THE EFFECT OF KNOWLEDGE OF ASIAN BRANDS ON THE PURCHASE DECISIONS OF YOUNG AMERICAN CONSUMERS ON PRODUCTS FROM CHINA, JAPAN, AND SOUTH KOREA.

INTRODUCTION

The U.S. market has been a constant target of many firms around the world for the last half century, in particular Asian firms. Today, few people deny that a growing number of Japanese firms have successfully penetrated the American market either by direct investment or export. Japanese brands such as Sony, Toyota and Mitsubishi have become household words to average American consumers. In the 1960s, Korean firms followed the Japanese approach, and the U.S. market has been a lucrative one for the last 30 years. Some firms have attempted to make their products or brand images appeal to American consumers. These include Hyundai automobiles (Excel and Sonata), Samsung electronics (TV sets and VCRs), and Daewoo computers. There are a limited number of Korean brands recognized in the U.S. market. Many Korean business firms in the past have opted for OEM entry into the American market by selling unbranded products--color TV sets, microwaves, and VCRs--to Sears, Amana, Emerson, Nike, and others. The strategy may have been profitable for a short time but the absence of brand equity and franchise with consumers can be seriously detrimental in the long run, particularly in the U.S. market where so many brands are available in almost every industry.

The latest player from Asia is China, which entered the American market in the 1980s. In spite of their lack of outstanding brands, their entry is formidable. Everyone in the American market feels their presence. This study is to investigate the status of Asian brands in terms of brand recognition by young Americans. Young consumers in America are attractive targets for automobile and electronics sales. First, they establish family earlier than their Asian counterparts. American males marry at 22 while Asian males marry at 26 on average. Second, there are 72 million American children and teens aged 18 or younger, comprising 28% of the total population. Psychographically this huge generation more readily will accept "mixed races," nontraditional families, and gender-bending sex roles. They are likely to accept foreign brands more readily than did generations in the past. Third, a young consumer is a key element in targeting to build a brand. The brands that make an impression on the young are often selected for them by adults and reach them through their parents. Habits and loyalties tend to be passed down. Targeting young consumers can result in a long-term relationship.

BRAND NAME AND BRAND LOYALTY

A brand name identifies the source of a product and differentiates the product from its competitors, and brand names do affect product demand (Sullivan, 1998). Brand awareness makes it easier for consumers to identify products. A brand's reputation for quality gives consumers important information about that product. A brand can possess an appealing image that many consumers cherish.

Creating brand loyalty is the biggest asset marketers like to pursue. Think about the value of The Coca-Cola brand which has the highest brand equity in the world. Fortune magazine calculated the brand equity of Michel Jordan at age 35, and his name was valued at $10 billion (Fortune).

In order to create brand loyalty, marketers have three goals: brand recognition, brand preference, and brand insistence (Boon & Kurtz, 1998). Brand recognition, making the products familiar to the public, is a company's first objective for newly introduced products. Advertising offers a good way to achieve consumer awareness. In 1997, some manufacturers spent $2 million for a 15-second commercial in the Superbowl. Brand preference is the second stage, where consumers rely on previous experience with the product purchased over competitors' products. Brand preference prevents buyers from shopping elsewhere. The ultimate stage in brand loyalty is brand insistence, in which consumers refuse to accept alternatives and search extensively for their favorite brands.

A GLOBAL BRAND

A global brand is one that is perceived to reflect the same set of values around the world (Chevron, 1995). A global brand may be measured based on how much "a share-of-mind" exists among global consumers. Studies identified the world's best-known brands and the 10 most globally admired companies. However, "true" global brands are a rare phenomenon.

There are four obvious advantages in having a global brand over a local brand (Kotabe & Helson, 1998). The first is economies of scale. The development costs for global brands can be spread over the large volumes produced. Not only in manufacturing, but also in distribution and marketing, substantial scale advantage strongly favors global branding. The second is high visibility. Prospective customers who travel around are exposed to the brand both in their home country and in the many parts of the world they visit. A global brand can also capitalize on the extensive media overlap that exists in many regions.

The third advantage is prestige. A global brand adds to the positive image of the firm. This will enhance leadership in the market. A prestigious global brand enhances even the image of an entire country, as McDonald's is a U.S. fast-food brand that personifies the roots of America. Finally, today's technology makes it possible for many brands to become global. A good web promotes a product worldwide instantly.

It is interesting to compare information in Table 1 with that in Table 2 it seems that companies most admired globally also benefit from their brands being most recognized. Global companies like Coca-Cola, Walt Disney and Microsoft are not only well known to world consumers; they are also admired as global citizens.

TABLE 1

The World's Best Known Brands

1.    Coca-Cola
2.    Microsoft
3.    IBM
4.    GE
5.    Ford
6.    Disney
7.    Intel
8.    McDonald
9.    AT&T
10.   Marlboro

Sources: INTERBRAND KOREA, Seoul, Korea, reported by the Dong-A Ilbo,
June 25, 1999, p.5.
TABLE 2

The 10 Most Globally Admired Companies

1    General Electronic   Electronics, electronic equipment
2    Coca-Cola            Beverages
3    Microsoft            Computers
4    Walt Disney          Entertainment
5    Intel                Computers
6    Hewlett-Packard      Computers
7    Berkshire-Hathaway   Securities/diversified financials
8    Pfizer               Pharmaceuticals
9    Sony                 Electronics, electronic equipment
10   Dell Computer        Computers

Source: Fortune, October 26, 1998, "The World's Most Admired
Companies," 206-226.

METHODOLOGY

A two-page questionnaire was used to collect relevant data on two college campuses in midwest America through self-administration. The questionnaire contained questions on brand name recognition by country and evaluation of product quality for three countries: China, Japan, and South Korea. There are 7 product categories with respondent experience, and 13 product choice criteria in a ten-point scale in addition to demographics and dichotomous questions of quality comparisons between countries. The sample characteristics are summarized in Table 3.

TABLE 3

Sample Characteristics

              Male                    220 (51.6%)
Gender        Female                  206 (48.4%)
              Total                   426 (100%)

              Under 20                 52 (12.2%)
              20 - 24                 287 (67.4%)
Age           Over 24                  81 (19.0%)
              Missing                   6 (1.4%)

              College students with average credit hours of 83.92
              Public                  391 (91.8%)
Education     Private                  27 (6.3%)
              Missing                   8 (1.9%)

              3.0 - 4.0               233 (54.7%)
              2.0 - 2.9               178 (41.8%)
GPA           1.0 - 1.9                 7 (1.6%)
              Missing                   8 (1.9%)

Location      Midwest America

In summary, the sample for the study consists mostly of a public university in mid-west America. While the gender distribution is almost even, the majority of the respondents (67.4%) are in the age category of 20-24, (which is considered a college age). Academic performance seems to be adequate as more than half of the group is maintaining a grade average of B or higher. In terms of school year, the students are considered to be "first semester Junior" with average credit hours of 83.92.

ANALYSIS

Product Purchase Criteria

Unlike consumers of previous generations to whom the "Made-in USA" labels mattered significantly, young American consumers value the country-of-origin (COO) much less.

In all but two of the 22 different studies in the past, country-of-origin was found to be statistically related to consumer product evaluation or choices (Liefeld, 1993). However, as shown in Table 4, today's young consumers value quality as their top choice criteria followed by reliability, performance and durability. Compared to a mean score of 9.19 for quality, the importance of the country of origin is a mere 3.58. Even considering a finding that determined that when more information cues were present in the choice or evaluation situation, the country-of-origin effect diminished in magnitude (Hong and Toner, 1989), the country-of-origin seems to be a choice criterion but not a significant factor to young American consumers.

TABLE 4

Product Choice Criteria of Young Americans

Quality                 9.19
Reliability             9.10
Performance             9.06
Durability              8.86
Liking                  8.52
Price                   8.43
Maintenance             8.07
Style                   7.66
Technology              7.38
Known to me             7.12
Innovativeness          6.97
Prestige                5.83
Country-of-Origin       3.58

Note: 10 point scale with 1 = Not important at all; 10=very important

This finding seems to contradict and reverse the importance of COO in another study in which nearly 90% of the respondents indicated that they would either definitely or probably consider an American-built car if they purchase one (Levin, 1987). In the same study, younger consumers were more likely to consider imports than were their counterparts.

Furthermore, the result seems to indicate that today's young consumers are more pragmatic than are the older consumers, who are more emotional and nationalistic, in the early 80s, one might see a scene in the evening network news where automobile workers are smashing a Japanese car with large hammers and axes. Retailers such as Wal-Mart heavily capitalized on "Made in USA". The result in this study indicates those days of commercial nationalism may be gone or will be in time.

Awareness of Chinese Brands

Information in Table 5 indicates that there are a limited number of Chinese brands known to young Americans. Many of the brands named as Chinese products are Japanese in fact. "Kikkoman" sounds like a Chinese word, but it is a Japanese brand soy sauce that is produced in Illinois. Nike is manufactured in China but it is an American brand. Among the 10 brands mentioned as Chinese, all but LaChoy, Tsingtao and Tigin Baln are either Japanese or Korean brands. The poor recognition of Chinese brands by young American consumers is understandable. Chinese brands have a relatively short history in America. Since the two countries normalized their relationship in the 1970s, many Chinese brands have experienced less than 20 years in the American market. Also there is a difference in the way of doing business between many Chinese manufacturers and American retailers. Many Chinese products coming to the American market are manufactured under the OEM agreement. Chinese manufacturers do not name the products; the products get American brand names, l:rom a strategic point of view, the Chinese manufacturers need to overcome their brands' poor recognition in America and establish their own standing in global markets.

TABLE 5

The Top 10 Chinese Brands Given by Young Americans

RANK      BRANDS       FREQUENCY   RANK   BRANDS     FREQUENCY

1         KIKOMAN      11          6      NISSAN     6
2         NIKE         9           6      SONY       6
3         LACHOY       7           9      TSINGTAO   4
3         SAMSUNG      7           10     TIGIN      3
                                          BALN
3         MITSUBISHI   7           10     HITACHI    3
6         RAMEN        6           10     TOYOTA     3
Total frequency        72

Japanese Brands Most Recognized

Young American consumers are more familiar with Japanese brands than with Korean or Chinese brands, (Table 6 shows the 10 most popular Japanese brands). They have a much better knowledge of Japanese brands than Chinese brands, and were able to identify correctly all but one brand, Hyundai, (a Korean brand). This could be because Hyundai is pronounced similarly to Honda and their logos are very similar (as shown below in Figure 1).

[ILLUSTRATION OMITTED]

TABLE 6

The Top 10 Japanese Brands Given by Young Americans

RANK    BRAND         FREQUENCY   RANK   BRAND     FREQUENCY

1       TOYOTA        266         6      TOSHIBA   25
2       SONY          139         7      HITACHI   17
3       MITSUBISHI    92          8      SUZUKI    13
4       HONDA         87          9      SANYO     12
5       NISSAN        44          10     HYUNDAI   10
TOTAL                 713

The high level of recognition of Japanese brands is expected. The Japanese economy is the second largest in the world, with a heavy penetration in the U.S. market--especially in automobiles and electronic products. However, the frequency of Toyota being mentioned might be because the study relied on sample respondents in a county near the American county in which a Toyota manufacturing site is located.

Korean Brands Recognition

Table 7 shows 127 "mentions of brands" considered Korean. While the top four (Hyundai, Kia, Samsung, and Daewoo) plus Gold Star, LG, and Hanjin are correctly identified as Korean, the rest are either American (Nike, Reebok, and Mattel) or Japanese brands.

TABLE 7

The Top 10 Korean Brands Given by Young Americans

RANK    BRAND     FREQUENCY        FREQUENCY   BRAND

1       HYUNDAI   34          5    TOSHIBA     4
2       KIA       31          6    SANYO       3
3       SAMSUNG   16          7    GOLDSTAR    2
4       DAEWOO    10          7    PIONEER     2
4       NIKE      10          8    LG          2
5       REEBOK    4           9    NISSAN      2
5       HONDA     4           9    MATTEL      2
                              10   HANJIN      1
TOTAL             127
TABLE 8
Country Image by Product Usage in 7 Categories

           TV    VCR   AUTO   Microwa   PC   TOYS   CLOTHIN
                              ve                    G

China      163   54    10     27        25   176    201
Japan      270   254   205    95        89   125    105
S. Korea   37    38    16     27        15   136    186

CONCLUSION

Based on the usage level in 7 product categories, the images of 3 countries have been depicted in Figure 2. While Japanese products show a unique image among the 3, Chinese and South Korean products have Fairly similar patterns. Japanese products are described "strong" in electronics (TVs, VCRs, Micro, and personal computers) and automobiles. Korea and China show some usage in TV and VCR but low in automobiles. Unlike Japan, China and Korea are "strong" in toys and clothing. Furthermore, Chinese toy and clothing products are stronger than Korean products. This may be an indication of growing Chinese exports to the U.S. market.

[GRAPH OMITTED]

Unlike the older generations, young American consumers seem to value the country-of-origin much less. Among the 22 different studies in the past, country-of-origin was found to be statistically related to consumer product evaluations or choices (Liefeld, 1993). As shown in Table 4, young consumers value quality as the top choice criteria followed by reliability, performance and durability. Compared to a mean of 9.19 for quality, importance of the country-of-origin is a mere 3.58. Even considering a finding that determine when more information cues were present in the choice or evaluation situation, the country-of-origin effort diminished in magnitude (Hong & Toner, 1989), the country-of-origin seems to be a criterion for choice, but not a significant factor.

This finding seems to contradict a recent study in which nearly 90% of the respondents indicated that they would either "definitely" or "probably" consider an American-built car if they were shopping today (Levin 1987). In the same study, younger consumers were more likely to consider imports than were their counterparts. The results from this study seem to indicate that today's young consumers are much more practical shoppers than are the older generations, which are more emotional and nationalistic.

REFERENCES

Boon, Louis E, and David L. Kurtz, (1998), Contemporary Marketing Wired. 9th ed., The Dryden Press, p.400.

Chevron, Jacgues R., (1995), "Global Branding; Married to the World," Advertising Age, May 15. (http://www.cl.ais.net/jchevro/art-globb.html)

FORTUNE, (1998), "The Jordan Effect," June 22, pp, 124-138

Hong, Sung-Tai and Julie F. Toner (1989), "Are there Gender Differences in the Use of Country-of-Origin in the Evaluation of Products?" Advances in Consumer Research, Vol. 16,468-472.

Johansson, Johny K., (1997), Global Marketing, Irwin, p. 198

Kotabe, Masaaki and Kristiaan Helsen, (1998), Global Marketing Management, John Wiley and Sons, Inc. pp. 333-334

Levin, Larry (1987)" New Care Buying: Imports vs. American," Tele Nation Response Fall P.2.

Liefeld, John P. (1993), "Experiments on country-of-origin efforts: review and meta-analysis of effort size," in Product-Country Images, Edited by Nicolas Papadopoulos and Louis A. Heslop, International Business Press, 1993 P. 117-156.

Sullivan, Mary W. (1998), "How Brand Names Affect the Demand for Twin Automobiles," Journal of Marketing Research, Vol.XXXV, May p. 154-164.

Sang T. Choe is Professor of Marketing at University of Southern Indiana and Hyun Jeong Cho is Professor of International Commerce at Keimyung University, South Korea.