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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

Mark F. Toncar

Associate Professor of Marketing

Youngstown State University

country of origin of automobiles sold in the united states
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
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
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
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
Constructs of Interest:

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

country of origin effects
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 effects8
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)
slide9
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
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
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
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
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
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
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
method16
Method
  • Subjects viewed automobile information, then completed:
    • Several short attitude measures
    • Brand personality scale
    • CETSCALE
    • Country Image scale
results attitude measures
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
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
Brand Excitement
  • Brazilian and Chinese cars were both more exciting than the U.S. car
brand sincerity
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
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
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
Brand Competence
  • N o differences between the three cars
interpretation of brand personality results
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 ethnocentrism25
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 ethnocentrism interpretation
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
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
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
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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