Special Session Summary the Differential Effects of Brand, Price, and Referents on Asian Vs. American Consumers

The proposed ACR Mission Statement (Lynch 1997) states that AThe mission of the Association for Consumer Research is to advance consumer research and facilitate the exchange of scholarly information among members of academia, industry, and government worldwide.@ (emphases added) To take one step forward to achieve this mission, this special session focused on extending consumer behavior theories in a cross-cultural perspective.

Citation:

Wai-Kwan Li (1998) ,"Special Session Summary the Differential Effects of Brand, Price, and Referents on Asian Vs. American Consumers", in AP - Asia Pacific Advances in Consumer Research Volume 3, eds. Kineta Hung and Kent B. Monroe, Provo, UT : Association for Consumer Research, Pages: 4-5.

Asia Pacific Advances in Consumer Research Volume 3, 1998      Pages 4-5

SPECIAL SESSION SUMMARY

THE DIFFERENTIAL EFFECTS OF BRAND, PRICE, AND REFERENTS ON ASIAN VS. AMERICAN CONSUMERS

Wai-Kwan Li, Gongos and Associates, U.S.A.

The proposed ACR Mission Statement (Lynch 1997) states that "The mission of the Association for Consumer Research is to advance consumer research and facilitate the exchange of scholarly information among members of academia, industry, and government worldwide." (emphases added) To take one step forward to achieve this mission, this special session focused on extending consumer behavior theories in a cross-cultural perspective.

With the establishment of various trading blocks, and the growth of global business, it is important to extend research findings across different cultures. An examination of the Table of Contents in the past five volumes of ACR Proceedings indicates that, only nine out of the 340 sessions (2.6%) were related to cross-cultural issues. Therefore, the objective of this special session was to arouse researchers’ interest in cross-cultural differences in consumer behavior. Furthermore, trade flows between the United States and Asian markets are growing faster than any other markets, which makes advance our understanding of Asian consumers an important priority. Hence, this session focused on extending Consumer Behavior theories to the Asian cultures across three different topics: brand equity, pricing policies, and consumer referents.

 

IT’S ALL IN THE NAME: CUSTOMER-BASED BRAND EQUITY IN DIFFERENT CULTURAL CONTEXTS

Nancy Wong, University of Hawaii at Manoa

Bernd Schmitt, Columbia University

It has been said that a firm’s most valuable asset for improving marketing productivity is the consumers’ knowledge about the brand that has been created from previous marketing programs. Much research had contributed to our understanding of the influence of brand equity in new product introductions, brand extensions, and advertising efficiencies. However, little is known about the specific nature of how brand equity functions at the individual level. In addition, much less is known about whether existing models of brand equity function in the same way across cultures.

Keller (1993) conceptualized customer-based brand equity as the differential effect of brand knowledge on consumer response to the marketing of brand. Brand knowledge is further divided into two parts: brand awareness (consists of name recognition and recall), and brand image (consists of brand associations such as attributes, benefits, and attitudes). Of the two dimensions, brand image is more complex and subject to idiosyncratic interpretations by the consumers. These dimensions of brand knowledge are hypothesized to have differential impacts on the creation of customer-based brand equity. For example, brand awareness i likely to be more substantial component of customer-based brand equity in luxury good than brand image.

Brand awareness and brand image are also hypothesized to exert differential influence on the creation of customer-based brand equity between individualist and collectivist societies. Individualism has been characterized by emotional detachment from ingroups, primacy of personal goals over ingroup goals, competition and individual achievement. On the other hand, collectivism has been described by the attributes of family integrity, self definition through social roles, hierarchical social structures, and strong ingroup/outgroup distinctions. Therefore, individualists are likely to value brand image more because a brand’s idiosyncratic meanings allow them to create individual and unique relationships with the same brand and yet maintain a different self-identity from others (e.g., "X is my favorite brand because this is what I was using on the day of my promotion"). On the other hand, collectivists are likely to value things that enhance their relationships with others within the social ingroups but elevate their social status to members from the outgroups. As a result, they may value brand awareness more for a brand’s signifier role in establishing group identity and social hierarchy (e.g., "Y is my favorite brand because it is used exclusively by the elite group").

Wong and Ahuvia (1997) proposed that this metaphor of individual identity versus group affiliation should extend into brand choice as well. Individualists should be more disposed to judge each product as an individual, whereas collectivists may place more emphasis on the product’s affiliation to a group such as a brand, manufacturer, or country of origin. Two national sample telephone surveys in Singapore and the United States showed that Singaporeans do have significantly higher luxury brand awareness than Americans.

This study extends the customer-based brand equity model by testing it both empirically and cross-culturally. Data are collected in both individualist (US) and collectivist (China, Singapore) cultures. The study is further divided into two parts: the "direct" part of the study assesses the impact of brand knowledge to a marketing element (print ads) while the indirect part examines the relationships between dimensions of brand knowledge that lead to these differential responses in the creation of customer-based brand equity.

 

A FIXED PRICE VS. A PRICE DISCOUNT: EFFECT OF CULTURAL DIFFERENCES ON THE EFFECTIVENESS OF PRICE PRESENTATION FORMATS

Rajneesh Suri, Drexel University

Sungho Lee, Seoul City University

Rajesh Manchanda, University of Manitoba

Saturn, a division of General Motors, has followed the fixed price policy (i.e., no price reduction) to market its cars and achieved great success. On the other hand, practitioners as well as past research in the area of comparative price advertisements have found that price discounting (i.e., offering a price reduction from a higher list price, e.g., Regular Price $20; Sales Price $16) increases consumers’ perceived value for the offer. The question then is which price policy is more effective, fixed price policy or the price discount policy? Practitioners are thrown into further confusion when deciding about price policies to be used in international markets, especially in countries that companies have no prior experience with. Recently, Suri and Monroe (1997) found that, in the US, a fixed price presentation format is more effective than a price discount format in increasing consumers’ perceived value for the offer. Hence, the research issue investigated in this study is the evaluation of the effectiveness of fixed price vs. price discount policies across different cultures.

From the five cultural dimensions identified by Hofstede (1994), we believe that the uncertainty avoidance dimension is pertinent to our research issue. Hofstede (1994) argues that consumers in a culture of high uncertainty avoidance (e.g., South Korea: uncertainty avoidance=85, se Hofstede 1980) tend to show more nervous energy. Hence, they are more motivated to process price information. Given this high motivation state, it is argued that prices presented in a discount format (vs. Fixed price format) will lead to an even higher arousal level, which will interfere with consumers information processing. In this situation, consumers are more likely to heuristically process the given price information. Past research suggests that when price information is heuristically processed, price is more likely to be used for determining a product’s quality than for determining the perceived sacrifice, and therefore the perceived value of a product is higher. In contrast, it is argued that when price information is presented in a fixed price format, consumers’ arousal is unlikely to be increased by the price presentation and therefore no interference due to anxiety will occur. In this situation, consumers are more likely to systematically process the given price information. Research shows that when information is systematically processed, a price cue is more likely to be used for determining the perceived sacrifice than for determining the perceived quality, and hence the perceived value of a product is lower. Based on this conceptualization, we hypothesize that in countries with high level of uncertainty avoidance, prices presented in a price discount format (vs. fixed price format) will be heuristically processed and will lead to a higher perceived value for the product.

On the other hand, consumers in cultures of low uncertainty avoidance (e.g., the US: uncertainty avoidance=46, see Hofstede 1980) are more easy going (Hofstede 1994; p.5-6). Hence, they are less motivated to process price information. Given this low motivation state, we argue that information that is presented in a fixed price format will be heuristically processed (as explained above) and will result in a higher perceived value for a product. In contrast, it is argued that when price is presented in a price discount format, consumers’ arousal level will be increased to a moderate level. Thus, price information will be systematically processed (as explained above), and will lead to a lower perceived value for a product. Based on this conceptualization, we hypothesize that in countries with low level of uncertainty avoidance, prices presented in a fixed price format (vs. price discount format) will be heuristically processed and will lead to a higher perceived value for the product.

A between-subjects 2 (high vs. low uncertainty avoidance) x 2 (fixed vs. discount price presentation formats) factorial design was employed to test the hypotheses. The U. S. and South Korea were selected as countries representing low and high uncertainty avoidance respectively. The dependent measures used in the study are perceived quality, perceived sacrifice, and perceived value. In addition cognitive responses were recorded to reveal the price evaluation process.

 

THE CONTEXTUAL INFLUENCE OF REFERENTS ACROSS CULTURES AND PURCHASE SITUATIONS

Julie Anne Lee, University of Hawaii at Manoa

Richard Brislin, University of Hawaii at Manoa

Individualism and collectivism have been accepted as one of the most important universal patterns of cultural differences in behavior. According to Triandis (1996, p.42) the current view of the theory of individualismBcollectivism is that: "All of us carry both individualist and collectivist tendencies; the difference is that in some cultures the probability that individualist selves, attitudes, norms, values, and behaviors will be sampled or used is higher than in others."

Triandis (1989) proposed that the content of the self may be different in collectivist and individualist cultures. Individualist cultures value autonomy, independence and self-reliance. Individualists impress others by showing that they are different. Consequently, individualists almost entirely define the self in individual terms, resulting in a similarity between the aspects of the self that are sampled in private and public settings. In his way, the public self is congruent with the private self. In contrast, collectivist cultures value conformity to the in-group in public and individuals in this culture impress others through politeness and a display of harmony with the in-group. This may lead to a suppression of the private self in situations when the in-group is salient. Consequently, while collectivists more often define the self by in-group terms, there is less necessity for consistency between the aspects of the self that are sampled in private and public settings.

Collectivists tend to be more contextually driven than individualists, changing their behavior with ingroup and outgroup members and in private and public settings. In collectivist cultures, interactions with ingroup members are likely to be very different from interactions with outgroup members, while in individualist cultures there is only a slight difference. In support, investigations of advertising effectiveness have found stronger culture differences with shared (Han and Shavitt 1994) and socially visible (Zhang and Gelb 1996) products as compared with personal products. In these studies people in the individualist culture (e.g., USA) have been more consistent across product categories, than those from the collectivist culture (e.g., Korea).

This study investigated contextual differences in Hong Kong (more collectivist) and the USA (more individualist) that have direct relevance for consumer behavior, especially as relates to referents and normative influences (who, how much and when). Individualists are more likely than collectivists to seek advice from people outside their ingroup, such as experts and people recently encountered who have product experience. They are also more likely than collectivists to decide on a product, without asking advice from anyone. Collectivists are more likely than individualists to seek advice from ingroup members, such as family and close friends. They are also more likely than individualists to take the advice from ingroup members once it has been sought. The extent of these differences will depend on the type of product and the context of purchase and use. Cultural differences will be more pronounced for joint purchases, shared products, and products with more risk associated with the purchase, such as unfamiliar, complex and expensive products. These differences are tested across nine product dimensions.

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