Countries in Asia, the Middle East, and South America continue to experience substantial growth in terms of globalization and profound transformations of their consumer markets. In these globalizing markets, consumers tend to hold more favorable attitudes toward globalization and its economic, social, and political ramifications. Meanwhile, consumers in Western markets are increasingly critical of globalization and re-embrace local values. Against this background, multinational corporations must decide whether to continue to pursue global branding strategies and/or rejuvenate local branding strategies.
“Following the 2008 financial crisis, consumers grew more skeptical of market globalization. As a consequence, brand globalness has come to symbolize globalization’s (experienced or imagined) downsides, such as market inequalities, cultural homogenization, and lost cultural identity.”
In light of globalization headwinds in many Western countries, we investigate the relative effectiveness of perceived brand globalness and localness as signals of brand credibility in globalized and globalizing markets. By addressing this timely issue, we generate novel consumer behavior insights to inform current international marketing strategy.
To explore the implications of market globalization for consumer preferences, we use signaling theory to conceptualize a model in which brand credibility mediates the effects of brand globalness and brand localness on price premiums through perceived quality and anticipated regret. We test this model using data from two studies in two different countries, Germany and South Korea, that we analyze using multi-group structural equation modeling.
Our study shows that the effectiveness of brand globalness and localness as signals of brand credibility differs between a globalized and globalizing market . In the globalizing market of South Korea, the positive effect of brand globalness on brand credibility is significantly stronger than the effect of brand localness. Comparing these relationships between markets, we find that the signaling function of brand globalness for brand credibility is substantially more pronounced in South Korea than in Germany, whereas the reverse is true for brand localness.
“In globalized markets, brand globalness is a weaker signal of brand credibility than brand localness, whereas in globalizing markets, the two signals are of equal importance.”
These effects are further contingent on brand origin and product category. For example, we find that only domestic brands benefit from globalness perceptions, whereas in the globalizing market, both domestic and foreign brands benefit from such perceptions.
This study adds to an emerging stream of literature concerning the implications of anti-globalization sentiments and provides insights into how marketers should (re-)position their brands in globalized and globalizing markets, depending on the characteristics of their brand and product category.
Full reference: Mandler, Timo, Fabian Bartsch, and C. Min Han (2020), “Brand Credibility and Marketplace Globalization: The Role of Perceived Brand Globalness and Localness,” Journal of International Business Studies, 52, 1559–1590. https://doi.org/10.1057/s41267-020-00312-2
Cite for: Global brands, local brands, globalization, anti-globalization, shifts in consumption patterns, signaling theory, use of student samples, multi-group structural equation modeling, measurement invariance, price premium
