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Customer Perceived Brand Equity in Measuring Consumption

Preference towards Local and Imported Products:


A serial Studies on Urban and Suburban Level of Indonesia
Society in Greater Jakarta
Sri Rahayu*

This study is generally aims to analyze how the preferences of Indonesian as a customer in consum-
ing the local and imported products. The specific purpose of this study is to confirm measurement tools
of the customer perceived brand equity, which are product country image, culture, marketing mix, and
product quality. The result of this study indicates that Indonesian consider much about the marketing
mix and product quality, while the culture not so much. The product country image on the other hand
gives the opposite effect. It is significantly related but has negative impact to the customer preference.
This study is expected to gives clarity in factors that contribute to create the customer preference,
consumption, and behavior in consuming local and imported product. So further local and imported
product could compete equally.

Keywords: Customer Perceived Brand Equity (CPBE), consumption preference, culture, product coun-
try image, product quality

Studi ini bertujuan untuk menganalisis preferensi masyarakat Indonesia sebagai konsumen dalam
mengkonsumsi produk lokal dan impor. Tujuan penelitian secara khusus untuk mengkonfirmasi cus-
tomer perceived brand equity sebagai alat untuk mengukur preferensi konsumsi, dengan variable di
dalamnya adalah product country image, culture, marketing mix, dan product quality. Hasil penelitian
ini menunjukkan bahwa variable yang paling mempengaruhi preferensi masyarakat Indonesia dalam
mengkonsumsi produk lokal dan impor adalah marketing mix, dan product quality, tidak demikian hal-
nya dengan culture. Bahkan product country image dalam penelitian ini memberikan efek yang nega-
tive terhadap preferensi konsumsi masyarakat. Penelitian ini diharapkan dapat memberikan gambaran
mengenai faktor yang berkontribusi dalam terciptanya preferensi, konsumsi dan perilaku konsumen
dalam mengkonsumsi baik produk lokal maupun impor. Sehingga kedepannya produk lokal dapat ber-
saing dengan seimbang dengan produk impor.

Kata Kunci: Customer Perceived Brand Equity (CPBE), preferensi konsumsi, budaya konsumsi, prod-
uct country image, kualitas produk

Introduction country for target exports. Indonesia has high


number of citizen, with high-level consump-
Imported product has become major issue in tion. It is showed by the number of import for
recent trade condition of Indonesia. Import oc- consumption product that reach 9.9US$ in the
curs in almost every sector and has increasing period of January to September 2011. Increased
trend. For the period of January to August 2010 approximately 38.5% from the previous year
to 2011, import for textile sector has increased which only 7.2US$. That high-level consump-
approximately 24.3%, while electronic import tion support 6.7% from the economic growth,
increased 7.48%. And, most of the imported and succeed to help Indonesia to survive global
products are come from China (The Ministry of crisis that affected most of the European na-
Trade, Republic of Indonesia 2011). tions.
Demographic evidence of Indonesia is one
of the reasons why it becoming the favorite *Research Expert at The Ministry of Trade Republic of
Indonesia, E-mail: srirahayu.indonesia@gmail.com

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On the other hand, that high-level consump- or service. (Susanto and Wijanarko (2004, p.
tion, cannot captured by the Indonesian them 127); Brand equity is positive differentiation
self. Local products must compete with im- effect that can be seen from the response of
port products in many ways such price, qual- consumers to the goods or services (Kotler and
ity, unique selling products, and not to mention Amstrong (2004).
the image of the country producers. That is why Customer Perceived Brand Equity (CPBE)
the local producers need to improvise in giv- is referred to the customer perception toward
ing more value to their product, so the local has the product quality as a whole (Aaker, 1991).
more competitive advantage than the import. It is also the ability of a customer to provide
Most of all the government should intervene in accurate statement about a brand compare to
taking strict policy to protect domestic indus- another alternatives available in the market, it
tries. is often called the intrinsic attribute. But during
Before to do so, the first step that can be the situation of market demand that is moving
done in the mean time is to analyze the char- rapidly, optimum-innovated-formulize-prod-
acteristics of Indonesian, and this is the study uct, or so call intrinsically formulize product,
takes part, to measure the factors that might in- is not enough. Customers also pay attention to
fluence customer regarding their preference to extrinsic attribute of the product, such as brand,
consume local and imported products. Brand is price, and others.
considered as a perfect measure of preference Consumer Loyalty to a brand is defined as
due to the brand creates value to all parts of the “consumer” who is committed to repurchase
distribution channel; manufacturers, wholesale products or services consistently in the future,
retailers, and customers (Aaker 1991; Cobb- despite situational influences and marketing
Walgren, Ruble, and Donthu 1995). some of the activities that have the potential to
cause switching behavior (Oliver 1997, p.392).
Literature Review Loyal consumers tend to continue to choose the
same brand even if competitors offer price dis-
Customer Perceived Based Equity counts or other promotions for their products.
Consumer awareness of and associations with
Brands represent enormously valuable piec- a brand is the ability of consumers to recognize
es of legal property, capable of influencing con- or recall that a brand is part of a particular prod-
sumer behavior, being bought and sold, and uct category (Aaker 1991) and they immediate-
providing the security of sustained future rev- ly associate the product to the manufacturer’s
enues to their owner. The value directly or in- brand (Aaker 1991; Aaker and Keller 1990;
directly accrued by these various benefits is of- Keller 1993).
ten called brand equity (Kapferer, 2005; Keller, The point is, one of the important dimen-
2003). Brand equity can also become measure- sions to build CPBE concerns not only whether
ment to know whether customer feel positive consumers aware of a particular brand or not,
differentiation toward a product compare to but with more emphasis on awareness and as-
another (Kotler and Amstrong, 2004). Overall, sociations are strong and provide a clear rea-
the brand equity is the power of a brand that can son to buy products (Aaker, 1991). This study
be added or decreased the value of the brand it combines the three dimensions of brand equity
self. to form the Customer Perceived Brand Equity
Keller (1993) also mentioned that Brand eq- (CPBE). The dimensions are further described
uity can become one of the reason why a person as follow.
continuous the use of a brand. Measurement of
brand equity is strongly associated with fidelity • Product Country Image
and measurement part of the new users into loy-
al users (p. 43). Some authors define brand eq- Product country image (PCI) is defined as “a
uity as: a set of brand assets and liabilities asso- place and/image where the buyer and/or seller
ciated with a brand, name and symbol that add may associate the product” (Papadopoulos and
to or diminish, the value provided by a product Heslop 2003, p. 404). PCI is one of the extrin-

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sic cues that are important and have impacts on (1997: 93) suggested that country equity might
consumer decision-making and choice behavior be product category specific.
(Papadopoulos and Heslop 2003). Keller and Since countries generated intangible assets
Lehmann (2006) said, “Despite the company in consumers’ minds, and since countries pos-
that makes the product, country or geographic sess equity, a country’s image could influence
location of where a product comes also asso- (positively or negatively) the equity of brands
ciated with brand equity.” In the other study, originating from that country, in a selected
product country image also called as macro product category. Extant research also sug-
country image that defined ‘the total of all de- gests linkages between certain consumer-based
scriptive, inferential and informational beliefs brand equity dimensions (Eg, perceived qual-
one has about a particular country’ (Martin and ity and brand associations) and country image.
Eroglu, 1993, p.193). For example, several Researchers have shown
PCI acts as a signal of product quality (Han that consumers’ perception of quality was af-
1989; Li and Wyer 1994) and also affects the fected by country-of-origin. Indeed, Haubl and
perception of risk (Wall, Liefeld, and Heslop Elrod (1999) found that consumers’ quality
1991) as well as the possibility of purchasing perceptions of the Slovenian brand Elan were
(Knight and Calantone 2000; Laroche et al higher when the brand was made in Slovenia
2005). It is also associated with the perception than when the brand was made in Germany. Lee
of the product evaluation such as product quali- and Schaninger (1996: 234) argued that, even
ty and credibility, brand identification, attitudes in the case of global prestigious brands, con-
and purchase intentions (Hong and Wyer 1990; sumers’ perception of quality and purchase de-
Leclerc, Schmitt, and Dubé 1994; Thakor and cisions are Likely to be influenced not only by
Lavack 2003). the brand name but also by where the products
We argue that product country images can are manufactured or assembled.
affect the equity they associate to a brand with
the country origin. That is, for a selected prod- • Culture
uct category (e.g., computers), for example
in Australia, consumers’ image of a country Levitt (1983) argues that globalization has
(e.g., USA) and image of the products from created a homogeneous market to the world,
that country, can affect the consumer-based eq- which increased the number of customer from
uity of a brand (e.g., IBM or Apple) from that different geographic location and cultural back-
country. Country image can influence the key ground to have the same preferences. Therefore
dimensions of brand equity such as brand as- people around the world have a tendency to live
sociations, perceived quality and brand loyalty, in a more uniform pattern which has facilitated
which in this study called as consumer per- the emergence of a global brand with a market-
ceived brand equity. ing strategy that has standardize across cultural
Brands from the same country share images boundaries (Zou and Cavusgil, 1996). But that
or associations, which is referred to country does not mean every country has the same cul-
equity (Shimp et al., 1993). Brands originating ture toward imported products. In fact, cultural
from a particular country can create intangible affects the purchase decision towards imported
assets or liabilities in consumers’ minds, shared products, whether the products are suitable in
by other brands originating from the same coun- accordance to the value espoused of a country.
try (Kim and Chung, 1997: 367). Shimp et al. In this research, the “individualism” dimen-
argue that country equity ‘disentangles the eq- sions are considered. This has been found to
uity contained in a brand’ (p: 328). In particular, be valid across several other studies (Blodgett
country equity is believed to be deriving from et al., 2001; Gregory and Munch 1997). Hof-
the association of the product with a country. stede (2001) found that “individualism” and
For example, brands such as Toyota, Mitsubi- “power distance” where the two main attributes
shi and Suzuki could share certain associations, that characterized the difference between Thai
such as ‘reliability’, because of their common and UK cultures. “High power distance” cul-
home country of Japan. Thakor and Katsanis tures (Thai) tend to be “low on individualism”,

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Table 1. Hofstede Cultural Dimensions
Dimensions Content
Power Distance The degree of inequality among people within a society
Uncertainty Avoidance The member of a cultural feel endangered by uncertain, ambiguous, risk or undefined situations.
Masculinity Vs. Femininity The sex role characteristics or attitude or norm or perception
Long – term Orientation The extent to which a society exhibits a pragmatics, future-oriented perspective rather than a conventional
historic or short-term perspective.
Source: Adapted from Usunie and Lee (2005), and Hofstede (1991).

whereas “low power distance” societies (UK) • Marketing Mix


tend to be “high on individualism”.
According to Hofstede (2001), “Individu- Product
alism” refers to the society where the ties be-
tween individuals are very loose. In contrast, According to Papadopoulus and Heslop
“collectivism” is defined as a society where (2003), Product as an extrinsic cue is impacting
individuals are integrated into strong and cohe- to customer decision-making and choice behav-
sive in-groups. In individualist cultures, people ior. It is also correlated to the product country
tend to be motivated by their own preferences, image and product quality. Product quality in
needs and rights in order to achieve their per- this term is the product sustainability and dif-
sonal goals (Lee and Kacen, 2008). On the side ferentiation from competitor’s to meet custom-
of “collectivist culture”, societies have a sig- er needs and satisfaction (Hunt, 1993). Not less
nificant attitude toward building long-term re- importance than Hunt, Deming (1982) defines
lationships and the role of trust. Members of so- that quality is the fitness for the used of prod-
cieties are often motivated by duties and norms uct that is confirmed to the requirements of the
of societies (Usunier, 2000). Triandis (2004), market.
with reference to Hofstede’s work (1980), also
demonstrated that collectivist societies are Price
more concerned with ‘interpersonal relation-
ship’ than an individualist culture. Price is divided into two terms, which are
Research conducted by Kimberly et al., price deal and price level. Both Price deal and
(1995) using the Hofstede theory, indicated that price level is also considered in this study. Price
cultural differences are seen as especially im- deals are short-term price reductions, including
portant for consumers’ choice of products and rebates, refunds, coupons, or discount, which
services. Roth (1995) discovered that the ser- unfortunately used to be a signal for lower
vices that place emphasis on variety and hedo- quality offers (Winer 1986; Yoo, Donthu, and
nistic experiences could generate value to an in- Lee 2000). Price deal, which is too often is
dividualist society. Also, Strabub et al., (1997) possible to confuse buyers, and usually affects
found that high power distance and collectiv- negatively to the brand awareness and brand
ist societies would reject the communication associations (Aaker 1991; Gupta 1988). But
media, which not support the social pressures. then again, price deal can also become one of
According to Heine and Lehman (1997), self- the reasons why customers buy their products,
concept of independent corresponds to the cul- since it is more profitable on their side.
tural concept of individualism, whereby people Price level on the other hand is generally as-
express themselves as inherently separate and sumed to provide important extrinsic cues for
distinct. Conversely, the cultural concept of buyers to evaluate a product (Aaker 1991; Rao
collectivism is related with the interdependent and Monroe 1989). For customers, a higher
self-concept that concerned on contextual, re- price is associates to higher quality.
lational, and socially situated. Further, Lee and
Kacen (2008) discovered that subjective cul- Promotion
tures tend to influence the buying intention of
consumers. Promotion is a marketing activity that works
to increase the sales of a product as success-

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Figure1. Theoretical Framework
ful in generating advertising brand equity and
affect sales (Boulding, Lee, and Staelin 1994; Cultural effects also influence the purchas-
Chy and Tellis 1994; Johnson, 1984; Maxwell ing decisions of the imported and local prod-
1989). The amount of investment in promotion ucts. Is the product in accordance with the val-
acts as a signal of product quality (Kihlstrom ues ​​espoused a country. Given that the origin
and Riordan1984; Milgronm and Rberts 1986) of imported products could come from several
and is also seen as an indicator for a good brand. different countries and will be evaluated by
Based on the above framework, the follow- the consumer it self, we introduce a dummy
ing model and hypotheses were proposed to test variable for the importing country of origin of
in this study. goods.
4 (four) latent variables were identified, that
is, Product Country Image (PCI), Culture, Mar- H3. MM is significant as measurement of the
keting Mix (MM), Product Quality (PQ). These customer perceived brand equity to con-
variables were hypothesized to measure the sume local and imported product.
reason customer to choose local and imported
product. According to Figure1, this study has 4 Marketing Mix in this study consists of
(four) hypotheses to be tested as follows: promotion, price level and price deal. We will
breakdown the detail one by one.
H1. PCI is significant as measurement of the Promotion. Promotion is a marketing activity
customer perceived brand equity to con- that works to increase the sales of a product as
sume local and imported product. successful in generating advertising brand eq-
uity and affect sales (Boulding, Lee, and Stae-
Image of origin of the product or brand lin 1994; Chy and Tellis 1994; Johnson, 1984;
(product country image) is extrinsic cues that is Maxwell 1989). The amount of investment in
important and have an impact on consumer de- promotion acts as a signal of product quality
cision-making as well as consumer and retailer (Kihlstrom and Riordan1984; Milgronm and
behavior (Papadopoulos and Heslop 2003). Roberts 1986) and is also seen as an indicator
Therefore product country image associated for a good brand. So correlation between pro-
with product quality, brand credibility, attitude, motions can be positive or negative.
an intention of purchase, so if consumers rate Price Level. For retailers, the high price lev-
the PCI positively and consumers will think the el can be counter-effective to develop loyal cus-
product is worth to buy and chosen to be one of tomers because loyal customers often expect
their product portfolio. Then arises hypothesis special prices from their suppliers (Feinberg,
above. Krishna, and Zhang 2002). Aaker, 1991 argued
that the retailer, which is one part of the distri-
H2. Culture is significant as measurement of bution channel, can offer high quality products
the customer perceived brand equity to are perceived at an attractive price. Same thing
consume local and imported product. applies to the consumer; the consumer will

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Table 2. Reliability Test (n = 30)
Variable Cronbach’s Alpha Result
Product Coutry Image 0.954 Reliable
Culture 0.859 Reliable
Price 0.911 Reliable
Promotion 0.847 Reliable
Brand Performance 0.864 Reliable
Perceived Quality 0.970 Reliable
Standar Quality Product 0.892 Reliable

Table 3. Reliability Test (n = 30)


Variable KMO Result
Product Coutry Image 0.940 Reliable
Culture 0.866 Reliable
Price 0.911 Reliable
Promotion 0.877 Reliable
Brand Performance 0.854 Reliable
Perceived Quality 0.953 Reliable
Standar Quality Product 0.924 Reliable

choose the products at prices cheaper than the uct suitability (fitness for use) to meet customer
high priced product, if the assumptions that af- needs and satisfaction. Suitability of the use of
fect other purchasing decisions are considered a product if the product is to have the use of a
fixed. long endurance, enhance the image or status of
Deal Price. Deal price is also considered in consumers who use it, not easy to damage the
this study. Price deal in the form of short-term quality assurance (quality assurance), and when
price reductions, rebates, refunds, coupons, or used ethically. If the quality of product meets
discount the price, it can reduce the effort to the customer needs, it will effect positively to
build brand equity as this may be a signal for their attitude and purchase of intention
lower quality and / or obsolete offers (Winer
1986; Yoo, Donthu, and Lee 2000). Deal price Methods
is also possible that too often confuse buyers
(Aaker 1991; Gupta 1988). Therefore, the deal This study uses single cross-sectional design
price negatively affects brand awareness and to analyze how the customer preference in con-
associations. suming local and imported products. This study
Based on self-perception theory (Dodson, took place in greater Jakarta, which is Jakarta,
Tybout, and Sternthal 1978), buyers who chose Bogor, Depok, Tangerang, and Bekasi. Total re-
the product because of price promotions (ie, spondents are 704 people divided into 13 city
external) cause consumers to easily switch to and region, in 88 villages. Selection of target
another product when external causes (special respondents is using systematic random sam-
price deal) will be removed, so that price pro- pling method based on population census data
motions can encourage consumers switch to (BPS, 2010), with the following criteria:
another product with a fast (switching) (Aila- a. Respondent should be divided into 50% of
wadi andKeller 2004; Walters 1991). As with woman and man, so the opinions of the per-
the consumer, the consumer will be more inter- ceptions are resulted equally.
ested in products that offer price deal because it b. Respondent should be age 21 or older or
will be more profitable on their side. married.
c. Perform shopping deals at least 1 time in the
H4. PQ is significant as measurement of the last 1-month in a shopping center, Market
customer perceived brand equity to con- Traditional, Modern Shop, and Small Shop
sume local and imported product. (not stall).
d. Residing or family member of the household
According to Juran (V. Daniel Hunt, 1993: that was selected as respondents.
32), the quality of the product is the use of prod-

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Figure 2. Path Diagram and Structural model of Theoretical Framework (standardized
solution)
Pre-test are performed to test the accuracy Result and Discussion
of the questionnaire as a measuring tool in the
study. Questionnaires will be declared as a To test our research hypotheses we estimat-
good gauge if it meets the test criteria of good ed a structural equation model using LISREL.
reliability and validity. Reliability testing on the We employed averaged indicators of the con-
pretest is using 30 (thirty) samples. Pretest data structs. This approach is suggested when model
processed using SPSS 17.0. There are variable complexity is high as the procedure offers the
in this framework that is formed of constructs advantage of obtaining more precise structural
such as marketing mix that formed from price, estimates (Bandalos 2002). We also considered
promotion, and performance; and product qual- possible confounding effects and incorporated
ity is formed from perceived quality, and stand- country and category products as control vari-
ard quality product. Table 2 demonstrates the ables. As explained in the previous subsection,
result of reliability test (pretest) and table 3 the measurement and the structural model are
demonstrates the validity of test result (pretest) explained as follows:
of all variables as follows. Figure 2 shows the factor loading value and
Based on test validity there are some con- error value based on the results of measurement
structs of the variables that have insufficient model through the standardized solution path
value on the value of communalities and com- analysis.
ponent value matrix. Nevertheless other indi- According to table 5, the value of variance
cators that also support the construct validity extracted of the marketing mix variable is not
still meets the criteria set value. Therefore these reach the minimum acceptance. However, the
variables are still included in the subsequent value of reliability of the variable is reach 0.57,
analysis. so the variable is retained. Except that, all of
All the latent variables, which are tested variables show good reliability both on the val-
through the construct of the questionnaire, ue of reliability construct as well as the variance
showed good results. Thus, all constructs can extracted. By that, the variable of product coun-
be continued as a measurement tools in the try image, culture, marketing mix, and product
main study. quality are reliable in measuring the customer
The measurement and structural model are perceived brand equity.
further explained in subsection result and dis- Based on the results of testing the measure-
cussion below. ment model and structural model as shown in
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Table 5. Reliability Measurement Analysis from The Standardized Solution Measurement
Model
Variable Construct Validity Error
Std. Loading Test (Std. Loading
Latent Construct Notation Value
Factors Scale Factors) 2
A1 0.97 Valid 0.94 δ1 0.06
A2 0.98 Valid 0.96 δ2 0.04
A3 0.98 Valid 0.96 δ3 0.03
PCI A4 0.99 Valid 0.98 δ4 0.02
Total 3.92 2.86 0.15
Reliability Construct 0.99
Variance Extracted 0.95
B1 0.29 Valid 0.08 δ4 0.91
B2 0.79 Valid 0.62 δ5 0.38
B3 0.99 Valid 0.98 δ6 0.03
Culture
Total 2.07 1.69 1.32
Reliability Construct 0.76
Variance Extracted 0.56
C1 0.55 Valid 0.30 δ7 0.69
C2 0.71 Valid 0.50 δ8 0.49
MM Total 1.26 0.81 1.18
Reliability Construct 0.57
Variance Extracted 0.41
D1 0.89 Valid 0.79 δ15 0.20
D2 0.89 Valid 0.79 δ16 0.21
D3 0.96 Valid 0.92 δ17 0.09
PQ D4 0.95 Valid 0.90 δ18 0.10
Total 3.69 3.41 0.60
Reliability Construct 0.96
Variance Extracted 0.85

Figure 3. Path Diagram and Structural model of Theoretical Framework (t-value)


figure 3, it is known that all variables are valid. The result indicates that the theoretical
The t-value of each variable are all > 1.96, and framework model has an accurate correlation
according to Wijanto (2008), every latent vari- between variables with the reality occurs. The
able that has t-value higher that 1.96 is valid compatibility of the model also in the scale of
and overall support the structural model. marginal fit, which is also indicates good fit-
The descriptive output from the structural ness. And finally the variables of product coun-
equation model gives the goodness of fit statis- try image, culture, marketing mix, and the prod-
tics as shown in Table 6. uct quality is a good fit to used in measuring or
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Table 6. Goodness of Fit Statistics for Theoretical Framework Structural Equation Model
GOF Measurements Acceptance Criteria Measurement Scale
Absolute
Goodness-of-fit Index (GFI) 0.80 Marginal fit
Root Mean Square (RMR) 0.01 Good fit
Root Mean Square Error of Approximation (RMSEA) 0.00 Good fit
Incremental/ Relative
Non-Normed Fit Index (NNFI) 0.83 Marginal fit
Normed Fit Index (NFI) 0.86 Good fit
Adjusted Goodness of Fit Index (AGFI) 0.70 Poor fit
Relative Fit Index (RFI) 0.82 Marginal fit
Relative Fit Index (RFI) 0.82 Marginal fit
Incremental Fit Index (IFI) 0.90 Good fit
Compare Fit Index (CFI) 0.87 Good fit
Parsimonious
Parsimony Goodness of Fit Index (PGFI) 0.53 Good fit
Source: Lawrence S. Meyers, Glenn Gamst, dan A.J. Guarino, 2006; Wijanto, 2008

Table 7. Result of Hypothesis Testing with SEM


Hypothesis t-value Results
H1 PCI significantly as measurement of the customer perceived brand equity to consume local and -2,32 Data support H1
imported product.
H2 Culture significantly as measurement of the customer perceived brand equity to consume local 5,69 Data support H2
and imported product.
H3 Marketing Mix (price & promotion) significantly as measurement of the customer perceived brand 8,25 Data support H3
equity to consume local and imported product.
H4 Product Quality significantly as measurement of the customer perceived brand equity to consume 10,55 Data support H4
local and imported product.

reasonable factor that influence the customer their perceived brand equity. Based on calcu-
perceived brand equity. lations of structural models for hypothesis 2,
Based on the figure 3, it is known the signifi- obtained t-value of 5.69. Value is greater than
cance of the hypothesis of this research through the value of t-table (1.96) and thus the data in
the t-value of each of the hypotheses set as fol- this study supports the hypothesis. This finding
low. Hypothesis that constructed is accepted shows that even though globalization has cre-
but the effect level is different between ante- ated a more homogeneous world market with
cedents. the same preference, purchasing decision what-
Based on the path diagram and structural soever still related to the values of a country
model above, these four hypotheses are signifi- thru the culture.
cant. The causal relationship formed and data Hypothesis 3 is testing that the Marketing
also supported the hypotheses as follow: Mix (price and promotion) have a significant
Hypothesis 1 is testing that the product impact on customer perceived brand equity
country image can have a significant impact on toward local and imported products. Based on
costumer perceived brand equity toward local calculations of structural models for hypothesis
and imported products. Based on calculations 3, obtained t-value of 8.25, the value is even
of structural models for hypothesis 1, obtained bigger than the value of PCI and Culture, that
t-value of -2.32. Value is greater than the value shows indirectly that promotions have more im-
of t-table (1.96) and thus the data in this study pact to the consuming preference of customer.
supports the hypothesis. However, PCI has Hypothesis 4 is testing that the Product
a negative value, meaning that the higher the Quality has a significant impact on customer
knowledge of a product country image could be perceived brand equity toward local and im-
inversely proportional to purchase behavior of ported products. Based on calculations of struc-
the country. tural models for hypothesis 3, obtained t-value
Hypothesis 2 is testing that Culture has a of 10.55 (the largest t-value of all hypotheses).
significant effect in influencing customer per- The same as marketing mix, product quality
ceptions of local and imported products thru that is formed from variables such perceived

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65
quality and standard quality product is the main the product. It can be acts inversely proportion-
factors that is become consideration of custom- al to purchase behavior of the country.
er to purchase their locals as well as imported Culture also has a significant effect in influ-
product. encing consumer perceptions of local and im-
ported products. Culture has a positive value
Conclusion correlated with perceived brand equity. It is ac-
cordance with study Zou and Cavusgil, 1996:
In this study, product country image has a Cultural effects are also influential in the pur-
significant impact on consumer perception of chase decision against imported products. Is the
local and imported products. As mention before product in accordance with the values ​​espoused
CPI is also associated with the perception of a country, region or community.
the product evaluation such as product quality This study also support Levitt, 1983 who ar-
and credibility, brand identification, attitudes gues that globalization has created a world mar-
and purchase intentions (Hong and Wyer 1990; ket that is more homogeneous with increasing
Leclerc, Schmitt, and Dubé 1994; Thakor and number of consumers of geographic locations
Lavack 2003). However, PCI has a negative and different cultural backgrounds but have the
value in this study, it can affect the perception same preferences. With the advent of globaliza-
of the consumption of local products and im- tion and people around the world have a ten-
ports. The point is that the higher the level of dency to live in a more uniform pattern has fa-
consumer knowledge of the product image of a cilitated the emergence of a global brand with a
country then the purchase of the country could marketing strategy that has standardized across
be going down. cultural boundaries (Zou and Cavusgil, 1996).
One of the reason may conclude from the But that does not mean every country has a
previous research, said that consumer brand culture (culture) related to the same imported
images could also change if the brands are products.
made in different countries. For example, Han This study measured cultural values ​​above
and Terpstra (1988) found that brand image of 3 (three) dimensions; attitudes toward foreign
Japanese cars Suffered erosion when produc- products; cultural values, and cultural dimen-
tion was shifted to South Korea. Similarly, Ne- sions. Based on the significance of each of
benzahl and Jaffe (1996) Suffered found that these dimensions, then the value of culture and
Sony’s brand image erosion when made in the cultural dimensions are the two most signifi-
USA, whereas GE’s brand image improved cant cultural influences that formed in her role
when made in Japan. Kim and Chung (1997) influencing consumer perceptions of local and
also suggested a link between country and imported products.
brand images. Researchers have argued that Marketing Mix (price and promotion) has a
these consumers have country-specific brand significant effect in influencing consumer per-
images. Further, a country’s image in a given ceptions of local and imported products. Based
market might be affected by the performances on the significant value price dimensions and
of major brands originating from that particular promotion indicates that the two dimensions are
country (Kim, 1995). Thus the marketing litera- significant, but the promotion clearly gives a
ture suggests a directional relationship between higher impact on consumer perceptions of local
country image and brand image. and imported products. It support study before
However, it is uncontested that Product which is the promotion is a marketing activity
country image can be a reference for the cus- that works to increase the sales of a product as
tomer to perceive the brand equity, especially successful in generating advertising brand eq-
for imported product. In fact, some countries uity and affect sales (Boulding, Lee, and Stae-
reflect the image of quality by itself. Neverthe- lin 1994; Chy and Tellis 1994; Johnson, 1984;
less, this study find that the signification result Maxwell 1989).
in negative way, meaning that the more cus- Product Quality has a significant effect in
tomer identifies the country origin of a product, influencing consumer perceptions of local and
does not guarantee the more they will purchase imported products. Product quality in this study

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66 Desember 2012 - Vol.IV - No. 2
to measure the product of each country imports country). Things that could be emphasized in
by 4 (four) dimensions, namely: reliability, Du- the process include:
rable, More Features Complete, and Keeping 1. Marketing Mix (Price & Promotion) &
quality. The fourth dimension is based on the Brand Association
theory of perceived service quality proposed Increase the process of marketing mix, es-
by Parasuraman, Zeithaml, and Berry (1990). pecially the promotion and brand associa-
Thus the product reliability, product durability, tion of local product to enhance the value of
completeness of features and excellent quality consumption. Create specific brand identity
is very significant in measuring and consump- and brand image in accordance to specific
tion became an excuse to perception of local customer segmentation. Striking a balance
and imported products between price and quality of the offered
In this study there are additional finding products, meanwhile ensuring the availabil-
shows that Indonesian in essence are more ity of products and improve the performance
proud of their local products compare to im- of the market to make local product easier
ported products. This actually gives opportu- to reach.
nity to local industries to produce more of the 2. Product Quality
local products, especially herbal products that Products made by the USA are recognizing
are natural heritage of Indonesia. Nevertheless as reliable, durable, have more feature, and
the impression of imported products as presti- maintain the quality of products. In relation
gious/more up-to-date/modern/more durable that customer prefer products that is more in
and so on, should be considered even more to quality, therefore, it becomes important to
be able to give a chance for the local product to communicate the quality of the local prod-
compete. ucts. It may not as qualified as the USA or
Therefore, cultural paradigm needs to be other imported products, but at least the cus-
emphasized to encourage the creation of such tomer aware that local products also have
an impression upon the local product (in the quality is some way, and let them choose.

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