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Homework answers / question archive / A recent Nielsen Global Brand Origin Report revealed that 91% of Chinese consumers consider a brand’s country of origin as important as or more important than buying drivers such as price, choice, selection, quality and function
A recent Nielsen Global Brand Origin Report revealed that 91% of Chinese consumers consider a brand’s country of origin as important as or more important than buying drivers such as price, choice, selection, quality and function.
Fifty per cent choose a global brand and thirty eight per cent choose a local brand for safer ingredients and processing. Similarly, 38% choose local brands and 30% global brands when it comes to price or value; 34% for global brands and 24% for local brands when it involves better product benefits, 28% or global brands and 27% for local brands for previous positive experience and 28% for global brands and 24% for local brands when it comes to overall nutrition. All of these were the top reasons behind selecting a product.
Overall 32% of respondents “agree” and 45% “somewhat agree” that global brands are mostly more expensive when compared to local brands. Twenty seven per cent of respondents “agree” by 27% and 45% “somewhat agree” that global brands offer latest product innovations compared to local brands. Similarly, 25% “agree” and 42% “somewhat agree” that global brands offer better quality.
In China, for baby food and formulas, 54% prefer global brands compared to 30% who prefer local brands. A similar trend is seen for beauty and personal care products, of which 47% prefer global brands in comparison to 28% who favour local brands. Chinese consumers prefer local fresh food. The responses for local vs global brands for vegetables is 71% vs. 9% for meat is 67% vs. 11% for fruits is 66% vs. 10% for yogurt is 58% vs. 16% and for seafood is 58% vs.
16%.
In the food and beverages categories, again local brands are preferred as 48% of Chinese consumers seek local brands and 28% want global products. A similar trend is found for packaged food. For instance, preference for ice cream is 38% local vs. 29% global, for crackers is 36% local vs. 28% global and for canned vegetables is 52% vs. 10% global.
Brand origin can be very important consideration in the current retail world. However, the brand sentiment varies in categories. Thus, the presence of a powerful brand has greater leverage regardless of the fact that it is a local or global brand. In the end, only brands that better fulfil the needs of customers and deliver strong value propositions will have an advantage in any market.
QUESTION 1
Discuss the factors that make some global brands are more expensive than local brands.
1. Higher prestige value:
Global brands are capable of competing more effectively on price due to the lower costs of production attained through economies of scale. Further, global brands are perceived to be of a better quality and known to lend prestige to the buyer. Thus, the premium tag associated with global brands enables them command a higher price than the local brands.
2. Extensive promotional campaigns:
Firms often need to expend more on advertising and promotional campaigns when launching a product in an foreign market. The firm might be completely new to the foreign market, calling for an extensive marketing campaign to awaken customer demand. The additional expenditure on advertising will only increase the price of the product.
3. Market characteristics:
At times governmental policies may inflate the price of a good in a foreign market. For instance , if the law in the host country raises the minimum wage, the cost of production will increase resulting in higher prices for customers. Tax structure, cost of raw materials also influence the pricing strategy. For instance, Starbucks is relatively more expensive in China than other markets due to expensive logistics.
