Product Evaluation by Chinese Consumers: An Intra-National Comparison

Charles Chin Chiu Tam, Greg Elliott, Macquarie University

Abstract
A fundamental premise which underpins much of the study of international marketing and
international consumer behaviour, is that there exist significant differences between the
domestic and foreign markets. Further, the foreign country is frequently treated latter as a
single, homogeneous entity, in that the research is commonly reported at the level of the
foreign country. This paper explores the question of whether, or not, there exist significant
differences in the product evaluation processes among Chinese consumers from different
geographic regions within China. Results from a survey of consumers in Hong Kong,
Shanghai and Chongqing indicate that, indeed, there exist significant differences in attitudes
towards country of origin, brand, price, products and purchase intentions.

Introduction
The field of international marketing is, by now, a topic which has been extensively researched
and documented. An underlying premise of international marketing is that, significant
differences exist between marketing in the home and foreign countries, typically based on
differences in the behaviour of buyers or consumers and/or selling firms. (After all, if no
differences existed, the study of international marketing would be largely superfluous.) A
principal focus of research in this field is product evaluation processes and choice behaviours.
Typically, the focus of international marketing studies is at the level of the foreign country-asa-whole, in which results are reported at the level of the foreign country (or countries) and
buyers in foreign countries are implicitly treated as a single, homogeneous group. For many
relatively homogeneous countries, this may be a safe assumption. For some countries,
however, this may be misleading. Thus, for large and or culturally diverse country, such as
China, the implicit assumption of homogeneity in consumer behaviour may be erroneous.
This study explores the question as to whether significant differences exist in the product
evaluation processes between consumers in different geographic regions in China. Of course,
the alternative proposition that there are significant differences in consumer behaviour based
on geographical differences is neither novel nor radical. It is however, a question which is still
relatively ignored in the international marketing literature.

Product Evaluation Processes

Over the past 30 years, a great deal of research has been done in studying the role and
influence of information cues used by consumers in evaluating products (Schooler, 1965;
Olson and Jacoby, 1972; Szybillo and Jacoby, 1974; Zeithaml, 1988; Tellis and Gaeth, 1990;
Samiee, 1994; Ahmed and dAstous, 1996; Li, Fu and Murray, 1997; Erevelles, Roy and
Vargo, 1999). Consumers often judge the quality of a product or service on the basis of
multiple informational cues (Bednall, Schiffman, Watson, and Kanuk, 1997). Fundamentally,
information cues can be categorized into two major types: intrinsic cues and extrinsic cues
(Olson et al., 1972; Szybillo et al., 1974; Jacob, Szybillo, and Schach, 1977). Intrinsic cues
are information directly associated with the physical characteristics of a product such as

product design, color, size, or aroma (Bednall et al., 1997). On the other hand, extrinsic cues
are information indirectly associated with a physical product such as country-of-origin, brand
name, price, warranty and word-of-mouth. These intrinsic and extrinsic cues, either jointly or
separately, provide the basis for the perceptions of product and service quality (Bednall et al.,
1997). Because of the multiplicity of intrinsic and extrinsic cues, the task of inferring or
predicting consumers evaluation processes and predicting their outcomes is thus often
difficult and unreliable. Despite these challenges, the current research seeks to develop a
product evaluation model which incorporates, inter alia, country of origin, brand and price.
The potential influence of these variables on consumers judgements has been extensively
researched and a brief review of this literature is discussed below.
Country of Origin
One widely discussed product cue is that of country-of-origin (COO hereafter). When
consumers make use of COO as an information cue to assess the quality of a product and
ultimately affect the purchase decision for that product, this phenomenon is referred to as the
COO effect. Since Schoolers pioneering (1965) work, many studies have demonstrated that
consumers have different perceptions of products made in different countries. In research on
Chinese consumers, Zhang (1996) found that products from Japan and the US were preferred
to those from South Korea. COO was thus identified as a significant factor in the product
evaluation process of Chinese consumers. While COO is generally found to be a significant
influence in consumers decision-making, its importance relative to other extrinsic cues, such
as price and brand, is less conclusive (Okechuku, 1994; Lee and Ganesh, 1999; Elliott and
Acharya, 2003; Hamin and Elliott, 2006).
Brand Name
A second commonly used extrinsic cue is brand name. Consumers form impressions of a
brand name which is a composite of elements including product knowledge, packaging,
advertising and pricing (Ahmed et al., 1996). An important function of brand name is to
minimize the information searching costs (Zeithaml, 1988). While brand name is undoubtedly
important (Okechuku, 1994), its relative importance compared with COO is the subject of
conflicting research findings. A number of studies (Tse and Gorn, 1992; Andaleeb, 1995; Han
and Qualls, 1985; Nebenzahl and Jaffee, 1996; Hulland, 1999) suggest that COO can be more
influential than brand. However, the effect of brand image was found to be stronger than that
of country image in other studies (Lee et al., 1999; Elliott et al., 2003; Hamin et al., 2006).
Price Level
Price is an obviously important extrinsic cue which has been studied extensively in product
evaluation research (Erickson and Johny, 1985; Erevelles et al., 1999; Yoon and Kijewski,
1997). Price has two opposite implications to consumers in terms of risk taking (Erickson et
al., 1985). The first implication is that consumers may want to buy a product of higher price
because of less risk expected with the performance of a more expensive product: price
seeking behaviour, (Leavitt, 1954; Tellis et al., 1990). The second implication is that
consumers may be exposed to a greater financial risk for buying a more expensive product.
Higher price will eventually become a greater barrier to product purchase. In price aversion
behaviour, consumers will choose the lowest-priced brand to minimize immediate costs.
(Kahneman and Tversky, 1979; Tellis et al., 1990) Empirical evidence on this question is

mixed. Owing to the divergent results, it has been argued that the price-quality relationship
may be product dependent and culture specific (Erevelles et al., 1999).
Inter-Regional Differences
While the questions of product evaluation processes and the relative influence of COO, brand
and price have received substantial attention in the international marketing literature, an issue
which has gone relatively undiscussed is the question of inter-regional (or intra-national)
differences in product evaluation. In this context, the dominant approach in studying
international consumer behaviour is to study aggregate differences between the home and
foreign markets in an effort to uncover what, if any, changes need to be made in marketing
activities in foreign countries. This is, of course, sensible but it ignores the potential problem
that, in large and heterogeneous foreign countries and markets, significant differences may
exist between regions. China is one such country and the issue is therefore to investigate if
significant differences exist in the product evaluation processes of consumers in different
regional markets. This question could be regarded as a no-brainer (sic.) by some academics
and practising marketers who may argue that, of course, international marketers would never
presume that foreign countries are homogeneous national markets. While this may be true in
practice, it is equally valid to assert that much of the discussion of international consumer
behaviour is focussed on differences between countries with little discussion of
(geographical) differences within. Beyond this question is also the issue of whether, or not,
international marketing activities are resulting in convergence (e.g. Farley and Lehmann,
1992; Statt, 1997; Levitt, 1983) or divergence (e.g. Boddewyn, 1981; Fisher, 1984; Fournis,
1962) in international consumer behaviour. In other words, are cultural differences increasing
or not and are such differences reflected in increasing differences in consumer buying
behaviour? The literature in support of both positions is extensive.

The Current Study

Objective
The objective of the current study therefore is to examine how consumers in different regional
markets in China evaluate the extrinsic cues of COO, brand and price in the formation of their
product preferences and purchase intentions. This question is expressed in the following
hypothesis.
There are differences between Chinese groups in their product evaluation characteristics.
Product evaluation characteristics are described by the variables in the product evaluation
base model, namely total COO attitudes, total brand attitudes, total price attitudes, total
perceived product quality, total product attitudes, and purchase intentions. Therefore, H1 can
be divided into the following six sub-hypotheses.
H1: There are differences between Chinese groups in their total COO attitudes.
H2: There are differences between Chinese groups in their total brand attitudes.
H3: There are differences between Chinese groups in their total price attitudes.
H4: There are differences between Chinese groups in their total perceived product quality.
H5: There are differences between Chinese groups in their total product attitudes.
H6: There are differences between Chinese groups in their purchase intentions.

(Note that the terms total COO attitudes, total brand attitudes, total price attitudes,
total perceived product quality and total product attitudes in the above hypotheses signify
that multiple item scales were used to construct composite measures. 1 )
Methodology
To answer these (and other) research questions, sample survey research was conducted in
three Chinese regional locations, namely, Hong Kong (SAR), Shanghai and Chongqing.
These three locations were chosen as representative of different location along a
Traditional/Chinese-Modern/Western continuum. It was felt that these three locations
would provide a sufficiently wide range of responses as to answer whether, or not, there exists
any significant differences in the product evaluation behaviours of consumers in these three
diverse locations. The hypothetical product chosen was domestic air conditioners, of Samsung
(South Korea) and Midea (China) brands, made in China or South Korea and at high and low
price levels. Both brands of air-conditioners are available in all three Chinese locations. The
choice of domestic air-conditioners was made carefully as the study sought to focus on a
relatively high-involvement product, but also one which was within the purchasing power of a
broad cross-section of Chinese consumers. Similar published studies have used cars (e.g.
dAstous and Ahmed, 1992; Schaefer, 1997) and televisions (e.g. Andaleeb, 1995; Kim and
Pysarchik, 2000; Hamin et al., 2006), but, in this case, it was felt that cars would not be
within the purchasing power of the majority of respondents. Conversely, televisions are
probably almost universal in China which would have made the purchase scenarios unrealistic
(eg a high priced Midea television made in Korea). A further reason to choose airconditioners is the importance of selecting a gender-neutral product (Hong and Toner, 1989).
The limitations imposed by such artificial purchase scenarios are, however, acknowledged.
Sample size
In order to infer significant differences between each of the factorial combinations of
hypothetical products, a minimum quota of thirty respondents per cell was specified. A total
of 795 responses were obtained by the combination quota/convenience sampling. Interviews
were conducted face-to-face in suburban shopping malls in each of the three regional Chinese
cities, namely, Shanghai, Chongqing and Hong Kong.
Analysis
For H1 to H6, the six product evaluation variables are tested for statistically significant
differences among the three Chinese groups. ANOVA tests were carried out with the six
product evaluation variables tested as a dependent variable with the Chinese groups treated as
the independent variable. Testing for each dependent variable separately raises the possibility
of increased risk of Type I error, which can be reduced by setting a more stringent alpha value
using Bonferroni adjustment. The normal alpha value (normally 0.05) is divided by the
number of ANOVA tests (six) to give a p value of 0.008.

1
The transformations of the dependent variables are summarized as follows:
1. Total COO attitude = COO attitude (quality) + COO attitude (technology) + COO attitude (reputation)
2. Total brand attitude = brand attitude (quality) + brand attitude (technology) + brand attitude (reputation)
3. Total price attitude = price attitude (quality) + price attitude (technology) + price attitude (reputation)
4. Total perceived product quality = perceived quality (innovation) + perceived quality (design) + perceive quality (prestige) + perceived
quality (workmanship)
5. Total product attitude = overall rating + overall confidence
Chronbach alpha ranged from .84 to .89 for all composite indices, indicating satisfactory reliability.

Results
The ANOVA tests indicate that there are overall significant differences among the three
groups for all the hypotheses at a level of 0.05. Therefore, the hypothesis that: There are
differences between Chinese groups in their product evaluation characteristics is supported.
Table 1. Tests of Between-Subjects Effects
Independent
Dependent
Type III Sum
Variable
Variable
of Squares
CITY
Total COO attitude
240.431
CITY
Total brand attitude
203.903
CITY
Total price attitude
61.984
CITY
Total perceived
537.641
product quality
CITY
Total product attitude
112.442
CITY
Purchase intention
29.407

df
2
2
2

Mean
Square
120.216
101.951
30.992

F
34.314
26.153
4.798

Sig.
p value
.000
.000
.008

Partial Eta
Squared
.080
.063
.012

268.821

40.837

.000

.094

2
2

56.221
14.703

35.449
17.853

.000
.000

.082
.043

The post hoc analyses (not shown) further demonstrate that there are significant differences
within each pair of groups except H3 (SH HK, HK - CQ) and H5 (SH - CQ) (at p<.05).
Implications and Conclusions
From the above results, it can be concluded that there are significant differences among the
three cities on the six product evaluation characteristics: total COO attitude, total brand
attitude, total price attitude, total perceived product quality, total product attitude, and
purchase intention. These results imply that it is therefore inappropriate to assume that
customers in different Chinese regions will respond in a similar way to the same marketing
program by making use of COO, branding, and pricing in a uniform way. Quality perceptions
and attitudes towards a product could be very different in response to common national
marketing tactics and strategies. A successful marketing program in one city may therefore
not achieve similar results in another city. These results therefore imply, unsurprisingly, that
China is a heterogeneous market. Beyond the process of product evaluation, it also seems
likely that other types of consumer behaviour, such as information seeking and actual
purchases may vary by regions as well.
Results show that the more developed cities, Hong Kong and Shanghai, tend to choose
foreign air-conditioners. This contrasts with the tendency to buy local air-conditioners in the
less developed city of Chongqing. In addition, both Hong Kong and Shanghai groups prefer
Samsung air-conditioners. In contrast, the Chongqing group does not show a significant
preference. Third, there is a general preference for high-priced air-conditioners in the three
cities, presumably because less risk is expected with the performance of a more expensive
product (Erickson et al., 1985) price-seeking rather than the price-aversion (Kahneman
et al., 1979; Tellis et al., 1990).
For marketing theorists, these results suggest two important conceptual implications. Firstly
for international marketing scholars and practitioners, these results imply that international
marketers should consider the possibility of intra-national or inter-regional differences in
export markets; rather than confining themselves to exploring for gross differences between
the domestic market and the foreign market-as-a-whole. Secondly, while there is a
conspicuous trend in domestic marketing towards (geographic) micro-marketing these
findings suggest that market segmentation based on geography within individual foreign
markets is certainly worthy of closer investigation.
5

Bibliographies
Boddewyn, J. J. 1981. Comparative Marketing: The First Twenty-Five Years, Journal of
International Business Studies, 12, pp.61-79.
Chike Okechuku 1994. The Importance of Product Country of Origin: A Conjoint Analysis of
the United States, Canada, Germany and the Netherlands, European Journal of Marketing,
28(4), pp.5-19.
DAstous, A. and Ahmed, S.A. 1992. Multi-Cue Evaluation of Made-In Concept: A Conjoint
Analysis Study in Belgium, Journal of Euromarketing, 2(1), pp.9-29.
Elliott, G. and Acharya, C. 2003. Consumer Ethnocentrism, Perceived Product Quality and
Choice: An Empirical Investigation, Journal of International Consumer Marketing, 15(4),
pp.87-115.
Erickson, Gary M., and Johny K. Johansson 1985. The Role of Price in Multi-Attribute
Product Evaluations, Journal of Consumer Research, 12, pp.195-199.
Eunsang Yoon and Valerie Kijewski 1997 Dynamics of the Relationship between Product
Features, Quality Evaluation, and Pricing, Pricing Strategy & Practice, 5(2), pp.45-60.
Farley, John U. and Lehmann, Donald R. 1992 Cross-National Laws and Differences in
Market Response, working paper, The Wharton School, University of Pennsylvania.
Fisher, Anne B. 1984 The Ad Biz Gloms Onto Global, Fortune, November 12, pp-77-83.
Fournis, Y. 1962 The Markets of Europe or the European Market?, Business Horizons, 5,
pp.77-83.
Hamin and Elliott, G. 2006 A Less-Developed Country Perspective of Consumer
Ethnocentrism and Country of Origin Effects: Indonesian Evidence, unpublished research
paper.
Han, M.C. and Qualls, W.J. 1985 Country-of-Origin Effects and Their Impact upon
Consumers Perception of Quality, in Tan, C.T. and Sheth, J. (Eds), Historical Perspectives in
Consumer Research: National and International Perspectives, Association for Consumer
Research, School of Management, University of Singapore, Singapore.
Israel D. Nebenzahl, Eugene D. Jaffe 1996 Measuring the Joint Effect of Brand and Country
Image in Consumer Evaluation of Global Products, International Marketing Review, 13(4),
pp.5-22.
Jacoby, Jacob, George Szybillo and Jacqueline Busato-Schach 1977 Information Acquisition
Behavior in Brand Choice Situations, Journal of Consumer Research, 3, pp.209-216.
John S. Hulland 1999 The Effects of Country-of-Brand and Brand Name on Product
Evaluation and Consideration: A Cross-Country Comparison, Journal of International
Consumer Marketing, 11(1), pp.23-40.

Kahneman, Daniel and Tversky, Amos 1979 Prospect Theory: An Analysis of Decision
Under Risk, Econometrica, 47 (March), pp.263-291.
Kim, Soyoung and Pysarchik, Dawn Thorndike 2000 Predicting Purchase Intentions for Uninational and Bi-national Products, International Journal of Retail & Distribution Management,
28(6), pp.280-291.
Leavitt, H. J. 1954 A Note on Some Experimental Findings about the Meaning of Price,
Journal of Business, 27, pp.205-210.
Lee, Dongdae and Ganesh, Gopala 1999 Effects of Partitioned Country Image in the Context
of Brand Image and Familiarity: A Categorization Theory Perspective, International
Marketing Review, 16(1), pp.18-39.
Levitt, Theodore 1983 The Globalization of Markets, Harvard Business Review, 61, pp.92102.
Olson, J.C. and Jacoby, J. 1972. Cue Utilization in the Quality Perception Process, in
Venkatesan, M.(Ed.), Proceedings of the Third Annual Conference of the Association for
Consumer Research, pp.167-179.
Sadrudin A. Ahmed and Alain d Astous 1996. Country-of-Origin and Brand Effects: A
Multi-Dimensional and Multi-Attribute Study, Journal of International Consumer Marketing,
9(2), pp.93-115.
Samiee, Saeed 1994. Customer Evaluation of Products in a Global Market, Journal of
International Business Studies, third quarter, pp.579-604.
Schaefer, Anja 1997 Consumer Knowledge and Country of Origin Effects, European Journal
of Marketing, 31(1), pp.56-72.
Schiffman, Bednall, Watson, and Kanuk 1997. Consumer Behavior, Australia: Prentice Hall.
Schooler, R.D. 1965. Product Bias in the Central American Common Market, Journal of
Marketing Research, 2, pp.394-397.
Statt, D.A. 1997. Understanding the Consumer: A Psychological Approach, London:
Macmillan.
Sung-Tai Hong and Julie F. Toner 1989. Are There Gender Differences in The Use of
Country-of-Origin Information in The Evaluation of Products?, Advances in Consumer
Research, 16, pp.468-472.
Sunil Erevelles, Abhik Roy, Stephen L. Vargo 1999 The Use of Price and Warranty Cues in
Product Evaluation: A Comparison of US and Hong Kong Consumers, Journal of
International Consumer Marketing, 11(3), pp.67-91.
Syed Saad Andaleeb 1995 Country-of-Origin Effects: A Country-Category Effect Hypothesis,
Journal of International Consumer Marketing, 7(3), pp.29-52.

Szybillo, G. J. and Jacoby, J. 197) Intrinsic versus Extrinsic Cues as Determinants of

Perceived Product Quality, Journal of Applied Psychology, 59, pp.74-78.
Tellis, G. J. and Gaeth, G. J. 1990 Best Value, Price-Seeking and Price Aversion: The Impact
of Information and Learning on Consumer Choices, Journal of Marketing, 54, pp.34-45.
Tse, D.K. and Gorn, G. 1992 An Experiment on the Salience of Country-of-Origin in the Era
of Global Brands, International Journal of Marketing, 1(1), pp.57-76.
Yong Zhang 1996 Chinese Consumers Evaluation of Foreign Products: The Influence of
Culture, Product Types and Product Presentation Format, European Journal of Marketing,
30(12), pp.50-68.
Zeithaml, V. A. 1988 Consumer Perceptions of Price, Quality and Value: A Means-End
Model and Synthesis of Evidence, Journal of Marketing, 52, pp.2-22.
Zhan G. Li, Shenzhao Fu, and L. William Murray 1997 Country and Product Images: The
Perceptions of Consumers in the Peoples Republic of China, Journal of International
Consumer Marketing, 10(1/2), pp.115-137.