Perceived financial well-being and its effect on domestic product purchases

Purpose: Global brands are attracted to emerging markets because of increasing wealth among their middle classes. However, amid increasing levels of consumer financial stress in many emerging markets, evidence points towards increased preferences for domestic products. The purpose of this paper is to examine the psychological constructs that mediate and moderate the relationship between reduced perceived financial well-being (PFWB) and domestic product purchases. Design/methodology/approach: The authors develop a model drawing from three theoretical perspectives: consumer stress and coping, consumer information processing and social identity theory. Hypotheses are tested via structural equation modelling and moderated mediation analyses using data from a survey of Brazilian consumers (n=1,043). Findings: Results show that the positive relationship between reduced PFWB and domestic product purchases is partially mediated by perceived value of global brands and frugality descriptive norm. Further analyses demonstrate that consumer confidence moderates the mediating effects of perceived value of global brands and pro-social consumer ethnocentrism on the relationship between reduced PFWB and domestic product purchases. Research limitations/implications: The antecedents of domestic product purchases identified in this study indicate opportunities for marketers of domestic and foreign products to respond to reduced PFWB, especially in relation to pricing, branding and communications. Future research should examine implications of PFWB on different populations, including other emerging markets, developed markets and lower-income consumers. Originality/value: This study contributes to international marketing literature by examining the hitherto unexplored influence of reduced PFWB on domestic product purchases.