How within-country consumer product (or brand) localness and supporting marketing tactics influence sales performance

Abstract

PurposeThis paper aims to move beyond previous investigations juxtaposing the performance of global versus domestic brands, where domestic is referred to as “localness” in the literature, conceptualizing and developing two measures of “within-country brand or product localness.” In doing so, it uses objective localness measures, rather than consumer perceptions of brand localness, as have been primarily used previously. Then, by leveraging established theory on brand authenticity and corollary literatures on brand identity and country-of-origin effects, this research develops and empirically tests key hypotheses about how these within-country, more geographically local products or brands (referred to as simply “localness” hereafter, for brevity), influence sales outcomes through increasing perceptions of brand and product authenticity.Design/methodology/approachTwo empirical studies using different archival data sets are conducted to test the hypotheses. Study 1 focuses on new product sales from 2002 to 2011 for 31 categories of consumer packaged goods US product launches initiated in 2002–2005, whereas Study 2 investigates online consumer review and retail sales data in the US craft beer industry from 2001 to 2011. Localness is operationalized as two different objective measures: in Study 1, local distribution is measured, and in Study 2, firm headquarters denotes the geographic bounds of localness. These two measures are motivated by prior consumer perceptual studies of Locavores (consumers who strongly prefer local products), which identify that local systems of production and/or distribution are the key signals of localness. Using two measures allows the localness construct to be tested for the potential firm-side boundaries of its scope and provides two empirical measures that future researchers can leverage.FindingsBrand (or product) localness gives performance advantages over national brands in the form of increased sales across both studies. The second study, focused on craft beer, dives more deeply into the theoretical mechanism (localness operates through increased perceptions of brand authenticity) and shows that while brand authenticity directly translates into higher sales, as anticipated, localness fully mediates this relationship. When coupled with supporting marketing tactics (high price and/or product variety), the link between localness and brand authenticity grows stronger. Local brands with low prices and/or limited product variety are deemed inauthentic by consumers, so it is important for brand managers to use marketing tactics that reinforce brand authenticity to support localness as a strategy.Research limitations/implicationsFuture research could extend this inquiry in a number of ways. These include combining both empirical measures of localness into a single empirical inquiry, investigating additional product categories and further integrating aspects of strategy such as market positioning and innovation strategy. Newer data could also reveal how these phenomena are continuing to evolve.Practical implicationsBased on this study, managers can benefit by leveraging localness as a key brand or product attribute to achieve a sales advantage, but they must do so by using marketing tactics consistent with an authentic brand positioning. Efforts to expand a brand’s geographic reach over time should likely be conducted very locally at first, before extending to regional markets and then to a global footprint. It is also posited that retail store managers can benefit from allocating some shelf space to local brand and product offerings.Originality/valueThis paper conceptualizes and measures localness in new ways compared to the previous literatures. It develops objective measures of within-country localness instead of using consumer perceptions of localness and/or considering domestic brands as being “local” compared to global brands; builds key linkages between concepts of localness, authenticity and sales performance; and uncovers when and how within-country localness is a key brand or product attribute associated with increased sales success.