Professor of Marketing at the Indiana University Northwest’s School of Business and Economics Subir Bandyopadhyay takes a closer look at consumer preference for certain foreign products in China.
It happens everywhere that consumers make semi-rational quality judgements based on a products’ provenance. Cornish pasties, Idaho potatoes, Belgian chocolates, Colombian coffee, the list of products sold with a geography-handle preceding is almost endless.
No surprise then that Chinese consumers make some of these semi-rational judgements with regards to foreign products. What the Professor wanted to investigate though is would they also be likely to make the same choices with regard to services?
This is a multi-billion dollar question as Country of Origin (COO) pricing differentials offer margin advantage to producers and to not exploit this benefit is to leave money on the table.
Using a small sample of Beijing based subjects hotels and restaurants were chosen to see if Chinese consumers perceived a difference between these two service products based on who was providing each.
They did. A key point for domestic service providers also emerged. Sure, it’s OK to charge higher prices but the consumer is going to scrutinize your product more critically than a foreign product at the same price point.
That pricier Luckin Coffee whipped-cream-cinnamon-decaf-latte with caramel drizzle will need then to be especially delicious if it’s to keep the similar offering from Starbucks at bay.
You can access the paper in full via this link Chinese Perception of Foreign Services.
Happy Sunday.