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An Investigation of Consumer Response to Sales Promotions in Developing Markets: A Three-Country Analysis.

LENARD C. HUFF

DANA L. ALDEN

Considering the importance of consumer sales promotions in the marketing mix of many consumer products throughout the world, there is a notable lack of research devoted to examining consumer response to sales promotions outside North America and Western Europe. In addition, relatively little research focuses on non-price promotions such as sweepstakes. This study develops and tests models explaining consumers' attitudes toward and use of coupons (a price-oriented promotion) and sweepstakes (a non-price promotion). The models are designed specifically for developing or newly industrialized countries with collectivist cultures and are tested with consumer samples from Taiwan, Thailand, and Malaysia. Aggregated data supports the models, yet cross-national differences also surest that managers should consider cultural and economic differences when planning sales promotion strategy in developing or newly industrialized countries.

THROUGHOUT THE WORLD, consumer sales promotions are an integral part of the marketing mix for many consumer products. Marketing managers use price-oriented promotions such as coupons, rebates, and price discounts to increase sales and market share, entice trial, and encourage brand switching. Non-price promotions such as sweepstakes, frequent user dubs, and premiums add excitement and value to brands and may encourage brand loyalty (e.g., Aaker 1991; Shea, 1996). In addition, consumers like promotions. They provide utilitarian benefits such as monetary savings, added value, increased quality, and convenience, as well as hedonic benefits such as entertainment, exploration, and self-expression (Chandon, Laurent, and Wansink, 1997).

A large body of literature has examined consumer response to sales promotions, most notably coupons (e.g., Sawyer and Dickson, 1984; Bawa and Shoemaker, 1987 and 1989; Gupta, 1988; Blattberg and Neslin, 1990; Kirshnan and Rao, 1995; Leone and Srinivasan, 1996). Despite this, important gaps remain to be studied. First, relatively little research has focused on response to nonprice promotions. Two exceptions include Ward and Hill's (1991) discussion of effective promotional game design and Chandon, Laurent, and Wansink's (1997) study of the utilitarian and hedonic benefits of both monetary and nonmonetary promotions. Second, while some work examines differences between North American ethnic groups in response to sales promotions (e.g., Hernandez, 1988; Kaufman and Hernandez, 1990; Donthu and Cherian, 1992; Green, 1995 and 1996; Tat and Bejou, 1994), little research has focused on markets in Asia, South America, or Eastern Europe. It is generally agreed that sales promotions are difficult to standardize because of legal, economic, and cultural differences (e.g., Foxman, Tansuhaj, and Wong, 1988; Kashani and Quelch, 1990; Huff and Alden, 1998). Multinational firms should therefore understand how consumer response to sales promotions differs between countries.

This study addresses both gaps in the literature. We first develop models explaining consumers' attitudes toward and use of coupons, a price-oriented promotion, and sweepstakes, a non-price promotion. These models are designed specifically for consumers in developing or newly industrialized societies with collectivist orientations. 'Collectivist' societies are distinguished from 'individualist' societies and are characterized by 'a tight social framework in which people distinguish between in-groups and out-groups; they expect their in-group (relatives, clan, organizations) to look after them, and in exchange for that they feel they owe absolute loyalty to it' (Hofstede, 1980). Such societies are common in such regions as Asia and Latin America (Hofstede and Bond, 1988). In particular, we focus on Asia and test models with data from Taiwan, Thailand, and Malaysia. Differences in consumer response among the three countries are also examined.

CONSUMER RESPONSE TO SALES PROMOTIONS

Explaining consumer attitudes toward coupons

Drawing on Mittal (1994), we posit that the level of coupon use is driven, in large part, by consumer attitudes toward coupons. We further propose that attitudes toward coupons are influenced by the following factors: (1) familiarity with coupons, (2) attitudes of family and friends toward using coupons, (3) fear of embarrassment or losing face when using coupons, and (4) the consumer's price consciousness. The first three constructs are particularly salient in developing or newly industrialized, collectivist societies, while price consciousness is likely to be more universal.

Familiarity

We propose that the greater the consumer's familiarity with coupons, the more positive the attitude toward them. This is consistent with literature dating as early as Titchener's (1910) analysis of familiarity and preference. According to Titchener, recognition of a stimulus produces 'a glow of warmth' and lack of recognition evokes 'an uneasy restlessness' (Titchener, 1910). Zajonc later showed (Zajonc, 1968; Moreland and Zajonc, 1977, 1979; Zajonc, 1980) that 'mere exposure' to a stimulus enhances a person's attitude toward it. Zajonc also found that the marginal effect on attitude of an additional exposure diminishes significantly after the consumer has received several exposures (Eagly and Chaiken, 1993). Thus, familiarity may be particularly important in developing societies, where consumers have had less exposure to coupons.

Perceived attitudes of family and friends toward coupons

The extended theory of reasoned action models behavior as a function of intentions. Intentions are a function of attitudes and subjective or social norms (Fishbein and Ajzen, 1975), which are assumed to be independent. While receiving extensive support in the United States (e.g., Shimp and Kavas, 1984), Lee and Green (1991) questioned the applicability of the model in collectivist societies, particularly concerning relationships between attitudinal and normative components of the model. As they argue, 'It seems logical that societies with strong group conformity pressures would foster strong interactions between individual and societal attitudes' (Lee and Green, 1991). Drawing from this, we propose that in collectivist societies, social normative factors directly influence attitudes toward sales promotions. For coupons, we introduce two separate social factors. The first is the attitudes of family and friends toward coupons. In a collectivist society, the attitudes of these reference groups should have a strong positive influence in shaping attitudes of individual consumers.

Consumer's fear of embarrassment or 'losing face'

A second social factor that may influence attitudes is fear of embarrassment when using coupons. Dhar and Hoch (1996) posit that fears of negative attributions (e.g., 'cheap' or 'low class') by others about coupon users may limit the impact of coupons on sales. Researchers have found that many African-Americans (Yovovich, 1981; Green, 1995) and Hispanic-Americans (Hernandez, 1988; Kaufman and Hernandez, 1990; Donthu and Cherian, 1992) have negative attitudes toward coupons, partly because coupons are a sign of low class or inability to pay full price. Kashani and Quelch (1990) report that Japanese consumers are still embarrassed to redeem coupons even though they have been used there since 1976.

Consumers from collectivist societies are particularly sensitive to how others view them. Hence, they have been found to be more prone to embarrassment than people from individualist societies (Singelis and Sharkey, 1995). Strongly related to embarrassment is the concept of 'saving face,' which is particularly strong in countries with strong Confucian traditions (Hofstede and Bond, 1988).

Because they are usually redeemed in public, coupons may produce a particularly strong fear of embarrassment. Besides fears that coupon use may be perceived as signs of 'cheapness' or 'low class,' other consumers may be perturbed when forced to wait while the consumer's coupons are being processed. This may further heighten a sensitive consumer's feeling of embarrassment and result in a negative attitude toward using coupons.

Price-consciousness

Researchers have found that coupon users are significantly more price-conscious than nonusers (Narasimhan, 1984; Babakus, Tat, and Cunningham, 1988; Tat and Bejou, 1994). We would, therefore, expect that the more price-conscious the consumer, the more positive will be his or her attitude toward coupons.

Explaining consumer use of coupons

Attitude

As discussed, we posit that a consumer's level of use will be driven largely by his or her attitude toward coupons (Mittal, 1994).

Availability

Mittal (1994) found that while attitude explains a fair portion of the variance for coupon use (38 percent in his study), it is not extremely high. There may be other variables independent of attitude that influence use. We propose that one such variable is availability, which should have a positive impact on use. Green (1995 and 1996) found that one reason African-Americans use coupons less than White Americans is that they are less exposed to the types of media that traditionally distribute coupons. Kaufman and Hernandez (1990) make a similar argument regarding Hispanic-Americans. Hernandez (1988) maintains that Puerto Ricans would use more coupons if manufacturers and retailers offered coupons more often.

Explaining consumer attitudes toward sweepstakes

For the same reasons described above for coupons, we propose that in developing, collectivist societies, familiarity and the attitude of family and friends toward sweepstakes will influence the consumer's attitude toward sweepstakes.

Because participation in sweepstakes is more private than for coupons, we don't expect consumers in developing, collectivist markets will have a strong fear of embarrassment if they enter sweepstakes. Furthermore, as sweepstakes have no direct influence on price, price consciousness is not included in our attitude model for sweepstakes.

Fun and enjoyment of participating in sweepstakes

One factor that universally should positively influence consumers' attitudes toward sweepstakes is the degree to which they feel that sweepstakes are entertaining. Chandon, Laurent, and Wansink (1997) argue that consumers derive several benefits from using sales promotions that can be classified into two groups: utilitarian and hedonic. Hedonic benefits include entertainment: the fun and excitement consumers receive from a promotion. As Chandon et al. (1997) mention, many sales promotions such as sweepstakes, contests, and free gifts are intrinsically fun. Chandon et al. (1997) found that, for nonmonetary promotions, the extent to which consumers felt the promotion was fun had a significant influence on their evaluations of the promotion.

Explaining the level of consumer use of sweepstakes

As with coupons, we model consumer use of sweepstakes as a function of the consumer's attitude toward and the availability of sweepstakes.

EXAMINING BETWEEN-COUNTRY DIFFERENCES

In the second step of our study we examine differences in attitude and use of coupons and sweepstakes among consumers from Taiwan, Thailand, and Malaysia. First, we estimate the above models explaining attitude and use of coupons and sweepstakes for each country and then compare the results. Second, we compare mean similarities and differences in attitude and use, as well as other relevant variables. To guard against possible problems with metric equivalence (Hui and Triandis, 1985), we extend this analysis by computing ratios of coupon to sweepstakes attitude and use. These ratios provide an indication of the relative popularity of coupons and sweepstakes in each country.

Because little research has discussed consumer response to sales promotions in Asia, the basis for predicting the results for any of our comparative analyses is very limited. We therefore adopt an exploratory approach and consider several important factors that may differentially affect consumers in each country.

Differentiating factors: cultural, economic, and legal

Despite their geographic proximity, Taiwan, Thailand, and Malaysia have important cultural differences. Using Hofstede's (Hofstede and Bond, 1988) measures of culture, Malaysia (104) is much higher on power distance than Taiwan (58) or Thailand (64). At the same time, Malaysians (36) have somewhat lower uncertainty avoidance than Taiwan (69) or Thailand (64). Based on their low scores on individualism, all can be regarded as collectivist societies.

Religion is an important factor shaping a nation's culture. Here the three countries are very different. Nearly 60 percent of the population of Malaysia is Muslim. Thailand is one of the most devoutly Buddhist countries in Asia. Buddhism, Confucianism, and Taoism are the predominant religions in Taiwan, but religion generally plays a lesser role in the lives of Taiwanese than in Thailand or Malaysia (James, 1995).

Attitudes toward gambling vary across countries. Fatalistic risk-takers, the Chinese like to tempt the gods: A Chinese proverb says that wealth is up to heaven. By contrast, gambling is taboo under Islamic teachings (Tanzer, 1994). Since sweepstakes could be considered a form of gambling, we may expect sweepstakes to be relatively more popular in Taiwan than Malaysia. We would also expect Chinese Malaysians to have more favorable attitudes toward sweepstakes than Malays.

Of the three countries, Taiwan is the most economically developed. Estimated GNP per capita in 1996 was $12,797 for Taiwan, compared with $3,034 for Thailand and $4,521 for Malaysia (U.S. Department of State, 1997).

According to a report by Boddewyn (1988), all three countries have fairly lenient laws regarding consumer sales promotions. No specific restrictions on coupons are mentioned. Each country appears to have more restrictions on sweepstakes than coupons, but it is not clear how these restrictions affect the availability or use of sweepstakes.

RESEARCH OBJECTIVES AND METHODOLOGY

Study sample

In Taiwan, a market research firm conducted telephone interviews in Taipei, yielding 200 responses. In Thailand, mall-intercept interviews conducted in Bangkok yielded 250 responses. In Malaysia, marketing students conducted personal interviews in urban areas, yielding 473 responses. Quota samples were drawn in all three countries to reflect ethnic mix, gender, and age. Respondents were required to shop at supermarkets at least once per month and be between 18 and 49 years of age. It is possible that differences in data-collection methods could induce differences in the composition of the samples. Despite this, differences were relatively minor. Samples were all generally urban, educated, and middle to upper middle class. One statistically significant difference was that the Malaysian sample was younger (mean of 26.4 years) than either the Taiwanese (31.4 years) or Thai (34.0 years) samples.

Study measures

To test our hypotheses, we developed multiple regression models for both attitude and use for each type of promotion. As discussed, attitude toward coupons is modeled as a function of (1) familiarity, (2) perceived attitudes of family and friends, (3) fear of embarrassment, and (4) the consumer's price consciousness. Coupon use is modeled as a function of: (1) consumer attitude and (2) perceived availability. Attitude toward sweepstakes is hypothesized as a function of (1) familiarity, (2) perceived attitudes of family and friends, and (3) perceived enjoyment from entering sweepstakes, while sweepstakes use is a function of: (1) attitude and (2) perceived availability. The appendix provides a detailed explanation of how these variables were measured.

RESULTS

Testing the models

Table 1 summarizes the results of regression models explaining attitude toward and use of both coupons and sweepstakes.

Coupons

As expected, when data from the three countries is aggregated, 'familiarity,' 'attitudes of friends and family,' and 'price consciousness' all have significant positive impacts, and 'fear of embarrassment' has a negative impact on consumer attitudes toward coupons. Also as expected, consumer attitudes and both measures of availability have significant positive effects on consumer use. However, within-country tests indicate that certain expected relationships don't hold. This is particularly true of Taiwan, where 'familiarity' and 'fear of embarrassment' do not appear to have significant effects on attitude, and 'knowing where to find coupons' (one measure of availability) does not significantly influence consumer use. In addition, 'price consciousness' does not have a significant impact on attitudes toward coupons in either Thailand or Malaysia.

Sweepstakes

When data is aggregated, all expected relationships hold. 'Familiarity,' 'attitudes of family and friends,' and the feeling that sweepstakes are 'fun' all positively influence attitudes toward sweepstakes. 'Attitude' and 'availability' positively influence use of sweepstakes. Within-country tests show that all expected relationships hold except the effects of 'familiarity' on attitude in Taiwan, 'fun' on attitude in Thailand, and 'knowing about sweepstakes' (one measure of availability) on consumer use in Malaysia.

Comparing means and relative response toward coupons and sweepstakes

Table 2 compares mean scores for selected variables for Taiwan, Thailand, and Malaysia. Taiwanese consumers generally report substantially lower familiarity, attitude, and use of both coupons and sweepstakes than Thai or Malaysian consumers. Thais generally report the most positive response toward sales promotions, particularly for coupons. Malaysians report the greatest fear of being embarrassed or losing face if they use coupons. Finally, Thais appear to be the most, and Taiwanese the least, price-conscious consumers.

While mean comparisons are interesting, caution must be used when interpreting the results due to potential response bias (Hui and Triandis, 1985). We thus conducted another analysis that is less sensitive to response bias that compares consumer response to coupons versus their response to sweepstakes. In this analysis, we divided the score for coupons by the corresponding score for sweepstakes on several response measures. The resulting ratios are shown in Table 3. The most apparent difference between the three countries is that Thais appear to have the highest relative regard for coupons. Familiarity, attitude, and use are all significantly higher for coupons than for sweepstakes in Thailand. To a lesser extent, Taiwanese also appear to respond more favorably to coupons than sweepstakes. Malaysians report the least favorable response toward coupons relative to sweepstakes.

DISCUSSION AND IMPLICATIONS

Aggregate models of attitude and use

The primary focus of this study was to develop and test models that explain consumer response to a price-oriented (coupons) and a non-price sales promotion (sweepstakes) in developing and newly industrialized collectivist societies. A secondary purpose was to examine differences in consumer response in three Asian nations.

Our models tested well with aggregated data. One important finding is that, in collectivist cultures, social normative factors appear to have a strong direct influence on consumer attitudes. This substantiates Lee and Green's (1991) contention that in collectivist societies strong interactions are likely between individual and societal attitudes. For researchers, this provides further evidence that Western models may not correctly explain consumer behavior in non-Western societies. For managers, this confirms the importance of interdependencies in Asia. While reference groups and opinion leaders are important in Western cultures, they may be even more important in collectivist societies.

Another important aspect of our models is the inclusion of availability as an indicator of consumer use. Our results support arguments that availability, as well as culture, impacts consumer use of promotions (Green, 1995 and 1996; Hernandez, 1988). Managers marketing in less-developed or newly industrialized countries should be aware that the more available the promotion, the more consumers will use them, despite cultural differences.

Country comparisons

Though the models tested very well using aggregated data, there were noticeable differences in the results among the three countries. In general, results were decidedly different in Taiwan than in Malaysia and Thailand, particularly in the models explaining attitude. For example, familiarity has a strong influence on attitude in Thailand and Malaysia, but not in Taiwan. In addition, the models don't fit as well in Taiwan (as evidenced by lower R(2)). One possible explanation for this is that Taiwan is more economically advanced than either Thailand or Malaysia. Thus, models tested in this study may be more appropriate for developing, rather than newly industrialized, societies.

One surprising result is that the Taiwanese report a low fear of embarrassment when using coupons. In the regression model, fear of embarrassment does not have a significant impact on Taiwanese attitudes toward coupons. This differs from certain collectivist, Confucian societies in Asia, most notably Japan and Korea, where some evidence indicates that consumers still fear losing face when using coupons (Kashani and Quelch, 1989; Huff and Alden, 1998). Perhaps Taiwanese do not attribute negative associations (e.g., 'low class' or 'cheap') to using coupons. There is no clear evidence of this in our results. A second explanation is that collectivism and Confucianism may be more complex than commonly thought and may manifest differently in Taiwan and other Chinese-dominated societies than in cultures such as Korea and Japan.

Also interesting is that Taiwanese consumers report less-favorable attitudes and use toward sweepstakes than consumers in Thailand and Malaysia. In addition, unlike Malaysia, where consumers appear to favor sweepstakes over coupons, Taiwanese consumers favor coupons over sweepstakes. In separate analyses we also found few significant differences between Chinese Malaysians and Malays in their response to sweepstakes. It appears, then, that if the Chinese do have an unusually high interest in gambling (Tanzer, 1994), that interest does not result in unusually positive attitudes toward or high use of sweepstakes.

It is interesting that price consciousness is not a significant indicator of attitude to~ ward coupons in either Malaysia or Thailand but is significant in Taiwan. This result occurred despite the fact that Malaysians and Thais both report significantly higher levels of price consciousness than Taiwanese. Perhaps this indicates that in a society where consumers are not generally price conscious, those who are price conscious are clearly the ones who use price-oriented promotions such as coupons. In a country where consumers are generally highly price conscious, other factors may be more important in predicting who will be the heavy users of coupons. This possibility deserves further examination.

Perhaps the most important finding from our country comparisons is that, despite the geographic, and, in some respects, cultural proximity between Taiwan, Thailand, and Malaysia, there are significant differences in consumer responsiveness to different sales promotions. This indicates that it will be difficult for firms to standardize consumer sales promotion strategies across the developing and newly industrialized countries of Asia. Managers must take care to understand how cultural, legal, and economic differences may influence consumers' response to sales promotions.

SUGGESTIONS FOR FUTURE RESEARCH As discussed

As discussed, this study raises a number of issues that should be examined in more depth and may require qualitative or experimental research approaches rather than survey methods. Also, though this study breaks new ground by focusing in Asia, future research should include a wider array of countries and cultures. We found substantial differences in consumer response to sales promotion, even among three countries as close in proximity as Taiwan, Thailand, and Malaysia. Perhaps research in a greater variety of countries will help us better understand how cultural, economic, and structural factors cause these differences.

In summary, effective international management of sales promotions is crucial to the success of many consumer products. It requires an understanding of how consumers respond to specific promotions in different countries. Our study begins to examine factors that influence consumer response to sales promotions in Asia, but much remains to be studied in this important area of international marketing. JAR

LENARD C. HUFF is assistant professor of marketing at the University of Hawaii at Manoa. He received his Ph.D. in marketing from the University of Michigan in 1994. His research interests are in the areas of quality and customer satisfaction, relationship marketing, and sales promotion. He has published in Management Science and Quality Management Journal.

DANA L. ALDEN is associate professor and chair of the department of marketing at the University of Hawaii at Manoa, He received his Ph.D. in marketing from the University of Texas at Austin in 1990. His research interests include cross-cultural communications and consumer behavior, international promotion strategy, and social marketing. He has published in such journals as the Journal of Marketing, Journal of Consumer Research, Journal of International Business Studies, Journal of Advertising, and Psychology and Marketing.
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Author:L., Lenard C.; Alden Huff Dana
Publication:Journal of Advertising Research
Geographic Code:90ASI
Date:May 1, 1998
Words:3765
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