Documente Academic
Documente Profesional
Documente Cultură
Philip J. Kitchen
The University of Hull, Hull, UK, and
1. Introduction
In the consumer durable category the room air-conditioners industry in Malaysia is the fastest growing in the world following China and UAE (Oliva and Holley, 2004; ConstructionWeekOnline.com, 2009). The Malaysian market has been growing at about 15 per cent per year for the last three to ve years and it is expected to grow in spite of the economic downturn. The market is expected to increase from 253,399 units in 1991 to 1,511, 276 units in 2020 (Mahlia et al., 2002). Factors driving growth include the resilience in the construction sector and the continuing demand for residential homes, lower prices and easier
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Journal of Consumer Marketing 27/6 (2010) 507 515 q Emerald Group Publishing Limited [ISSN 0736-3761] [DOI 10.1108/07363761011078244]
payment schemes in a market where consumers have increasing disposable income, and aspire toward higher living standards and more comfortable homes. Consumers are now looking for improved quality, and more technologically advanced as well as better priced products. In making the decision to purchase, very often consumers rely on various informational cues or attributes in product evaluation, including intrinsic as well as extrinsic attributes (Chao 1989a, b, 2001; Miyazaki et al., 2005; Olson and Jacoby, 1972; Richardson et al., 1994; Schellinck, 1983). However, market growth has accelerated competitiveness. Currently there are about 20 brands of room air-conditioners in Malaysia ranging from well known brands produced by entrenched players such as Panasonic, Samsung, LG, and York, to new brands such as Topaire and TCL from new entrants, all jostling for position. This highly competitive market has forced companies to look towards ways to better satisfy increasingly well-informed and demanding consumers. Understanding consumers begins with knowledge about what they want and how they evaluate product attributes that matter for decision making. 507
Marketing a consumer durable brand in Malaysia Fon Sim Ong, Philip J. Kitchen and Shih Shiuan Chew
2. Objectives
The focus of this study is to test the extent to which Malaysian consumers rely on both intrinsic and extrinsic product attributes for decisions on room air-conditioner purchase in this consumer durable category. The research objectives, utilising conjoint analysis, are: . to examine preferences for air-conditioners based on consumers perceived value under multi-attribute situations; . to examine the relative importance of extrinsic and intrinsic attributes important to Malaysian consumers; and . based on the outcomes of the conjoint analysis, this study will then use simulation to suggest marketing strategies for Malaysian and Japanese companies interested in serving the Malaysian room air-conditioners market. From the earliest multiple-cue study by Schooler and Wildt (1968), research on multi-cue product evaluation has grown substantially spanning different product categories and different evaluative criteria (e.g. Chung, 2002; Iyer and Kalita, 1997; Johansson and Nebenzahl, 1986; Leila and Dwight, 2006). Although numerous studies on product evaluation have been conducted in the past in Malaysia (e.g. Kamaruddin and Mokhlis, 2001; Ong and Chuah, 2006), this study is the rst attempt that uses conjoint analysis focusing on multi-cues. Conjoint analysis approach is preferred since this method overcomes the problems associated with singlecue and self-report studies by presenting choices to consumers under a multi-attribute judgment situation. It provides a more realistic assessment of the importance of each attribute relative to other attributes. Although conjoint analysis has been developed and in use since the early 1970s, it remains a major set of techniques for measuring buyers tradeoff among products and services for which purchase decisions are based on multiple attributes (Green and Srinivasan, 1990; Aribarg and Foutz, 2009; Kim et al., 2009).
country of design (Acharya and Elliot, 2001; Hamzaoui and Merunka, 2006) in relation to the product being evaluated. Research in marketing has provided evidence that consumers often use extrinsic cues as the basis for their evaluation of product quality (for example see Dodds et al., 1991; Miyazaki et al., 2005; Rao and Monroe, 1989). Based on the research outcomes of previous studies (e.g. Bilkey and Nes, 1982; Chao, 2001; Iyer and Kalita, 1997; Tse and Gorn, 1993), country of assembly (COA) or country of manufacture (COM) are important evaluative dimensions for consumers. They suggest that consumers view products from developed countries more favourably than products from less developed countries, hence increasing the perceived value of room air conditioners branded by manufacturers from developed countries. Similarly one would expect consumers perception of purchase value to be higher for well known brand names compared to less known brands. Brand name is commonly used by buyers when making judgments about purchase value (Johansson and Nebenzahl, 1986; Kitchen et al., 2006). In addition, brand names carry some of the information usually associated with country of origin, with their implicit reference to corporate headquarters. Brand names provide customers with readily recognisable information about a rms product and it is seen as providing tangible and intangible benets. Technological advancement serves as the intrinsic cue in this study. Technology advancement refers to innovativeness in product and design dimensions (Roth and Romeo, 1992). This attribute encompasses the use of new technology and engineering advances, including the design of appearance, style, colour and variety. The notion that products made using higher technology increases buyers perceived purchase value and vice versa is well accepted. Generally quality is an important characteristic that consumers consider when making purchase decision for products and for durables in particular. Quality is dened as consisting primarily of reliability, workmanship and performance dimensionality (Han and Terpstra, 1988; Li and Dant, 1997; Roth and Romeo, 1992). Good quality positively affects buyers evaluation of products. Another important attribute closely related to quality is product warranty that tends to have a positive impact on perceived purchase value. Warranty has been found to be an effective extrinsic cue that gives assurance about product quality (e.g. Bearden and Shimp, 1982; Feldman, 1976). Warranties give assurance to consumers about possible redress if the product does not perform as expected. Excellent warranty terms result in positive evaluation of product by most consumers. It increases consumers condence in making purchases (Armstrong et al., 1975) by reducing their perceptions of risk of purchase (Erevelles, 1993; Perry and Perry, 1976). Consumers were also found to rely heavily on the length of warranty as a reliable cue to product quality when they are not highly knowledgeable about the particular product (Blair and Innis, 1996). Finally, purchase value has an inverse relationship with price such that higher price represents a monetary measure of what must be sacriced to purchase the item, and leads to consumers decreased willingness to buy (Zeithaml, 2000). Demonstrably, however, price can also be taken as a proxy for quality in association with the brand name.
Marketing a consumer durable brand in Malaysia Fon Sim Ong, Philip J. Kitchen and Shih Shiuan Chew
Thus, based on past empirical research, the hypotheses developed for this study are as follows: H1. The perceived value of the purchase of room air conditioner will be higher for a product made in a developed industrialised country compared to a product made in a less-developed country. The perceived value of the purchase of room air conditioner will be higher for a product with a well known brand name compared to a product with a lesser known brand name. The perceived value of the purchase of room air conditioner will be higher for a product with a lower price compared to a higher priced product. The perceived value of the purchase of room air conditioner will be higher for a product with superior quality compared to one with a lower quality. The perceived value of the purchase of room air conditioner will be higher for a product with a better warranty term compared to one with lesser warranty term. The perceived value of the purchase of room air conditioner will be higher for a product designed using high technology compared to a product made using low technology.
H2.
H3.
H4.
5. Sample
A total of 700 survey questionnaires were distributed via a convenience sampling method covering major urban areas in Malaysia since air-conditioner owner/users are mainly urban. From this, 441 questionnaires were returned and 15 questionnaires were dropped from analyses due to incomplete answers, with a nal sample of 426 respondents representing a response rate of 61 per cent. Briey, the respondents consisted of 55 per cent (n 233) females and 45 per cent (n 193) males, about 51 per cent (n 216) in the age group of 26-30 years old, about two thirds were single and slightly more than half had university education. Due to the convenience sampling method, about 64 per cent (n 271) were Chinese, 20 per cent Malays and the remaining consisting of Indians and Other ethnic groups, although the majority of the population in Malaysia are Malays. About 62 per cent of the respondents had an estimated monthly income of RM3000 or more. More than half had a university level of education.
H5.
H6.
4. The study
To study the relative importance of product attributes for decision making on room air-conditioners as well as attribute preferences under a multi-cue situation, conjoint analysis was used to develop product proles that respondents evaluated in a survey. Conjoint analysis was favoured because it overcomes the problems associated with single cue and self report studies by representing consumer choice as a multi-attribute judgement environment (Okechuku, 1994, p. 6). The conjoint prole was based on six attributes that represent both extrinsic and intrinsic cues. The extrinsic cues included were country of manufacture, brand name, price, and warranty, whereas intrinsic cues were quality and technological advancement (Table I). Combining all attribute levels resulted in 576 proles. By using a fractional factorial design (Cochran and Cox, 1957), the number of proles was signicantly reduced from 576 to 16 proles while maintaining the ability to estimate the utility. This was done by performing the orthogonal design program. Respondents were required to rank the 16 options according to their preferences. An example of a conjoint prole, card No. 4 is shown in Figure 1. Table I Conjoint study design
Product attributes Brand name Country of manufacture Price Warranty Technological advancement Product quality
6. Results
Conjoint analysis generated the part-worth utilities and by comparing the utility values, results show that for country of manufacture Japanese air-conditioners were the most preferred. South Korea was next, followed by Malaysia and China, providing support for the preference on country of manufacture that air-conditioners manufactured in a developed industrialised country was perceived as better than those from developing countries (Table II). H1 which postulates that consumers perceived higher value from airconditioners made in developed countries compared to those made in developing countries, is supported. In terms of brands, Panasonic was favoured over Samsung while Samsung was valued more than Acson. TCL was the least preferred, supporting H2 which states that well known brands
Number of levels 4 4 3 2 2 3
Attribute levels TCL; Acson; Samsung; Panasonic China; Malaysia; South Korea; Japan RM800; RM1000; RM1200 1 year; 3 years Basic; advanced Poor; average; good
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Country of manufacture
Price
Quality
are regarded as having higher perceived value over the lesser known brands. Surprisingly for price, part-worth utility shows that lower price was preferred providing support for H3 about the inverse relationship between price and perceived value. Results supported the positive relationship between quality and preference where stronger preference was given to higher quality. Consistent with the literature, longer warranties were preferred. Similarly, the more advanced the technology for the product was perceived to be, the stronger was the preference. Thus, H4, H5, and H6 were supported, respectively. The Pearson r-value was 0.993 and Kendalls tau value was 0.883 indicating that the model provided a good t with the data. This high degree of judgmental consistency provided assurance that the tasks were meaningful and that respondents took their participation seriously. In addition to knowing consumers preferences within each level of the attribute, it is equally important to understand how consumers rate the relative importance of the attributes. Table III shows the relative importance of each conjoint product attribute based on part worth results. The standard practice of dividing the range of each attribute (highest part-
worth utility minus lowest part-worth utility) by sum of the ranges for all attributes was used (Jain et al., 1979). These relative importance values add up to 100 per cent. Quality was the most important attribute to Malaysian respondents, accounting for the highest percentage of explained variance (32.7 per cent). Brand name was the next most important, accounting for 22.7 per cent of the variance and this was followed by country of manufacture (18.5 per cent). Price explained 10.5 per cent of the variance in the decision making among Malaysian buyers. Warranty was found to be next in importance, explaining 9.5 per cent of the variance. It should also be noted that technological advancement had a minimal impact on the decision making of consumers, explaining just 6.1 per cent of the variance. This could be due to the attention that consumers paid to extrinsic attributes such as country of manufacture and brand name, which together made up 41.2 per cent of the variance explained. Consumers tend to associate quality and brand name while they tend to assume technology as being embedded in quality.
Contrasts Q.B.C.P.W.T
Quality (Q) Brand (B) Country of manufacture (C) Price (P) Warranty (W) Technological advancement (T)
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7. Discussion
A better understanding of preferences among Malaysian consumers in this consumer durable category, in particular the relative importance of quality, brand name, country of manufacture, price, warranty, and technological advancement can be exploited for more focused marketing strategies. New product development, positioning or re-positioning, and effective integrated marketing communication strategies (Kitchen and Li, 2005) may need to be re-assessed and reformulated to take into consideration market dynamics potentially in different cultural circumstances. For companies perceived to be foreign, the research results point to the importance of capitalising upon a consumer durable products intrinsic properties (i.e. superior quality, functional benets or the ways these are presented) in addition to brand recognition and country of manufacture. Since Malaysian consumers prefer better known brands and view products made in developed countries more positively than products made in less developed countries, they may respond more favourably to promotion based on extrinsic attributes, in this case, brand name and country of manufacture. Conjoint analysis results show that Malaysian consumers place relatively low levels of importance on price, warranty and technological advancement. It appears that although consumers perceived a higher value from low price compared to high price, pricing and extended warranty terms are not the most important factors among Malaysian consumers. This could be due to the association between quality and price such that a higher price is commonly associated with higher quality. Consumers are likely to pay premium pricing for room air conditioners with what is perceived to be high quality. In turn, this may favour foreign brands, in particular those from Japan. Although technological advancement was not viewed as that important when compared to other attributes, its role is much more subtle. For example, what is obvious to consumers are quality, features and design which are in fact outcomes of technological advancement.
purchase behaviour over the Maximum Utility and the Bradley-Terry-Luce model (Luce and Tukey, 1964; Green and Srinivasan, 1978; Curry, 2003). Based on the results of the simulator, marketing strategies are suggested for Malaysian and Japanese companies. Simulation based on Malaysian companies is an obvious choice since this study concerns a consumer durable marketed in Malaysia. Findings from the simulation could be useful for Malaysian companies so that they could formulate strategies to their best advantage on how to compete to gain market share. The choice of Japanese companies can be attributed to: rst, their competitive longevity (spanning several decades) in this market; second their technological leadership in terms of quality, brand awareness, and established brand preference especially in the premium segment of the market; and, thirdly, it is useful to carry out a simulation to see how Japanese companies can compete further in Malaysia. Finally, it will be good for Malaysian companies to be benchmarked against the established industry leader. Additionally, it is interesting to see how Japanese companies could defend their leadership position by adopting the suggested strategic approach. 8.1 Recommended marketing strategy for a Malaysian competitor For Malaysian companies, by far the single most important area for improvement is to increase the perceived quality of air-conditioners made in Malaysia. To improve quality signicantly, Malaysian companies need to consider various strategic options. One way is to establish a joint venture with a foreign rm, particularly one with high prestige and has superior technology. Another option is to consider a strategic alliance with an established brand so that the Malaysian company is allowed the use of the brand name. An example of a company that adopted this strategy is the OYL Group of Malaysia where royalty is paid for the use of the York brand. The York brand conveys a strong message to Malaysian consumers that it is a good quality product, supported by a good warranty term and strong after sale services. Table VI shows the changes in total utility score if an alliance is forged with a well-known brand that will result in changes in the price level and technological advancement. The new marketing mix suggested for a Malaysian competitor will result in a signicant increase in market share from a mere 10 to 25 per cent (Figure 2). By having an alliance or a joint venture partner with a strong brand name such as Samsung, the perceived quality of air-conditioners will improve from average to good and the technology used will be improved perceptually from basic to advanced. This will result in a higher price from RM1000.00 to RM1200.00. The total utility will improve from 3.8 to 5.6. 8.2 Recommended marketing strategy for a Japanese competitor Currently, Japanese competitors dominate the Malaysian room air-conditioner market due to the perceived superior quality of their products. They have established their brand name that is associated with an image of high quality. They could maintain their market share by capitalising on product quality as well as their strong brand name. Advertising and promotional activities should continue to emphasise high product quality. However, the price structure may need to be improved since consumers are becoming more demanding. If Japanese manufacturers were to shift their production to 511
Marketing a consumer durable brand in Malaysia Fon Sim Ong, Philip J. Kitchen and Shih Shiuan Chew
Figure 2 Estimated market share of Malaysian companies with changes in marketing mix (Logit model)
ID 17 18 19 20
developing countries such as Malaysia to reduce production costs, they could offset buyers poor impression of products made in developing countries by extending the warranty term, from one year to three years. Quality perceptions remain good and the technology used is advanced technology. The price under the model will drop from RM1200 to RM1000, leveraging on the strong brand and affordable price. Table VII shows the improvement in total utility when production is moved to within Malaysia and the warranty term is extended. Figure 3 shows estimated market share of Japanese competitors increasing from 52 to 61 per cent by implementing the recommended strategic changes. However, careful checking needs to be carried out to ensure that price reductions do not result in a reduction of brand quality.
Second, the conjoint design was limited to only four countries corresponding to four brands that compete in this consumer durable market. In reality, there could be more than one brand from a country such as Japan. Another limitation is the dynamic business environment that inuences decision making which could involve out-sourcing of parts or process to third party companies located in another country. This could sometimes blur the effect of country of origin (COO), which may be more of an issue in this rapidly developing Malaysian economy. The design of conjoint analysis could include country of design (COD), country of assembly (COA) and also source country for key components to better understand the effect of COO, COA and COD. Third, the approach for this consumer durable product (i.e. room air conditioners) could also be extended to other product categories, and cross-cultural analysis could be undertaken. For example, price and country of origin criteria may well enjoy different perceptions in differing cultural contexts.
Pay royalty to use well known and prestigious brand name (e.g. Samsung) (0.211) Malaysia (2 0.070) RM1200 (20.823) Good (3.816) Advanced (0.486) 1 year (0.543) (1.326) 5.6
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Figure 3 Estimated market share of Japanese competitors with changes in marketing mix (Logit model)
Finally, while the simulated strategic marketing approaches are based inexorably on the results from conjoint analysis, they do represent idealised strategies. In each case, a simulated approach needs to be augmented by quantitative and qualitative criteria gathered in relation to specic brands in specic cultural contexts. However, simulation may well represent an interesting and rst analytical stage for current competitors and those considering market entry. There is signicant room, therefore, for further research.
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University Business School; Afliated Professor, School of Business, University of Rennes. Visiting Professor: University of Malaya, Malaysia. Editor Journal of Marketing Communications. He has published 12 books and over 100 papers in leading journals around the world. He is listed as one of the The Top 50 Gurus who have inuenced the Future of Marketing, in Marketing Business, December 2003, pp. 12-16. Fellow of CIM, RSA, HEA; and Member of the ALCS, Institute of Marketing Science, Institute of Directors (UK). Shih Shiuan Chew is the Quality Assurance Manager at OYL Techonology Sdn Bhd, a company that manufactures air-conditioners for the Malaysian and export markets.
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