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JOURNAL OF RESEARCH IN NATIONAL DEVELOPMENT VOLUME 8 NO 2, DECEMBER, 2010


 

ANALYSIS OF CONSUMERS PROPENSITY TOWARDS FOREIGN PRODUCT: A SURVEY OF SHOE CONSUMERS IN TWO STATES IN NIGERIA

 

Sunday O. E. Ewah  and Angiating Ikwun

Faculty of Management Sciences,Cross River University of Technology, Ogoja Campus

E-mail: soniewah@yahoo.com

 

Abstract

This study is an empirical analysis of consumers’ propensity to buy foreign goods, despite the fact that such goods are equally produced in domestic firms. The product that was taken into consideration was shoe. To elicit data for the study, questions were formulated and administered to 1412 respondents in Cross River and Abia States. The model specification for the test of hypotheses formulated was Spearman Rank Correlation Coefficient. The result from the study showed that patriotism has no effect on how consumers make their purchase decisions in the two states. Moreover, consumers’ preference and disposition did not favour locally made shoes, hence the high demand for foreign brands. Finally the study made us to understand that the major determinants of consumers’ decision to patronize foreign brand was the quality of the shoes as well as the technology used for its production. It was recommended and concluded that, producers should improve on the quality of the product to attract consumers’ willingness to buy, while the government as a matter of necessity should create the enabling environment that would generate a favourable business climate.

 

Keywords:Consumers, patriotism, foreing, local, shoes 

  


Introduction

There is an upsurge in the consumption of foreign made goods, which falls within the category of consumer’s goods in Cross River and Abia State of Nigeria.  The rate such buying is unfolding and the much desire for them has adverse effect on similar goods that are locally produced. Olakunori (2002) confirmed that; there is too much preference for foreign made goods in developing countries as a result of their citizen’s lingering colonial mentality and inferiority complex, which resulted to the importation of manufactured consumer goods.

Some of these goods that are bought from outside the country include; printed fabrics, second hand clothing, foot wear, tooth paste, beverages etc.; despite the fact that these goods are equally produced locally or in domestic factories for a ready market that is skeptical.  Recent development in Nigeria shows that many companies in major commercial cities have been shut down due to dwindling sales as a result of buyers’ preference for foreign made similar products as against local brands. This has resulted to the lay-off of workers, thereby adding to the number of unemployed in the country. Moreover some of these retrenched and frustrated workers in most cases constitute social problem to the society at large.  If industrial growth and sustainability is not encouraged through acceptance and patronage of locally made goods, the economic prospects of the country will be in shambles and investment culture especially within the private sector will be in doubt.  This factor led to the poor economic foundation of Nigeria during the colonial days, for the imperialist government  only encouraged us to buy their manufactured goods and take away Nigeria’s raw materials (in the form of export) at prices below their value.  They never saw the need for Nigeria to have industries that could produce similar goods because Nigeria was a ready market for their products. It is noted that over importation and dependence on foreign goods had led to the indirect devaluation of the value of the naira, capital transfer, low per capita income, dumping of goods, among other economic vices.  If consumers’ decide to buy at least reasonable quantity of the locally produced goods, all these will be minimized and the economy will grow and more wealth will be created for capital project, infrastructural facilities, job creation, etc.

 

Statistical data from previous years showed that Nigerian’s import for consumer goods has been increasing over time, in spite of the efforts of the   government on the prohibition of the import of consumers’ goods with some exceptions. Most outlets and markets are still flooded with these goods.  Nigerians perception and attitudes are still positively disposed towards foreign goods and they are ready to buy them given the purchasing power.

           

 

Theoretical models           

Theories of international or foreign trade have been classified into Mercantilists era (1500 to 1800), which is characterized by a regulated economy via, trade and commerce functions, by the government to achieve presupposed growth and development.  To buttress their position, the Mercantilists preached the gospel of exports as against imports of goods.  The period next in succession is that of the classical economists which includes:  Adam Smith (1723-1790), David Richardo (1772-1823), and John Stuart Mill (1806-1873), who advocated free trade and law of comparative cost and were equally against the Mercantilists protective and interventionist ideology to international trade.  The third era that surfaced was government intervention in home and foreign trade through another set of restrictions that discourage import in order to boost export, while protecting infant industries at home market.  This is because the much expected benefits to be derived from laissez faire or free trade policy was not forth coming, rather unequal distribution of income and wealth was experienced. The last epoch is a combination of free trade and government intervention based on regional and sub-regional integration. Free flow of goods was still believed to bring about social welfare, while government intervention was to check excesses at the macro level, which could be in the form of equitable redistribution of income and resource allocation to viable sector. But the new slogan at the global market is globalization; which is mostly announced by the developed countries (DC) to the hearing of developing countries, which Nigeria happens to be one. A proper view of the variety hypothesis shows that as real income increases, consumers tend to buy more varieties of a product. Since a greater number of these extra commodities come from abroad than from domestic market. Therefore the share of imports in demand tends to increase more than proportionately with per capital income (Michaely, 1977).

 

The implications of varieties hypothesis suggest that international trade takes place because of the wider market which offers more choice and scope for specialization. More, specifically the greater the income elasticity of demand for import the greater the opportunities for varieties in international trade. Thus growth in foreign trade resulting from growth in real income is in favour of countries that produce variety of products. Also given the current wave of globalization it appears that third world countries that face greater difficulty in producing variety products are condemned to suffer balance of payments deficits for a long time (Nyong, 2005). The variety hypothesis highlights the enormous challenge developing countries with limited export commodities face in their attempt to industrialize and produce varieties of commodities without providing policy alternative. Hence the theory is more relevant to advanced countries that produce varieties of products and process superior technology.

 

 

Views concerning made in Nigeria goods

It is sometime true that country of origin and level of development affect the quality of products that such a country turnout or produces (Odiogor, 2007). For example in Nigeria, Italian and British shoes are valued much and as such are highly favoured  in terms of purchase decisions when compared to local ones.  Most made in Nigeria products like shoes (Aba made), cloths (local fabrics) etc., are of low quality and substandard in relation to foreign competing types or brand. He went further to suggest that local manufacturers should maintain and produce high quality products that will attain international standard and acceptance like those from overseas. Some observers believed that the poor quality of some products in Nigeria is as a result of the inefficiency of the law enforcement agencies, like Standard Organization of Nigeria (Son) and others to wage the sledge harmer on such producers, hence the continuous existence of poor quality Products in the market.

 

Research methodology

A random sampling of respondents’ responses from the two major towns that the research took place is elicited. The total sample size was 1,434 possible respondents, representing 0.05 per cent of the total population of Aba North and Calabar municipality. When the questionnaires were administered, 1412 (98.5%) were returned as valid ones, while the remaining 22 (1.5%) were not returned and this number represents invalid questionnaire.

 

The model specification for test of hypotheses formulated was the Spearman’s Ranked Correlation Coefficient. This statistical tool seeks to establish the strength or degree of association between the dependent variables and independent variables. 


 

 

Data analysis and discussion

Table 1:           Research question and responses.

S/N

Questions Asked

Responses

Yes

%

No

%

Total

1

Patriotism has no effect on purchase decision in the two states.

724

51.3

688

48.7

1412

100

2

Consumers preference and disposition to buy local shoes is favourable

681

48.2

731

51.8

1412

100

3

Technology of production influences the purchase of made-in-Nigeria shoes.

730

51.7

682

48.4

1412

100

 

4

The quality of shoes influence the type consumers will buy

802

56.8

610

43.5

1412

100


Source: Field work, 2009.

 

In question one, it is observed that 724 (51.3%) respondents accept that patriotism has no effect on purchase decision. 688 (48.7%) respondents disagreed with the research question and believe that it has a significant effect. The majority response above signifies that every purchase decision of both local and foreign products is independent of patriotism. There is every expectation that the consumer is well inform

 

 

and guided by the expected satisfaction they derived from both foreign and local products, they are able to make purchase decision. This result was confirmed when the test of hypothesis was operationalized and the null hypothesis, which states that patriotism has no place in how consumers in the two states appreciate and buy made-in-Nigeria shoes was accepted. This means consumers’ decision is independent of patriotism.

 

The response in question two shows that 681 (48.2%) respondents gave a positive response while 731 (51.8%) respondents gave a negative answer. This result shows that majority of the respondents accept the fact that consumers do not respond favorably to local products. Most of them rather prefer to buy foreign brands, even when competing local brands are better. The economic implication of this decision is that similar products or brands in domestic industries and market will be affected. The decision may even result to dying industries and the unemployment rate will increase at an alarming rate, because the product of domestic manufacturers is not commanding the market or generating the required revenue to sustain further production and replenish raw inputs. This is consistent with Dos Santos (1970) earlier assertion that, the preference and over demanding of foreign goods as against domestic product is a vice rather than a virtue, because it is a disadvantage that does not encourage the growth of local industries. Therefore behaviours that perpetuate a vicious circle in Nigeria business environment must be avoided at all costs (Nnanna, Alade and Odoko, 2003).

 

Question three, clearly shows that 730 (51.7 %) respondents agreed that technology has a great influence on production capability. The remaining 682 (48.3%) respondents disagreed and believe that technology has little part to play. This result implies that majority of the respondents are in support of the importance of technology in enhancing the productive sector of any economy. Obadan (2004) rightly put it, Sub-Saharan African Countries must overcome their low level technological development in production process and pay more attention to adaptation and adoption of technologies that enhances competitiveness of their economies. The technological deficiency of the two states where the research was carried out has a great impact on the products that are produced, which is equally a major problem in Nigeria. The government has been so slow on the issue of technological empowerment and this needs urgent attention.

 

Question four lay emphases on the influence of quality of shoes on purchase decisions. From the analysis above, it can be observed that 802 (56.8%) respondents accept that the quality of shoes influence their purchase decision of which type to buy or consume. In the other case, 610 (43.2%) respondents answered negatively. In other words they did not subscribe to the fact that the quality of the shoes has salient characteristics which often, is taken into consideration before the actual buying. The result therefore means that majority of the respondents favour quality of the product as a determinant factor which consumers depend on. The more reason the demand for some local products have been in the decline, due to compromised quality of some products. Suffice to say that consumers always want satisfaction from the product they buy and in the course of such buying they consider the quality. This confirms Juran (1991) earlier study that quality means a product is fit for use. Most contemporary scholars had acknowledged that the quality of a product means the totality of features and characteristics that bear on its ability to meet and satisfy customers’ requirements. Hence most often buyers place much emphasis on quality more than any other factor. Consequently what differentiate the products of developed countries and that of the developing countries lies in the quality of the product each turns out at any given period. In the true sense of it, some producers especially in Nigeria may be willing to produce high quality products but the necessary raw inputs are not available to attain that required standard. This of course is as a result of some attendant constraints that are either artificial or constituents of government policy apart from the gullible attitude of some businessmen.

 

 

 

 

 

 

               

Test of hypotheses formulated

                                 

 

 

 

Hypothesis One

H0:       Patriotism has no place in how consumers in the two states appreciate and buy made-in-Nigeria shoes.

H1:       Patriotism has a place in how consumers in the two states appreciate and buy made-in-Nigeria shoes.

 

 

 


Table 2: Test of Hypothesis one using data drawn from  question qne.

Variables

X

Y

d

       d2

Civil servant

117

113

4

       16

Self employed

75

65

5

       25

Students

97

93

4

       20

Business sector

250

240

10

     100

Manufactures

157

155

2

         4

Others categories

28

22

6

        36

Total

å = 201

  Source: Researchers’ Computation.


 

Decision: The result from the test of hypothesis one shows that the calculated value, 2.1 is less than the table or critical value, which is 2.7. It therefore means that H0 should be accepted and H1 should be rejected. Thus, it suffices to say that patriotism has no

 

 

place in how consumers in the two states appreciate and buy made-in-Nigeria shoes.  

 

Hypothesis Two

H0:       Consumers attitude is not favourably disposed to the consumption or purchase of locally made shoes. 

H1:       Consumers attitude is favourably disposed to the consumption or purchase of locally made shoes.


 

Table 3: Test of Hypothesis Two using data drawn from question two.

Variables

X

Y

d

          d2

Civil servant

110

120

-10

        100

Self employed

80

60

-20

        200

Students

90

100

-10

        100

Business sector

225

265

-40

      1600

Manufactures

150

162

-12

        144

Others categories

26

24

4

           16

Total

å = 2160

  Source: Researchers’ Computation.

 

 

 

 

 

 

 

 

Decision: The result from the test of hypothesis two indicates that the calculated value which is 2.0 is less than the critical value which is 2.7, this result implies that H0 should be accepted and


H1 should be rejected, meaning that consumers attitude is not favourably disposed to the consumption or purchase of locally made shoes.

 

Conclusion

It is true that trading activities intensified in this part of the country during the days of the scramble for colonies. The colonialist came with both political and economic intentions. As they penetrated the inter-land they came with their products which they sold to the natives. These newly found products instill a new pattern of consumption. Armed with this inclination, consumers’ propensity towards buying foreign goods continued even when similar goods are found in domestic market. This has really exposed competing local brands to severe competition. In as much as this study is not advocating autarky or complete restrictions, other measures should be adopted, as suggested in the recommendations.  The implications of not taking the right step have negative effect on the performance of other macro-economic variables. In achieving these objectives all must put their act together. This means that producers should produce quality shoes especially when they are opportune to have the much needed materials or inputs, and increase the chances of the products becoming more competitive. 

 

It is the believe of this study that if the quality and technology of production is improve and maintained there is the likely-hood that products  made in Nigeria will have a reasonable share of the market, even in the face of competing foreign brands. The government must provide or create the enabling business environment that will lead to the realization of this objective. Consumers’ also have a part to play. The study quite appreciate the fact that the consumer is a king, who is well informed about market conditions and ready to take rational decisions in every exchange transaction. It therefore sufficed to say that consumers should appreciate and patronize local products, if such products meet their needs and expectations in the face of competing brands from oversea. No nation became advanced suddenly; some of them sacrificed and had an inward orientation that favoured their economies. It is better to encourage domestic producers of this product to put in their best to make the product viable and saleable.

               

Recommendations

Based on the finding of this study, the following policy recommendations are made;

1.         As a matter of fact producers of shoes must learn to manufacture quality shoes. They should not compromise quality because of the cost factor attached to each unit of production. This is because a good quality product can advertise and market itself. Sometimes in the short-run such a product may not be making reasonable profit, but in the long-run profit will accrue because it has won a reasonable number of consumers’ patronage.

2.         The government must provide the enabling environment that favours the performance of business through the provision of space for the citing of shoes manufacturing companies by willing and able entrepreneurs. The government can equally fund and establish its own company

3.         There should be opportunities for producers of the product to obtain facilities in the form of loans, deferred payment for inputs, subsidy on some expensive materials used in making shoes, etc, for this will better their position.          

4.         Since some of the equipment or operating machines used in factories for the production of shoes are too expensive for a willing entrepreneur that is proficient in shoe production to buy, it will be necessary for the government to make provision for such and make them handy to deserving individuals. That is, such buyers must reach agreement with the government on how to pay back the cost of the equipment or machine that will be spread over the years. This will encourage domestic firms to produce and foster the growth of local firms. Moreover the technological advancement which is long envisaged will be a step by the corner.

5.         You can take a horse to the stream, but you can not force it to drink water, so also is the consumer, he is exposed to the product, the decision to buy lies on the choice he makes. But sometimes the choice consumers make is based on their attitude, perception and the prevailing situation apart from their economic disposition, if that is the case consumers of shoes in Cross River and Abia states and Nigeria as a whole should try as much as possible to patronize made in Nigeria shoes. Especially those that compete favourably with the ones from Asian countries, that have connotation of being sub-standard. To add to this point, the government is propagating and urging buyers /consumers to buy made in Nigeria products, in order to strengthen the economy. If that is done producers will remain employed for as long as possible and contribute to Gross National product (GNP) generation.

6.         Enlightenment campaigns and workshops must be conducted to train and reorientate both producers and consumers. Also research and development institute that will take care of this sector should be put in place or become more functional if it is already in existence.   

  

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