ISSN (Print) : 2231-6043 ISSN (Online) : 2395-1907 ©2020 Justice K. S. Hegde Institute of Management Nitte Management Review, Vol 13(1&2), DOI : 10.18311/nmr/2019–2020/v13i1&2/26374, 62-68, January-December 2019–2020 Reverse Consumer Preference from Global Brands to Local Brands in the Industry

Shilpa Praveen Justice K.S Hegde Institute of Management, Nitte – 574410, Karnataka, India; [email protected]

Abstract India as a nation is still being exposed to global brands in the soft drinks industry though multinational players have had a good hold on the market for the past two decades. While Indian consumers are

consumers are showing reverse preference to local brands as well. Reverse consumer preference does notstill implyexperiencing rejection benefits of global of globalization brands or acceptance in the last fewof local years, brands a new alone. trend However,has emerged this where does implythese that there is a new love or loyalty being displayed towards a local brand. This phenomenon is being supported by the fact that local players are reporting higher growth rates compared to global giants in

not affected by exposure to wide array of global brands or inducement through promotion. the soft drink market. Strong affinity that a consumer displays towards the culturally rooted flavors is

That local brands are getting more attention could be on the account of two factors. Either local implicationsbrands with globalof such flavors a distinction are coming are important.up displacing If theglobal former brands is true, or the what preference is at play of ispeople some towards form of reverselocal flavors engineering are being on capitalized the product upon that by local local players suppliers are able which to globalundertake players outwitting are unable the toglobal match. player. The If the latter is true it is an indication that global players are providing some form of demonstration

What this would mean is that in the former case there is brand substitution whereas in the latter case effects to the local counterparts in distribution, promotion etc. but with different flavors altogether.

there is flavor substitution. Both these phenomena could also be occurring simultaneously. Keywords: Culturally Rooted Flavors, Global Brands, Local Brands, Reverse Consumer Preference

1. Introduction era is now under threat as it faces new competi- tion. Just when the “Big 2” (i.e. Coca- and Customer preferences are more complex and -Cola) felt that they owned the market with important to retailers today than ever before. some tiny, almost ignorable companies in the side- Identifying the factors that affect consumer prefer- line, a lot of these tiny players did their homework, ence towards non alcoholic beverages is essential learnt from the examples led by the “Big 2” on how in view of the changing perception of the con- to replicate their models with local expertise that sumer towards soft drinks. This study is an attempt they developed and created two models. One by to understand consumer preferences and factors creating duplicates of the global flavors and the that cause the shift in consumer preferences. The other by replicating the model but with flavors that global soft drink industry that enjoyed a glorious they are well aware of and are more local in nature. Shilpa Praveen

A developing nation like India is exposed time i.e. choose a drink of their true choice with- to globalization in full throttle for the last three out thinking of implications of observability. decades. Hence Indian consumers are inevitably Consumers change the preferences to the adopting a lot from the global culture. It could products and services several times during their be the preference for spoken language English, lifetime3. The change in consumer preference is also non- traditional apparels, different genre of music, called as preference reversal4. Subsequently, this exercise routines, lifestyle changes, cuisines from is being used by the consumer researchers as this all over the world being tailored into Indian tables, explains the psychological process involved in deci- and even beverages. Euromonitor International a sion making5–7. The understanding of preference trusted name in offering reliable statistics said in reversals provides a guideline to decision makers their latest report “The soft drinks industry faces to develop strategies to promote their products/ multiple headwinds in 2016. Key emerging markets services8. In the recent past many industry analysts will continue to struggle, while health concerns have observed the reversal of consumer preference are growing-and shifting. Traditional low-cal- in soft drinks industry. For instance, research finds orie options may not be enough to carbonates; that the Japanese consumers prefer the local flavors consumers are increasingly skeptical of added to the global cola-based varieties. Similarly, the ingredients, particularly artificial sweeteners,” says Indian consumers shifting their preference from Head of Soft Drinks and Hot Drinks Research, global brands and flavors to regional brands and Michael Schaefer. Reduced-sugar carbonates flavors10,11. The similar shift is taking place in the underperformed regular, full-calorie carbonates US too as health conscious consumers preferring in both North America and Asia Pacific. A large- the local soft drinks to global soft drinks12. scale shift to lighter, often naturally less-sweet Prior studies have examined the factors influ- beverages-bottled water above all-will continue to encing the changes in consumer preference in drive innovation globally. various geographies and products. The factors In the last decade the market share of the such as product quality7, comparison effect8, will- global giants saw a steady decline. While the ingness to pay5, product attributes13,14, customers weather is in the favor of beverage companies (ris- personal attributes15, brand substitution16 and so ing temperature), the global giants are struggling on. However, the studies mentioned above are in year on year with the growth numbers. This hap- the context of products other than soft drinks. In pening is peculiar to the otherwise rising demand this study, we examine the factors contributing for global products1 Experts2 imply that preference to the change in consumer preference in the soft for products comes naturally to a consumer when drinks industry. he is presented with various options for a product that he needs. The other important factor exam- 2. Theoretical Framework ined through this study is if consumers display a different behavior in terms of choice of their bever- Brand substitution and flavor substitution are ages while they are in company of others, in public important phenomena to be studied in the context view or socializing versus carefree individual/lone of our enquiry into reverse consumer preference.

Figure 1. Reverse consumer preference model.

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It will be a matter of interest to both global flavored soft drink population. For the sake of par- as well as local players to find out which of these simony this was necessary. In any case this can be are occurring. For instance, if brand substitution justified by considering that cola (as contrasted is a more dominant occurrence then perhaps the with orange and clear lime) holds more than half global brands have to study local brands with of the soft drinks market share provided by global global flavors more carefully to find out the rea- players in India. sons for lackluster performance of global brands. In case flavor substitution is a more dominant phe- 4. Flavor Substitution nomenon this may be a cue for global brands to seek out to more local flavors in their portfolio. In Here as indicated earlier, the local players are this study we attempt to understand the consumers capitalizing on offering local flavors in lieu of in figuring out which of the phenomena is at play. traditional flavors offered by global majors. The industry’s giants have begun relying on new 3. Brand Substitution products and non-carbonated beverages for sales growth17. For empirical testing, going by the same Brand substitution happens when a consumer of argument as before, we are considering Cola fla- a global flavor like Cola shifts from Coca-Cola or vors as a representative for global flavors. The Pepsi-Cola to a local cola flavor such as Paper boat, question here is to what extent cola flavors are Bindu, Mada or Joy. A similar phenomenon could being displaced by local flavors. happen to Orange (Fanta, Mirinda) and clear Lime (Sprite, Seven up, Mountain Dew) as well. The fol- 5. Review of Literature lowing table shows three dominant flavors in soft drinks covered by two major global brands. There is a limitation on literature found on For studying brand substitution - more Reversal of consumer preference, however abun- particularly reverse preference through brand dant literature and resources are found on changes substitution - we have chosen here, for the empiri- in consumer preference and factors that initiate, cal study, cola to be a representative of the global influence these changes. Research18 also provides

Table 1. Dominant soft drink flavors for brand substitution Global Brand Reverse Preference through Brand substitution. * Flavor Coca–cola Pepsi Cola Cola Coke, Pepsi Cola flavor by Mada, Joy, Amruth Orange Fanta Mirinda Beyond the scope of the study Clear Lime Sprite, Seven Up, Mountain Dew Beyond the scope of the study

*The local brands mentioned here are from Mangaluru region.

Table 2. Dominant soft drink flavors for flavor substitution Global Brand Reverse Preference through flavor substitution. * Flavor Coca–cola Pepsi Cola Cola Coke, Thums Up Pepsi This will be empirically determined Orange Fanta Mirinda Beyond the scope of the study Clear Lime Sprite, Seven Up, Mountain Dew Beyond the scope of the study

64 Vol 13 (1&2) | January-December 2019–2020 | www.informaticsjournals.com/index.php/nmr/index Nitte Management Review Shilpa Praveen empirical insights regarding the fact that consum- beverages is at place. Furthermore, a study17 using ers’ resistance to the brand name substitution is the conditional effects (moderated-mediation the main determinant of the transfer of consum- approach) technique found that both male and ers’ trust from the old to the new brand. Finally, female young consumers prefer the innovation of loyalty transfer heavily relies on trust transfer. drinks to suit local tastes and be produced locally; Experts19 opined that the relative contributions of the drinks should also have health and well-being taste and health considerations on consumer lik- benefits. Beverage innovators should learn from ing and purchase intent of cola drink. Eight types the local popular infused drinks as the baseline of commercial cola drinks were evaluated by 305 for drinks innovation and should innovate to suit adult consumers who responded on food habits. local tastes. In particular, beverage manufacturers The data suggested that in spite of current con- should consider satisfying the market segmenta- cern about reducing dietary fat, health remains tions for flavor lovers and health seekers. In the secondary to taste in the selection of cola drinks initial stages of globalization, the first generation for consumers. Glocal strategies are being applied consumers are likely to be attracted towards the by local brands/flavors to tap a new potential mar- global brands. In fact, research also suggests that ket20. The industry’s players are relying on new when the novelty factor is high the arousal for products and noncarbonated beverages for sales such product is also high, however due to repeated growth. This trend has been observed over the past exposure the novelty fades off and fails to cause twenty years17. Experts21 also suggest that consum- arousal. In such cases a drink which is uncommon ers prefer variety amongst hedonic products such can cause higher arousal23. This is due to higher as restaurants or music even though all the prod- social acceptance of the consumers of the global ucts and its facets are clear to them. In the paper brands. Accordingly, it is found that ‘foreignness’ they discuss how customers sometimes move away of any product is likely to make it less preferable from a famous/ favorite option to a lesser favorite/ to the consumers24. Hence, in this research, we preferred option for the sake of variety. Though attempt to examine the factors that explain the this move could give them lesser pleasure than changes in preference that cause a stir in the soft they could experience by choosing the option they drinks industry. know can give them pleasure. Further, research22 in the field of behavioral economics adapted from 6. Research Design works in the field of psychology said preference reversal is when a person prefers to bet on P which A random sample of fifty-eight students has has a high probability of winning a small amount been chosen from a population of one hundred of money than bet on $ which has a small chance and eighty students who belong to the first year of securing big amount of money. However, they MBA class of Justice K. S. Hegde Institute of place a higher value for the $ bet than the P bet. Management. These students typically represent One area of research in which the preference college going girls and boys. Since this is a pilot reversal phenomenon has evolved as a study of survey to validate the questionnaire and to fine importance is the study of consumer behavior, and, tune the logistics for a larger study this attempt more specifically, consumer choice making. For has been made with the above-mentioned sample. example, experts23 in their study had majority of The respondents represented the age group of their respondents mentioning food consumption 21-23 years. They make a significant contribution when asked about what memories make them nos- to the overall Soft drinks business and are a very talgic, of which nearly half involved food products diverse group with uniqueness of their own. The related to the respondents’ childhoods. Thus, the respondents form a mix from different regions of change in preference of a consumer from their pre- Karnataka. They are also very convinced about vious memories to current status is worth studying their choices and have different traits of any prod- to see if a pattern of reversal to culturally rooted uct prioritized differently.

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This study can also be replicated to other and pride had a significant relationship with con- age groups to investigate the possible different sumption of local cola drinks. This meant that for outcomes that can appear. Is there a necessity the respondents in this age group to choose a local emerging for the Soft Drink Industry to strategize cola over global cola they looked at health con- differently for different groups? Standardization of sciousness and the level of pride they felt while products and flavors by Global players need not they consumed a quality global flavor offered by necessarily agree with the times ahead. But per- a local brand. haps discounting the global brand too much will In the recent times in India along with the also work in favor of local players who are close literacy rate going up consumers are also being to the market and offering the market with as exposed to benefits of natural drinks and cons of much personalization of flavors that they require carbonated, sugary high calorie drinks. Following sooner than global brands and almost never later the path that few countries have already set, than them. Hector beverages CEO Neeraj Kakkhar Government of India is also creating a subtle ripple recently in an interview did record that drinking of awareness and social/health affecting messages a Jaljeera drink versus a Cola was being consid- on consumption of sugary products. In the last ered “cool” these days. He also went on to say that decade consumer knowledge on adulteration of Global giants would not think of adopting cultur- food and beverages, scandals that have happened ally rooted flavors into magnanimous production in different industries have made consumers more unless they see opportunity to replicate the same aware and cautious. These factors could thus be flavors in other emerging markets as well. contributing to rating health consciousness as a high factor when it comes to choosing a local cola 7. Results and Discussions brand. However, when, a cross tabulation of pride The study is limited to non-alcoholic but carbon- was done with how a consumer would behave ated and non-carbonated soft drinks for cola drinks when he was socializing versus when he would i.e. brand substitution. Out of 58 respondents, 53% be alone, pride as a factor was neutral. Majority of the respondents did not buy any local cola brand agreed that they would have a global drink when in the last one month at the time the questionnaire in company or alone, what came as an assertive was administered. This could also be interpreted response to the research gap was a significant that respondents of the surveyed age group were number of respondents said that they prefer a largely inclined towards consuming a global brand. global cola when in company and a local cola while When the respondents were asked to rate the alone. When asked directly if their choice of bev- factors that they mostly liked or disliked in a local erage was affected by the company that they had cola on a likert scale, only health consciousness majority gave an affirmative answer. This implies that when it comes to consuming a cola drink with Table 3. Consumption of local cola versus global cola Table 4. Chi Square results Percentage of Frequency Percentage Chi Square Df Local Cola Taste 5.009 4 0 31 53.4 Price 4.238 3 25 12 20.7 International brand appeal 4.03 4 50 9 15.5 Hygiene 2.402 4 75 4 6.9 Health consciousness 14.491*** 4 100 2 3.4 Pride 8.587** 4 Total 58 100.0 Availability 2.059 3

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Table 5. Analysis of behavior pattern versus pride Pride 1 2 3 4 5 Total If you were X Which one of the 1 2 7 14 7 1 31 following ways would you consider 2 0 2 6 2 1 11 to best describe your choice 3 0 1 3 1 0 5 4 0 2 6 1 2 11 Total 2 12 29 11 4 58 anyone “Observability” definitely had a role to play through either Brand substitution or flavor sub- for the respondent age group. stitution. The study done confirmed that Health While trying to find out what are the factors Consciousness and pride are influential factors that contribute to flavor substitution, Culture root- when the respondents had to choose a local cola edness emerged as a significant factor.. Culture over a global cola. Observability as a factor when rootedness is one’s attachment to flavors that one one consumed a local flavor while in company has been brought up with or those flavors that of others also emerged in this study done with come as an integral part of geographical culture. respondents in their early twenty’s. The research For a person from Dakshina Kannada, a dis- area on Reverse consumer preference has vast trict in Karnataka, Kokum is a fruit that is dried scope in the coming times and this study is a base after ripening and a refreshing drink is made for comprehensive studies that will be carried out which is served usually during summers, also further. It will be a matter of great interest to see if Southern part of Karnataka is famous for Tender reverse consumer preference in soft drink prevails Coconut. There are a few local players with the or global brands continue their waging war join- latest generation in business who have capitalized ing hands with the movement of globalization in on this opportunity and packaged kokum, Tender emerging markets and win. coconut milkshake, Til juice which are now a big hit amongst the crowd. Similarly, Hazoorilal and 9. References Sons from the Northern part of India have taken their business to the next new level with cultur- 1. Ratner RK, Kahn BE, Kahneman D. Choosing ally rooted flavors like jimlim lime, Kashmiri Jeera less preferred experiences for the sake of variety. J Consum Res [Internet]. 1999; 26(1):1–15. http:// masala, which they have marketed for decades. www.jstor.org/stable/10.1086/209547 https://doi. Companies like hector beverages are entering the org/10.1086/209547 market Pan India with out of the box packaging, 2. Dhar R. Consumer preference for a no-choice attractive marketing but with local flavors that can option. J Consum Res [Internet]. 1997; 24(2):215– entice a Indian’s taste buds, like Gol gappa, chilled 31. http://www.jstor.org/stable/10.1086/209506 https://doi.org/10.1086/209506 rasam, sattu drink, aamras, jamun. These flavors 3. Mathur A, Moschis GP, Lee E. Life events and brand are a beautiful blend of history and geography. preference changes. J Consum Behav. 2003 Dec; 3(2):129–41. https://doi.org/10.1002/cb.128 4. Slovic P, Lichtenstein S. Importance of variance pref- erences in gambling decisions. J Exp Psychol. 1968; 8. Conclusion 78(4):646–54. https://doi.org/10.1037/h0026647 Reverse Consumer Preference as a term though 5. O’Donnell M, Evers ERK. Preference reversals in willingness to pay and choice. Journal of Consumer has not been defined in literature specifically, is a Research. 2019; 45(6):1315–30. https://doi. phenomenon that is being observed across many org/10.1093/jcr/ucy052 industries be it FMCG, Health Products or Food 6. Fiedler K. Construal level theory as an integrative and Beverage Industry. The movement can happen framework for behavioral decision-making research

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