Perceived financial well-being and its effect on domestic product purchases

Abstract

Purpose Global brands are attracted to emerging markets because of increasing wealth among their middle classes. However, amid increasing levels of consumer financial stress in many emerging markets, evidence points towards increased preferences for domestic products. The purpose of this paper is to examine the psychological constructs that mediate and moderate the relationship between reduced perceived financial well-being (PFWB) and domestic product purchases. Design/methodology/approach The authors develop a model drawing from three theoretical perspectives: consumer stress and coping, consumer information processing and social identity theory. Hypotheses are tested via structural equation modelling and moderated mediation analyses using data from a survey of Brazilian consumers (n=1,043). Findings Results show that the positive relationship between reduced PFWB and domestic product purchases is partially mediated by perceived value of global brands and frugality descriptive norm. Further analyses demonstrate that consumer confidence moderates the mediating effects of perceived value of global brands and pro-social consumer ethnocentrism on the relationship between reduced PFWB and domestic product purchases. Research limitations/implications The antecedents of domestic product purchases identified in this study indicate opportunities for marketers of domestic and foreign products to respond to reduced PFWB, especially in relation to pricing, branding and communications. Future research should examine implications of PFWB on different populations, including other emerging markets, developed markets and lower-income consumers. Originality/value This study contributes to international marketing literature by examining the hitherto unexplored influence of reduced PFWB on domestic product purchases.

How consumer confidence affects price conscious behavior: The roles of financial vulnerability and locus of control

“…We used existing scales to measure the constructs in our model. Four items each measured NCC and PPC ( Hampson et al, 2018 , Ou et al, 2014 ) on a nine-point scale (1 = “much worse”, 5 = “no change”, 9 = “much better”). Perceived financial vulnerability was measured with four items adapted from the scale of Anderloni et al (2012) .…”

“…Consumer confidence is defined as “a psychological construct that measures customers’ perceptions about their recent and future financial situation and economic climate” ( Ou et al, 2014, p. 339 ). Though this definition implicitly distinguishes between individuals’ personal finances and the national economy, consumer confidence is universally treated as singular construct, both conceptually and operationally (e.g., Hampson et al, 2018 , Hunneman et al, 2015 , Ou et al, 2014 ). In contrast, we propose a distinction between two types of consumer confidence.…”

“…Academic literature provides equivocal evidence ( Table 1 ). Several researchers have demonstrated that consumer confidence explains changes in household expenditures ( Benhabib and Spiegel, 2019 , Dees and Brinca, 2013 , Dragouni et al, 2016 , Singal, 2012 ) as well as customer satisfaction ( Ou et al, 2014 ), customer loyalty ( Hunneman, Verhoef, & Sloot, 2015 ), and consumer ethnocentrism ( Hampson, Ma, & Wang, 2018 ). However, the efficacy of consumer confidence data is not universally accepted.…”

“… Study Context Model summary Major finding(s) Independent variable Mediator(s) Dependent variable(s) Moderator variable(s) Benhabib & Spiegel (2019) USA (2005 –2016) Consumer confidence – PCE – Positive empirical relationship between CC and future economic activity as well as future consumption expenditures. Hampson et al (2018) Brazil Financial well-being Ethnocentrism, value of global brands, norms Domestic brand consumption Consumer confidence CC attenuates the indirect effects of reduced financial well-being on domestic brand consumption via consumer ethnocentrism and perceived value of global brands. Dragouni et al (2016) USA (1996–2013) Consumer confidence – Outbound tourism demand – There is a moderate to high interrelationship among consumer confidence and outbound tourism demand Hunneman et al (2015) Netherlands(2009–2013) Store attributes Store satisfaction Share of wallet Consumer confidence CC negatively affects the relationship between service evaluations and satisfaction.…”

“…The first was conceptual. Consumer confidence is typically conceptualized as a singular construct, operationalized as the average of answers to questions about respondents’ perceptions of the national economy broadly and their personal finances specifically (e.g., Hampson et al, 2018 , Hunneman et al, 2015 , Ou et al, 2014 ). Yet the implicit assumption that evaluations of the national economy and personal finances are the same thing is potentially flawed.…”