"Ethnocentric tendencies of Indian consumers – Impact on preference for domestic versus foreign products"
by
Dr Binod Agarwal (Director, TALEEM Research Foundation, Ahmedabad)
in conjunction with
Archana Kumar (PhD Candidate, University of Tennessee, Knoxville),
Dr Ann Fairhurst (Professor, University of Tennessee, Knoxville), and
Dr Youn-Kyung Kim (Professor, University of Tennessee, Knoxville)
In Indian history, the "Swadeshi movement" supported indigenous manufacturing by promoting a "Be Indian, Buy Indian" philosophy. This resulted in limited entry of foreign companies into India. Lately, the Indian Government has loosened such restrictions. As a result, India is witnessing a massive influx of foreign products in its market with domestic products facing stiff competition from them. We believe that understanding the attitude of Indian consumers toward foreign and domestic product is essential. This will benefit Indian marketers in developing successful strategies and increase their competitive advantage, which in turn will benefit the Indian economy.
In a consumer psychology context, ethnocentrism is the preference for domestic over foreign products. Ethnocentric consumers consider it their duty to purchase domestic products in order to increase commerce within their country and to boost their country’s economy. Previous studies have shown that consumers in developing countries may perceive foreign goods to be superior to domestic products in certain aspects. Although a reasonable amount of purchase of foreign goods is acceptable, limited purchase of domestic goods can be detrimental to the country’s economy. It is essential to achieve a balance in the sales of foreign and domestic goods to improve the economy of a country. Understanding consumer ethnocentrism is essential in the Indian market where fierce competition between domestic and foreign products exists.
The primary goal of this study is to assess the level of ethnocentricity of Indian consumers and its influence on Indian consumers’ attitudes toward foreign products and attitudes toward domestic products. This study will also identify relevant antecedents of ethnocentric tendencies (i.e. cultural openness, patriotism, conservatism and collectivism/individualism) and selected demographic characteristics (i.e. age, gender, education and income) that may influence ethnocentric tendencies.
This study will develop a profile of Indian consumers characterized by high and low level of consumer ethnocentric tendencies in terms of antecedents and demographic characteristics. This study will also determine whether and how consumer ethnocentric tendencies will influence attitude toward domestic products against foreign products. The impact of antecedents and demographic characteristics on consumer ethnocentric tendencies will be examined.
The benefits of this study are numerous. Firstly, if the study finds that Indian consumers prefer foreign products to domestic products, suggestions can be made for management of Indian companies selling domestic products in India to develop appropriate strategies to compete with foreign products. On the contrary, if Indian consumers are found to prefer domestic products to foreign products, managers can reassess their existing strategies to reinforce their contributions to the Indian economy. Secondly, management executives will have an understanding of the demographic characteristics that impact ethnocentric tendencies. This will enable them to segment their customers and develop appropriate strategies for each targeted segment. Overall, this study will contribute to increasing the sales of domestic products in the Indian market, which will have a positive impact on the country’s economy. Finally, this study will contribute to the theoretical development of a timely but less-researched topic.