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Does Nationalist Appeal Affect Chinese University Students’Product Evaluation? A Conjoint Analysis

Ming OuyangUniversity of New Brunswick at Fredericton

Hongxia ZhangPeking University

and Nan Zhou

City University of Hong Kong

Revised for Asian Journal of Marketing , October 2002

Category: Consumer behavior, international marketing

All authors contributed equally to this paper.

Contact author:

Dr. Zhou NanDepartment of MarketingCity University of Hong Kong83 Tat Chee AvenueKowloonHong KongEmail: [email protected]



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About the Authors

Ming Ouyang is Assistant Professor of Marketing at the University of New Brunswick inFredericton. He received his Ph.D. degree from the University of Manitoba, and had post-doctorial training at the University of British Columbia. His research interests includemarketing modeling, international marketing, e-commerce, and marketing in China. Hisresearch has appeared in Journal of Advertising , Journal of Business Research, Journalof Global Marketing , Review of Marketing Science , and elsewhere.

Hongxia Zhang is Associate Professor of Marketing at Guanghua School of Management,Peking University, People’s Republic of China. She received her Master degree fromPeking University, and currently is a Ph.D. candidate at Peking university. Her researchinterests include marketing in China, advertising, and children marketing. Her researchhas appeared in International Journal of Advertising and Marketing to Children andmany leading Chinese academic journals.

(Joe) Nan Zhou is Associate Professor and Head of Department of Marketing at CityUniversity of Hong Kong. He received his Ph.D. degree from the University of Utah. Hiscurrent research interests include marketing and management in China. His research hasappeared in Journal of Advertising, Journal of Advertising Research, Journal of Business

Research, Journal of Consumer Research , Journal of International Business Studies ,among others.



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Does Nationalist Appeal Affect Chinese University Students’

Product Evaluation? A Conjoint Analysis

Abstract

This study reports an experiment in which Chinese university students were asked

to choose between Coca-Cola, an American brand, and Future-Cola, a Chinese brand

using an appeal of “Chinese consume Chinese Cola”. In our conjoint analysis, the

importance ranking for the participants is as follows: price, brand knowledge, and

patriotic feeling. This suggests that whether or not the brand being a Chinese brand is not

as important as price and brand image in making a purchase decision.

Key words: brand preference; nationalist appeal; China.



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DOES NAITONALIST APPEAL AFFECT CHINESE UNIVERSITY

STUDENTS’ PRODUCT EVALUATION : A CONJOINT ANALYSIS

Introduction

Companies marketing abroad need to monitor consumer perception toward the

foreign origin of their products in target markets continuously and carefully. This is

because that from time to time, a nation’s people may develop an intensive feeling of

national pride with an anti-foreign business bias and resist buying foreign products. It can

have detrimental effects on the affected foreign companies (Cateora and Graham 1999;

Klein et al. 1998). Economic nationalism, in many ways, is one of the most important

issues that faces multinational corporations (see, e.g., Burnell 1986; Martinussen 1997;

Ozkirimli 2000). However, it has been largely ignored in the marketing and consumer

behavior literature (Klein et al. 1998).

In the case of China, as the country increasingly opens its market to foreign

competition, it has become more nationalistic toward foreign products in recent years

( Business Week 1997). For example, Klein et al. (1998) reported that animosity had a

significant impact on Chinese consumers’ buying decisions on Japanese products beyond

the effect of consumer ethnocentrism. In the mind of many Chinese consumers living in

Nanjing, a city that endured a massacre under Japanese occupation during World War II,

historical war-related factors were associated more closely with animosity than were

contemporary economic concerns toward Japan.

Although it is difficult to generalize the above findings in a broad context, many

Chinese consumers have more favorable predispositions toward domestic brands than



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foreign brands, reflected in the domination of domestic brands in many sectors of the

Chinese market.

However, markets even in China are increasingly global due to China’s WTO

membership. Many companies are creating international operations that aim to capture

larger customer bases and greater profitability. It is important for companies marketing in

foreign countries to understand how their foreign country association affects the

consumers’ assessment of their products, especially when they face competitions from

local brands that employee nationalist appeals.

The Study

This paper reports the results of an experiment in which Chinese consumers were

asked to choose between Coca-Cola, an American brand, and Future-Cola, a Chinese

brand using an appeal of “Chinese consume Chinese Cola”.

Coca-Cola has been the number one seller of non-alcoholic drinks in China. By

1999, it accounted for about 50 percent of the cola market in the country Luo and Xu

1999). In a head-to-head challenge of Coca-Cola, Wahaha Group, the largest Chinese

beverage producer, launched a nationwide marketing “war” in the summer of 1998

promoting a new brand called Future-Cola with a nationalist slogan “Chinese consume

Chinese Cola” (Li D. 1999; Li J. 1999; Zheng 1999; Zhu 1999). In a short period of one

year, Future-Cola captured about 10 percent of the cola market in China (Huang and

Yang 2000).

Clearly its nationalist appeal to some degree worked. Nationalist pride has always

been an important issue in the Chinese history and economy (Unger 1996; Weston and



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Jensen 2000). As China’s economy and international trade expand, there have been

numerous indications of a growing disenchantment with Western business operations and

cultural influence in the country. At the heart of any nationalism conflict, it is about a

people’s collective identity and loyalty (Cottam and Cottam 2001; Martinussen 1997;

Smith 1998). In our study, we asked the following questions: Did nationalism influence

Chinese consumers’ brand choice when they faced a choice of buying Coca-Cola or

Future-Cola? How did they compare Coca-Cola and Future-Cola in terms of their product

attributes in making the choice? Our propositions were that nationalism would influenced

their brand choice, and that, ceteris paribus , whether or not a brand being a Chinese

brand was an important consideration in making the choice.

We attempted to address our research questions through conjoint analysis, a

technique measuring the trade-offs buyers make between different product offerings on

the basis of salient features of each product (Green and Tull 1975; McDaniel and Gates

1999). Conjoint analysis has been used in consumer studies to determine products

featuring preference (Curry 1990, Wyner 1993), optimal pricing (Green et al. 1999;

Smallwood 1991), and competitive analysis (Cattin and Wittink 1982; Wittink and Cattin

1989). Green et al. (1999) provide a summary of conjoint analysis in consumer studies.

Its relevance to our study as an analytical tool is that it has been effectively used to

examine the joint effects of product availability and pricing on potential buyers’

selections among alternative brands in a specific product class (Green and Savitz 1994).

Specifically, conjoint analysis permits researchers to determine empirically the relative

value consumers attach to each level of each product attribute. These estimated values are

part-worths or utilities, which can be used as a basis for simulating consumer choices.



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Method

Participants

We recruited a total of 100 students from three leading universities in Beijing

(Peking University, Tsinghua University, and Beijing Medical University) in June 1999.

Students were approached randomly on campus until we reached our targeted quota of 50

males and 50 females respectively. The response rate was 92 percent. The participants

were willing to give their responses without any financial incentive. Both the sampling

method and size used here were similar to previous research using conjoint analysis.

Stimuli

We followed the full-profile approach in constructing our stimuli. The stimuli had

three attributes and a total of 2 level x 3 level x 2 level = 12 combinations (see Table 1).

----------------------------------

Insert Table 1 about here.

----------------------------------

The first attribute considered the participant’s brand awareness or knowledge of

Coca-Cola and Future-Cola. Its first level, “Yes”, as explained to the participant, meant

the participant’s knowledge about the brand “went beyond simple brand recognition”; its

second level, “No”, meant that the participant’s knowledge about the brand “did not go

beyond simple brand recognition if s/he recognized the brand”.

The second attribute was on the price of a 355 ml can of Coca-Cola or Future-

Cola in Yuan, the Chinese currency. We presented three price levels to the participant,



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4.5 Yuan, 5.5 Yuan, and 6.5 Yuan. They were all within the range of the actual retail

prices in stores in Beijing, where the three universities were located.

The last attribute was about the participant’s “patriotic feeling” or ethnocentrism

(Klein et al. 1998) regarding the brand. It had two levels. The first level, “Yes”, meant

that when buying cola the participant took into consideration whether the brand was a

Chinese brand; the second level, “No”, meant that the participant did not take into

consideration whether the brand was a Chinese brand.

For the last attribute, there is a background. When Wahaha began to promote

Future Cola, it used a nationalist slogan, “ Chinese consume Chinese Cola,” in its

national TV campaign (Li D. 1999; Li . As high as 82% of the respondents in one survey

said that they recognized Future Cola this way as a result.(Being Statistical Bureau 1999).

During that time period, there were many famous foreign brands in the Chinese market,

creating great pressures on local producers. Many Chinese companies were losing market

share, and many also believed that using nationalist appeals could help them stop or slow

down the trend. Chang Hong, a leading TV producer, promoted its company’s image on

TV with the slogan “Developing our own industry to serve for our motherland, and take

national prosperity as our responsibility.” Jian Libao, a well-known beverage company,

promoted its company image with the slogan “National beverage with national spirit”.

Lekai, a leading film producer, called on “Fighting for Chinese brand” in its ads. The

“Buy Chinese” topic was a daily popular subject in the mass media (Lei 2000; Liu 2001;

Luo 1997; Wan 2001; Wang 1999). It would be almost impossible for anyone to ignore

the topic. In asking the participants whether they took into consideration if the brand was



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a Chinese brand in buying a cola, we assumed that they were aware of the above

mentioned background.

We included these attributes in a questionnaire, as part of a larger-scale consumer

study. The participant was asked to evaluate all the combinations and rate their purchase

choices on a five-category scale. The five categories were: “I would definitely buy”, “I

would probably buy”, “I am not sure whether I would buy or not”, “I probably would not

buy”, and “I definitely would not buy”.

Measures

We used standard estimation to estimate the part-worths and the relative

importance of each attribute (Lilien et al. 1992). A participant's utility function of

attribute k for a brand is defined as:

where i refers to the ith participant, k refers to the k th attribute, P is the level of the

attribute, and d is a dummy indicator: d = 1, if the brand has attribute k at level p; and d =

0, otherwise. λ is the part-worths to be estimated. For a K attribute ( K = 3 for our study),

the estimating equation is an additive function:

u d ik ikp kp p

P

==

∑ λ 1

1( )

)2(1

ed R K

k k ik i += ∑

=

λ



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where e is the error term. We first estimated each participant's part-worths, and then

aggregated the whole group to obtain an overall result. Eviews (Econometric Views) was

used to perform the estimation, as the program handles dummy variables effectively.

Results

The estimated results are summarized in Table 2 and illustrated in Figure 1.

Columns 2 and 3 of Table 2 and Figure 1 (a) show the overall response to the first

attribute: brand knowledge. The overall estimates for “Yes” for Coca-Cola and Future-

Cola are 0.779 and 0.511 respectively, and those for “No” are 0.097 and 0.184

respectively. These estimates suggest that the participants as a whole had a greater

tendency to purchase Coca-Cola than Future-Cola due to their greater knowledge about

the brand.

-----------------------------------------------

Insert Table 2 and Figure 1 about here.

-----------------------------------------------

Columns 4, 5, and 6 and Figure 1 (b) show that, first, the participants’ purchasing

desire is negatively related to the price levels; and, second, ceteris paribus , the

participants were more willing to buy Coca-Cola than Future-Cola (0.821 versus 0.502

for a price of 4.5 Yuan, 0.516 versus 0.254 for a price of 5.5 Yuan, and 0.212 versus

0.005 for a price 6.5 Yuan, respectively). These results indicate that Coca-Cola is more

desirable than Future-Cola at all of the price levels.



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The results in Columns 7 and 8 and Figure 1 (c) are the most interesting. When

the participants bought Coca-Cola, the estimated score was 0.032 if they took into

consideration whether or not the brand was a Chinese brand; and the score was 0.022 if

they did not take into consideration whether or not the brand was a Chinese brand. Both

scores being close to zero indicate that whether or not the brand was a Chinese brand was

a neutral consideration when the participants chose Coca-Cola. This suggests that the

participants had a very weak association of nationalism with Coca-Cola. However, when

the participants bought Future-Cola, the estimated score was 0.243 if they took into

consideration whether or not the brand was a Chinese brand; and the score was 0.011 if

they did not take into consideration whether or not the brand was a Chinese brand. The

positive score 0.243 suggests that those buying Future-Cola did so with a patriotic feeling

and they were concerned with supporting a domestic brand, and the close-to-zero score

0.011 indicates that not buying the brand was due to weak patriotic feeling or having little

desire to support a domestic brand.

Finally, Columns 9 and 10 report the estimation accuracy. We estimated the

correlations between the actual ranking and the predicted ranking to test the estimation

accuracy. They are 0.853 and 0.788 for Coca-Cola and Future-Cola respectively. Since

the number of stimuli in this study is small (3), to prevent possible data overfitting, we

performed cross-validation tests, and the results for the holdout sample are 0.891 and

0.847 for Coca-Cola and Future-Cola respectively. From the values, we can see that the

estimates are all statistically valid. In addition, based on the results in Table 2, we

calculated the relative importance of the stimuli by the sum of ranges of part-worths of



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the each attribute (Hair et al, 1992). The results are 0.47 (price), 0.35 (brand knowledge),

and 0.18 (patriotic feeling) respectively.

Managerial Implication and Conclusion

Taken together, as shown graphically in Figure 1, the importance of the attributes

for the participants is ordered as (1) price, (2) brand knowledge, and (3) patriotic feeling.

In other words, when faced with a choice between Coca-Cola and Future-Cola, whether

or not the brand being a Chinese brand was not as important as price and brand image.

Soft drinks are convenience goods purchased frequently with minimum effort. It

is understandable that the less they cost, the more preferred they are. What is intriguing

here is that at all of the three price levels, the participants preferred Coca-Cola to Future-

Cola. This is consistent with the brand value concept that generally a better-known or

more established brand has greater perceived customer value than a less-known brand has.

The Coca-Cola Company is known for being very effective in creating high-perceived

value of its products. This has made Coca-Cola “The Best Known Product in the World”

(e.g., Allen 1994). In discussing the efforts of company’s worldwide creative strategy for

brand image and value building, a senior marketing manager of the company once said

succinctly: “Customers no longer have to watch [our] commercials anymore, they… want

to” (cited on Duncan and Moriarty 1997, p. 34).

Further, Coca-Cola was an early entrant to the Chinese market under the

country’s open door policy initiated in the late 1970s. Arriving in the market first allows

a brand an opportunity to get in the consumer’s mind first (Ries and Trout 1993). With



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first mover advantage (Pan et al. 1999) and years of effective marketing efforts, Coca-

Cola has dominated both Chinese consumers’ mind share and the country’s market share

of soft drinks. As pointed out by Allen (1994), wherever one goes, no matter where one

may be in, if one wants a Coca-Cola, there is usually one close by.

A critical factor affecting a foreign company’s image is the place of manufacture

rather than the location of the company’s headquarters (Tse and Gorn 1992). Coca-Cola

has bottling plants all over China. It has also worked hard on other endeavors to promote

an image of good corporate citizenship in China. As a result, many of our respondents

probably took Coca-cola for granted because it has become part of the integrated Chinese

national economy so that whether or not it was a Chinese brand did not seem to matter.

But for those participants who cared about whether or not a brand was Chinese,

Future-Cola, which was promoted as the cola for the Chinese, would attract their

attention.

Thus, for companies marketing their products abroad, it is important to know that

a product’s image is more important than its country association and that the positive

image associated with a product’s home country, when managed properly, can be

established and maintained over time in a host country (see e.g., Cordell 1992; Darling

and Wood 1990; Kotabe and Helsen 1998; Maheswaran 1994; Nagashima 1970). In this

regard, it is not an overstatement that, after two decades of continuous marketing efforts,

Coca-Cola, an American brand, has become part of the Chinese people’s daily life.

This, however, does not mean that Coca-Cola has become part of the Chinese

culture. Marketing managers have to be aware that in general consumers prefer domestic

products to imports (Kotabe and Helsen 1998), and many consumers, i.e., those who hold



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strong nationalist beliefs, may evaluate foreign products negatively as a result (Klein et

al., 1998). Cateora and Graham (1999, p. 147) point out that the consumer’s nationalist

feeling “comes and goes as conditions and attitudes change, … foreign companies

welcome today may be harassed tomorrow”. Close and continuous monitoring of the

perception toward the foreign origin of their products among consumers in foreign target

markets and their effects on product purchase is needed for any company to succeed in

the international marketplace.

This study is a first attempt in applying conjoint analysis technique, which “is

especially useful for simulation purpose” in marketing research (Wierenga and Bruggen,

2000, p. 61), to investigate consumer behavior in China (Ouyang, Zhou and Zhou, 2000).

It might also help researchers understand a puzzling phenomenon in China currently, i.e.,

on the one hand, many young people show strong nationalism in protesting against

America, on the other hand, they seek all possible opportunities to study and work in

America.

For our study, we used Chinese university students in our sample. They are young

and open-minded and would not hesitate to buy any brands, Chinese or foreign, that

promotes Western lifestyles. But, nationalist appeals have a strong influence on older

people (Shimp and Sharma 1987) and politically conservative consumers (Anderson and

Cunningham 1972). Sometimes demographics alone can make a difference (Kotabe and

Helsen 1998). Further research is needed. Future research can also use other types of

products and different methodologies.



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Table 1: Stimuli Attributes and LevelsAttribute Level

Brand Knowledge Yes No

Price (Yuan) 4.55.56.5

Brand’s “Nationality”Consideration

Yes No

Table 2: Estimated Overall Results (sample size = 100)ColaBrand

Part-worths Estimates

BrandKnowledge Price(Yuan) Brand’s NationalityConsideration

EstimatingAccuracy

Yes No 4.5 5.5 6.5 Yes No Estimate

Holdout

Coca .779 .097 .821 .516 .212 .032 .022 .853 .891Future .511 .184 .502 .254 .005 .243 .011 .788 .847



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Figure 1: Overall Results of Part-worths Estimation

Coca-cola Future-colaYes 0.779 0.511No 0.097 0.184

(a) Brand Knowledge

0.779

0.097

0.511

0.184

00.10.20.30.40.5

0.60.70.80.9

Yes No

Coca-colaFuture-Cola

Coca-cola Future-cola0.821 0.502 4.50.212 0.005 6.5

(b) Price

0.821

0.212

0.502

0.0050

0.2

0.4

0.6

0.8

1

4.5 6.55.5

Coca-colaFuture-cola



21

Coca-cola Future-cola

Yes 0.032 0.243

No 0.022 0.011

(c) Patriotic feeling

0.032

0.243

0.022

0.0110

0.05

0.1

0.15

0.2

0.25

0.3

Yes No

Coca-cola

Future-cola

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Does Nationalist Appeal Affect Chinese... AJM Oct 2002