Consumer Choice of U.S. Brands in Foreign Markets

Volume 44 Number 3 Fall 1997

CONSUMER CHOICE OF U.S. BRANDS IN FOREIGN MARKETS: OPPORTUNITIES FOR ALABAMA TEXTILE AND APPAREL MANUFACTURERS

Christie Caine and Sandra Forsythe

Future success in the global marketplace requires accurate response to consumer demands in international markets. Successful firms must identify customers' needs and expectations so they can develop product and marketing strategies that will enhance success in international markets. An AAES study is helping Alabama textile and apparel producers identify their customers' needs around the world.

AAES researchers developed a model of the consumer choice process and tested it with consumers from Korea, China, Mexico, and the United States. This model provides a framework for understanding customer needs and demonstrates the interrelationship between product attributes, the customer's perception of product attributes, and resulting evaluations of the product's quality and value.

Purchase decisions are based on consumers' perceptions, and those perceptions may vary by country since culture is a powerful force shaping perceptions and, thus, product choices. That is why careful examination of customer demographics, purchase behaviors, and attitudes toward U.S. products and brands is critical.

Mall intercept studies of consumers in four countries were conducted to examine the effect of product attributes on consumers' perceptions of quality, value, and willingness to buy a U.S. brand apparel product. Product attributes important to the consumer for apparel products include physical attributes of the product, such as the style, fabric quality, and workmanship, as well as brand name and price.

In examining consumer attitudes and purchase behaviors in international markets we can see how the individual markets differ. China, South Korea, and Mexico represent diverse emerging markets with a growing middle class and growing potential for U.S. textile and apparel products. The U.S. market was used as a benchmark to compare Asian and Latin American markets.

Consumer segments were compared on a number of variables to better understand how market segments differed and what was necessary to satisfy customers in each market. For example, consumers who are most likely to purchase U.S. brands are typically younger, more highly educated, more affluent, and more fashion and brand conscious than the average consumer in those markets. Most bought U.S. brands because they represent the American lifestyle or image.

Statistical analysis was used to test the effect of physical attributes, U.S. brand name, and price on perceptions of quality, value, and willingness to buy among customers in each of the four countries.

The model (see the figure) shows color coded country paths: red-China, orange-Mexico, purple-Korea, and green-USA. The width of the line indicates the strength of the relationship.

Model of consumer choice for U.S. products in four countries.

Consumer perception of physical attributes had a strong impact on perceived quality. Brand was also important, but the effect of price on perceived quality was less important than intrinsic attributes or brand (except for U.S. customers, who have been conditioned to look for sales). U.S. brand name did affect quality perceptions in all countries except China; however, most respondents did not examine the country-of-origin label when evaluating garments. They appeared to base their evaluations on their perception of U.S. brands rather than actual country of origin. That is, consumers appeared to use U.S. brand names as an indicator of product quality, fashionability, etc. The direct effect of price on perceived value is significant in all markets. There is a strong relationship between perceived quality, value, and willingness to buy in all markets.

Understanding customers' needs, expectations, and motivations for purchase allows companies to develop more effective product and marketing strategies to maximize customer satisfaction. For example, among Mexican apparel customers, image and status are very important; thus, high status brand names are very popular. Furthermore, high quality apparel is desired to convey a high status and image. Mexican customers are willing to pay higher prices for apparel than Korean, Chinese, or U.S. consumers. They seldom purchase apparel products that are on “sale” because they believe it denotes inferior quality. Therefore, marketing strategies that build a strong brand image consistent with the status-oriented attitudes and values of Mexican customers will be most successful in that market.

By comparison, customers in South Korea are more price and value conscious and more prone to purchase apparel products on sale than are Mexican consumers. Thus, strategies of value-oriented promotion, advertising, pricing, and sourcing are necessary to maximize customer satisfaction in South Korea. Positioning a U.S. brand/product near the high end of the market was typically the most successful positioning strategy in Mexico. In Korea, positioning products toward the top with emphasis on competitive prices was the best strategy.

This research can benefit the Alabama apparel and textile industry by providing better forecasting of potential customer response to changes in product quality, offerings, and service levels for each market; enhancing customer satisfaction (and sales and profitability) by more effectively identifying and responding to customer needs and expectations; reducing risk associated with errors in developing and positioning a product for specific international markets; and anticipating potential effects of advertising, promotion, pricing, or other positioning strategies on consumer perceptions of the brand/product.

Caine is a Technology Specialist for the Center for Textile and Apparel Technology and Forsythe is Wrangler Professor of Consumer Affairs.

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