CHINESE CONSUMER BEHAVIOR

Country-of-Origin Effects on Automobile Products: A Chinese Consumer Perspective

Abstract

Consumer knowledge has frequently been mentioned in the literature as a potential mediating factor in consumers' use of country of origin as a product information cue. However, there is little agreement on the appropriate definition and measurement of consumer knowledge in this context, nor on the likely direction of its impact. Reports of empirical findings concerning the issue are even scarcer. Looks at various dimensions of consumer knowledge and how they impact on consumers' use of the country of origin cue in evaluations of alcoholic beverages. Finds that neither brand familiarity nor objective or subjective product knowledge has a general main effect on consumers' use of the country of origin cue but there are significant interaction effects. Shows that objective product class knowledge can, under certain circumstances, increase consumers' reliance on country of origin when evaluating products with unfamiliar brand names but not with familiar brand names.

Table of Contents

Chapter 14

Introduction4

Chapter 210

Literature Review10

Country-of-origin effects10

CO and product evaluation11

CO as an extrinsic cue12

Country image13

CO and branding16

The CO controversy17

CO, brand and the services sector19

Information search20

Efficiency of choice23

Dimensions of consumer knowledge26

Impact of dimensions of consumer knowledge on country of origin effects28

Brand familiarity28

Objective product class knowledge29

Subjective product class knowledge29

References31

Chapter 1

Introduction

In recent years, China has surpassed Japan and the major European car markets, and rapidly become the second largest automotive market in the world. Only in the United States of America are more vehicles sold every year, and even this will change in the future. With a projected annual growth of approximately 20 percent, China is destined to become the number one auto market in the world within the next three years. Indeed, even with far more conservative expectations, the “Middle Kingdom” will gain the global top spot not later than 2015.

What makes China so outstanding among all major auto markets is the tremendous growth of the passenger vehicle market, combined with the immense potential for further development. The increasing economic prosperity enables more and more households to purchase passenger vehicles, providing mobility and freedom to move around, as well as offering a way to display success and elevated social status.

The fast expansion of the passenger vehicle market (cars, MP Vs, SUVs) is driven by first-time buyers who are purchasing an automobile for the first time in their life for private purposes. These buyers account for 70 percent of new vehicle sales in China. This substantial addition of new cars over recent years has increased the share of passenger vehicles among all automobiles in the market (including trucks and buses) to almost 60 percent in 2007, from a level below 40 percent five years ago. The forecasted Gross Domestic Product (GDP) growth over the next three years of an average 8.4 percent and the projected increase of household incomes will support the continued expansion of the passenger vehicle market in the near future. As one of the fastest developing car markets with huge potential for further growth, China has attracted virtually all car manufacturers to produce and sell ...