Oil Change Behavior of Passenger Cars Owners in Egypt: Effects of Brand Origin on Consumer Attitudes - Thesis Example

Effects of Brand Local and Nonlocal Origin on Consumer Attitudes - The Case of Oil Change behavior of Passenger Cars Owners in Egypt 0 Introduction1.1 Background to the Study Consumers are the most important entities to marketers and investors (Bafour, 2004). This is because the success of otherwise of their trading depends on whether or not their products are purchased by consumers. To win the hearts of consumers to purchasing your line of product however, a marketer needs to consider a number of factors and put in place series of actions to ensure that consumers have preference for the type of product they are trading in (Gardner, 2009). One of the best ways a marketer can ensure that the product they put before consumers are the ones they prefer to buy is to conduct critical study into the consumer behavior of the targeted group of consumers. This is because studying and understanding the consumer behavior and purchasing habit of a group of consumers gives a marketer an idea of what to trade in. There are times that two marketers have traded in the same kind of product. However, one marketer experiences higher patronage than the other. In such a situation, it means that even with the same kind of product they are dealing in; there are some consumer preferences attached to certain aspects of the product. The oil marketing industry in Egypt is one market that has a lot to do with consumer preference for oil products. Investigations have shown that the country of origin of oil product is a major aspect of consideration for consumers. 1.2 Purpose of the study This paper is therefore being written as a research paper to study the consumer behavior of automobile users in Egypt to identify aspects of oil products that they have preferences for and the ones they less have preference for. Specifically, the aspect of oil product to be considered will be country of origin. More specifically, the paper shall investigate factors and conditions that inform their line of purchase and how marketers can take advantage of this line of purchase. 1.3 Hypothesis There is preference for nonlocal oil products among vehicle owners in Egypt. Oil product marketers can take advantage of the trend of consumer behavior towards oil product purchase 1.4 Research questions 1. What is the consumer behavior of Egyptian users of oil product and what informs their choice of purchase? 2. What factors account for preference for nonlocal oil products as compared to local oil products in Egypt? 3. How local oil product traders position themselves strategically to meet the competition with nonlocal oil product traders? 4. How can oil product marketers in general take advantage of the fact that there is higher preference for nonlocal oil products? 5. How does the general trend of preference for nonlocal oil products affect the economy of Egypt? 1.5 Delimitations to the study Even though works of literature portray general preference for nonlocal products in most Arab and developing countries, the specific country of consideration in this paper is Egypt. Even in Egypt, the line of product to be considered is refined oil product; though the writer admits that there exists preference for other lines of product such as food, clothes and textiles. 2.0 Literature Review 2.1 Consumer behavior in Egypt with reference to preference for foreign products in motor oil products The general trend and attitude behind the way and manner consumers make purchases of products and services is very crucial to marketers. It serves as indicators for what a marketer should trade in and why. Perner (2009) explains consumer behavior as “the psychological processes that consumers go through in recognizing needs, finding ways to solve these needs, making purchase decisions, interpret information, make plans, and implement these plans.” In Egypt, there is a consumer behavior trend where consumers are very mindful of the origin of a product they are dealing in; especially refined oil product. This means that in the processes of recognizing their needs, finding ways to solving their needs and making final decisions on how to solve their needs, Egyptian oil product consumers give premium consideration to the place where the product was made or is coming from. Egypt is one country with several oil marketing companies. Whereas some of these companies are regarded as traditional or pioneering companies, some other ones are considered as merely emerging companies. Generally, though, Farouk (2004) notes that oil companies in Egypt can generally be divided into local and nonlocal. Farouk (2004) goes on further to say that even with local companies, there are some who sell among their products, oil products that are regarded as to be of nonlocal origin. Some of these products include crude oil, lubricants, solar chargers, solar collector, coal, solar controllers, bitumen, industrial fuel, paraffin and natural gas. In a recent research by Sharma (2011), it was found that there exists general preference for nonlocal products sold by foreign and local oil marketing companies in Egypt. 2.2 Variables accounting for Preference for Non-local Oil Products among Egyptian Consumers 2.21 Influence of globalization Globalization is easily linked with the ease of doing business across borders by the use of technology. In with this the Levin Institute (2011) notes that “globalization is a process of interaction and integration among the people, companies, and governments of different nations, a process driven by international trade and investment and aided by information technology.” One influence of globalization however has to do with the fact that people have gained the quest of living like people of other nations as a way of feeling really part of the globalised world trend. This is to say that an Egyptian would for instance want to use clothes used by a British and eat food eaten by Americans to feel more like being part of the globalization phenomenon. Not surprising therefore, Tetram (2008) documents that when oil consumers in Egypt use products of nonlocal origin, they feel like they are keeping pace with globalization and that they are breaking the borders that guards around them. One another way that globalization has had influence on the consumer behavior of Egyptian consumers with preference to refined oil products is that it has made accessibility to nonlocal oil products from foreign countries easier (Balakrishnan, 2011). For instance by the click of a button, an oil company in Egypt, even if local can have access to nonlocal products from other parts of the world. 2.22 Influence of “quality halo” There is a psychological quest for quality behind why Egyptian consumers prefer some refined oil products to others. In accordance with this, Batra et al (2000) discovers from their research that, there is a general believe among consumers in Egypt that nonlocal refined oil products generally of highest quality as compared to local oil products. Surprisingly, Sharma (2011) laments that there is no empirical study that proofs the authenticity of the stereotype that products from developed countries are of highest quality. This not withstanding, it is extremely difficult to eliminate this believe and mindset of people. To a large extent, there are reviewers who have justified the thoughts and this particular consumer behavior trend among Egyptian refined oil consumers. The justification is that products from the developed world are manufactured by developed and more advanced companies, who know what it takes to produce products of premium quality. It is also said that these people have the expertise in terms of human resource to ensure that their products are the best (Batra et al, 2000). Another strong justification for local consumers to develop a quality halo for foreign or nonlocal products is that these products go through routine exportation checks to ensure that they are not substandard or of lower quality. 2.23 Influence of social status Egypt is a country made up of people of many different social backgrounds. It is said that “social class is very apparent in Egypt since it determines your access to power and position” (Kwint Essentials, 2011).For this reason, the variable of social status can never be eliminated in consumer behavior and consumer choice and preference for products. It is common knowledge that people of higher social status would want to show the world that they are really of such class by adhering to materialism. As explained by Hartney (2009), “someone with a high level of materialism, described as "materialistic," considers material possessions to be central to their life and their identity, and focuses a good deal of their energy on acquiring possessions.” Generally, oil products of nonlocal origins are more expensive than those of local origin. Some of the factors accounting for the expensiveness of the foreign oil products are taxes, export duties and supposed quality. To that person with social class however, the mere fact that all other people acknowledge that oil products of nonlocal origin are expensive, he or she would want to purchase that particular one to live up to the accolade of high class. This is therefore one reason why most people regarded to be of the higher class would go for oil products of nonlocal origin. 2.24 Issue of Patriotism It has been argued that citizens who have the highest levels of patriotism believe in their country, including everything that is made in their country (Columbus, 2000). For this reason, patronage of local products should be relatively higher in countries where there is much preaching or campaign on the need for patriotism. Patriotism has been explained as having very close meaning with loyalty for one’s country. In the opinion of Madan (2002), “patriotism is based upon the idea of a nation and its central institution, the state.” This means that patriotism has more to do with national loyalty and allegiance than “shared descent like in families, castes and tribes” (Madan, 2002). Quite closely, Kwint Essentials (2011) explains that “The family is the most significant unit of Egyptian society.” This could explain why there is generally low level of patriotism at the national level. Indeed, Kwint Essential adds that “Nepotism is viewed positively, since it is patronage of ones family.” Due to this, people are more concerned about individual family promotion rather than the collective promotion of the image of the country. By and large, once there is a conscious effort at the national stakeholders’ level to champion the promotion and support for locally manufactured or produced products, the consumer behavior of Egyptians is likely to be changed in this regard to opt for more local oil products. 2.3 How local oil product traders can position themselves strategically to meet the competition with nonlocal oil product traders If local marketers are to view the continuous preference for nonlocal oil products as a menace that needs to be stopped or a trend that needs to be changed, then they really have a lot to do in terms of strategic positioning. By strategic positioning, it is implied that local marketers should put themselves in a position whereby their products will be come products of choice and preference to the local consumers. To do this, Muhammad (1999) advocates the institution of competitive advantage among local marketers. According to the Investor Words (2011), competitive advantage involves “condition which enables a company to operate in a more efficient or otherwise higher-quality manner than the companies it competes with, and which results in benefits accruing to that company.” Judging from this definition, local companies should challenge themselves to produce products that can be proved to be of the highest quality. Again, methods of marketing should be considered. This way, any system of bureaucracies that makes the purchasing of local oil products cumbersome should be removed (VA Simple Services, 2011). There should also be availability. Indeed, if local product owners can make their products available in times of shortest or market distress, there is no denying the fact that their products will become the products of choice. Even more, customer appreciation programs and customer relationship managements should be taken very seriously by local producers (Cook, 2008). This is because this strategy will give consumers a sense of belongingness to the local companies. 2.4 Effect of patronage of nonlocal products on economy of country 2.41 Kills Creativity and Innovation at the Local Level The Zimbabwean (2011) holds very thoughtful literature on why the influx of foreign products kills creativity and innovation at the local level. The news magazine points out that local scientists, researchers and analysts are going to relax with the need to expand their own innovative and creative techniques because any advancement they need in terms of oil product quality and performance will be coming from foreign land. As long as local oil product producers are going to have a feeling that their efforts are not being appreciated and as long as the investments made by local oil product producers are not worthwhile; earning them enough revenue out of their capital, creativity and innovation in the industry is sure to die. Anokye (2008) outlines a lot of reasons why this position is valid and empirical. In the first place, because of the absence of preference for their products, local producers are not going to have the motivation to continue producing. With such low motivation to produce, local producers will be content with their current stakes, never realizing the need to change style. Again, due to the supposedly low patronage, local producers are not going to have the capital to produce. Indeed, it is only in the midst of enough revenue that developmental and strategic plans can be implemented. 2.42 Undermines the success and progress of local businesses Records from the Central Intelligence Agency (2011) show that “Cairo from 2004 to 2008 aggressively pursued economic reforms to attract foreign investment and facilitate GDP growth.” As of 2010, the same source gave the gross domestic product of Egypt as $497.8 billion. Economically, the more the sources of revenue, the more the total amassed wealth. This means that if the nation’s strategy plan to focus mainly on foreign direct income had been expanded to include more variables such as the expansion of local businesses, the gross domestic income of the nation could have even been better. As it is now, the oil industry in Egypt is one of the largest sectors of the nation’s economy. For instance the General Authority for Investment (2011) notes that “the petrochemicals sector represents approximately 12% of Egypt’s total industrial production and is currently worth around US$ 7 billion.” With such proportion of the petrochemical industry, if nonlocal businesses are allowed to have upper hand and dominion, the resulting factor will be that a lot of the money gathered in the country will be used to develop the economies of parent companies rather than Egypt. Local businesses are also going to be denied the needed resources to grow to a level that the country will become dependent on local businesses. 2.5 Implication of Preference for Nonlocal Products to marketers / businesses Not withstanding the fact that a lot have been reviewed with congruence to helping local businesses grow, one thing that cannot be denied is that all marketers and investors can take advantage of the new trend of consumer behavior and preference for nonlocal oil products to grow their businesses. At the national level, authorities are advised to consolidate the activities of foreign marketers such that much of the revenue raised can remain in the countries of operation and in this case, in Egypt. As noted by Perner (2010), global trade agreements such as “General Treaty on Trade and Tariffs, and trade organizations such as the World Trade Organization (WTO), North American Free Trade Agreement (NAFTA), Middle East North Africa (MENA) and the European Union (EU)” have all come as opportunities for developing countries to benefit from the investments made in their countries. If policy makers can take advantage of the treaties that regulate international trade among nonlocal companies, profits and revenues earned can be used to develop local businesses so that local businesses will not suffer the losses discussed earlier. Until the general trend is changed, oil product marketers in Egypt are advised to see the trade in nonlocal oil products as a boost for their businesses and trade in nonlocal products even if they are local businesses. As this is being done, other factors that have been identified to promote the patronage of local products should also be considered alongside. 3.0 Methodology 3.1 Research Design The research design dictates the pace of the actual conduct of the research. This means that the research design lays bare, how the researcher is going to go about the actual conduct of the research in terms of data collection. It is in line with this that Experiment Resources (2008) notes that “the design is the structure of any scientific work. It gives direction and systematizes the research.” Exposed to several research designs, the researcher after careful study of the research aims and the research questions set chose survey as the most prescribed research design for this research work. Basically, survey was considered appropriate because it would give the researcher the opportunity to gather data from as many sources as possible to clarify the ambiguity associated with the research topic. Certainly, the purpose of the research demands that the researcher measures the trend associated with a system and Trochim (2006) notes that “the broad area of survey research encompasses any measurement procedures that involve asking questions of respondents.” Indeed, the measurement procedures to be measured here is the preference for nonlocal oil products over local oil products by Egyptian fuel consumers. Just as suggested by Trochim (2006), the measurement of procedure shall be done by asking questions from consumers on their consumer attitudes towards the purchase of motor oil products. 3.2 Population and Sampling The population and sample refers largely to the people who are going to be involved in the research work. The difference however is that the population refers to a larger group of people, out of which the sample will be selected. Castillo (2009) therefore notes that “a research population is generally a large collection of individuals or objects that is the main focus of a scientific query.” For this research work, all automobile users in Egypt (Cairo) are used as a population. Out of this huge number, the researcher selects fifty-five (55) people as sample size. It is out of the fifty-five (85) people that the researcher is going to collect the survey data from. The process by which the researcher shall select the fifty-five (55) members of the sample size is referred to as sampling. As Trochim (2006) notes, “sampling is the process of selecting units (e.g., people, organizations) from a population of interest so that by studying the sample we may fairly generalize our results back to the population from which they were chosen.” Specifically, the researcher used both random sampling technique and purposive sampling technique to select the fifty-five (55) participants in the sample group. Random sampling technique is a probability sampling procedure whereby all people in the population have an equal chance of belonging to the sample size. Probability sampling ensures that the sampling procedure is free from all forms of bias and favoritism that may go a long way to affect the results of the research. For instance in this research and with the research topic at hand, a researcher who is not careful on avoiding bias may select only participants, whose consumer behavior is in line with what the research problem states and thus favors the achievability of the hypothesis. To avoid such a situation and rather put the hypothesis into a critical study, the researcher selected fifty (50) out of the fifty-five (55) sample size members through a random sampling technique. Specifically, the researcher selected one day, on which he set a time (from 9am to 12noon). On this day, he selected a petrol station in the heart of the city of Cairo. In other to ensure fairness, the researcher decided he would select the first fifty (50) people to come to filling station and express interest to take part in the research. The five other people who were selected through purposive sampling were experts in the petrochemical industry in Egypt and they were selected as such because the researcher needed to be sure of their level of competence. 3.3 Research Instrument As noted already, the researcher is going to shall involve fifty-five (55) participants, made up of two major groups. The groups are consumers and experts. Each of these groups is going to have a different method by which data will be collected from them. The material or method the researcher is going to use to collect data is referred to as research instrument. With the consumers, the researcher shall use questionnaire on them to collect quantitative data. Questionnaire is a piece of paper that contains questions to be answered through writing. The researcher found the questionnaire appropriate for the consumers because their number was too large to take them through one-on-one interview one after the other. Moreover, most of them arrived at the filling station in groups and so the questionnaire was appropriate for attending to more than one person at a time. Even more, the researcher expected to collect quantitative data, which had to do with figures and facts. For this reason, written and recorded data were seen as the best way to do this. With reference with the five (5) experts, the researcher saw the interview as an appropriate data collection instrument for two major reasons. First, their number was not large and so one-on-one interview was going to be possible. Secondly, as experts, the researcher wanted to give the five participants more room to express themselves and their opinion, which was of course not going to be done well through the questionnaire because the questionnaire is more restrictive. Because data to be collected from the experts were did not pertain to numbers or figures, it was easier collecting them qualitatively 3.4 Data Collection Procedure The major data to be collected on field through primary data collection is the choice of oil used by consumers. In Egypt, oil change among passenger cars takes place in service stations, also known as petrol stations. There also are some who change their oil at authorized automobile branded service centers if the car is in warranty period. Most of the service stations, whether they are run by local investors and owners or are run by foreign owners sell both local and nonlocal oil products. As the hypothesis states, greater majority of consumers have quest and preference for nonlocal products. The data to collected through the questionnaire would therefore seek to find on a broader base, Whether consumers buy local or nonlocal oil products. The specific product makers that consumers are more comfortable buying from (example Mobil 1, Shell Helix, Shell V-Power, Total Quartz, Chevron Havoline and so on) How much it costs consumers to buy local or nonlocal oil products. Why consumers have preference for one form of commodity (local and nonlocal) over the other. Personal experience of consumers with the kind of oil product they have used for long. Finally, the researcher shall buttress all primary data collected; especially those collected qualitatively with secondary data research whereby the researcher shall review data to support or back the ideas shared by the experts. 4.0 Data Analysis The data analysis stage of the research is the stage where all data collected by the researcher from the sample size are going to be presented and discussed. Broadly, the data collected are expected to answer all the research questions posed by the researcher. The data collected should also contribute to the achievement of the research aims set by the researcher. In order to ensure clarity of analysis, the section has been broken into various themes and analyzed as follows. Choice of Oil Product Origin The question sought to find out from the fifty (50) respondents, the origin of oil products they preferred most. The options given to them were local origin and nonlocal origin. Out of the fifty (50) respondents, the graph below indicates their line of answers received. From the graph, it can be seen that as many as thirty-seven (37) out of the fifty (50) respondents, preferred nonlocal oil products to local oil products. Referring to the literature review, Sharma (2011) remarked that “there exists general preference for nonlocal products sold by foreign and local oil marketing companies in Egypt.” The data collected from respondents on their general preference for origin of oil confirms Sharma’s assertion. Upon further secondary research, the researcher discovered that there were several factors that made consumers have a taste for foreign oil products. But even before asking consumers to explain why they generally preferred the nonlocal oil products to local oil products, the researcher asked the thirty-seven (37) respondents who selected nonlocal products to select among a list of oil companies and products, the ones that they most traded in their products. Specific Brand Most Patronized Even though only one service station was used for the researcher, it was generally accepted that a lot of the consumers who came to that filling station were not regular customers and that they certainly patronized nonlocal oil products from other companies and service stations. The researcher therefore asked respondents to state specifically, the products or companies they preferred most. Again for the sake of getting accurate results, the research was not conducted in a filling station that was also a manufacturer. What this means is that the filling station were the research was conducted did not have their products listed among the options given to the respondents. Rather, the filling station had in stock, products from all the companies that were listed. The graph below represents answers gathered from respondents. The graph above depicts very tough competition among the various nonlocal oil product dealers and companies in Egypt. This is because there are highly products that show an overwhelmingly higher superiority over other products. This development has a huge implication to business and that is, companies that produce these products must put in much measure that focuses on building competitive advantage based on service rather than product. This is because their products are already popular among the populace. Cost of Nonlocal Oil Products Still on the thirty-seven (37) respondents who pointed out that they preferred nonlocal oil products, the researcher asked them as simple question on cost of nonlocal products. The question was: “Nonlocal oil products are expensive as compared to local products.” Responses received are represented below. Rather ironically, a lot of people preferred nonlocal oil products despite the fact that they were expensive. This confirms the theory of Mandel (2006) that states that consumers exchange quality for cost no matter how expensive quality may cost them. This is to say that consumers will always consider cost as a last resort and that as long as they can afford, they will pursue a certain product for reasons and factors that meet their needs. Variables affecting consumer decision These variable factors are foremost decisions of consumers, taken on the basis of general perception among the public on nonlocal oil products rather than what they have personally experienced. This is to say that if a respondent for instance have a higher preference for nonlocal oil products as compared to local oil product, what the researcher sought to find from them was what they heard from the public before settling on the quest to opt for nonlocal oil products. For those who did not have preference for nonlocal oil products, this section sought to know from them what they hear from other people as reasons why these people prefer nonlocal oil products. The table below is a summary of data collected from the all fifty-five (55) respondents (including experts who were interviewed). Variable Number of Respondents Quality Halo Measure of Social Status Unavailability of Local substitutes Admiration for foreign lifestyle Consumer’s Ethnocentrism 19 5 15 9 7 Total 55 Indeed the results show that the variables that inform or would possibly inform consumer attitude towards the purchase of oil products are wild and varying. Looking at the fact that each of the variables presented to the consumers scored a point, it could be said that the decision formulation model of consumers are highly varied and scattered. However, the highest among the varied variables went to quality halo and unavailability of local substitutes. This means that a lot of consumers have developed the faith that foreign oil products are of the highest quality as compared to local oil products. There are also some who feel that they would just go for nonlocal oil products because of the continuous absence of the kind of local oil products they have always wanted to have. Implications to Local Producers Following the trend of data gathered so far, five (5) experts in the petrochemical industry in Egypt were interviewed. One of the major things the researcher wanted to find from them was what local producers of oil products could do to keep up to pace with their nonlocal competitors. Qualitatively, the researcher gathered from the interviewees that they placed a lot of premium on the need for local producers to be mindful of quality. This was because most people had developed the idea that products of nonlocal origin were superb than local products in terms of quality. Even though the interviewees admitted that it was going to be difficult, they were of the view that if quality was made the hallmark of local producers, that hallmark could grow into becoming a competitive advantage and little verbal praise and admiration they received from their customer could be a long way to serve as publicity and advertisements for them again, the experts were keen on the need for local producers to be up to speed with stock. They lamented of frequent shortest of local products; not resulting from bumper sales but because of under production rate. Finally, the experts asked local producers to begin going into merger with some of the nonlocal products. They observed that this would make them enjoy all competitive advantage held by the merging companies. This view is supported by IT Business Edge (2008). 5.0 Conclusion and Recommendation This paper has been examining the hypothesis that Egyptian vehicle operators prefer nonlocal oil products to local products. By and large, data gathered from two major sources – thus consumers and experts have come to proof the hypothesis to be valid and also explained why the framework of the hypothesis has come about. Mainly, the research has established that there are a number of factors that push consumers into deciding to go after a particular product and key among these factors is quality. Availability is also an issue of great concern. Based on these conclusions, two clear recommendations that have already being highlighted by the experts are being re-echoed: 1. Local producers should bring themselves into the market by making quality their major competitive advantage. 2. Where possible, local producers should merge with nonlocal producers to ensure that they also take advantage of the existing trend of consumer behavior, which does not seem to change anytime soon. REFERENCE LIST Anokye F. (2008). Impact of Influx of Foreign products on Local Markets. PrintMark Publications Limited: Durban Bafour A. 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