International advertising provides communications with mass markets, so analysis of the county of origin effects and consumer behavior issues are crucial for the overall success of an international company and international advertising campaign. International advertising can be seen as a one-way channel. International advertising is set, standardized, less adjustable, and impersonal in contrast to national campaigns. In this case, country of origin effects should be taken into account by marketers to save costs and time spent on ineffective messages and promotions. For foreign markets, advertising can be tailored to individual situations. Even if data are not available, it behooves management to think of the total promotional task and match resources with market potential. There is at least advantage to thinking in terms of inputs of alternative mixtures and resulting outputs. International advertising affects both costs and revenues; used effectively, it can increase sales and profits. It supplements and improves the effectiveness of other elements of the marketing mix, alters the predisposition of potential purchasers, provides information, and gains brand loyalty, attracting customers and stimulating consumer desire and action. The questions I would research his “Does the country of origin have a profound impact on the end consumer and sales volumes?” The main objectives of the research paper are to evaluate the role o country of origin effects on sales using secondary data (current literature). Also, the research paper will identify the main success factors related to consumer behavior, possible gaps in research, and future projections. China will be used as an example of consumer behavior towards foreign brands and products. As a principal means of illuminating the attributes that differentiate a product, advertising is a competitive weapon that can secure a market niche and assure some stability in the marketplace by shaping demand curves, making them more inelastic and extending markets.
Unique preferences of consumers and their attitudes towards country of origin are the core factor of success and market position of the company. For example, with a relatively small budget, many alternatives are not feasible. Once a total budget is set, management should think in terms of the possible impact of different combinations: the extremes of spending the total budget on advertising or on personal selling, and the results expected from different combinations of each. Here again, although it is impossible to get precise data, management estimates can be made (Chitty et al 87).
Decision-making in consumption
Critics argue that the county of origin has a great and profound impact on what consumers buy. Researchers (Fan and Xiao; Schultz and Kitchen) underline that consumers work their way through the five consumption themes in much the same way Maslow (1954) proposed people work their way up to his hierarchy of motivations. Regrettably, it is not that simple. Consumers living on subsistence incomes are often convenience stores’ best customers because national grocery stores and discounters have fled their neighborhood, frequently tread endless miles around shopping centers. After all, it is cheaper than a movie or babysitting and occasionally engage in extravagant self-indulgence. The most chronic and crippling handicap confounding consumer behavior towards foreign brands and the science of consumer research today is directly traceable to the origin of the term consumer itself.
Quester et al and Clow and Baack find that a second significant determinant of shopping and consumption behavior is roots–the consumer’s cultural and ethnic ancestry connected with the county of origin effects. There have always been crosscurrents of change at work in society. One is the current of cultural and ethnic diversity and insulation that is the legacy of polyglot immigration. The other current is the relentless erosion of cultural identity and ethnic insulation from generation to generation toward a melting pot of homogeneous expectations. More than any other factor, the marketplace, with its unending array of material opportunities and possibilities, has been the great leveler, the most common denominator, in Chinese culture. These terms and the stereotypes they evoke do an injustice to the rich diversity of cultural backgrounds that have been both the strength of Chinese society and her beacon to the world. In fact, China is, and has always been, a checkerboard of cultural and ethnic identities that remain structurally separate and, for all intents and purposes, separable, despite a decline in overt acknowledgment of differences.
Schultz and Kitchen, Labarbera underline that whether international marketers view cultural and ethnic differences as healthy or invidious, they cannot ignore the pluralistic character of social structure. Accordingly, the roots dimension of the Consumer identifies the major threads of cultural and ethnic ancestry. Approximate percentages of the Chinese population currently corresponding to ethnic background are presented below for illustrative purposes (acknowledging the fact that many significant ancestral streams of immigration are omitted): Their children and their childrens’ children may maintain their cultural and ethnic identification but are typically far less insulated in the cocoon of their cultural roots.
In their research, Kozup et al explain that for many consumers, a significant denominator of the roots dimension is the discontinuity between the value system of the culture of origin and the value system of the host culture. A third, far less important denominator is the contrast between the retailing infrastructure of the culture of origin and that of the culture of destination. The greater the discrepancy in retailing infrastructures, the more difficult the up scaling or downscaling in consumption and shopping behavior. Overall, however, people assimilate shopping and consumption behaviors of the host culture much more rapidly than they assimilate its values. Consumers choose products following such characteristics s: value, convenience, collision of the old with the new, marriage of shopping and show biz, self-indulgence (Keegan and Green 32).
Following Yi, country of origin effect on advertising and purchasing cannot be considered in isolation from the shopping standards of a particular country. Retailing standards and practices are deeply entrenched in national culture, an arena in which the Chinese community conscientiously avoids interference. For example, national planning restrictions prevent hypermarkets from reaching their full market potential by limiting square footage or disallowing permits, even in France where they are well accepted. Hours of operation are also controlled by either national or regional legislation in all member countries. Retailers are open an average of fifty hours per week, but over half of Chinese community do not permit Sunday openings. Liberalization of hours of operation is a very controversial political issue. Since there is no coordinated effort among consumers to address them, regulatory restrictions on market potential are unlikely to be reduced in the near future.
In their research, Clow and Baack state that the obstacle that overseas expansion poses for retailers is not an unfamiliar experience. It is a classic market development/diversification dilemma–creating new markets for either existing or new products. Even extensive marketing research is insufficient to unlock the door. Partnerships or other workable relationships with indigenous retailers is indispensable to market penetration. Joint venturing with native firms also permits retailers to take advantage of indispensable expertise and established distribution networks. Educational and occupational opportunities, however, have not been accompanied by a widespread acknowledgement of equality between the sexes, but the wheels have finally been set in motion. Second, rising incomes are fracturing an Asian institution, that of the entire extended family living under the same roof South Korea has seen a downsizing of households from an average of more than five members fifteen years ago to fewer than four members today, a trend that is echoed from Taiwan to Hong Kong to Singapore. While household size shrinks, the sheer number of households continues to explode as a tidal wave of couples aged 20 to 30 establish families. Young family households independent of the extended family may pay less deference to their elders. Affluent Asians may be on the threshold of unprecedented consumer independence.
Griffin and Mcarthur agree that international advertising relies on successful interactions between two individuals who enjoy what they are doing, even having fun, and who care about one another. The key to effective advertising is culture, which starts with leaders, not merchants, who view total control of a many-tiered hierarchy as the appropriate managerial style of retailing. At the absolute bottom of such hierarchies are found customers and, almost unnoticed (by management), salespeople. Many “top managements” believe that people are primarily motivated by fear and greed and that salespeople can be “manipulated” to provide service. Of course, customers and salespeople notice one another, usually without much enthusiasm, often as necessary evils to be coped with while shopping and clerking. Retailing cultures must be created that celebrate, even idolize, the sales organizations, sales associates, and customer service representatives-whoever is in direct contact with the customer. Motivation is created by a blend of compensation, special incentives, and recognition. There is little doubt that a high level of cash compensation (with variable components) is the strongest motivator of all. However, with a large part-time sales force, retailers often cannot afford to motivate through cash compensation. Low salaries are compounded by the need to recruit from ethnic groups, immigrants, and now older segments and from less-educated groups. Motivation, therefore, takes a high degree of skill, but it can be done.
Some researchers (Yangwen; Yi) admit that there is a great difference between ‘traditional’ Chinese consumer behavior and a new class of consumers emerged. It is important to note that ‘traditional’ consumers were influenced by Communist ideology and low level of economic development always limited their purchasing power. The main factors of consumer behavior are habit, impulse, and drives in buyer selections and decision making. In contrast to modern generations traditional consumers were less influenced by impulse and drives in buyer selection but a habit. Most of them did not buy expensive products and were embarrassed if they paid too much for a product. Reliance on habit was especially evident in many purchases of convenience products. Here the expectations were based on past experience and learning, and circumvent the decision process. However, in situations involving important decisions, where there was less experience available, buyers went through a more intensive process of information gathering and decision making. Where incentives were strong enough and the expectations were high or great, the buyer did not act habitually and was willing to put some effort into solving his consumption problems. The similarity with new consumers is that there are many situations in which each consumer choice does not involve a new decision process but becomes rather habitual (food, cloths, etc.). Common among the cultures which do seek to put the decision-making process close to the customer, in the hands of store managers and even salespeople, is a decentralized decision-making process, a free flow of two-way communications, and constant employee recognition supported by adequate compensation and targeted incentives. Incentives may include cash as Nordstrom does, or prize and travel incentives, or just recognition. Granting employees the freedom to experiment and take risks is a powerful motivator that will help attract and keep the best individuals. Strong customer-oriented cultures start with a strong new-employee orientation program and progress through constant training, feedback and promotion from within. They view the sales organization as customers of all the corporation’s services and near the top of an “upside-down” organizational structure with the customer at the very top. Functional crosstraining and cultural education are important in “flat” organizations with strong cultures. Strong cultures stress tradition and teamwork. At companies such as Mary Kay and L. L. Bean, the culture is founded on the Golden Rule. The culture will require leaders who can “coach”–those who can motivate and persuade a team that constantly must improve. Such employee forces must, of necessity, be more independent, more self-confident, truly interested in their work, and satisfied with their achievements. Learning by both individuals and groups must be constant in such organizations and must be viewed as enjoyable. A fundamental principle of psychology is that happiness is a byproduct of effort and is achieved with self-sufficiency. The goal of every international advertising campaign should be to create a self-sufficient, empowered messages surrounded by a culture that encourages and rewards learning new job skills, leadership techniques, and personal self-improvement. Performance development will replace performance appraisal.
In China, a country of origin effect has an impact on consumers’ decision and buying process. The communications process is concerned with the dissemination of stimuli and their perception, impact, use, and effectiveness (Kitchen 32). Marketing communications have meaning to the extent that an individual’s predisposition or experience permits him to see, hear, or read them. Two predispositional factors govern the relationship between a message and its recipient. These are the sender set and the customer set. The former includes media, appeal, advertiser, copy, theme, and layout. The latter, containing the individual differences of people and their psychological, social, and economic situations, intervenes between the sender and the receiver of marketing information. It is not only the message, but also the way in which it is presented, that results in communications. For example, gestures, manipulation of objects and symbols, facial expressions, posture, and stance are all part of the total communication. Both the source of the communication and the message itself can influence the reactions of the recipient. Credible sources tend to get better acceptance. Audience characteristics are also important in determining what is communicated. People select what they watch or hear. The result is selective exposure followed by selective perception and retention. Communications that agree with predispositions are more likely to be heard than those that do not. This self-selection can be either deliberate or subconscious. As audiences also misinterpret messages by evading or misperceiving those that counter their predispositions, communications are most effective when they reinforce existing inclinations (Kozup et al 37).
The impact of a message on consumer behavior, which is governed by intervening variables, determines its marketing effectiveness. Since companies cannot control the personality of recipients, the environment in which messages are relayed, the environments surrounding responses, the group norms, and the relationships of individuals to groups, they have difficulty in assuring effective communications. Mass communication may essentially reinforce rather than change consumer attitudes and opinions. Such forces as group norms; interpersonal relations; the perception, retention, and selective exposure of individuals; and the impact of opinion leaders, are extremely influential.
Effective market communication requires an integrated promotional system that reaches from primary producer to ultimate consumer. Communications flow to markets through long, complex channels that include manufacturers, retailers, wholesalers, consumers, agencies, and media (Yangwen 65). Each unit can break the chain or pass on the information as it sees fit. The amount and quality of information, therefore, depends on the channel. Formal channels, however, do not account for all marketing communications. Publicity, which is an integral part of many promotional campaigns and sometimes precedes the advertising and sales effort, lies outside them. Although it can be important in gaining market acceptance for products and companies, publicity, like word of mouth, is often a relatively low-grade communications channel with a high degree of interference, distortion, and noise (Schultz and Kitchen 98).
Advertising is just one major element of the communications mix described. Other major components include personal selling, public relations, and sales promotion. A major problem confronting marketing management is how much of the sales task should be performed by advertising and how much by other elements of the marketing mix. Advertising can be appraised meaningfully only in terms of its effect on other aspects of marketing. As in all decisions, management is concerned with the returns on resources expended. A suitable rate of return should be realized on any investment in advertising, and since advertising has become a large item in the corporate budget, it necessarily creates considerable opportunities for increasing productivity (Chitty et al 43). Coordination of sales and advertising effort, however, is a weak area of marketing management. Often sales and advertising managers behave like rivals rather than members of the same marketing team. Lack of coordination affects sales and profits adversely, and both sales and costs can be pushed beyond optimal levels. However, the organizational changes reflected by the marketing-management concept and the brand-manager system are designed to provide more effective promotional campaigns that have greater market impact. Sales or advertising managers should not concern themselves with which group gets the biggest budget or is more important to the company (Clow and Baack 87). Rather, they should develop the most effective total marketing communications. Both should assess their relative contributions to the total marketing task and view each other as alternative and supporting communications resources. As alternatives they present management with different means of cultivating markets. The problem at this level is one of deciding what proportion of the total promotional budget should be allocated to each. Even though a synergistic relationship often exists between them, advertising and personal selling perform different parts of the marketing task. Advertising supports selling and makes it more effective. It can lower sales costs, which is important. The roles of advertising and personal selling vary by industry and company. In packaged goods and cosmetics, advertising is a more important element of the promotional mix than personal selling. Industrial goods are dominated by personal selling. Other than product category, factors that influence the relative use of advertising or personal selling include the volume purchased, the use of direct or indirect distribution, and the geographic spread of the market, the product costs, and the repetitiveness of the purchase. Regardless of their relative significance, each should be recognized as part of a planned marketing effort (Fan and Xiao 275).
It furnishes information, calls attention to some clues and not others, changes attitudes and opinions, relates products to consumer need, gives consumers support for their decisions, affects the intensity of desires, and thereby generates action. The nature of advertising tasks is indicated by the decisions that must be made: the amount of money to be spent on advertising, the allocation of the budget among classes of media, the specific media to be selected within each class, the frequency and continuity of ads, the makeup of the specific messages to be presented, and the kinds and amount of advertising research (Griffin and Mcarthur 55). These are difficult decisions to make. For instance, management is faced with the decision of whether to advertise in markets where sales are high or low. The role of advertising in the marketing mix varies with the product and its stage of development (Labarbera et al 29). International; advertising compresses time horizons for the acceptance of products and facilitates the introduction of new products. We have explained that a new product may be a fundamental, functional, or strategic innovation. Fundamental and functional innovations necessitate basic changes in consumer habits, which are difficult to achieve and require heavy advertising. Strategic and tactical innovations do not demand great change in consumer habits, a fact that may shift the focus of the advertising job. During periods of expanding markets, volume, price, and distribution channels are important factors and mass advertising supports them. As markets mature, advertising becomes a competitive weapon. Now minor product adjustments are stressed to persuade consumers who know the product to select it over competitors’ products, and to endeavor to increase the rate of use. By creating demand at the ultimate consumer level, advertising can influence retailer and wholesaler decisions to carry a product — this pulls the product through the channels. To a large extent the product is presold. Conversely, by aggressive promotion, by the development of dealer and retailer campaigns, by providing advertising allowances, and by preparing merchandising programs, advertising can also push a product through the channels of distribution to final consumers (Keegan and Green 76).
Traditional Chinese consumers were not brand conscious. They preferred to buy familiar products at low price. Following Fan and Xiao (1998) new consumers (especially) students follow the same patterns of buyer behavior: “the average Chinese student was not very brand conscious, but quite price and quality conscious. The student was neither very time conscious nor overwhelmed by information” (275). Thus, for the majority of new consumers brand image symbolizes life style and social position, personal uniqueness and superiority. Another important characteristic of ‘traditional’ consumers is that they bought necessities but did not purchase luxury items and services saving money for the future. “Traditional” Chinese consumers bought only those products which helped them to solve problems in ways that were compatible with the profit, volume, and image objectives. These buyers seemed to resist change automatically on the basis of habits, attitudes, and psychological factors (Quester et al 87).
Influenced by country of origin, many consumers resist innovations. In this case, external opposition comes from customers as they react in the marketplace; to an extent, a company may temper it by communicating with customers and helping them overcome resistance to change. Definite limits to the company’s influence exist, however, beyond which corporate action will probably have little effect. External opposition also includes governmental regulations, which may hamper (or encourage) innovation, and society, which establishes an environment in which innovation may be fostered or discouraged. Internal opposition to innovation stems from the enterprise itself (Yangwen 65). Before 1980s, resistance to new products occurred because of the lack of new skills needed to adjust to the situation. Although the Chinese culture seems to have inertia, and consumers reacted less favorably to change, it is still necessary to help consumers learn and relearn to accept changes (Yi). In contrast to modern consumers, quality of products was less important than a price. The lack of information, the dynamics of the market, and the problems of measuring both costs and demand made it a difficult task. A distinction was often made between price determination and quality. The activities and focus of each were different. Price determination refers to the processes and activities employed to arrive at a price for a product.
The way cultural and ethnic identity is expressed in Chinese consumption is far from clear, primarily because the relationship between them has been the subject of little research. Hence, our insights into the relationship between cultural and ethnic roots and consumption are quite general:
- The meaning and importance of value and convenience will vary little according to the consumer’s ethnic and cultural identity.
- The meaning and importance of old versus new, shopping and show biz, and self-indulgence will vary considerably according to the consumer’s ethnic and cultural identity.
- As successive generations of consumers are assimilated into the host culture, the meanings of each of the five consumption themes-value, convenience, old versus new, show biz, and self indulgence–will converge with those of the host culture (Schultz and Kitchen 66).
For the international marketing task should be not complete with the sale of the product; satisfied customers must be retained. Reaffirmation of consumer choice, a postsale activity, is important. Continued advertising after a purchase gives the customer public acknowledgment of his wise choice, and tends to eliminate or reduce cognitive dissonance. The customer is reassured and resold. Repeat business is the avenue to continued success, and post-sale advertising often the course to repeat business. International advertising messages are confronted with making a significant decision about how much to spend on advertising (Kozup 37). There are several difficulties in determining an advertising appropriation: the cause-and-effect relationship between advertising and sales is complex; advertising is heterogeneous; the appropriate balance between creativity and scientific data is not easily attained; and the relative importance of advertising, price, product, channel, and other promotional changes is hard to assess. If the sales or profit generated by advertising could be foreseen clearly, the difficulty of determining how much money should be allocated to advertising would vanish. Although parallel cost-value calculations can often be made for physical production, they cannot be made for advertising. Yet the problem is not one to be attacked by uniformed guesswork or without logic. The principles of spending advertising dollars in total, or for a campaign, can be stated in economic terms: management must take a marginal approach (Schultz and Kitchen 87).
Based on the country of origin effects, international advertising is defined not solely by ethnicity, but by stronger ethnic identification and the desire to maintain cultural heritages. This will change the fabric of society in many ways. This has the potential to provide a competitive advantage over xenophobic countries such as Japan that have little or no immigration and relatively low birth rates. Many immigrants are true entrepreneurs, and it takes only one generation to spin off new, highly motivated capitalists. Foreign companies must prepare for the future by identifying likely changes, determining die impact of those changes on company goals and operations, and planning effective responses. Some types of companies may entertain dramatic changes in all parts of their marketing strategy as possible responses to anticipated future events. Product lines, pricing and credit policies, promotional methods including advertising and selling, and distribution channels might all be candidates for major overhaul. Value sensitivity will grow as consumers become more proactive in the purchasing process. Price alone will lose its significance as a value measure as people gain information and pay greater attention to what they buy. This leads to a fourth development, which is a greater desire for information in order to become knowledgeable and participate more actively in the acquisition process. People are becoming more concerned about making themselves heard and will utilize communication methods that are convenient in bringing them information and passing on their own opinions.
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