Evaluation of Eastern-Central European citizen’s decision-making style – a comparative study. Part I.

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Evaluation of Eastern-Central European citizen’s decision-making style – a comparative study. Part I.

Having looked at western and Eastern-Central European adverts, the prominence of fact-based commercials was identified in ECE countries, whereas most of the western advertisements creatively take the audience to a journey, while showing limited information. This comparative study evaluates the reasons for this phenomenon, while answers the following questions: What kind of identity emerges as a consequence of the turbulent political and economic changes, as consumers’ transition from a communist to a democratic country? What kind of adverts do ECE consumers prefer? What influences their decision-making? The first part of the publication looks at identity formation from an academic point of view, with its main focus on Slovak consumers. It identifies possible reasons behind differences in decision-making styles, arising from the turbulent political and economic changes. These factors resulted in ECE consumers having higher risk aversion, uncertainty avoidance and lower institutional trust, having an impact on their information-searching behavior while creating a new consumer base with developing identity. The second part of the contribution will analyze findings and present recommendations.

1 The historical and economic changes influence the decision-making style and identity of ECE consumers, arising from higher risk aversion and uncertainty avoidance

ECE countries faced turbulent changes thorough history. The collapse of the Soviet Union resulted in social and political revival, but brought about decline in economic growth, inflation and unemployment (Bakacsi et al. 2002, p. 78). It resulted in lower social safety, new regulations, institutions and political systems; problems when entering new markets leading to limitations in expansion; downfall of Soviet markets, purchasing power, and fiscal redistribution, consequently lower GDP and privatization (Bakacsi 1994). This created fear, uncertainty, and a “tangible gap between people’s wish of stability and the surrounding environment” (Bakacsi et al. 2002, p. 79).
After the dissolution of the Soviet Union, ECE countries went through liberalization of foreign trade, privatization, restructuring, tax and social insurance reforms, to reestablish their macroeconomic stability. Slovakia entered the European Union on 1 May 2004 and experienced growing GDP until 2008-2009 (European Commission 2015). The financial crisis resulted in growth slowdown and turbulent economic changes.
Arising from the historical and economic changes, a new customer base emerged; ECE individuals’ identity shifted from being citizens to consumers. In the past, ECE was part of the COMECON, the ‘Council for Mutual Economic Assistance’ (CMEA), facilitating economic development and flow of goods between Soviet countries (Balassa 1992). The Soviet Union did not enable the flow of foreign goods, leading to limited advertising; the ad itself was “the product to be consumed” (Egipt 2014). Customers could not consume the advertised product, since it disappeared from the shelves immediately; sometimes the advert was produced so that “at the time of airing, a product would be available for sale”; soviet ads did not aim to sell to a target audience, but to provide an entertainment for their citizens, apart from the few TV programs available (Egipt 2015). The Soviet, entertaining advert with no sales goal, differs from today’s marketing, that serves the purpose of gaining consumers attention to inform, convince and remind them of a product (Wood 1958).
Historical changes in post-soviet countries created a new, learning customer, who is constantly transitioning from a citizen with no need for advertising, to a western consumer, with different attitudes towards marketing. The upcoming sections observe the notion of changing identity in more depth: Sections 1.1 and 1.2 highlight why Slovak consumers are more risk averse and have higher uncertainty avoidance. Section 1.3. draws together these two notions to present how they contribute to advertising decision-making.

1.1 Turbulent historical and ongoing changes lead to higher risk aversion

Hofstede and Bond (1984, p. 419) defined risk aversion as “the extent to which people feel threatened by ambiguous situations, and have created beliefs and institutions that try to avoid these”. Risk aversion can have an effect on consumers’ decision-making style: it increases need for information and brand loyalty (Matzler et al. 2008).
To observe risk aversion, The Hofstede Centre’s research on cultural differences is examined. Although Hofstede’s cultural research has been widely criticised for its‘ over-realiance on differences being drawn from one’s natural culture, while neglecting individuality (Ali et al., 2008), it can be argued that Hofstede’s doctrine is still a prevalent source for cultural difference mapping (Minkov and Hofstede 2011; Mooij and Hofstede 2015). Slovakia’s score of 51 demonstrates higher need to avoid future uncertainty than UK and US (The Hofstede Centre 2015).

Figure 1: Hofstede’s country specific cultural dimensions
Source: The Hofstede Centre (2015)

Perlaki (1994) argued that the ECE culture could be best described as “highly centralized, strictly hierarchical culture, a dislike for uncertainty, …and strong collectivist attitude” (Brouthers et al. 1998, p. 488). These cultural factors result in lower marketing orientation (Ennew et al. 1993), different ethical standards (Puffer and McCarthy 1995) and lower trust towards authority (Casson 1994), as compared to western countries.
LeFebvre and Franke (2013) claimed that collectivist cultures consider group interest hence discourage risk-taking. Consequently, an individualistic culture, such as the US and the UK, encourages higher risk-taking behaviour, than the collectivist Slovakia (Hofstede 2015). Eramilli (1996) supports this argument: uncertainty avoidance outlines a society’s risk aversion: high uncertainty avoidance relates to higher risk aversion and increased need for control over foreign operations. Thus, ECE countries should be more risk averse, since are uncertainty avoiders.

1.2 Higher uncertainty avoidance and risk aversion, a consequence of the Soviet Union and the communist economy

Before the collapse of USSR, ECE citizens were “information underload” (Susjan 1999, cited in Money and Colton 2000, p. 193); after the dissolution, markets opened up; demand for product-related information grew. Customers could only personally evaluate the product, since other’s opinions were not available (Money and Colton 2000). Consequently, customers tried to overcome the novel risk by buying more expensive products, since these signalled higher quality (Shama 1992).
Similarly to the above findings, the extent literature has shown that Slovakia has higher uncertainty avoidance, and citizens are more risk averse than in western countries, due to the change from a Soviet country to democracy. Soviet citizen could not choose between products, and advertisements had no selling objective; the role of marketing in the Soviet Union was utilitarian; consumers only received information about the product’s function (Fazekas 1978; Naor 1986).
The shift from a communist economic actor to a western consumer has resulted in shifting identity of ECE citizens: western brands presented thousands of information and new products to customers not used to choice. ECE consumers, who were uncertain about new products, had to learn how to be a consumer, and make purchase decisions.

1.3 Impact of higher risk aversion and uncertainty avoidance on ECE consumers’ decision-making style

According to Shimp and Bearden (1982), consumers with high-risk aversion seek for more information about the product when making a purchase-related decision. Matzler et al. (2008) observed risk aversion and its’ effects on brand loyalty through an empirical research on mobile phone users, and concluded that high-risk averse individuals are more brand loyal than low-risk averse consumers. According to Matzler et al. (2008, p. 155), “risk-averse consumers feel threatened by ambiguous and novel situations and are reluctant to try new products” because they believe the financial, social and performance risks are higher than the benefits; they either search for more information before buying, or become brand loyal (Kapferer and Laurent 1985).
Vilčeková‘s (2014) research supports this argument: she compared the differences in Slovak consumers buying behaviour after the financial crisis. Slovak customers paid more attention to price and quality than advertising. Consumers are brand loyal to established brands, since are more price sensitive and “when they give away their money they expect to get the desired performance” (Vilčeková 2014, p. 308). According to Vilčeková (2014), this is because brands act as shortcuts that ease decision-making, signal quality and value.
Vilčeková’s (2014) research indicated that Slovak consumers are either brand loyal or engage in personal information search. This argument supports Kapferer and Laurent’s (1985) research: high-risk averse consumers either become loyal to their favorite brands, or search for extra information, since they want to avoid neglecting details, thus are inclined to obtain more facts to avoid uncertain outcomes. To summarise, ECE consumers are highly risk averse and either seek for more information regarding a brand or remain brand loyal to avoid uncertain outcomes.

End of Part I.

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Kľúčové slová/Key Words

decision-making, cultural differences, consumer identity, Eastern-Central Europe
rozhodovanie, kultúrne rozdiely, spotrebiteľská identita, východná a stredná Európa

JEL klasifikácia

M31

Résumé

Hodnotenie štýlu rozhodovania občanov východnej a strednej Európy – porovnávacia štúdia. Časť I.

Po preskúmaní reklám v západnej, východnej a centrálnej Európe je možné zhrnúť nasledovné fakty: reklamy orientované na fakty boli identifikované v ECE krajinách, kým reklamy na západe boli kreatívnejšie, avšak obsahovali limitované informácie. Tento článok hodnotí dôvody tohto javu a odpovedá na tieto otázky: Aký druh identity vzniká v dôsledku turbulentných politických a ekonomických zmien ako prechod spotrebiteľov z komunistickej do demokratickej krajiny? Aké typy reklám preferujú spotrebitelia ECE? Aké faktory ovplyvňujú ich rozhodovanie? Prvá časť publikácie sa zaoberá formovaním identity z akademického hľadiska. Identifikuje možné dôvody rozdielov v štýloch rozhodovania, ktoré vyplývajú z turbulentných politických a ekonomických zmien. Tieto faktory viedli k tomu, že spotrebitelia ECE majú vyššiu averziu voči riziku, vyhýbanie sa neistote a nižšiu inštitucionálnu dôveru, čo má vplyv na ich správanie pri vyhľadávaní informácií, pri vytváraní novej spotrebiteľskej základne s rozvíjajúcou sa identitou. Druhá časť publikácie analyzuje zistenia a uvádza odporúčania.

Kontakt na autorov/Address

MSc Barbara Némethová DIC, MSc Strategic Marketing, Imperial College Business School, South Kensington campus, London SW7 2AZ, United Kingdom, e-mail: [email protected]

Recenzované/Reviewed

5. september 2018 / 11. október 2018