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U.S. Consumer Perceptions of Imported Automobiles: Challenges for Emerging Market Country Manufacturers Mark F. Toncar Associate Professor of Marketing Youngstown State University U.S.A. Canada * Mexico * Japan France Germany Sweden Italy S. Korea China…. Brazil….

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U.S. Consumer Perceptions of Imported Automobiles: Challenges for Emerging Market Country Manufacturers

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U.S. Consumer Perceptions of Imported Automobiles:Challenges for Emerging Market Country Manufacturers

Mark F. Toncar

Associate Professor of Marketing

Youngstown State University


U.S.A.

Canada *

Mexico *

Japan

France

Germany

Sweden

Italy

S. Korea

China….

Brazil….

Country of Origin of Automobiles Sold in the United States


Chinese Automobiles are Coming

  • Shanghai Automotive Industry Corporation (SAIC), a global Fortune 500 company has partnered with both Volkswagen and General Motors

  • Nanjing Automobile Group bought bankrupt MG Rover, the last independent car company in Britain.

  • Chery Automobile Company has announced a joint effort with entrepreneur Malcomb Bricklin to sell sport utilities, sedans and sport coupes in the U.S. beginning in 2007

  • Geely Automobile Holdings, LTD will offer a compact sedan and a sports car for sale in the U.S. market in the fall of 2008

    • Both plan to export up to 250,000 vehicles to the U.S.A


Brazilian Automobiles Are Coming

  • Obvio! is poised to enter the U.S. automobile through an exclusive distribution agreement with ZAP to distribute two models in the North American market

  • ZAP hopes to begin marketing the OBVIO automobiles in the United States in 2007


Will U.S. Consumers Accept Automobiles from Emerging Market Countries?

  • Country of origin effects are strong with automobiles

  • High profile outsourcing of U.S. jobs to China

  • Prevalence of organized labor in the U.S. automobile industry


Constructs of Interest:

Country of Origin, Consumer Ethnocentrism, Country Image, andBrand Personality


Country of Origin Effects

  • Consumers infer beliefs about products based on beliefs about the country from which the product originates

    • Verlegh and Steenkamp 1999

    • Ex. Perception of Mexico having a poorly skilled work force will lead to a less favorable impression of products from Mexico that require skilled labor


Country of Origin Effects

  • In general:

    • Developed country consumers prefer domestic to imported products (Wang and Chen 2004)

    • Products from LDC are subject to a greater COO effect and are evaluated less favorably than domestic products (Bilkey and Ness 1982; Verlegh and Steenkamp 1999)


But:

  • China is perceived as neither LDC nor developed country

  • China is an aggressively industrializing nation possessing high quality, efficient and often world-class manufacturing

  • It is unclear how COO will influence the perception of Chinese automobiles


Consumer Ethnocentrism

  • Peoples’ beliefs about the appropriateness or morality of purchasing foreign-made products (Shimp and Sharma 1987)

  • May moderate or intensify Country of Origin effects of Chinese automobiles


The Shortened CETSCALE

  • Only those products that are unavailable in the U.S. should be imported from other countries.

  • American products first, last and foremost.

  • Purchasing foreign-made products in un-American.

  • It is not right to purchase foreign products.

  • A real American should always by American-made products.

  • We should purchase products manufactured in America instead of letting other countries get rich off us.

  • Americans should not buy foreign-made products, because this hurts American businesses and causes unemployment.

  • It may cost me in the long run but I prefer to support American products.

  • We should buy from foreign countries only those products that we cannot obtain within our own country.

  • American consumers who purchase products made in other countries are responsible for putting their fellow Americans out of work.


The Country Image Scale (Martin and Eroglu 1993)

  • Economically developed / Economically underdeveloped

  • Democratic system / Dictatorial system

  • Mass-produced products / Handcrafted products

  • Civilian government / Military government

  • Predominantly industrialized / predominantly non-industrialized

  • High labor costs / Low labor costs

  • High literacy rates / Low literacy rates

  • Free market system / Centrally planned system

  • Existence of welfare system / Lack of a welfare system

  • Stable economic environment / Unstable economic environment

  • Exporter of agricultural products / Importer of agricultural products

  • Production of high quality products / Production of low quality products

  • High standard of living / Low standard of living

  • High level of technological research / Low level of technological research


Brand Personality

  • Consumers view brands as having human characteristics (Aaker 1997)

    • Sincerity

    • Excitement

    • Competence

    • Sophistication

    • Ruggedness

  • Differences in brand personality may reflect more or less favorable overall consumer perceptions


Method

  • Experimental Design

  • Three treatment groups of student subjects, 50 in each group

  • Each group received information about a new automobile

    • The Chinese HF Lobo

    • The Brazilian Puma

    • The newly redesigned Ford Focus


Chinese HF Lobo/Brazilian Puma/ Ford Focus

  • FEATURED SPECIFICATIONS

  • 2.4L 5-Speed Manual or 4-Speed Automatic Transmission

  • Stainless Steel Single Exhaust

  • Front and Rear Disc Brakes with ABS

  • Front and Rear Seats with Anti-Submarining Cross Beam

  • Energy Absorbing and Collapsible Steering Wheel

  • Dual-drive Electric Power Steering

  • Powered Windows, Locks, and Child Proof Anti-burst Locks

  • Front Airbags with SMART/OCS System

  • Side Airbags

  • Remote Keyless Entry with Alarm System

  • Air Conditioning

  • AM/FM Single CD Audio System

  • 16" Alloy Wheels

  • Leather or Sport Cloth Upholstery

  • EP A Est. MPG: 28 City/ 36 Highway

  • MSRP $13,900.00


Method

  • Subjects viewed automobile information, then completed:

    • Several short attitude measures

    • Brand personality scale

    • CETSCALE

    • Country Image scale


Results: Attitude Measures

  • U.S. manufacturer was significantly more trusted than Chinese or Brazilian

  • Brazilian car scored significantly higher on “I’d like to be seen driving that car” than both U.S. and Chinese

  • Brazilian car scored significantly higher on “I like the appearance of the car” than both U.S. and Chinese

  • Interpretation: Trust is an important issue; products from Brazil are unusual and novel


Results: Brand Personality

  • Significant differences among the three groups on four of the five brand personality dimensions

    • Brand excitement

    • Brand sincerity

    • Brand sophistication

    • Brand ruggedness


Brand Excitement

  • Brazilian and Chinese cars were both more exciting than the U.S. car


Brand Sincerity

  • Brazilian car was more sincere than U.S. car and the Chinese car

  • No difference between U.S. car and the Chinese car


Brand Sophistication

  • Brazilian car was more sophisticated than the U.S. car

  • Brazilian car was marginally more sophisticated than the Chinese car (p=.078)

  • No difference between the American car and the Chinese car


Brand Ruggedness

  • Brazilian car was more rugged than the U.S. car

  • Brazilian car was more rugged than the Chinese car

  • No difference between the U.S. and Chinese car


Brand Competence

  • N o differences between the three cars


Interpretation of Brand Personality Results

  • Cars from Brazil may seem more exotic and new, and this may account for observed differences

    • Implies a strong country of origin effect

  • Cars from China are not perceived as very different than U.S. cars

    • No differences in 4 of the 5 brand personality measures between U.S. car and Chinese car

    • Implies a weak country of origin effect


Consumer Ethnocentrism

  • Consumer Ethnocentrism of subjects who viewed the U.S. car was significantly lower than for the Brazilian and Chinese car

  • This is unusual since the treatments were randomly assigned to subjects, consumer ethnocentrism should also have been randomly distributed


Consumer EthnocentrismInterpretation

  • CETSCALE was administered after exposure to the car.

  • CETSCALE results may have been “primed” by exposure to the car.

  • May actually have measured some kind of country-specific consumer ethnocentrism


Results: Country Image:

  • Not surprisingly, the U.S., as the only developed country in the study, was the source of most statistically significant differences

  • However, When comparing Brazil and China, Brazil was perceived as:

    • Less economically developed

    • Less industrialized

    • Less stable economic environment

    • Lower standard of living


Interpretation: Country Image

  • Brazil is generally perceived the least favorably

  • Cars from Brazil may be fascinating, exciting, new…because they are from Brazil

  • China is perceived to be far more similar to the U.S. on many of the country image measures


Conclusion

  • Trust is a major hurdle to overcome for emerging market country automobile manufacturers

  • Cars from Brazil and cars from China are perceived very differently, with cars from Brazil generally being viewed more favorably

  • Chinese automobile manufacturers may have an easier time exporting to the U.S. because of the overall perceived similarity of the U.S. and the Chinese car.


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