In order to provide the Chinese home appliance manufacturers consortium with assistance in achieving their goal of improving the “Made in China” image, our first objective was to accurately define the perception of products that are “Made in China.” In particular, to determine whether or not “Made in China” has a negative connotation in the U. S. marketplace and if so, to better understand the contributing factors to this perception. First, we conducted secondary research consisting of a review of literature and statistical studies. The focus was on the broader topic of a product’s country-of-origin and its effect on the consumer purchase decision process.
Second, we focused on the specific impact of “Made in China” on purchase behavior. Third, to gain further insight into the consumer perception of “Made in China” in the home appliances category, we conducted primary research in the form of consumer surveys, retailer interviews and secret shopper studies. Finally, we conducted secondary research on the actions that can be taken to overcome or change a negative country-of-origin image. Secondary Research Our secondary research identified several key themes, all of which support the hypothesis that a product’s country-of-origin plays a significant role in the purchase decision process.
These findings are summarized below: Impact of Country-of-Origin (COO) On Consumer Perceptions and Purchase Decision-Making Process: A number of statistical studies have explored the effect of country-of-origin on consumers’ perceptions of products and how it influences the decision-making process. Studies by Heslop and Popadopoulous (1993, 2000) concluded that COO image is one of the most important influences on decision making for foreign-made products. These studies revealed that buyers evaluate COO using multiple criteria including the country’s level of advancement, the buyer’s feelings about the people of the country and the buyer’s desire to be more closely aligned with the country. In addition, a study by Liefeld and Wall (1987, 1991, 1993) found a positive relationship between product evaluation and the degree of economic development of the COO.
The Homework on Made In China
In the Article Made In China, John S. McClenahen it is made apparent that much of international business will pass through the People's Republic at one point or another. Many of the world's premier corporations and manufacturing have invested in the People's Republic at some level. By producing a year-to-year gross domestic product that exceeds 8% increases, the People's Republic is able to boast ...
Support of these finding was found in a study by Wang and Lamb (1983) in which it was determined that U. S. consumers evaluate products according to the country in which they are produced. Culture, political situation and economic development of the source country were contributing factors to this evaluation criterion. Further support that COO plays an important role in shaping consumers’ attitudes towards products was found in studies by Hong and Wyer & Nooh, Sa ” are, and Powers (1989, 1999).
These studies determined that COO has a symbolic and emotional meaning to consumers.
Both the direct influence of COO on product evaluation and the influence of COO on other product attribute information were statistically significant. A halo effect seems to exist in which a belief about one product trait produces a belief structure about unknown traits that are congruent with the known trait. Therefore, if a consumer knows nothing more about a product than the country-of-origin, and they have a negative perception of that country, they will adapt a negative perception towards the product as a whole. A separate study by Erickson, Johansson and Chao (1984) identified this “halo effect” in which the country image affects consumers’ beliefs about tangible product attributes, and in turn affects their overall evaluation of the product. Studies by Nooh, Sa ” are and Powers, (1999) also found that in combination with other marketing characteristics, COO can positively or negatively influence the consumers’ perception toward a product. A positive correlation exists between a favorable COO perception and the consumer’s product preference.
The Review on Country of origin, consumer’s Perception and Brand Image
... H4: Product category will moderate the effect of COO image on the purchase intentions, consumer’s perceptions, and brand image We expect that the perceived quality ... and positive yet insignificant correlation between the COI and consumer’s perception (0.08). The previous studies findings concerning this correlation were (0.48) which is ...
Compared to the other marketing influences such as quality, technology sophistication, product features, brand recognition, advertising image, and distribution / retailer perception, COO had a less important influence on product choice. However, the study by Erickson, Johansson and Chao (1984) determined that COO serves as a signal for product quality and performance. Therefore, a negative perception of COO translates into a perception of poor product quality. This finding is supported by a study conducted by Dz ever and Quester in which it was observed that COO and its perceived quality can impact future purchasing decisions. In regards to the COO effect on the purchase decision-making process, a study by Gurhan-Canli and Maheswaran (2000) found that consumers were more likely to focus on the COO when their motivation to buy the product was low or if their decision-making process directed them away from the COO information.
A study by Ulgado and Lee (1998) found that electronic appliance consumers consider COO information to be as important as other specific product attributes and a study by Okechuku and Onyemah (1999) determined that COO is significantly more important than price and other product attributes when considering what products to purchase. These studies demonstrate that country image influences consumers’ perception of foreign made products. The next step in our secondary research was to determine the current state of consumer perceptions of products made in China, particularly as it relates to product quality. Impact of “Made in China” On U. S. Consumer Perceptions: A statistical study by Schniederjans, Cao and Olson (2004) identified several key findings in regards to U.
S. consumers’ perceptions of quality for products made in China. China’s questionable quality practices in the past have influenced consumers to varying degrees, ultimately resulting in the perception that products made in China are poor in quality. Based on survey results from 500 U. S.
consumers, the average quality rating on Chinese products was “poor value” indicating that consumers have a poor perception of Chinese made products. Product durability was also low when compared to non-Chinese manufactured products. The results of this study conclude that when compared to non-Chinese manufactured products, Chinese manufactured products are perceived as having less quality and less value. To further investigate the perception of made in China on U. S. consumers’ product preferences and purchase decision-making process for home appliances, primary research was conducted at both the consumer and retailer level.
The Term Paper on Bringing a Brazilian Cosmetics Brand to China
Introduction “Natura’s mission is to promote ‘bem estar bem ‘, the well-being and being-well. In Natura’s philosophy, everything is connected. The Natura experience is all about building the relationship of yourself with others and the nature,” our Natura host Jimena Berlanga opened the introduction of the company passionately by talking about the meaning behind the brand. I immediately sensed the ...
Primary Consumer Research Primary research was conducted among consumers to gain insights on the current perceptions of “Made in China” for home appliances and Chinese made products in general. A qualitative survey (see exhibit A) was developed and distributed via email to a sample of 55 people between the ages of 25 and 65. A total of 28 responses were received. Exhibit B provides a complete list of all survey responses. The key insights and findings include: KEY INSIGHTS: 1. “Made in China” is equated to “Manufactured in China.” It is not equated to a Chinese brand.
Therefore awareness of Chinese brands is low. 2. “Made in China” is associated with such attributes as cheap / inexpensive , lower in quality, unreliable and less durable… Less than 40% of respondents indicated they had purchased a home appliance made in China within the past 5-10 years. However, none of the brands that were purchased were of Chinese origin. This indicates very low recognition of Chinese brands…
The respondents were very consistent in their reactions to the terms “Made In China,”Made in USA,”Made in Germany,” and “Made In Japan.” . The dominating response to the image of “Made in China” was doubtful quality, unreliable, cheap, mass-produced, and huge assembly lines. Only a few people commented on the perception improving and equating it to Japan 20 years ago. Nobody suggested a Chinese brand indicating a low recognition of Chinese brands…
The dominating response to the image of “Made in USA” was high quality, innovative, solid, expensive, reliable, good value, and lots of options. Three brands including GE, Maytag, and Whirlpool were mentioned suggesting strong brand recognition. One equated it with red, white & blue. A few commented that it was not as good as European or Asia products. One noted that the product is likely not made in the USA… The dominating response to the image of “Made in Germany” was high-performance, over engineered, expensive, well designed, cutting-edge, sophisticated, luxury, and higher cost / higher quality.
The Term Paper on A Study of Brand Name translation in China
... be used. So, for Chinese products, there must be first a Chinese character brand name, then a translated brand name. With China¡¯s further opening and ... animals, birds or precious things. Chinese brand names that indicate the material, quality function and peculiarity of certain products can be cope with this ...
A few commented on its utilitarian image… The dominating response to the image of “Made in Japan” was quality, low cost, good value, reliable, innovative technologies, electronics oriented, sets the standard. One commented that they never differentiated between “Made in China” and “Made in Japan” while one other regarded it as cheap and poorly made. Primary Retailer Research Primary research was conducted among three key retailers, two national and one local, to gain insights on the current perceptions of “Made in China” for home appliances from the retailer perspective.
In-person interviews and secret shopping trips were conducted at Best Buy, Sears, and ABT. A complete list of retailer survey responses can be found in Exhibit C. The key findings and insights listed below are preliminary in nature and may not be representative of the retail industry due to the small sample size. KEY INSIGHTS: 1.
Retailers perceive Chinese brand home appliances as inferior in quality and therefore do not carry them. In addition, they feel there is minimal consumer demand as a result of low brand recognition. 2. Retailers are reluctant to carry Chinese brands due to low margins. 3.
Salespeople don’t feel confident endorsing and selling the Chinese products due to lack of brand and product knowledge. Best Buy (National).
Carries a range of Haier’s home appliances, including compact, tabletop, and regular sized dishwashers, compact and regular sized refrigerators, freezers, wine and beer coolers, microwaves, as well as washers and dryers… Salespeople regarded the Haier products as inexpensive and lacking a strong reputation… Haier products don’t appear to contribute significantly to sales. Maytag, Frigidaire, and Whirlpool are the consistent big sellers in the refrigerator category…
The Review on Impact of Product Price and Brand Name on Quality Perception
In ordinary usage, price is the quantity of payment or compensation given by one party to another in return for goods or services. In modern economies, prices are generally expressed in units of some form of currency (For commodities, they are expressed as currency per unit weight of the commodity, e.g. Tshs per kilogram.) Although prices could be quoted as quantities of other goods or services ...
Salespeople not knowledgeable on Chinese products, and they lack awareness that Haier is Chinese-made and they are unfamiliar with product attributes. Sears (National).
Carries one Chinese product, Haier’s mini wine cooler. They carry it because they feel Haier is the top brand in this product category… Other Chinese brands have tried to gain Sears as a distributor. Sears feels that these products are inferior in quality to the brands they carry including Kenmore and GE and therefore do not want to carry these Chinese brands.
ABT (Local).
Carries refrigerators, ranges and wine coolers by the Chinese Avanti and Haier brands… Carries these products to give customers a lower price alternative to the top brands of GE, Amana, Kitchen Aid, Maytag, Whirlpool, etc… These Chinese products are positioned as a good quality alternative and are not used to up sell to top U.
S. brands. The margins are fairly low due to the low pricing and therefore are not a key product they focus on selling… Salespeople feel that consumers perceive Chinese brands as inexpensive and not necessarily the best in quality. Overcoming or Changing the COO Image Various studies show that if the country-of-origin is relevant, action should be taken, including promotion of the origin images, suppression of the images or a pricing strategy to enhance the competitiveness of products with unfavorable COO images. A study by Nebenzahl (1991) concluded that country-of-origin perceptions could be favorably influenced by sponsorship.
An example can be found in the positive image of South Korea after they hosted the Olympics. Respondents were more likely to purchase South Korean made products after the Olympics were held in Seoul, Korea. Our research uncovered several key ways to change an unfavorable COO perception: 1. High prestige retail outlet. In order to reduce risk, consumers tend to favor a more prestigious retail outlet when they have a negative perception of country of origin. (Thorelli, Lim and Ye, 1989) “The more prestigious the outlet, the lower the impact of the country of origin” (Ahmed and d’Astous, 1995).
The Term Paper on The effect of country of origin on Chinese consumers
... not manufactured in their country of origin. None of the respondents preferred buying products not manufactured in the country of origin. Chinese consumers acculturated to foreign environments ... other attributes specified in the matrix above. • Consumer perception of Luxury product brands manufactured in home country: Most of the respondents (87%) believed that ...
Analysts say that consumers are more inclined to purchase Chinese products once they appear in the stores. It’s in indication that the retailer stands behind the quality of the merchandise. (Meyer. J. China Looks Upmarket, The Christian Science Monitor) 2. High level of warranty.
A warranty has a significant effect on overall attitude, quality perception and buying intention. (Thorelli, Lim and Ye, 1989) Offering a strong warranty to offset a negative effect of the country of origin was a good marketing strategy especially for consumer electronics. (Ahmed and d’Astous, 1995) A warranty was found to be influential when choosing between a domestic and an imported brand. (Schooler, Wildt and Jones, 1987) 3.
High degree of product familiarity. The effect of country-of-origin is higher for products that are less available on the market. (Parameswaran and Yaprak, 1987) The less the product is known, the higher the effect of country of origin. Therefore, to counteract the effect of country-of-origin, brands must be established and well known. There is growing evidence that the negative perception of products made in China is changing. According to Boston Consulting Group, the U.
S. consumer perception given to exports from China in other categories, including name-brand running shoes, clothing, high-end cameras, electronics, and medical equipment, suggests that the “Made in China” label no longer carries the stigma of low manufacturing quality. They believe that, with the right quality control and communication, resistance to “Made in China” vehicles should not pose an obstacle, particularly for entry and mid-level vehicles. The secondary and primary research supports the consortium’s belief that “Made in China” has a negative connotation in the U.
S. marketplace and that this perception has an adverse effect on U. S. consumption of Chinese brands. The next step is to develop a marketing strategy that the consortium can implement over a five-year period to change this perception and ultimately improve the performance of Chinese brand home appliances in the U. S.
marketplace. Situation Analysis: The “Made in China” home appliance consortium’s goal is to improve the image of the Chinese country of origin and the term “Made in China” among U. S. customers.
While the current image appears to be negative, the consortium believes that a long-term branding strategy can help change that perception to one of “quality, price-value and a feeling of confidence.” The chart below provides a SWOT analysis of the current state of “Made in China” home appliances. Strengths- Strong history of innovation- Impressive manufacturing infrastructure- Enthusiastic, spirited, and hard-working workforce- Recent Chinese home appliance brand successes in the U. S. (i. e.
Haier) – Chinese management eager to learn Western business / marketing practices Weaknesses- Negative image associated with “Made in China”- Lack of depth in management and leadership- Lack of investment in R&D- Minimal U. S. customer research / insights – Lack of product innovation – Lack of marketing and branding knowledge within the U. S. market- Lack of overseas distribution- Low awareness and recognition of Chinese brands in the U. S.
Opportunities- Worldwide visibility from 2008 Olympics in Beijing – Other countries such as Japan and Korea have proven that it is possible to successfully establish strong global brands- Generation Y (U. S. age 5-15) is the most culturally diverse generation ever- The growing demand for global brands in the U. S. marketplace- Partner with U. S-based distributors that offer promotional assistance Threats- High brand awareness of U.
S. home appliance brands- Retailers not motivated to carry product due to low customer demand and low profit margins- Very strong competition from established global brands that are perceived as high quality Strategic Objectives: 1. Improve western business skills of Chinese companies. 2. Build brand awareness of Chinese brands as quality products to increase demand in the U. S.
home appliance category. 3. Identify optimal positioning, target audiences, product mix, & distribution channels in the U. S.
4. Establish evaluation measures. Action Plan: Improve western business skills of Chinese companies… Deliver educational programs including industry symposiums and training seminars on key business issues including marketing, branding, leadership / management .
Bring in leaders in western business and marketing management. Leverage events through public relations… Host seminars featuring successful Chinese companies. Highlight their investment in R&D, marketing and brand development programs, and their go-to-market strategies in the U. S. Leverage events through public relations…
Create an independent consulting group of US-based executives to work with Chinese companies to evaluate their current business practices in the U. S. and provide recommendations for improvements. This consulting group would be funded by the consortium and the services would be made available to Chinese manufacturers… Provide companies with access to U. S.
marketing guidelines and best practices… Conduct extensive consumer research to gain insights on purchase behaviors, product preferences, and unmet needs in the U. S. home appliances category. Provide Chinese companies with access to the research findings. Build brand awareness to increase the demand of Chinese brands in the home appliance category among U.
S. consumers… Sponsor and exhibit at high-visibility U. S.
industry events including the consumer electronics show to build awareness among U. S. retailers and consumers… Sponsor the 2008 Beijing Olympics and promote the individual Chinese brands to generate awareness among a global audience.
Leverage the prestige and elite status of the Olympics to create an association of these attributes with Chinese brands… Negotiate business arrangement with the Olympics Committee to provide Olympics housing quarters with Chinese products… Develop high-profile Internet strategy to inform the U. S. market place of product quality and innovations as well as generate word-of-mouth… Identify high-profile Chinese product placement opportunities in the media…
Develop guerilla marketing programs to generate a buzz among the younger U. S. audience. Identify the optimal positioning, target audiences, product mix, and distribution channels Positioning – Develop a “value-for-money” positioning to appeal to price-sensitive U.
S. consumers that are not concerned with the absence of established, well-known brand names. Positioning should be focused on high quality, good value, and product innovation. Develop marketing communications guidelines that focus on key values including China’s heritage, innovation, intelligence, wisdom, and industriousness. Audience – Younger, urban, more culturally diverse, and receptive to products from other countries.
Fairly limited existing cultural bias. Product – Focus on product innovations that respond to the needs and tastes of the U. S. market. Establish an independent R&D unit funded by the consortium in an effort to improve product quality and innovation. The findings from this R&D unit would be made available to Chinese manufacturers.
In addition, form strategic alliances with high-tech partners to introduce cutting-edge products. Develop and promote strong warranties to encourage trial and assure customers of product quality and durability. Price – Retail prices should be established at a level that is just below established, well-known competitors and above those of manufacturers that rely solely on low price. Distribution – Establish demand through small and mid size retailers by offering high-quality products at reasonable prices. Leverage these retail relationships to increase penetration in large mass retailers including Wal-Mart and Best Buy. In addition, utilize distributors that offer promotion and service assistance to manufacturers.
This will provide Chinese companies to opportunity to learn more about the U. S. market. Eventually phase out distributors and sell directly to retailers once appropriate market knowledge is obtained. Establish evaluation measures. Track U.
S. sales of Chinese-made products… Track the number of retailers that sell Chinese-made products… Ongoing evaluation and improvement of educational programs based on attendee feedback… Track overall awareness of Chinese brands in major metropolitan areas. Evaluate perception of quality, innovation, and intent to purchase…
Track the quantity and quality of U. S. media mentions… Track the number of successful product launches using technologies developed by the independent R&D unit… Track U. S.
sales of the companies that utilize the services of the Consulting Group. Budget 2005 Budget Allocation Educational Program Development, Execution and Tracking 15, 000, 000 30%Consulting Group 10, 000, 000 20%Consumer Research 15, 000, 000 30%Independent R&D Unit 7, 500, 000 15%Sponsorships 2, 500, 000 5% 50, 000, 000 100%2006 Educational Program Development, Execution and Tracking 15, 000, 000 30%Consulting Group 10, 000, 000 20%Consumer Research 15, 000, 000 30%Independent R&D Unit 7, 500, 000 15%Sponsorships 2, 500, 000 5% 50, 000, 000 100%2007 Educational Program Development, Execution and Tracking 15, 000, 000 30%Consulting Group 7, 500, 000 15%Consumer Research 12, 500, 000 25%Independent R&D Unit 10, 000, 000 20%Sponsorships 5, 000, 000 10% 50, 000, 000 100%2008 Educational Program Development, Execution and Tracking 15, 000, 000 30%Consulting Group 7, 500, 000 15%Consumer Research 12, 500, 000 25%Independent R&D Unit 10, 000, 000 20%Sponsorships 5, 000, 000 10% 50, 000, 000 100%2005-2008 Total Spend Educational Program Development, Execution and Tracking 60, 000, 000 U. S. Consulting Group 35, 000, 000 Consumer Research 55, 000, 000 Independent R&D Unit 35, 000, 000 Sponsorships 15, 000, 000 Total 200, 000, 000 References Ahmed, S.
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