthermore, clients can sponsor TV shows which will discuss, feature and often demonstrate the clientâ&#x20AC;&#x2122;s product or service within the show. This is not possible in the UK because of the strict regulations separating editorial and sponsorship from advertising. In addition, in the UK there are strict rules about the prominence of placements. In Thai television the limits of exposure are decided by the programme makers. In both countries there are limits on the categories of product or service which can receive exposure in television, weapons, drugs and alcohol being the most obvious examples.

In Thailand, the measurement of placement effectiveness is sophisticated and parallels advertising effectiveness measures, with placements being evaluated by ROI. The UK situation is likely to change radically over the next five years as paid-for placements increase on commercial UK TV, but the product placement agencies already have a relatively well developed system for measuring the quantity and quality of brand exposure. The longer establishment of the industry in Thailand means that more complex measurement processes are in place for assessing the value of exposures. Evaluation of placement effectiveness remains complex, and depends on the marketing problem the exposure was designed to solve, whether that was concerned with positioning, sales generation, long term brand equity, competitive activity, market share or any other marketing objective. Overall, there is an industry consensus that brand/product placements on TV generate such high visibility and prestige that benefits accrue in the form of enhanced brand equity and wider audience reach, but the long term sales affects are far more difficult to calculate with precision.

Concluding Comments This study has addressed a gap in previous research by conducting a managerial investigation into product placement as an aspect of promotional strategy in Thailand and the UK. Both countries offer many opportunities for brands to be placed in television and therefore could form part of a co-ordinated international promotional campaign. However, the local conditions under which brands may receive exposure in television programming are very different as regards the principal actors, fee structures, media infrastructure and regulatory systems. The study has illustrated why local knowledge is essential for brand clients intending to use television programme exposure in their international promotional strategy, but it has also suggested that there is enough commonality for campaigns spanning Asia and the West to be worthwhile. In addition, the study suggests that further research is needed into 106 106

product placement strategy in local television contexts to detail differences in media regulation and agency practice.

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