1. 1 Consumer Attitude toward Advertising: A Comparison between the U.S. and China Jun Yu Joyce Zhou

2. Background The importance of advertising International advertising Globalization: convergence of consumer patterns? This study examines consumers in two of the largest economies: China and the U.S. 2

3. 3 Advertising in China and the U.S. China’s advertising industry started around 1980 China has become one of the most intense advertising battlegrounds in the world since then(Tefft, 1994). Nielsen Media Research reports that advertising in China experienced a 25% growth in 2006 and another 20% in 2007. Currently U.S. ranks first in ad spending, China the third

4. 4 Consumer Attitude toward Advertising Advertising value (Ducoffe, 1995) A subjective evaluation of the relative worth or utility of advertising to consumers It comprises of the key dimensions of Informativeness Entertainment Deceptiveness Irritation

5. Advertising Value 5

6. 6 Different National Cultures The two markets have different cultures Culture (Hofstede, 2005) Individualism / collectivism Uncertainty avoidance U.S.: a highly individualistic society (IND = 91) China: a highly collectivistic society (IND = 20)

7. Individualism (Hofstede, 2005) Individualism pertains to societies in which the ties between individuals are loose People are expected to sta nd up for themselves Emphasize independence, self-assertion and self-control 7

8. Collectivism (Hofstede, 2005) Collectivism pertains to societies in which people from birth onward are integrated into strong, cohesive in-groups Close friends, family and so on Information obtained from in-group sources is much more reliable than info from out-group sources. 8

9. High-Context and Low-Context Hofstede (2001): Most collectivistic cultures are high- context, whereas most individualistic cultures are low-context. High context: rich information is in either the physical environment or supposed to be known by those involved little info is in coded, explicit message Low context: the mass of info is vested in the explicit code 9

10. Uncertainty Avoidance The extent to which the members of a culture feel threatened by ambiguous or unknown situations China and the U.S. are similar on this dimension UAI: uncertainty avoidance index China: UAI = 30 (ranked 68 th ) U.S.: UAI = 46 (ranked 62 nd ) 10

11. Advertising Informativeness The U.S. and China are similar on uncertainty avoidance Looking for information The primary role of advertising is to inform consumers of products or brands (Bauer and Greyser, 1968) 11

12. 12 Hypothesis 1 H1a: Consumers from both cultures will find advertising informative. H1b: Informativeness plays a significant role in contributing to advertising value in both cultures.

13. Advertising Entertainment De Mooij (2005) Individualistic / low-context cultures are more verbally oriented (read more) Collectivistic / high-context cultures are more visually oriented (watch more) Messages that can be watched are more conducive to entertainment elements (e.g., commercials with plots) 13

14. Hypothesis 2 H2a: Chinese consumers are more likely to feel advertising to be entertaining than American consumers. H2b: Entertainment plays a more influential role in contributing to advertising value for Chinese consumers than for American consumers. 14

15. Advertising Deceptiveness In collectivistic cultures, the most reliable sources are members of the same group, not external ones (Hofstede, 2005) Advertisers pay to send messages to consumers (not in-group) 15

16. 16 Hypotheses 3 H3a: Chinese consumers perceive advertising to be more deceptive than American consumers. H3b: Deceptiveness plays a more influential role in negatively contributing to advertising value for Chinese consumers than for American consumers.

17. Advertising Irritation Irritation: individuals react adversely if they believe their freedom is in some way threatened (Brehm, 1966 & 1972) Freedom not to see ads Freedom to choose products on their own The U.S. is the most individualistic society in the world 17

18. Hypotheses 4 H4a: American consumers perceive advertising to be more irritating than Chinese consumers. H4b: Irritation plays a more influential role in negatively contributing to advertising value for American consumers than for Chinese consumers. 18

19. 19 Samples Surveys were conducted in universities in both China and the U.S. A total of 440 questionnaires were completed in China and 395 in the U.S. Many studies in this area have used students as the survey respondents They represent young consumers (Haller, 1974).

20. 20 Model Fit Modelchi-squared.f. chi- square/d.f. P-valueCFINNFIRMSEA The China group 66.13481.34.04.97.96.04 The US group 95.39671.42.01.96.95.05

21. 21 ** p<.01 * p<.05

22. 22 Results: Informativeness A t-test to compare the means of informativeness scores between the two groups lends support to H1a (P-value =.33) in finding no significant difference between the two groups. For both groups, informativeness has a significant and positive impact on advertising value (P-value =.00 for both groups), supporting H1b.

23. 23 Results: Entertainment A t-test to compare the mean entertainment scores between the two groups lends support to H2a (P-value =.04) in finding that Chinese consumers perceive advertising to be more entertaining than American consumers. The entertainment factor has a significant and positive impact on advertising value, and the coefficient for China is larger that the coefficient for the U.S. (.39 vs..28). H2b is supported.

24. 24 Results: Deceptiveness A t-test to compare the mean deceptiveness scores between the two groups does not show a significant difference (p=.08). Our findings indicate that deceptiveness does not have a statistically significant effect on advertising value in both groups. Therefore, H3 is not supported.

25. 25 Results: Irritation A t-test to compare the mean irritation scores between the two groups lends support to H4a (P-value =.01) in finding that American consumers perceive advertising to be more irritating than Chinese consumers. The irritation factor has a significant and negative impact on advertising value, and the coefficient for China is larger that the coefficient for the U.S. (-.11 vs. -.19). H4b is supported --- irritation adversely affects advertising value more for American consumers than for Chinese consumers.

26. 26 Implications It appears that consumers in both cultures look to advertising as an important source of information on products and services. Thus “advertising as information” is expected by consumers in general and will be well received by consumers from both countries. Ads should provide adequate information for both cultures

27. Implications Consumers in the U.S. find advertising more irritating than those in China. For advertisers, this implies more flexibility in the type and frequency of advertising for Chinese consumers (to a certain extent), in comparison to U.S. consumers. 27

28. Implications Since entertainment is valued more by Chinese consumers, advertising adopting entertainment elements could be highly successful High-context --- rely on visual rather than verbal message An example A Pepsi commercialA Pepsi commercial 28