Impact of Confucianism on Customer Perception of Western Brands - Literature review Example

? Analysing the impact of Confucianism on behaviour and perception of western brands Contents Literature review 4 1. Introduction 4 2.1Confucianism 7 2.1.1 Confucianism Meaning 7 2.1.2 Chinese culture and Confucianism 8 2.1.3 Neo- Confucianism 10 3.1 Consumer behaviour 10 3.1.1 Consumer behaviour and Chinese culture 10 4.1 Branding 11 4.2 Customer based Brand Equity Pyramid 12 4.2.1 Brand Salience 13 4.2.2 Brand Performance and Brand Imagery 13 4.2.3 Consumer Judgements and Consumer Feelings 14 4.2.4 Consumer Brand Resonance 15 5. Conclusion 16 Reference 18 Bibliography 21 1. Literature review 1.1. Introduction China has become one of the important parts in the global economy and no investor or business leader seems to ignore the influence of consumer in China. The preference and taste of Chinese consumers tends to sway demand and thus spend trajectory of the global consumer spending (CNBC, 2013). China has about 1.3million HNW individuals making it one of the most attractive wealth management markets and thus the high street fashion brands expand to China to make profits (BBC News, 2012). Sale of goods in china is exploding despite of tax importing the Chinese market. Online consumption of western product by the Chinese consumers by 11% in the next five years or so and sales of the brands will grow by twice by about 25% a year. China is the largest consumer of Louis Vuitton and accounts for about 15% of global sales (The Economist, 2011). The Chinese market have proved to be an important market for most of the western brands as the top five most recognised brands in China are imported overseas. In the Chinese market the top brands which have successfully made are Nestle S.A, Chanel, Samsung Group, Apple Inc, Sony Corp, Nike Inc, Starbucks Corp, Canon Inc and other brands. With other western and luxury brand such as Armani, Louis Vuitton and Gucci were also reported to show high in rating among the western brands. Thus it was analysed and stated that China prefers foreign brands (China.org, 2012). The continued rise of consumers in China and rising demand for western brands has proved to be helpful for the luxury sector. The Chinese market is expected to become the leader in consumption of luxury brands by the end of 2014 and contributing about 40% of growth in the next 10 years overtaking Americans and the Japanese. China is predicted to have consumers who will be able to afford luxury brands and products (Smither, 2012). Americans fast food companies such as KFC, Mc Donald’s, Dunkin Donuts have succeeded in China and it is mainly because of the brand image possessed by them of being trustworthy and healthy. According to China market research group, the consumers view these brands as healthy as the Chinese fears tainted ingredients as compared to fats. Thus it quite clear that the way the consumers based in China tends to view the brands is different from how the brands are perceived in other countries. Thus the success depends on localising the brand. One such example is of Renault, which localised it product in order to appeal to the young professionals in China. The new initiative is to become part of larger trends of retailers who are offering localised services, special products to the Chinese consumers and access the lucrative market (Train, 2011). However there have been incidents when brands have not succeeded in creating brand image for the Chinese consumers. The main reason why brands tend to fail in China is they do not adapt to the concept of localisation of the product. Groupon which happened to close 13 of its stores in China is the latest example of western internet company to fail in Chinese market. The company failed mainly because of local understanding of the consumers, arrogance, management structure were the factors lead to failure of Groupon in China. These are the four main reasons for failure of Groopons. Arrogance Groupon used to pay highest salary based on market standard and atract5ed the top employees of its competitors. The company also assumed that this would work well in the Chinese market. The company also thought that it could buy the leading domestic player in its industry in Chinese market but unfortunately the largest group buying site of China Lashou refused to the deal of acquisition. Inefficient understanding of local market Groupon’s strategic management team of China seemed all international market have similar characteristics in terms of consumer buying behaviour and market competition and inter-firm rivalry or alliances among each other. But, group buying behaviour of Chinese market was different than other foreign markets of Groupon. The company used mass email promotion strategy like it did and successes in Germany, but unfortunately received negative response or negligence from the Chinese customers. The vendor was also not satisfied with their aggressive sales strategy and un-realistic expectation of sales figures. Wrong selection of local partners Groupon’s made a wrong decision in the case of selecting local partner Tencent. It did not rely on the Tencent’s expertise instead they hired professionals by high salary for managing operation in all over the country. Rural operation of the company was also leaded by the foreign employees who have very limited knowledge and understanding of the needs and demand of the rural people in the country. Inefficient management structure Groupon’s did not focus on local talents to include in its strategic management group. Therefore, the top management of the company in China was not efficient enough to understand teh local market trend and the consumer behaviour of the country. (Tech in Asia, 2013). Other westerns brands that failed in China are Best Buy, eBay, Home depot, Amazon were brads which shut their stores and faced stiff competition from the local brands. Above all Wal-Mart which dominates the home market faced dwindling market shares and failed to grab profit in China (Rein, 2012). 2.1 Confucianism 2.1.1 Confucianism Meaning Confucianism is a western term which does not have any counterpart in the Chinese, can be said to be a social ethic, scholarly tradition, political ideology and way of life. The term Confucianism which is sometime viewed as religion and sometimes as philosophy, can be therefore be understood as encompassing way of living and thinking the entails of ancestor’s reverence. The East Asians professes themselves to be Buddhists, Christians, or Muslims along with others, but by way of announcing affiliation about religion primarily do not cease to be Confucians (Britannica, 2013). Confucianism can be termed as religious as well as philosophy tradition which had evolved way back in China and latter was practised all over East Asia. The founder of Confucianism was Kong Qiu born in 552 B.C.E and died in 479 B.C.E. Confucianism tends to play an important role as region does in different culture and is also aid to be substance of learning, maintain social codes and is the source of value of the Chinese (Britannica, 2013). This concept is essential for the paper because as it value social norms, respect for members of the family, society the Chinese consumers also values these aspect to a great extend. Although they are adopting the western brands but they stick to their traditions and are not adopting the western culture. Confucianism is also describe as ethics and humanism but is highly termed as one of the major religious across the world. The termed is recognised as different from other religion. Within China the term Confucianism is claimed to be one of the three teachings “san chiao” which tends to include Confucianism, Buddhism and Taoism. The inclusion of the term Confucianism as one of the three teachings speaks more about expensive meaning and not suggesting it something which tends to identify tradition as religious in western sense. Some of the experts would argue to the fact that Confucianism can be identified as one of the mode of teaching or religion and is inclusive of religions and also of non religious traditions. As per C. K. Yang, Confucianism has also been the reason for which the East Asian culture cannot be said to be a fully religious culture. One of the prime question which sets to arise is whether Confucianism is a religion or not. In context to this question many scholars have viewed Confucianism a social humanistic and not religion as it focuses the establishment of relation person and capacity of individual in the development of moral nature. Thus number of issues got associated with the perception as focused mainly upon ethicality and humanity and thus cannot be said to be religion (Taylor & Choy, 2005, p. Xii). Confucius emphasised more on the principles of self guidance. To Confucius person tends to become noble by developing the five traits of humanity, righteousness, wisdom, proper conduct and trustworthiness. The most essential and important Confucian value is respect (Luo, 2009, p.27). 2.1.2 Chinese culture and Confucianism In analysing the consumer behaviour of Chinese in context to western brands a focus is made towards Confucianism and is essential as the tradition tends to have had an enormous impact upon the Chinese people and also assumed to influence the consumer behaviour in the Chinese market. Chinese culture has its roots based in the philosophy of Confucianism. In most of the cases the term Confucianism is used as synonymous with the Chinese culture and thus to understand the behaviour of Chinese people a description of Confucian values is must. Confucianism is termed as philosophy of conservatism where the emphasis was placed on maintaining the harmony and status quo. Social hierarchy is an essential element in reinforcing the stability and the concept of Confucius promoted that every individual has status in society and conduct of should be guided through one status. Confucianism also tends to promote the group conformity of the Chinese people. As prime importance is behaviour of the people in the society and thus the individuals in China are experiencing a strong social pressure in order to comply with the group and is highly evident from the consumer behaviour of the Chinese consumers (Henriksen, 2009, p. 26). Although China is influenced by three philosophical factors, Confucianism, Taoism and Buddhism, the Chinese culture is thus characterised by Confucianism. The Chinese tends to adhere quite easily the standard of various groups as compared to people in the individualistic society. It tends to assumes differences from members of various groups but at the same time respecting the individual standard of the group. The Chinese consumers believe that consumption of product which is of foreign origin is much more symbolic. It is further assumed that comments and recommendation tends to play essential role in choosing a brand (Li, n.d, p.6-7). Guanxi culture in China is derived from Chinese philosophies, Confucianism. As Confucian in China means relation oriented society whereas Guanxi can be thus defined as informal a personal connection in between to individuals who seems to be have strong bonding by implicit psychological contract and allow the norms like mutual commitment, long term relationships, obligation and loyalty (Luo, 2009, p. 27). 2.1.3 Neo- Confucianism The Neo- Confucianism philosophy had undergone changes in China and it is not strange that the new philosophical concept had risen when China lacked any political strength ad also suffered from invasion from the foreigners. Thus the rise of Neo- Confucianism had made distinct era in the Chinese philosophy and is indicative of success of a new force which is regarded as renaissance. The rise of Neo- Confucianism was mainly due to four main factors, first being reaction against the foreign investors; secondly reaction against Buddhism; the third factor being influence of Daoism and the fourth factor is revival of Confucianism. The Neo- Confucianism went further in developing new concepts and ideas which were foreign to Confucianists at an early stage (Huang, 1999, p. 5-6). 3.1 Consumer behaviour 3.1.1 Consumer behaviour and Chinese culture Confucianism tends to focus on family values towards individuals and Chinese people have deep concept of family members and is widely reflected in the buying decision made by the Chinese. But at the same time culture also emphasises “root” generation continuation where the children are often looked as future of family and are put various expectation. Therefore in the process of identifying the needs marketers needs to keep in mind age and kids and decide on the strategy. It has been seen that there are many different ways through which consumers are able to gain information like commercials, personal and public sources, and also through word of mouth. Collectivism tends to play an essential role in it as Chinese consumers prefers remaining in the same group with others and it is one of the reason why the Chinese need to find information about brands and being accepted by other members in the group is highly important. In addition, Guanxi and Mianzi culture influences the behaviour of buyer in China. In this context, it means that the consumers expect to think as generous, rich, good taste and others. The Mianzi culture has prompted consumption of luxury in Chin. But according to research, Chinese have low involvement when the purchase for private consumption but when purchase is made for private consumption the involvement level is quite high. Chinese greatly values smoothness in relationship and social harmony and social significance of the products are important in expressing status, approval, gratitude, approval and also disapproval. Guanxi culture is the second reason for consumption pattern in China. The Chinese believes that it is essential to sustain good relationship in order to succeed with both organisations and individuals (Luo, 2009, p. 29). 4.1 Branding According to reports it has been revealed that the makers of luxury goods usually focus mainly towards brand awareness. This is because of lack of understanding among the buyers with context to luxury goods. Brands tend to become ubiquitous in the global culture and tend to become an integral part of the economic and cultural landscape. But despite of branding many brads tend to fail and most of the big brands such as Mc Donald’s, IBM, GM, Coca Cola and others have had made mistakes in branding and marketing the product o the target consumers With accordance to Chinese luxury market, the consumer relies heavily on recommendations from others and also from the information gained from the physical stores (Haig, 2011, p. 7). Confucianism is a concept which also involves in branding and it should be interest for the marketers who want to understand at a much deeper context. It is a true fact that culture tends to shift and so is Confucianism (Qing, 2012, p.110). Culture conveys a set of relationship bout the organisation which tends to inspire the people in the organisation. Culture plays an important role in brand building. For example in case of Apple the culture perceived about it by people are innovative, creative, dynamic irrespective of people working with Apple or not. This happen because of the image created by Apple based on its distinction and thus it can be said that culture and branding are equally vital for an organisation (Davis, 2010, p. 101). 4.2 Customer based Brand Equity Pyramid Talking in regards to branding, it can be said that branding is mainly done for the purpose of communicating the values of a particular product or service to the consumers, using either the above the line or below the line promotional techniques and branding activities. The reason to focus and provide so much importance on the brand factor is that it helps in making an identity for the product or service in the minds of the consumer (Kapferer, 2008, p. 15). Talking on this aspect, it can be said that the customer based brand equity pyramid is a unique model that helps in a great way in the process of establishing an identity for a brand. Figure 1: CBBE Model (Source: Keller, 2001) Describing about this model, it can be said that the entire pyramid comprises of several small elements like the brand salience, brand imagery, consumer judgements, consumer feeling and finally the consumer brand resonance (Hutt & Speh, 2012, p. 175). 4.2.1 Brand Salience Talking individually, it can be said that the brand salience is highly related to the awareness level of the customers with regards to the brand. Brand salience is a key factor that helps in building up brand identity (Elliott & Percy, 2007, p.154). Talking in a more narrowed manner, it can be said that the brand name, symbol as well as brand logo, creates a major impact in the process of developing the retention power of the consumers in regards to the brand. In this case, it can be said that since the Chinese consumers are exposed to the luxury brands because of their travelling nature, hence, the brand salience is strong in regards to these consumers. 4.2.2 Brand Performance and Brand Imagery It can be said that the performance and imagery issues of the brand are directly linked to the factors of brand meaning. Brand meaning is essential because it provides the platform to place an image in the minds of the consumers, and thereby helps the customers to relate themselves with the brand (Shajahan, 2006, p. 44). Talking about brand performance, it can be said that delivering a product of superior value is extremely essential to this factor as it helps in the process of enhancing the value communication of the product or service to the consumer by the firms as well as through the consumer’s own perception. Brand imagery highlights the issues related to the extrinsic properties of the concerned product or service, which also comprises of the brand’s ability to meet the sociological as well as psychological expectations of the targeted consumers. Talking on this note, it can be said that the Chinese consumers have the expectation that a quality factor equivalent to that of a Western brand is important. It also needs significant importance to mention that the 4.2.3 Consumer Judgements and Consumer Feelings It can be related that the factor of consumer judgements and consumer feelings are directly related to the responses that are initiated by the brand. It can be said in these regards that the consumer judgements focus on the process of evaluating the personal view points and opinions of the consumers on the basis of their individual perception and experience that have formed through the consumption of the product or service (Keller, 2001, p.8 – 15). For the purpose of developing a strong brand judgement in the minds of the customers, a firm should focus on delivering branded products of high quality. Other important factors related to the consumer judgements are credibility, consideration and superiority of the brand. Talking about consumer feelings, it can be said that this is a factor of high importance and significant relevance in regards to the development of the brand. Talking in these regards, it can be said that the consumer feelings highlight the issues that are related with the emotions of individuals that are generated as a result of the course of association of the individuals with the brand. Talking on these lines, it can be said that the most important sub factors that essentially contribute to the process of generation of feelings of the consumers to the brand are warmth, security, social approval as well as the fun factors. The issue of self respect also provides generates significant amount of emotional bonding with the brand by the individual. Talking in relevance it can be said that the issues of both consumer judgements and consumer feelings are positive for the western brand in the minds of the intended target consumers. The Chinese consumers focus on acquisition of luxury brands of the western category while viewing it as a daily purchase which is expected to provide value to the consumers in the course of its designated product life cycle or service consumption time. 4.2.4 Consumer Brand Resonance The factor of consumer brand resonance is related and associated with the process of developing positive and strong relationships of the brand. Talking in this tone, it can be addressed that the brand resonance represents the amount of synchronization that consumers form during their course of interaction with the brand. Behaviour based loyalty, factor related to attachment attitude as well as sense of community and active kind of engagements are some of the key factors that needs to be highlighted since they contribute in a major way in the process of forming of relationships. Talking in these lines, it can be said that due to the high fascination of the Chinese consumers in regards to acquisition of highly popular western brands, it can be easily said that the consumer brand resonance is high. However, it also needs to be highlighted that since there are a wide range of alternative brands present in the market, which have the similar kind of western tag and popularity, it can be said that the consumers of the desired market segment has a wide range of choices, which makes the behaviour based loyalty of the consumer, take a significant dip (Keller, 2001, p.8 - 15). The Chinese believe in something called emotional chord and branding is not just differentiating the product but is all about attachment, trust and loyalty. The brand should be able to connect emotionally with the customers and thus inspire loyalty through brand names and logos. In addition long term relationship is vital for sustaining in the Chinese market. Finally local involvement is highly appreciated by the Chinese consumers. A western brand which has been able to adapt to the local culture has tasted success and other which did not localise failed in the Chinese market. The Chinese tends to be formal and social status plays an important role for the Chinese consumer as suggested in Confucianism. The Chinese seeks harmony, trust and stability in business and thus it can be said that the Chinese culture relates itself to the concept of Confucianism (Jayaraman, 2009, p. 5). 5. Conclusion As per findings, western brands often tend to face dilemma in adapting the local culture of China and gains popularity through modernity and also through designing trends and avoids clashes with traditional customs. But the reality remains that western brands are highly preferred by the Chinese consumers. Apple has high value in China, Starbucks a coffee joint is set in almost every street in China. But the Chinese consumers have no intention of adopting the western culture but are international and modern and remained Chinese. China being a Confucian society the citizen is likely to have conflict in standing out and fitting into the culture (DOCTOROFF, 2012). Reference BBC NEWS, 2012. High Street fashion brands look to China for profits. [Online]. Available at: < http://www.bbc.co.uk/news/business-18607684> [Accessed 17 January 2013]. Berger, R., 2012. CHINESE CONSUMER REPORT – Luxury. [Pdf]. 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