1 UNIVERSITY OF VAASA FACULTY OF BUSINESS STUDIES DEPARTMENT OF MARKETING Connie Nurhayati INFLUENCE OF BRAND ORIGIN TOWARDS CONSUMERS’ PREFERENCE AND RECOGNITION: COMPARISON OF GLOBAL AND NORDIC BRANDS BY OLDER FINNISH CONSUMERS Master Thesis in International Business Vaasa 2017 2 TABLE OF CONTENT page LIST OF FIGURES 4 LIST OF TABLES 5 ABSTRACT 6 1. INTRODUCTION 7 1.1 Background of the Study 8 1.2 Problem Statement and Objectives of the Study 10 1.3 Delimitation of the Study 11 1.4 Structure of the Study 12 2. CONSUMER BEHAVIOR AND SEGMENTATION 14 2.1 Consumer Behavior Elements 16 2.1.1 Consumer Internal Psychological Factors 17 2.1.2 Consumer Cultural and Social Factors 20 2.1.3 Buying Decision Making Process 21 2.2 Older Consumer as A Market Segment 23 2.2.1 Older Consumers and Advertising 25 2.2.2 How Older Consumers Use the Internet 28 2.3 Finnish Consumers Profile 29 2.3.1 Finnish Consumers Transformation 31 2.3.2 Finnish Life Standards 32 2.3.3 Finnish Modern Consumers Grouping 32 3. BRANDING AND COUNTRY ORIGIN 35 3.1 Brand Equity 35 3.1.1 Brand Positioning 37 3.1.2 Product strategies and brand loyalty 40 3.2 Country of Origin 41 3.2.1. Country animosity versus affinity 41 3.2.2 Country of origin and perceived product quality 42 3.3 Conceptual framework 45 3 4. RESEARCH METHODOLOGY 46 4.1 Research Approach 46 4.1.1 Research Focus 48 4.1.2 Reliability and Validity 50 4.2 Data Collection Technique 50 4.2.1 Research Sample 50 4.2.2 Participant Observation 52 4.2.3 Semi-Structured Interview 52 5. DATA ELABORATION AND ANALYSES 54 5.1 Ostrobothnia Profile 54 5.2 Participants Coding 57 5.3 Couple Profiles 60 5.3.1 Lifestyle 67 5.3.2 Purchase Habit 69 5.3.3 Leisure Activities 72 5.4 Perception towards Brands 73 5.4.1 Global Brands 74 5.4.2 Nordic Brands 76 5.5 Buying Decision Making Factors 78 5.5.1 Information Search 78 5.5.2 Promotion and Advertising 81 6. SUMMARY AND CONCLUSION 82 6.1 Summary 82 6.2 Managerial Implication 84 6.3 Conclusion 85 7. LIST OF REFERENCES 86 APPENDIXES 90 Appendix 1. Interview core questions 90 4 LIST OF FIGURES page Figure 1 Buyer Decision Process 21 Figure 2 Major Brand Strategy Decision 37 Figure 3 Halo Summary Construct as a Dynamic Model of Country Image Impacts to Brand Attitude 44 Figure 4 Conceptual Framework 45 Figure 5 Map of Ostrobothnia 54 5 LIST OF TABLES page Table 1 Social Class and Grade Structure in United Kingdom 15 Table 2 Family Life Cycle Segmentation Base 15 Table 3 Possible Advertising Objectives 25 Table 4 Profiles of Major Media Types 26 Table 5 Finnish Modern Consumers Characteristics 33 Table 6 Research Sampling Dimension 50 Table 7 List of Municipalities in Ostrobothnia 56 Table 8 Profile of Research Participants as Couples or Households 59 Table 9. Summary of empirical findings about lifestyle, purchase habit and leisure activities of older Finnish consumers 83 Table 10. Summary of empirical findings about perception towards brands and buying decision making factors of older Finnish consumers 84 6 UNIVERSITY OF VAASA Faculty of Business Studies Author: Connie Nurhayati Topic of the Thesis: Influence of brand origin towards consumers’ preference and recognition: Comparison of Global and Nordic brands by older Finnish consumers Name of the Supervisor: Prof. Jorma Larimo Degree: Master’s Degree in International Business Master’s Programme: International Business Year of Entering the University 2015 Year of Completing the Thesis 2017 Pages: 91 ABSTRACT Although older population exist significantly in the demographic profile of many countries in Europe and North America, they have never been well-represented as a market segment. For the last five decades, the demographic structure in Europe has changed significantly, including in Finland. The low birth rates and higher life expectancy consequently change the shape of the demographic pyramid and put the older population to be a major part of the overall population. This study is focused on older Finnish consumer behaviour towards Nordic and Global brands, including their sub segmentation and all the factors that may influence their preference, purchase habit and buying decision making. The theoretical framework is constructed by theory of country origin, country animosity and affinity as well as the relation of country origin with the perceived product quality by consumers that are linked to the branding theory elements such as brand positioning, brand loyalty, brand equity, and followed by the explanation about consumer behavior, segmentation, buying decision making process and a closer look of older Finnish consumers’ profiles. This framework is the basis in conducting the empirical part of the research. The empirical part of the study presents the data that was obtained with ethnographic approach by conducting the participants’ observation and in – depth semi – structured interview which have given enormous insights about the older Finnish consumer behavior. KEYWORDS: Older consumers, Consumer Behaviour, Finnish, Nordic Brands, Global Brands 7 1. Introduction Since its independence in 6 December, 1917, Finland has been through several economic transformations. The cold climate has meant limited agricultural development and a dependency on raw materials, yet Finland has found its way to be one of the most prosperous countries in Europe. Traditional raw materials production, particularly forestry, remains a key sector that provides secondary jobs in Finnish rural areas. Yet it is Finland’s competitiveness in manufacturing industries such as metal, engineering, telecommunication, and electronics that is the motor of the economy. Currently the Finnish balance of trade is 30%, exports dominated by the technology sectors such as; information and communication technology, gaming, cleantech, and biotechnology. (CIA World Factbook 2017) Before 2009, Finland enjoyed the vast economic growth and successfully became one of the best performing economies within European Union. However, the global recession strongly hit Finnish economy in 2012 – 2014, and still leave its traces until present. Due to its small domestic market, in order to recover Finland needs to boost its exports by searching for more alternative markets to replace Russia that has been suffering from long-term recession. Finnish rapid aging population will lead to decreasing productivity in the traditional industries that will eventually threat the fiscal sustainability and economic growth. These problems should be addressed immediately in order to keep Finland globally competitive. (CIA World Factbook 2017) Finland however, is not the only country that suffers from rapid aging population. For the last five decades, the demographic structure in Europe has changed significantly. The low birth rates and higher life expectancy consequently change the shape of the demographic pyramid and put the older population to be a major part of the overall population. Rosling (2016) explained that significant improvement of healthcare, life standard and income redistribution, have dramatically expanded the life expectancy and decrease the mortality rate if compared to the post World War II era, which resulted to the inevitable increasing number of older population. (Rosling, 2016 Gapminder.org) It is shown by the median age in 28 European Union countries is 42.2 years by 2014. (Eurostat 2016) While the median age in Finland is 42.4 years (CIA World Factbook 2017) In Finland, Germany, Sweden, France, Netherlands, Italy and some other European countries, the older population in age of 55 and 8 above make up more than 30% in average from the whole country population. (CIA World Factbook, 2017). This number is excluding the age group of 40 – 54 years old, which if included would make the older population to become a bigger segment, according to the country’s demographic profile. This significant change of demographic structure could contribute to a certain extent for bringing the European Union into economy crises. As most European countries have a vast numbers of senior citizen, who are over 50 years old and soon to be pensioners that are funded by government social benefit, while the countries heavily rely on tax revenue from active taxpayers. 1.1 Background of the study Despite their ample existence in the demographic profile of many countries in Europe and North America, older population as consumers have never been well-represented market segment. We can confirm this situation from the rarity marketing campaigns that are targeting older consumers. It is a result of a stigma of older consumers’ stereotypes that include physical and mental capabilities. (Gunter, 1998:1) Similar situation happens in Finland, as the Finnish demographic map shows that the existence of older or older consumers to be quite dominant. However, many advertisements or other kind of promotions were not built to target the older or older consumers. This situation would seem to abandon a significant number of consumers that might bring a big influence to companies’ marketing and sales performances. The vast number of older consumers is also believed to influence the national domestic consumption pattern in general, as it is found that the level of spending of older consumers is decreasing, despite their bigger possession of wealth compared to other age group in population pyramid. Spending composition found to be changed among the older consumers, because they simply allocate their money more to healthcare services, gifts and donations, rather than spending it on leisure, automobiles and fashion. (Drolet et al 2010) In general, there is skepticism that older or older consumers will spend as much as their younger counterparts in spending on consumer products, since their spending patterns are rather to be different. Drolet, Schwarz and Yoon (2010) explain that older consumers tend to spend less on transportation services and products, vacation, and food. Nevertheless, they spend more on healthcare, donation and gift. In addition, if they were wealthy in the past and continue to 9 become wealthier, there is a tendency that they will spend less on healthcare and food, but will spend more on leisure activities, especially travel. (Drolet, Schwarz and Yoon, 2010:46) However, many of people from this demographic group are also active consumers. In several European countries, people who are over 50 years old tend to have more money to enjoy themselves, as they have the freedom from financial burdens like mortgage and child rearing, while healthcare and pensions are significantly subsidized by the government. (Gunter, 1998:1) Moreover, Gunter (1998) elaborates that the existence of Grey Market which is occupied by the over 50 year old consumers, indicates a growing and increasingly affluent section in a society. (Gunter, 1998:40) As one of the least researched market segments, some arguments arise when it comes to comprising older consumers as market segments. Some experts use classification of 65 years and over as the retirement age marking. Some others use 60 years and over in order to comprise how the decline in physical and mental skills influence their consumption. While 50 years and over is used to represents those who enter pre-retirement or early retirement age, thus called as “The Grey Market”. (Gunter, 1998:5) Gunter challenged the common stereotype about older consumers as the non-prospective segments by Louden and Della Bitta (1993:156):  Older consumer are homogenous. (Gunter believes that older market segment consists of few sub segments).  Most people in this segment think themselves as old. (Gunter quite agrees with this, yet he adds that it does not begin until they become 70 years old).  Older consumers are less important than other consumer segments. (Gunter counters that in USA, those who are 50 years and above own nearly half of all American disposable income and entitled for almost one-third spending on home appliances, jewelries, new cars, floor coverings and groceries).  Older consumers are not keen to try on something new. (A survey released by Golding and Company found that in the preceding 12 months, 45 percent of older consumers had tried a new brand of cereals and 30 percent had tried new canned soup as well as soft drink brands). 10  Older consumers tend to suffer mental inclination. (Gunter describes that only five percent from this market segment who suffer mental impairment. In addition, intelligence changes a little from age 51 to 80).  Older consumers tend to be in poor health condition. (Gunter finds that they will remain healthy until their last years).  Older consumers enjoy the solitude. (Many are found to be sexually active, involved as volunteers or partake on new responsibilities).  Older consumers are not physically active. (A Gallup poll revealed that many who are 65 years and above are engaged in regular sport activities). (Gunter, 1998:6) 1.2 Problem statement and objectives of the study The ample existence of older population in Finland, combined with the rarity of marketing studies about older consumers, has led the researcher to conduct this research. Based on the illustrations and explanations on the introduction and the previous sub chapter, the main research question about older Finnish consumers in this research study is as follows: “How does the cultural and social background of older Finnish consumers influence their preference and recognition towards the global brands compared to Nordic brands?” Based upon the problem statement mentioned, the objectives of this study are as follow: ● To discover of how the cultural background combined with social background of older Finnish consumers influence their brand preferences ● To find out until which extent the country of origin of the brand influence the recognition and buying decision making process of older Finnish consumers. ● To provide empirical data about the purchase habit pattern of older Finnish consumers The problem statement and the objectives of the study above will be the framework of the whole study. Therefore, the researcher believes that the research is best presented as 11 explanatory and comparative study. Furthermore, this study is significant due to the fact that there are not many research about older Finnish consumer behavior despite their ample existence in the country’s population. Hopefully, this research will be able to fill in the research gap by academically elaborating the importance of older consumers as a segmentation in marketing study and discover the relevance of present facts and analyses about Older Finnish consumer behavior with the existing theories. The researcher aims this research to provide some practical significance in order to provide practical information and data about Older Finnish consumers’ aspiration towards Finnish retail industry. In addition, this study can be used by Finnish retail practitioners as a feedback to see how Older Finnish consumers perceive their brands. 1.3 Delimitation of the Study This research is conducted to obtain a clear understanding about how older Finnish consumer in age of 50 to 65 years old, perceive global brands and how they compared them with Nordic brands, which assumed to be more familiar to them in their daily life. This research will use ethnography as the research approach, which drives the researcher to heavily rely on in-depth interview and observation take in-depth interview data collection methods. Therefore, the delivery of this study will be based on the point of view or perspective of the respondents as samples of older or older consumers in Finland. Ideally, this research could embody larger older age spectrum and cover many industries. As the research has to be kept focus and manageable, the researcher decided to concentrate on older Finnish consumers in age of 50 to 65 years old. Moreover, the brands are also limited by taking brands from Fast Food, Alcohol, Automotive, Home Appliances and Footwear industries. Due to the fact that Finland has a limited availability of consumer brands, and the limitation made the researcher to take Nordic brands to represent local brand in those five sectors mentioned above. This research also has a time constraint, whereas everything is scheduled to be finished prior to May 2017. The limited network of researcher in Finland, also made the observation and interview to be conducted only in Ostrobothnia area, with combination of Swedish-speaking Finnish and Finnish-speaking Finnish people as research participants. By including the Swedish-speaking people as research participants, the researcher aims to capture the 12 experience from two different Finnish subcultures, which assumes to offer different perception and characters. Hence, the researcher tries to give maximum efforts to make the data collection of this research balanced and accountable. 1.4 Structure of the study The study is constructed into six chapters in order to cover the full picture of the background of the study, theoretical framework, research methodology, research findings and its analysis, and its conclusion. The first chapter describes about Finnish economy and older consumers as the setting and object of this research study. On this chapter, the researcher will also explain the justification of the study, why older Finnish consumers are chosen and different from other Nordic consumers. This chapter also stated the problem statement, the objective, the significance of the study and other matters that are directly related to this research study. The second and third chapter will elaborate about theory of country origin, country animosity and affinity as well as the relation of country origin with the perceived product quality by consumers that are linked to the branding theory elements such as brand positioning, brand loyalty, brand equity, and followed by the explanation about consumer behavior, segmentation, buying decision making process and a closer look of older Finnish consumers’ profiles. This chapter is needed to examine consumer behavior, what factors that influence them, and how they are segmented by their personality and behaviors. Furthermore, this chapter also elaborates in more detail about the older consumer as a market segment. This chapter focuses more on the attitude of older consumers towards promotions, advertisements, and their internet usage. This chapter also discussed about the evolution of Finnish consumers behavior, especially the baby boomers generation. Finally, on the last sub chapter, the researcher explains about the buying decision making process. Moving on the fourth chapter, it elaborates the review about methodology that is used by the researcher to conduct this research study. Whereas the researcher uses the qualitative research method with ethnography as research approach, and participant observation and informal semi-structured interviews as data collection techniques. These data collection techniques are 13 applied to the research sample or participants, who are chosen carefully to represent the older Finnish consumers in age 50 to 65 years old, as the object of this research study. In the chapter five, the researcher describes and discusses the research findings and the data that are obtained from the interview and observation. By using the methodology that is explained in chapter four, the researcher will analyze the relevant points and correlation between the collected data and the theoretical framework given. As the closing chapter of this research study, the chapter six contains the conclusions of the research as the whole study and suggestions based on the analysis that has been given in chapter six. The conclusions and suggestions are expressed by the researcher and supported with the references obtained. Thus, these conclusions and suggestions are hopefully to be necessarily matched and beneficial to the study. Nevertheless, this chapter also contains the managerial implication related to the research findings. 14 2. Consumer Behavior and Segmentation Consumer behavior studies always have been involving the theories derived from psychology, sociology, and economics. It corresponds with the nature of marketing as an interdisciplinary study. On this chapter, consumer behavior and its elements will be elaborated in several phases. The first sub chapter will explain about the construction of consumer behavior in general. Meanwhile the second sub chapter will focus on the discussion about the existence of older consumers as a market segment, which will be linked to the profile of Finnish consumers in detail, including their transformation over time. This should provide a vivid description of how older consumers in Finland experienced the change in their consumption curve in their life time span. The last sub chapter serves as an explanation about purchase decision making process including all of its related factors. Consumer behavior is studied in order to create better understanding for the marketers to provide a better environment for their customers. It emphasizes the core concept of marketing that puts customers in the ultimate position. As the size of the consumer product markets are enormous, it is impossible to reach the whole market with one simple strategy or understanding. Therefore, market segmentation is conducted as process to breakdown the whole market for a product or service into specific subgroups or segments. These segments represents as a manageable size of target market which can be reached by a set of marketing strategy that is conveyed through of marketing mix. (Lancaster and Reynolds 2004:32) Lancaster and Reynolds (2004) amplify that in consumer product markets there are three common segmentations: geographic, demographic and lifestyle or psychographic. Geographic is found to be an inevitable segmentation as markets are divided into segments based on their geographical situation. Given the differences in climates, time zones and cultures, geographic segmentation allows companies to set a customized strategies for each region. Meanwhile, demographic segmentation consists of a rage of bases for subdividing the markets such as age, gender, income, social class, education, nationality, political view, family size, family life cycle and sagacity, or the refinement of family life cycle grouping system. (Lancaster and Reynolds 2004:36 – 38) 15 In many countries, social classes are divided in a distinct structure with several layers. Herewith is the description of social classes division in the United Kingdom as described by the table below: A Upper middle class (executive, higher managerial, administrative or professional) B Middle class (intermediate managerial, administrative or professional) C1 Lower middle class (supervisory, clerical, junior administrative or professional) C2 Skilled working class (skilled manual workers) D Working class (semi and unskilled manual workers) E Lowest levels of subsistence (state pensioners with no other incomes, widows, casual and lowest grade earners) Table 1 Social class and grade structure in the United Kingdom (Lancaster and Reynolds 2004:37) However, the social classes might not be applicable in every country. For example, in Nordic countries whose societies are more socialist and egalitarian, the social class could have less layers, due accountable clean government, high taxation that lead to minimum income disparity. As child rearing expenses are high, the refinement of family life cycle grouping becomes important in segmentation. Furthermore, sagacity is mainly broken down into four stages: dependent, pre – family, family and late. Nevertheless, this sagacity is detailed by the following table: Bachelor Stage Young single earner who is not living with parents or known as YUPPIES (Young Urban Professionals) Newly Marrieds Young married couple with no children or known as DINKIES (Double Income – No Kids) Full Nest I Young married couple with the youngest child under 6 years age Full Nest II Married couple with the youngest child is 6 years old or over Full Nest III Older married couple with dependent older children living at home Empty Nest I All the children have left home, but the head of family is still working or known as WOOPIES (Well Off Older Persons) Empty Nest II All the children have left home and the head of family is already retired Table 2 Family life cycle segmentation base (Lancaster and Reynolds 2004:38) 16 2.1 Consumer Behavior Elements Consumer behavior is a whole spectrum of studies about consumer’s totality decision as a person or group in relevance with their acquisition, consumption, and disposition of goods, services, activities and ideas involving decision making units. Consumer behavior is a dynamic process that may involve many people other than the consumer itself, therefore it involves many decisions. There are four main domains that constructs consumer behavior. They are psychological core, the decision making process, consumer’s culture and consumer behavior outcomes. (Hoyer and MacInnis 2007:3 - 11) Kotler and Armstrong (2015) argue that consumer behavior is the buying behavior of end consumers, thus individuals and households that buy products and services for personal consumption. While Lancaster and Reynold (2004) define consumer behavior as: “The acts of individuals directly involved in obtaining and using economic goods and services, including the decision processes that precede and determine these acts.” (Lancaster and Reynolds 2004:50) Lancaster and Reynolds (2004) suggest the idea of using five core psychological notions in order to understand comprehensively individual buyer behavior: personality and self – concept, motivation, perception, attitudes, and learning. (Lancaster and Reynolds 2004:55) Furthermore, Hoyer and MacInnis (2007) elaborate more about consumer involvement as consumer motivation affects them when processing information in buying decision making. (Hoyer and MacInnis 2007:51) Consumers’ low involvement is correlated with their low motivation in searching the information about the product they purchase, and usually happens to non – durable products. The purchase on most common grocery products fall into this category, as most consumers would take the decision making shortcuts like choosing the product with cheapest price, color, flavor or scent. On the contrary, durable products evoke high consumer involvement or as Hoyer and MacInnis (2007) call it, felt involvement. Hoyer and MacInnis (2007) explain felt involvement as psychological experience of the motivated consumer, this involvements include enduring involvement, situational involvement, cognitive involvement and affective involvement. (Hoyer and MacInnis 2007:51) Enduring involvement occurs when consumer is interested to engage in an offering or activity in a long period of time. For example, golf enthusiasts joining the course membership. 17 Nevertheless, consumers can engage in several enduring involvements for offerings or activities at once. (Hoyer and MacInnis 2007:51) While for enduring involvement consumers need to engage in offerings or activities for a long period of time, situational involvement requires less commitment. Situational involvement is happens to consumers on the one – time purchase situation. For instance, non – gadget enthusiasts will just buy a new smartphone when their old one is broken. However, Hoyer and MacInnis (2007) argue that situational involvement would be more engaging when consumers buy gifts. Moving on cognitive involvement, where the consumers are thoughtfully processing information related to their goals, therefore will learn thoroughly about the offering or activity. For example, when a professional swimming athlete buys a swimming gear, he or she will learn thoroughly about the product specifications in order to improve their performances. Last but not least, affective involvement is more psychological and emotional than the other involvements. Companies would aim to evoke consumer’s sentimental stimuli to lead them in executing the purchase. (Hoyer and MacInnis 2007:52) 2.1.1 Consumer internal psychological factors Apart from their social circles, consumers often face many considerations regarding their personal situation before following their peer suggestions or execute the purchase. As individuals, people have different age, life-cycle stage, financial situation, lifestyle, characters and self-concepts. (Kotler and Armstrong 2015:169) We need to understand people’s differences and diversities in order to respond them with the right marketing efforts. Different occupations also might drive different product and brand preferences. For instance, people who work in creative and entertainment industries might have more variations in their wardrobe compared to people who work in finance industry, as their work environments have less strict dress codes and tend to let them to explore with their fashion sense at work. Moreover, Kotler and Armstrong (2015) amplify that different occupational group could create a niche market by their jobs nature. (Kotler and Armstrong 2015:170) For example, Caterpillar as a shoemaker is a well-known brand among oil, industrial, electrical, civil engineers for its safety boots. On the other hand, a person’s financial situation plays an important role in shaping his or her consumption pattern. Kotler and Armstrong (2015) mention how marketers watch the 18 financial trends, such as personal income, savings and interest rates prior to set their periodic marketing target and strategies. (Kotler and Armstrong 2015:170) In addition, lifestyle becomes another factor to tackle before setting the marketing strategies. Lifestyle is defined by Kotler and Armstrong (2015) as a pattern of living as shown in someone’s psychographics that involves major AIO dimensions (activities, interests, opinions). From lifestyle, we can profile people beyond their social class and personality, as it captures how they act and interact in the world. (Kotler and Armstrong 2015:170) Each individual has a distinct personality that shapes their purchase behavior. Personality is explained by Kotler and Armstrong (2015:170) as unique psychological characteristics that distinguish a person or group. In other words, personality can be formulated by terms of traits such as self-confidence, dominance, sociability, autonomy, aggressiveness and many others. Lancaster and Reynolds (2004) add that personality is the main notion of individual consumer behavior as most of purchase decisions are the reflections of individual’s personality. The self – image is created by individuals with an aim to express the inner selves in a socially relatable and acceptable form. Marketing must acquire these inner needs and responds them by providing products or services that are socially acceptable. (Lancaster and Reynolds 2004:55-56) Enhancing the personality concept, motivation requires a reaction to a stimulus. When it is correlated to purchase behavior, motives serve as the drive to posse goods or services. Hunger, thirst, warmth and shelter are categorized as physiological motives. Whilst, acceptance, success and prestige are psychological motives. A combination of motives are always at play in forming a purchase decision. (Lancaster and Reynolds 2004:57) Consumers with different backgrounds and situations will have different motives in purchasing the products and brands, since their motives reflect their priorities and preferences When it comes to perception, Lancaster and Reynolds (2004) explains how marketing practitioners are interested in how consumer perceive and react to products in relation to quality, aesthetic, image, and price. As the need of satisfaction is something psychological and intangible, marketers tend to influence customers with both practical and illogical motives to push the purchase decision. Consumer motives and perceptions will correspond with their attitude. Consumer strongest attitudes were established by the influences from their family and social interaction. In marketing, a set of customer attitude can be taken as a set of 19 cognitions a potential consumer has regarding to the potential purchase in the future. Many marketing practitioners believe that once companies established this attitude in the consumer’s mind, then it will be hard to change. (Lancaster and Reynolds 2004:62) Nevertheless, learning process through experience may help many customers to adjust their perceptions and attitudes. It can also facilitate the shift of behavior, when a consumer figures that certain products are more favorable than the others, then repeat purchase would happen. This satisfaction is the base of brand loyalty. (Lancaster and Reynolds 2004:63) Another influence of consumer buying behavior can be obtained from their beliefs and attitude. Kotler and Armstrong (2015) discuss belief may be founded on real knowledge or religious faith that carries an emotional charge. While attitude leads people to like or dislike things, and moving closer or further from them. (Kotler and Armstrong 2015 - 174) On the other hand, Gunter (1998) argues that behavioral segmentation distinguishes each segment of consumers from the others in terms of their patterns of consumer behavior. Behavioral segmentation concentrates on (1) product purchase pattern; (2) benefits obtained from the products; and (3) psychological classification of consumers. These characteristics are taken into account when examining the older consumer behavior as a market segment. (Gunter 1998:43) On the other hand, product usage segmentation classifies consumers by their purchase habits toward certain products and how they use them. Furthermore, it can segment based on their product orientation within product categories by testing certain preferred consumer brands. This analysis is useful to pinpoint detailed product purchase and brand preference patterns, marketers can yield the information in order to target specific consumers with specific product and messages. (Gunter 1998:44) Marketers establish the idea that brands have personalities, so people can associate themselves with brands which they see match their personalities. (Kotler and Armstrong 2015:171) Kotler and Armstrong (2015) discuss the brand personality as the specific mix of human traits that is labelled to a certain brand. Jennifer Aaker (1997) identifies five brand personality traits: sincerity (down to earth, honest, cheerful and wholesome), excitement (daring, spirited, imaginative, and up to date), competence (reliable, intelligent, and successful), sophistication (glamorous, upper class, charming) and ruggedness (outdoorsy and tough). (Jennifer Aaker 1997) Different brands have different personality, for instance, 20 McDonald’s with sincerity, GoPro with excitement, Forbes with competence, Jeep with ruggedness and Cartier with sophistication. The brand image positioning is mostly infused on their advertisements. (Aaker 1997; Kotler and Armstrong 2015:160) 2.1.2 Consumer culture and social factors Cultural factors play a broad and deep influence on consumer behavior. Culture is defined as the set of basic values, perceptions, wants, and behaviors learned by a member of society from family and other important institutions. (Kotler and Armstrong, 2015:161) Despite the small – sized territory of Finland, apart from national culture, there are also number of subcultures or ethnic groups within a country. The swedish – speaking population happens to be the largest subculture in Finland. Hoyer and MacInnis (2007) state that ethnic influences become major variables in consumer behavior. Members of subcultures or ethnic groups are bonded together by their commonalities in heritage, set of belief, religion and social experiences that set them apart from the rest of the society. Marketers need to research ethnic groups and work out beyond their stereotypes and identities specific characteristics and behavioral patterns that can be directed using the right strategies and tactics. (Hoyer and MacInnis 2007:317) Social class exists in every nation, even in Finland, although the disparities are not so visible. Many experts argue about the influence of social class on consumer behavior. This suggestion is also supported by Kotler and Armstrong (2015) that explain social class as ordered groups whereas its members share commonalities in values, interests and behaviors. Moreover, social class is measured by several variables like occupation, income, education, and ascribed and achieved status combined. (Hoyer and MacInnis 2007:334 – 336; Kotler and Armstrong 2015:164) Nevertheless, when it comes to social factors, it is impossible to exclude the influence of consumer’s small group, family, social networks, social roles and status into their perception towards brands. (Kotler and Armstrong, 2015:164) Small social groups are divided into two, membership group and reference group. Both of this groups are seen to be influential in setting consumer perception towards brands. Membership group is defined as a group where a person belongs to, for example a family or a community. Whilst reference group is seen as an aspirational group where some people hope to be part of. For instance, a junior football athlete is aspired to play in an elite football 21 club like Manchester United. Due to their power of influence, many marketers target reference group to gain brand awareness and consumers loyalty. (Hoyer and MacInnis 2007:401; Kotler and Armstrong 2015:165) On the other hand, word-of-mouth also has a power in influencing consumers buying behavior. Since people have more tendencies to trust personal recommendation from people who they know well and trust, compared to advertisement and other marketing campaign. (Kotler and Armstrong 2015:165) Meanwhile, opinion leaders are seen to be the strongest individuals within groups, whereas they possess social influence towards others. (Kotler and Armstrong 2015:165) The undeniable power of internet has brought these opinion leaders as influencers in buzz marketing as part of online marketing strategy. (Kotler and Armstrong 2015:166) The idea of buzz marketing is ordinary consumers into brand evangelists who will advocate the product and brand through social media. (Kotler and Armstrong 2015:165-166) As nowadays, many people, especially the younger generation check on the consumer reviews online on Reddit, Facebook, Pinterest, Twitter and other social media before executing their purchase. Normally, people belong to various social groups, such as family, schools, companies, clubs and other organizations, where they perform different roles and own different status in each group. Each role and status require them to perform according to the expectation from people or society in their surroundings. These expectation could vary depends on the local culture, social norms and values. (Kotler and Armstrong 2015:167) 2.1.3 Buying decision making process The purchase decision making process is begun long before the actual purchase and continues in certain period of time after. Kotler and Armstrong (2015) explain that marketers aim to approach consumers and be involved in this entire process. The buyer decision process consist of five stages, which is explained by the figure below: Figure 1. Buyer Decision Process (Kotler and Armstrong 2015:175) Need recognition Information search Evaluation of alternatives Purchase decision Postpurchase behavior 22 Need or problem recognition is a situation where the buyer recognizes his or her need that is caused by thoughts or physiological sensitivity, for instance, hunger or thirst. On this stage, consumers examine theirs ideal state and actual state. For example ideal state is flashed by food and drinks advertisements on billboards, which then leads to an actual state examination whereas the consumer feels thirsty or hungry. These stimuli will move people to buy the products they see on the advertisements. (Hoyer and MacInnis 2007:195 – 198; Kotler and Armstrong 2015:175) Not every consumer is keen in searching for information. When their drive is strong and they find the right satisfying product close by, there is high possibility that they will execute the purchase. If they do not find the product right away, they will conduct the information search related to the product. Consumers are likely obtaining information from personal sources (family, friends, neighbors, acquaintances), commercial sources (advertising, salespeople, dealer websites, packaging and display), public sources (mass media, consumer rating organization, social media, online searches, and peer reviews), and experiential sources (examining and using the product) These information sources vary and change depends on the product types and buyers. (Kotler and Armstrong 2015:175) In the past, consumers received information about products from commercial sources which are controlled by the marketers. The messages are conveyed in one-way communication, then later evaluated by personal sources of the buyers. Nowadays, consumers share their experiences, perceptions, and reviews over their products usage immensely. Many of them will check the reviews and ratings provided a reliable product assessment from the other consumers. The knowledge and awareness of consumers about the products are gradually accumulated overtime, which may lead to brand preference and loyalty. (Kotler and Armstrong 2015:176) The alternative evaluation is the next stage taken after consumers have gathered ample information. Kotler and Armstrong (2015) suggest that alternative evaluation is a stage where consumers process the information they have to choose several alternative brands. Consumers do not always undertake the same consideration when it comes to evaluating the 23 purchase alternatives. Many factors could influence their evaluation, for instance their financial situation, product life cycle, environmental concerns, internal stimuli and other reasons. (Kotler and Armstrong 2015:176) After ranking the brands and forming purchase intention on evaluation stage, consumers will likely to execute their purchase decision by buying their most preferred brand. However, Kotler and Armstrong (2015) argue there are two factor could come in between purchase intention and purchase decision. The first factor is the attitude of others, it is related to the people in the first social circle of the particular consumer that influence his or her behaviors. For example, some people buy apartment or house because their parents demand them to do so. The second factor is more related to financial situation of the consumers. When consumers build their purchase intention, they might have certain plans and expectation, for instance the expected income that they will use to pay the purchase, the expected economic situation and others. These unexpected situational factors could easily deviate their purchase intention to null situation. (Kotler and Armstrong 2015:176) Either satisfied or not satisfied, after they bought the products consumers will engage to post- purchase behavior. Kotler and Armstrong (2015) advocate two variables, the consumer’s expectations and the product’s perceived performance to determine whether buyers are satisfied or dissatisfied with their purchases. When the product performance meets the consumer’s expectation, then the consumer will be satisfied. However, when the product fails to fulfill consumer’s expectation, then the consumer will be dissatisfied. These situation should urge the marketers to not overwhelm their promises to the buyers, with a hope that they will be satisfied, so they repurchase or even recommend it to their social circle. (Kotler and Armstrong 2015:177) 2.2 Older consumer as a market segment The existence of older population in retail marketing is given less attention compared to other age groups. Older consumers tend to be seen as a homogenous group, and attributed with stereotypes like limited physical mobility, dependent to others, and narrow - minded, despite 24 being more prosperous than other age groups. Older consumers can be distinguished from the other consumers by their behavioral segmentation. (Gunter 1998:43) As explained on the earlier chapters about the age groups among older consumers, the focus of the explanation below are older population in age 50 to 65 years old. Nevertheless, research found that self - perceived age has implied of how the older people think of themselves might provide better insights for consumer behavior than their physical age. Gunter (1998) discusses of how many older people might not recognize their aging process until they are 75 years old. In addition, self - perceived age is heavily related to their health and financial condition. Furthermore, physical age can be closely linked to the purchase volume of aging medical products. (Gunter 1998:54) A psychographic approach about older consumer behavior was given by Day et al (1987) on the study about lifestyle measures which led to two major groupings, the Self - Sufficient and the Persuadable. The first group performs an extent of self - sufficiency that appears on their attitude that they are in control of their lives. While the Persuadable is more sensitive to persuasion as they feel they are not in full control of their lives. (Day, Davis, Dove and French 1987; Gunter 1998:48) The Self - Sufficient is comprised of two subgroups: (1) Active Integrated and (2) Disengaged. People who belong to Active - Integrated group see themselves as opinion leaders and keen to interacting with others. They are affluent and capable in handling most situations and are certain with their decisions, hardly shaken by social pressures. Besides being opinionated, they are also found to be more educated, yet politically conservatives. Meanwhile, people who belong to the Disengaged generally have similar opinions with the Self - Sufficient. Moreover, they have less income with their counterpart and are less active. They are basically confident enough in handling their daily life matters and quite happy with their lives, except when it comes to financial problems. Despite of their confidence, they prefer to enjoy their daily routines, with occasional party and keep a small circle of friends. Nevertheless, they still update themselves with the world’s current issues (Day, Davis, Dove and French 1987; Gunter 1998:48 - 49) On the other hand, the Persuadable are also divided into two subgroups: (1) the Passive Dependent and (2) the Defended Constricted. The first subgroup, Passive Dependent exhibit 25 a self - withdrawal to life apathetically, since they do not have any desire to stand out of the crowd. They have minimal new social contact and make their homes as center of their lives, which make them unassertive, unadaptable and less-updated with the situations outside the home. The second subgroup, the Defended Constricted shows different traits from their counterpart, as they are highly sociable, seek for acceptance from others and financially capable to satisfy desires for something new and different. However, they do not always have the confidence to fulfill their desires. Due to their needs for acceptance, somehow they are hesitant to fulfill their desires, as they believe people expect them to do wise things as they are older. They tend to fear of missing interesting events in life, in consequence they become social orientated and continue the activities that have been done in their forties. (Day, Davis, Dove and French 1987; Gunter 1998:49) 2.2.1 Older consumers and advertising According to Kotler and Armstrong (2015) advertising is developed as a specific communication task to be achieved with a specific target audience during a specific period of time. (Kotler and Armstrong 2015:406) There are three possible advertising objectives as explained in the tables below: Informative Advertising ● Communicating customer value ● Building a brand and company image ● Inform the market about a new product ● Explaining how a product works ● Suggesting new features of the product ● Informing the price change to the market ● Describing the available services and support ● Correcting false impressions Persuasive Advertising ● Building brand preference ● Encouraging switching to a brand ● Changing customer perception of product value ● Persuading customer to purchase immediately ● Creating customer engagement ● Building brand community 26 Reminder Advertising ● Maintaining customer relationship ● Reminding the customers about the needs of the product in the near future ● Reminding the consumers where to buy the product ● Keeping the brand in consumer’s mind during the off seasons Table 3. Possible Advertising Objectives (Kotler and Armstrong 2015:406) Kotler and Armstrong (2015) discuss that there are two major elements in every advertising strategy, these elements are: advertising messages and media options. Traditionally, the creative department would start the audio - visual messages, then the media department proceed to the best media placement strategy. Nowadays, where media placement cost is skyrocketing and the wave of social media, drive companies to be more focused on specific target market and media planning function. (Kotler and Armstrong 2015:409) Media planners generally aim to choose the most effective and efficient media to convey the advertising messages to the target audiences. Each medium offers advantages and limitations as follow: Medium Advantages Limitations Television Wide mass-marketing coverage; combines sight, sound, and motion; appealing to the senses High cost; high confusion; less audiences selectivity; rapid exposure Online, mobile and social media Low cost; social sharing power; focus on individuals and customers community; interactive and engaging The audience has the most control for content and exposure; Has big potentials to only have narrow impact Newspapers Good local market coverage; huge Small pass- along audience; poor reproduction quality 27 acceptability; high – reliability Direct mail Targeting specific audience; no ad competition on the same medium; allows personalization High-cost per exposure; “junk mail” image Magazines High geo-demographic selectivity; credible and prestigious; durable and can be passed-along Long ad purchase lead time; high cost; no guarantee of position Radio High geo-demographic selectivity; low-cost; high acceptance by the locals Rapid exposure; labelled as the ”half-heard” medium; fragmented audience Outdoor Highly- repetitive exposure; low - message competition; low - cost; good positional selectivity Generalized audience selectivity; creative limitation Table 4. Profiles of Major Media Types (Kotler and Armstrong 2015:416) Responding to the profiles of major media types, Kotler and Armstrong (2015) most of marketers aim to build an integrated marketing communication campaigns by utilizing a full mix of paid, owned, earned and shared media. (Kotler and Armstrong 2015:416) Many advertisers assume that older consumers do not like to see older models in advertisements that targeted to them. However, IPC Magazines (1998) in UK conducted Prime Time Survey with result that 62% of older women prefer to see women in their age on advertisements. On the other hand, many advertisers worry that if they put older people on 28 their advertisements, it will drive away their target audiences from the younger age groups, although this argument was never confirmed with evidence. (Carrigan and Szmigin 2000) It is commonly believed that even when advertisements are featuring older models, they still need to appear younger than their age and still look attractive. Despite the existence of older models on advertisements, aging or oldness is not a message to be encouraged there. Carrigan and Szmigin (2000) argue that the images of older people on advertisements are only depicted in two ways, either they are youthful or they are caricatured, instead of appearing as legitimate members of society. (Carrigan and Szmigin 2000) Gunter (1998) suggests that advertising messages targeted at members of Self - Sufficient can be designed to have more of them being portrayed as self - confident, independent and outgoing. Some probable scenarios would show them having outdoor events, private parties or being up-to-date with life aspects like technology. On the contrary, the people in the Persuadable group would feel more related if they are portrayed around homelife. (Gunter 1998:49) In order to be more comprehensive, advertisers need to convey more factual information to people who belong in Active Integrated group to provide the sense of power or capabilities in making their own decisions. Meanwhile, people from the Disengaged Integrated can be approached by depicting people seeking advices from their loved ones or closest social circle. (Gunter 1998:49 - 50) In reality, the Passive Dependent people seem to appear more on the advertisements. Whereas they fit the generic old age stereotypes like avoiding risk, emotionally dependent and conservative. (Gunter 1998:50) 2.2.2 How older consumers use the internet Some research in Germany report their surprising findings on their research that break the classic stereotype of people above 50 years old that they are practically distant from information technology. Meiners and Seeberger (2010) argue that the number of older people above 55 years old that use internet or namely the “Silver Surfers” has grown massively even when compared with the teenage users. (Meiners and Seeberger 2010) Meiners and Seeberger (2010) discuss that Silver Surfers in Germany spend 97 minutes online per day, with typical usage on search engines, email, music download, and making calls via internet. (ARD/ZDF 2009; Meiners and Seeberger 2010) While their counterparts in USA spend more time online than teenagers. (Pepper Institute of Aging Policy 2007; Meiners and Seeberger 2010) 29 Researchers, including Meiners and Seeberger (2010) argue that at least half of population of above 50 years old people in Europe are already online. Unlike the teenagers users which believed has reached their peak highest growth, the number Silver Surfers is expected to continue growing, especially for those who are above 60 years old. The potentials of this upcoming market cannot be ignored as the older consumers have more purchase power compared to other age groups. (Meiners and Seeberger 2010) Older people enjoy the internet usage as it offers the convenient and cheap information obtaining process and cheap interactive communication via email or messenger. (ARD/ZDF 2009; Strauch 2008; van Baal 2007; Graune 2007; and Meiners and Seeberger 2010) Moreover, in the USA older women spend more time online than their husbands. For instance, women over 55 years old is the fastest growing segment with growth up to 175.3%. (Smith 2009; Meiner and Seeberger 2010) From all of the explanations above, we can see that internet cannot be excluded from list of useful promotional tools to execute marketing strategies targeted on older consumers. 2.3 Finnish consumer profile As many other European countries, Finland has suffered low birth rates for the recent decades, despite the continuous effort of the Finnish government to increase it through integrated programs and benefits. Low birth rates might not be the only cause of 42.4 years as Finnish median age (CIA World Factbook 2017), the expansion of life expectancy as the result of excellent healthcare system and effective redistribution of income and wealth. In consequence, Finland is put with a demographic composition that placed the older people as the majority. As a country, Finland has a low domestic consumption. Nevertheless, Finnish consumers are keen on excellent quality and environmental friendly products. (Ekström, 2010) Despite the fact that most Finnish consumers travel extensively, older Finnish consumers are still known to be conservative and modest people, whose lifestyles are far from lavish regardless the income level. Finland as a country and a nation also known to be quite homogenous. However, as the globalization emerged, global brands keep on flooding Finnish retail market along with its 30 sophisticated promotion methods on digital media. This situation might give insufficient knowledge of global brand distinction for the older consumers, and lead them to a sentiment over product or brand origins. In consequence, the low level consumption of older consumers in Finland may influence the domestic consumption curve and national economy growth in general. Finnish consumers are known to be less consumptive compared to other European nations, especially the older or older consumers. Heinonen and Peltonen (2013:50) argue that this behavior is rooted from the Finnish mentality, the mentality of scarcity. In Finnish custom, in ideal person is portrayed as industrious, prudent, persistent, calm, and frugal. (Heinonen 1998:12; Stark 2011:55) Finland suffered from many wars, whether as part the reign of Swedish Kingdom, Russian Grand Duchy in 1807, the Great Famine from 1866 to 1868, the Civil War, the Great Depression in 1930s and the World War II. Moreover, Finland’s geopolitical situation is placing the country to be the gate of the west to the east. Whereas, ideas, technology and philosophy flow, and influences the culture and society in so many ways. In the past, Finnish people struggled from time to time over the scarcity of food and harsh climate and environment, which led to poverty. Self – sufficiency became a strong principle among Older Finnish consumers and saving resources. Resources can be described here into three components, money, time and work. (Heinonen 1998:32-45; 1999:79-82) The hardships over scarcity of resources, poverty and austerity by nature have driven Finnish consumers’ mentality to turn down overindulging, dandyism and lavish lifestyle in general. On the other hand, self – control and rationality are considered as virtues of real Finnish people, despite the rise of Finnish economy in the 1980 that made Finland, nowadays to be a wealthy country with affluent consumer basis. (Heinonen and Peltonen 2013:56 – 59) Older Finnish consumers are considered to be interesting to research due to its characteristics, whereas it illustrates a modern consumer society that evolved from a poor agrarian Nordic country, a developing country with specialization in processing forestry products into a wealthy nation with an outstanding educational system and specialized in advanced technologies. The cultural background and the mentality of scarcity that belong to older Finnish consumer might put them away from self- indulgence experience like traveling 31 across the continent. Moreover, the older generation also have the tendency to access minimum amount of information about global brands. 2.3.1 Finnish consumer transformation After World War II, especially in the 1960’s Finland rebuilt by the rapid economic growth that transformed the country to be a welfare state and modern consumer societies. Technological breakthroughs have become part of Finnish daily life. Refrigerator, washing machine, vacuum cleaner and television were found in more than half of Finnish homes. (Kortti 2003:245; Heinonen and Peltonen 2013:167) The baby boomers who were having their youth in the 1960’s, experienced the most of this transformation era. They were trapped in a paradoxical situation whereas they were main target of consumerism via advertising, as well as the centre of social movements that promoted equality and commonality at once. The 60’s decade has established the concept of modern and media - driven consumption that is still an essential for nowadays consumerism. (Heinonen and Peltonen 2013:173 - 174) Finland in the 1960’s and 1970’s immensely followed the welfare society model set by Sweden, which turned the society as a consumer society, by having a growing per capita consumption of commodities, efficient production methods and organized distribution channels, increasing social labor divisions and a greater social mobility. (Glennie 1995:165; Heinonen and Peltonen 2013:182) In three decades, 1950’s to 1980’s the number of Finnish people who worked in agriculture dropped by two thirds.(Statistical Yearbook of Finland 1981:5; Heinonen and Peltonen 2013:139) Many of them moved to urban areas or even emigrated to Sweden in 1960’s as Sweden was seen as an example or more developed country. (Heinonen and Peltonen 2013:184) Despite geographically situated next to Russia, Finland was never part of eastern bloc, even though industrialized products export to Soviet Union had a significant role in the Finnish rapid economic growth. For many decades, Finland strives to balance their economic position as the border of Nordic and western bloc to Russia or Soviet Union in the past. (Heinonen and Peltonen 2013:183) 32 2.3.2 The Finnish life standards During the 1970’s Finnish consumer society was introduced to an improved concept of life, which was previously considered as luxury concept. This concept was exposed by pop culture and mass media, and portrayed with good food, traveling to warm and exotic places, swimming pools, fast cars, romance and freedom. As one of symbol hedonistic life, the increasing consumption of alcohol and tobacco also became more common in the 1970’s, including for women. (Heinonen and Peltonen 2013:184) Other affluent Finnish staple common consumption is the ownership of summer cottage and sauna. An ideal summer cottage is located by the lake or by the beach. Every family has at least one sauna, one in their house or apartment and the other one is in their summer cottage. (Heinonen and Peltonen 2013:255-256) As happens in other Nordic countries, like Sweden and Norway, Finnish government is entitled to the monopoly of alcohol production, licensing, import and sales. Alkoholiliike or nowadays Alko is a state-owned company that was established in 1932 and is entitled to monopoly in producing, importing and selling alcohol in Finland. Alko was an adaptation of Swedish Bratt System, whereas people needed to be registered and then were given quota to purchase alcohol beverages. Alko also gives the license to other companies to produce or import alcoholic beverages, however only Alko can own all alcohol retail shops. For restaurants, they can buy from an Alko-licensed producers or import agents. (Heinonen and Peltonen 2013:89) Over time, Alko by funding Suomen Kansan Ryhtiliike movement contributed in educating people in drinking responsibly. The Helsinki Olympic Games in 1952 was a turn point where alcohol drinking regulation was flexible, as tourists were allowed to buy alcohol without having an Alko registration card, and longdrinks were introduced. (Heinonen and Peltonen 2013:95) 2.3.3 Finnish modern consumers grouping As an egalitarian society with high taxation rate, Finland has less income disparity compared to other countries. Nevertheless, as related on the first sub chapter that explains about psychological and cultural factors in consumer behavior, Finnish consumers can be grouped 33 into three characteristics. Heinonen and Peltonen (2013) suggest that Finnish modern consumers are divided into three characteristics, the Agrarian consumers, the Middle – class consumers and the Consumer of economic. The agrarian character is based on Protestant values, whereas a virtuous consumer is seen as economical and have saving and self- sufficiency as the morality core. On the other hand, the modern hedonistic consumerism that values pleasure, self – indulgence and individualism eventually established in Finland, where the Finland’s agrarian society shifts to middle class society. Finnish society is now getting used to a higher standard of living, as the trend of urbanization keeps on going, followed by economy improvement, wealth distribution throughout the country and technology advancement that brings in information and trends from all over the world. (Heinonen and Peltonen 2013:61) The full comparison of these groups as discussed by Heinonen and Peltonen (2013: 61) are as follow: Agrarian / Peasant Consumer Middle – class Consumer Economic Consumer Agency Producer Worker, consumer Consumer, investor Economy Frugality Self – sufficiency and efficient use of material: avoiding to spend money and use the existing tools to make things function. Moderation The resources owned is earned from paid labor: Spending in moderation to have a reasonable comfort. Maximizing profit Utilizing maximum value of money: Seek for maximum indulgence or quality with less sacrifice. Consumption Buying as little as possible. Has the desire to be trendy, yet won’t buy on the first release products. Leveraging from different tools: Trials, samples, loyalty cards, social benefits, 34 investment to increase wealth and etc. Character Self – sufficient, puritan and collective. Collective, hard- working, follow the trends. Individual, egoistic, rational, efficient, trendsetter. Work ethic Diligence Always work, home or beyond. Working Paid labor, pension. Enterprise Paid labor, entrepreneurship, optimize the social benefit and investment Hedonism Self – denial Avoid the useless consumption Entitlement Do the self- rewarding from hard work Proportionality Enjoy spending and as much as earning Table 5. Finnish modern consumer’s Characteristics (Heinonen and Peltonen 2013:61) Finland as a prosperous country, finances its public consumption with its tax revenue. Education, healthcare, and other well-being aspects are well-funded by the government. People generally enjoy outdoor activities and cultural events like opera, concerts, film screenings and other performances. These activities are nowadays also available in other cities, apart from Helsinki. (Heinonen and Peltonen 2013:258) 35 3. Branding and Country of origin A brand is defined by Kotler and Armstrong (2015) as a name, sign, symbol, or design, or a combination of these that identifies the maker or seller of a product or service. It is quite often to find a situation where consumers attach themselves to certain brands by certain associated images of the brands. (Kotler and Armstrong 2015:237). Moreover, branding has a main focus of how to develop a strong brand. Keller (2013) suggests the concept of customer – based brand equity to explain a perspective on what brand equity is and how it can be built, measured and managed best. Customer - based brand equity is the distinctive effect that brand knowledge has on consumer response to the marketing of a particular brand. There are three main concepts in the definition: distinctive effect, brand knowledge and consumer response to marketing. (Keller 2013:68-69) When a consumer is highly aware and familiar with a brand and holds some strong favorable, and unique brand associations in memory, then customer – based brand equity is established. (Keller 2013:73) Another approach to build brand equity is by leveraging secondary brand associations for the brand. Leveraging secondary brand associations can be done by linking the brand to companies, countries, channels of distribution, other brands (through co-branding), characters (through licensing), spoke person (brand ambassador), events (through sponsorships), other third party sources (through awards or reviews) (Keller 2013:260) Globalization has enabled consumers to choose brands originating from different countries, based on their beliefs about the quality of the products associated. For example, many global consumers prefer to drive German cars and wear Italian fashion products. Therefore this chapter aims to provide the explanation and correlation of branding theories and country of origin. 3.1 Brand Equity The product or service itself is the heart of brand equity, as consumers experience with the product or service composes the primary influence of their perception towards a brand. (Keller 2013:111) Creating brand awareness is the first thing to do in order to build brand equity. Keller (2013) defines brand awareness as a reflection of the ability of consumers in identifying various brand elements like name, logo, symbol, character, packaging, and slogan 36 under different conditions. (Keller 2013:339) Brand awareness is constructed by brand recognition and recall. According to Keller (2013), brand recognition is a situation when consumers are able to recognize the brand, which they have been exposed to before, when they go to the store. Furthermore, brand recall happens when the brand is on top of consumers’ mind when they are given the product category. For example, people mention Wilson as a brand that they recall for tennis racket. As a fundamental basis of brand equity, brand awareness can be developed by improving the familiarity of the brand through repetitive exposure (for brand recognition), and build strong associations with the right product category or other relevant consumption cues (for brand recall). (Keller 2013:76) Rust et al (2004) explain that brand equity is customer’s subjective and intangible examination of the brand, above and beyond its objectively perceived values. Supported by Keller (2013), they suggest that consumer brand awareness, brand attitudes and perception of brand ethics are the key aspects of brand equity. (Rust, Zeithaml, Lemon 2004; Keller 2013:135) On the other hand, Kotler and Armstrong (2015) define brand equity as a differential effect that distinguish the brand name has on consumer response to the product and its marketing. It can function to measure the brand’s capability in capturing consumers’ preferences and loyalty. (Kotler and Armstrong 2015:249) A brand is a powerful company asset that must carefully nurtured and managed. Hence, a brand exists in the consumers’ minds. It something that represents consumers’ perceptions and feelings about a product and its performances. (Kotler and Armstrong 2015:249) When consumers react more favorably to a certain brand than to generic brand, then this particular brand owns a positive brand equity. On the other hand, negative brand equity is a situation where consumers react less favorably to a certain brand. (Kotler and Armstrong 2015:249) It is emphasized by Kotler and Armstrong (2015) that global brands became big not only because they have unique benefits and reliable services, but also because they successfully established a deep relationship with their consumers. (Kotler and Armstrong 2015: 249 – 250) Many global companies are competing to strengthen their brands and enhancing their brand equity, since brand equity is regarded as a valuable asset. Brand valuation is defined by Kotler and Armstrong (2015) as a conduct of measuring the total estimation of financial value of a brand. Hence, high brand equity gives the company several competitive advantages. For 37 example, a strong brand is automatically entitled to a strong consumers brand awareness and loyalty, since consumers demand many retailers to sell some particular brands in their stores. This situation creates an opportunity for manufacturers or producers to negotiate better deals with their resellers. As the brand has a high credibility along with consumers’ awareness and recognition, it will be easier for it to launch a new product lines or brand extensions. Moreover, a strong brand allows company to avoid price wars with its competitors, due to its strong presence and domination in the overall market share. (Kotler and Armstrong 2015:250) Nevertheless, a strong and profitable customer relationship forms the basis of a strong brand. Thus, customer equity as the value of customer relationships that the brand creates becomes the ground of brand equity. Finally, we can conclude that customer equity should become the prime goal in setting the marketing strategy, whilst brand management serves as a major marketing tools. (Kotler and Armstrong 2015:250) 3.1.1 Brand Positioning Keller (2013) explains that brand positioning is the core of marketing strategy. Brand positioning is seen as the act of designing company’s offer and image so they will be distinctively and highly perceived by the customers. (Keller 2013:79) Moreover, Kotler and Armstrong (2015) also emphasize that major brand strategy decisions in mostly involve brand positioning, brand name selection, brand sponsorship and brand development. In addition, brands are described as powerful assets with challenging natures therefore they must be carefully developed, fostered and managed (Kotler and Armstrong 2015:252). As supported in details by the figure below: Figure 2. Major Brand Strategy Decision (Kotler and Armstrong 2015:253) Brand positioning Attributes Benefit Beliefs and values Brand name selection Selection Protection Brand sponsorship Manufacturer’s brand Private brand Licensing Co - branding Brand development Line extensions Brand extensions Multi brands New brands 38 Brand positioning is divided by three levels, starting from the lowest, product attributes to benefits and the highest, beliefs and values. Product attributes can be easily copied by competitors. For example, P&G with its 2in1 shampoo by the brand Rejoice that introduced the concept of shampoo and conditioner in one product, which was instantly followed by many other toiletries manufacturers. (Kotler and Armstrong 2015:252) In order to obtain a better positioning, a brand must be associated with a desirable benefit. For example, Volvo with safety, Facebook with connection and sharing and DHL with wide coverage and on time delivery. (Kotler and Armstrong 2015:252) Those brands which can manage their attributes and benefits will aim for strong beliefs and values. Successful brands require a deep and emotional engagements with consumers. Advertising agency, Saatchi & Saatchi on Kotler and Armstrong (2015) amplifies that brands should aim to be lovemarks, which explains as products or services that inspire loyalty beyond rationalities. For example, Apple inspire many of its consumers to change their phone every time they launch a new one, despite the technology of the previous phone can still cope with the needs of its consumers. (Kotler and Armstrong 2015:253) Brand names selection plays a crucial factor in a brand’s success. There are several required qualities in brand naming, these qualities are: (1) the name should describe product’s benefit or qualities, (2) it should be easy to remember, recognize, (3) it should be unique, so it becomes distinctive compared to other brands, (4) it should be expandable, in case that the company decides to add more product categories, (5) the brand name is ideally does not have unpleasant meaning in any foreign language, (6) last but least the brand name should be original and never been used before, so there is no legal issue to arise. (Kotler and Armstrong 2015:253) Fast moving consumer goods and retail market have always been dominated by national brands like Nestle, P&G, Mondelez, and Unilever. However, there has been a significant change in the fast moving consumer goods or retail market in the last decade. Big retailers like Target in the USA, Carrefour in France and Asia or Kesko Group in Finland launched their private brands. Kotler and Armstrong (2015) amplify the studies which discover that many consumers nowadays become more price – conscious and less brand – conscious. The 39 studies also show that store or private brands sales more rapidly than regular or national brands, and ousted them by 6 percent annual sales growth in the last six years. (Kotler and Armstrong 2015:254) Many manufacturers spend years and tremendous amount of money to develop their brands. However, some manufacturers take a different branding strategy by associating their products or brands with a well-known or established characters from popular movies. In consequence, their sales growth will be heavily influenced by the popularity or rating of the programs where the characters belong. (Kotler and Armstrong 2015:255) Apart from licensing, many companies which already have an established brand, decided to join forces to launch a product line with co – branding strategy. Co – branding is defined by Kotler and Armstrong (2015) when two companies with two established brands join their power to produce a product together to obtain a greater brand equity. For example, Nike and Apple launched Nike + iPod Sport Kit, which enables runners to enhance their performance by linking their shoes with iPod to monitor speed, heart rate and calories burn. (Kotler and Armstrong 2015:256) The last stage of branding strategies after brand sponsorship is brand development. Kotler and Armstrong (2015) suggest that a company usually has four options in developing their brands. These four options are line extensions, brand extensions, multibrands, or new brands. Line extension as the first option is defined as a situation where a company extends their existing brand names to new forms, colors, sizes, ingredients, or flavors of an existing product category. (Kotler and Armstrong 2015:256) For example, Valio launches yoghurt with various flavors. On the other side, the second option, brand extension strategy goes extending an existing brand name to new or modified products in a new category. For example, H&M has launched cosmetic line under the same brand with their clothing line. (Kotler and Armstrong 2015:257) The third option, multibrands comes up with a strategy where a company sells several different brands in a certain product category. For example, Nestle has several brands in chocolate and confectionary, such as Kit-Kat, Smarties, Wonka, Lion Bar, Aero, and Crunch. (Kotler and Armstrong 2015:258) The last option is new brands, where a company invests its power of its current brand name is declining, so there is an 40 urgency to launch a new brand name. However, this strategy can also be used by companies who want to expand their market and none of their existing brands are seem to be appropriate. For example, Toyota launched Lexus as their premium brand for luxury market and Scion for millennial consumers. (Kotler and Armstrong 2015:258) Companies need to carefully manage their brands. Advertising campaigns and other promotion activities can be utilized to make the brands recognized. However, it is believed that strong brands are built upon their consumers’ brand experiences through personal experiences, word of mouth, social media mobile applications and others. (Kotler and Armstrong 2015:258-259) 3.1.2 Product strategies and brand loyalty Keller (2013) advocates that favorable brand association influences consumer product evaluations, perceptions of quality and purchase rates. (Keller 2013:99) From this statement, we can see that product quality becomes the primary influence. It is obligatory for companies to create and deliver a product or service that is able to satisfy the consumer’s needs and wants. Thus, companies must achieve the expectations set by the consumers in order to establish brand loyalty. (Keller 2013:187) Keller (2013) defines perceived quality as consumers’ perception of the whole quality or superiority of a product or serviced compared to its competitors’ quality related to its intended purpose. The efforts to achieve the perceived product quality is endless, as consumers tend to set higher expectation once the product is improved. Product quality is a broad subject beyond functional product performance, as it also includes the quality of product delivery and installation; the courtesy and helpfulness of the customer service; and the quality of the repair service. (Keller 2013:187) These aspects might not be entirely applicable for non – durable products, as it requires less thoughtful decision making. Aftermarketing is developed to establish a strong bond and long-lasting relationship with the customers. Aftermarketing, especially customer service programs and loyalty programs are 41 crucial factors of profitability. Moreover, customer service programs enhance the expertise image of a brand, while loyalty programs divert customers from brand switching and increase retention towards other brands. (Keller 2013:188-189) 3.2 Country of Origin According to Jaffe and Nebenzahl (2001), country origin is defined as the country which associated by consumers as the source of particular brands or products. For example, BMW as a german brand, although BMW has some assembly or production plants outside Germany. (Jaffe and Nebenzahl 2001:27) Apart from country origin, many consumers nowadays add made-in country label into their consideration as part of their buying decision making process. Despite only small population of consumers seem to understand what made-in label really means. According to the survey that was conducted by Federal Trade Commission (FTC) in the United States in 1995, later followed by a survey by the Australian Federal Trade Commission in 1999, approximately only 7 percent of the respondent who could describe what made-in label really means (Jaffe and Nebenzahl 2001:141-142). Jaffe and Nebenzahl (2001) explains that made-in country is a country where the final production takes place. (Jaffe and Nebenzahl 2001:26) Indeed, to put a country on the made-in label does not take a company to conduct the entire production activities in one particular country. For example, a designer bag can be produced in several countries. The body of the bag can be sewed in Indonesia together is assembled with the zipper and handle that are produced in China, while the label stamping and packaging are done in Spain. Thus, it appears a bag that is made in Spain. Nevertheless, there are different regulations applied in different industries and countries related to the made-in and product-of labelling manner. 3.2.1. Country animosity versus affinity Nowadays, a made-in country or origin country might results to subjective and bias consumer response. This situation is likely to lead consumers into certain sentiments, whether to buy or not to buy certain brand or product based on their associated country. With this sentiment, a consumer will buy or not buy certain brand or product, regardless the quality of the product itself. (Jaffe and Nebenzahl 2001:79) Consumers are mainly segmented into two dimensions: ethnocentrism – othercentrism (patriots – inferiors) and animosity – affinity (hostiles – friends). (Jaffee and Nebenzahl 2001:79-85) 42 Animosity is believed as to be constructed by ethnocentrism, a situation whereas consumers are reluctant to buy imported products. Jaffe and Nebenzahl (2001) call these ethnocentric consumers as patriots. This group of consumers sees their act of buying local products as a patriotic duty as they contribute to national economy. (Jaffee and Nebenzahl, 2001:72) On the contrary, Jaffee and Nebezahl (2001) explains othercentric consumers or the inferiors as a group of consumers who generally prefer to buy imported products. This behavior is mostly found in developing countries. Moreover, the ownership of certain foreign brands or products can be seen as a symbol of higher social class.(Jaffee and Nebenzahl 2001:71) However, this favoritism that constructs affinity towards particular countries is very subjective and bias, just like ethnocentrism that constructs animosity. (Jaffee and Nebenzahl 2001:84) Aside from those two dimensions, Jaffee and Nebenzahl (2001) also segment the consumers by their attitude. They are divided into four attitudes: (1) patriots, (2) cosmopolitans, (3) traitors, and (4) hostiles. As aforementioned, patriots are consumers who prioritize to buy local products, regardless their quality. While the hostiles despise imported products from certain countries, based on their disapproval of any policy related to the particular country. However, the hostiles are not necessarily have the bias or preference towards locally made products and tend to have equal judgment over all products. (Jaffe and Nebenzahl 2001:71) On the other hand, traitors which matches the othercentric dimension, obviously prefer imported products. They do not see buying local products as a duty of everybody to support local economy. Nevertheless, there are the cosmopolitans who judge the products equally and value them based on quality and other attributes, without ignoring the country origin. (Jaffee and Nebenzahl 2001:71) 3.2.2 Country of origin and perceived product quality Jaffee and Nebenzahl (2001) develop a theory that describes how country origin image influences the brand or product images. This theory is built upon the relationship of marketing fundamentals, which are exposure, perceptions, retention, knowledge, attitudes and behavior. (Jaffee and Nebenzahl 2001:38) 43 There are a number of previous researches that explained country image effect (CIE). However, along with other researchers, Jaffee and Nebenzahl (2001) rather focus to halo or summary construct. (Erickson, Johansson, and Chao 1984; Johansson 1989; Johansson, Douglas and Nonaka 1985; Shimp, Samiee and Madden 1993; Jaffee and Nebenzahl 2001:42) The halo construct refers to a situation where someone is not familiar or has no knowledge and experience related to the products that are made in particular countries. However this situation does not make this person to be free of opinion about particular country as a source of product. The country image still will be built up by his or her insufficient knowledge and perceptions. At last, this perception of consumers about made-in country has a direct impact to consumers’ attitudes towards brands or products that are believed to be originated from particular countries. Jaffee and Nebenzahl (2001) follow Han (1989) who explains the halo construct formulations as: Made-in Country Image (MCI) => beliefs about attributes => brand attitudes (Jaffee and Nebenzahl 2001:42) On the other hand, the summary construct is driven by the country images that were obtained from previous experiences with products or brands from a certain country which led to a perceived to other products or brands that come from this country. Experience here is not necessarily defined as personal experience. This experience can be obtained from other people that are passed via various medium, such as word-of-mouth (offline and online product reviews) and mass media. In result, Jaffee and Nebenzahl (2001) agree with Han (1989) who formulates the following hypothesis that explains the relationship between experiences with brand attitudes: Experiences => beliefs about attributes => made-in country image (MCI) => brand attitudes (Jaffee and Nebenzahl 2001:43) Nevertheless, these two above mentioned constructs, Lampert and Jaffee (1998) suggest halo and summary can be combined to become halo – summary construct, as a dynamic model. This model constructed upon three stages that refer to the dynamic process that is begun where country image takes a role as a halo construct. This construct continues to build 44 whereas consumers gain more experience from the product they previously bought based on halo construct. The experiences obtained from the purchase will help to develop familiarity with the true attributes of the product and eventually revise the existing or previous country image. (Jaffee and Nebenzahl 2001:44) The dynamic halo – summary construct is described as follow: Figure 3. Halo – Summary Construct as a dynamic model of country image impacts to brand attitude (Jaffee and Nebenzahl 2001:44) In the first phase, as the consumers have no experience related to the brand or product, the country image will act as a halo which fuels the expected attributes that results in their brand or product attitude. In the second phase, as the consumers have gained some experience from the previous purchase, they will revise their knowledge about the brand or product attributes which will lead them to revise country image. In the third phase, the revised country image acts as the beliefs related to brand or product attributes. In conclusion, the halo – summary model explains that country image may change overtime and may shift from halo construct to summary construct as more information and experiences obtained will enrich the consumers’ knowledge about particular countries. (Jaffee and Nebenzahl 2001:46) Initial country image (halo) beliefs about attributes Brand attitudes Purchase decision Product purchase Experience (summary) Familiarity with attributes Revised country image Revised country image Attributes about beliefs Brand attitudes Purchase Decision 45 3.3 Conceptual Framework This research is based on the combination of theories from several disciplines, like psychology, anthropology, economics, sociology and marketing. The description below is the conceptual framework of this study: Figure 4. Conceptual framework of the study Self – Identity & Attributes (Personality, Gender, Attitude, Lifestyle, Income) Social Process (Sociological approach) towards brands: Motivation, emotion, peer– recommendation Mental Process (Psychological approach): Cognition, language, perception Consumer’s Recognition and Preference Consumer Behavior Domain: Product knowledge Purchase habit Consumer loyalty to brands Response to advertisements Mass / social media usage 46 4. Research Methodology This study in using qualitative research methodology. Daymon and Holloway (2004) explain that qualitative research is concentrated on words instead of numbers, researcher involvement, participant viewpoints, small-scale studies, holistic focus, flexible, processual, natural settings, inductive and then transformed into deductive. (Daymon and Holloway 2004:6) The researcher believes that this study fits well to qualitative research methodology due to several reasons. First of all, the research object is a niche group, older Finnish consumers which fits the small-scale studies. Secondly, the data collected was concentrated on participant viewpoints that were obtained from researcher’s involvement through the observation and interview in the natural settings of research participants. This research is also processual, as the study explains about the evolution of Finnish consumerism. Although in this research, the data collection was conducted before the theoretical framework was fully developed, this study can be still categorized as a deductive study. Due to the fact that the researcher uses the existing theories for the analysis of research findings. 4.1 Research Approach This research uses ethnography as the research approach of this study. Ethnography is rooted in cultural anthropology, a study founded that focused on small – size group of societies, and is concerned upon the nature, construction and maintenance of culture. (Goulding 2005:298) There are four basic premises in using ethnography as an approach in consumer research: (1) Ethnography is a study of behavior conducted in natural settings not in the library; (2) It requires the empathetic process of understanding the participants language that includes the use of dialect, jargon, and other special uses of words; (3) Ethnography requires a long – term immersion of the researcher in the research setting in order to be able to capture spontaneous yet important moment of daily consumption; (4) The researcher is also required to understand the local values and wisdom in order to understand the value systems that shape the consumption patterns. (Elliott and Jankell – Elliott 2003:216; Arnould and Wallendorf 1994; Holt 1997; Thompson and Troester 2002) Daymon and Holloway (2004) highlight ethnography as a research approach that requires researchers to immerse themselves in a 47 group, organization, or community for an extended period of fieldwork. Ethnography can either be combined with other research approach, like grounded theory or discourse analysis or solely used on its own. (Daymon and Holloway 2004:129) Daymon and Holloway (2004:130) elaborate that ethnography is both a research methodology and the product of the research itself. Moreover, ethnographic research can be conducted with qualitative or quantitative methodologies. Thus, in public relations, marketing communication and other people-focused disciplines, most researchers conduct the research in qualitative methodology. In consumer research, ethnography is widely appreciated. Pettigrew (2000:257) explains that consumption symbolize a phenomenon that adequately can be directed by ethnographic techniques, based on the social meaning that is communicated by material possessions. Moreover, Arnould (1998: 86) adds that an in – depth discussion of consumer – oriented ethnography proposes the idea that ethnography pursues to clarify the structured patterns of actions that are cultural and/or social, instead of solely cognitive, behavioral or affective. Ethnography can be distinguished from other qualitative research approaches by its emphasis on culture and people’s distinction. In other words, what makes one group of people is different from the others. (Daymon and Holloway 2004:129- 130) Culture is the implicit knowledge, belief, values and shared meaning that is held together by a group, organization or community which describes their certain way of life. Furthermore, culture is reflected in people’s behaviors, such as in language, rules, norms and how they interact with each other, including their consumption of products and services. (Daymon and Holloway 2004:130) In other words, ethnography studies are theoretical, descriptive, comparative and cultural. (Daymon and Holloway 2004:132) According to Daymon and Holloway (2004), there are two types of ethnography: descriptive or conventional and critical ethnography. Descriptive or conventional ethnography is concentrated on the description of communities or groups, uncover patterns, typologies and categories through analysis. Meanwhile, critical ethnography includes the study of macrosocial factors, like social power, common sense assumption and hidden agenda examinations. Critical ethnography has some objectives such as bring in some changes in the setting where the research is conducted, for instance, facilitate the minority in the researched 48 group to speak up and state their needs. (Daymon and Holloway 2004:132) Hence, following these descriptions, researcher believes that this study can be categorized as critical ethnography. Due to the non-existent representation of older consumers in Finland as a market segment. 4.1.1 Research Focus The research focus of this study is the consumer behavior of older Finnish consumers in age 50 - 65 years old towards global and Nordic brands or products in Finland, including their marketing activities to reach out this older segment of consumers. The consumer behavior shall embody all related factors to shopping behavior, buyer decision making process, perception towards brands, and response to promotion and advertisements. In order to ease the data collection, researcher will put several Nordic brands and global brands from several categories such as home appliances, automotive, fast food, outdoor gear and alcohol beverages. During the interview, the researcher points out several Nordic and global brands to the participants in order to stimulate their responses towards brands, and also to elaborate their consumption pattern. These brands are chosen