What Americans want

by on April 28, 2012 at 6:24 am in Economics | Permalink

Ask Americans if they are willing to spend more to buy American-made products, and nearly half say they are often willing to do this. But in the latest Economist/YouGov Poll, the country where a product is made trails price, quality, and even convenience, as an important factor in consumer decision-making. The public gives even less importance to a product’s brand, its impact on the environment, or the political leanings of the company that produces it.

Here is more, and for the pointer I thank Bruce Bartlett.  Once again, here is Bruce’s new book on taxation.

Bill April 28, 2012 at 9:27 am

Re: “The public gives even less importance to a product’s brand, its impact on the environment, or the political leanings of the company that produces it.”

You have to be careful here about intangibles affecting purchases.

At the margin, all lost sales are important in competitive industries.

I know of some market research work being done on the effect on sales by companies that contributed to political candidates in elections two years ago, following Citizens United. This is ongoing research, but some of the effects are interesting:

1. Persistence of effect is high. People don’t forget, and in some cases, remembering isn’t as important as changing buying habits which are then difficult to change.

2. Purchasing is social, particularly when you purchase for others, such as buying someone a gift or purchasing a gift card for someone else. At that point, you are expressing your identity. Case in point: one retailer through a PAC and through the actions of its CEO very publicly supported a political candidate. The retailer’s gift card business took a hit during the election season which preceded the Christmas gift season.

Some of the affected companies do not want to have discussed publicly what happened, but I think the next election cycle will give you some evidence of how companies will readjust based on the lessons they learned.

Bill April 28, 2012 at 10:07 am

By the way, I just looked at the link, and I would say two things\\

The effect is pretty high, and higher than what the post summary claims: For example, in response to the question: How often do you avoid buying certain products because of the political leanings of the company: 4% said Always, 9% said Often, and 28% said Sometimes. Now, this is what people say, and there is no measure of what in fact they do, but this is not insignificant!

You’d spend money in an advertising campaign to move the needle by 1%.

Greg G April 28, 2012 at 10:02 am

I used to own a store that offered the largest selection of American made work boots in our market. Many consumers told us that it was very important to them that their boots be American made. Only a few of them were actually willing to pay the difference.

Reminds me of when my son was four years old. His grandmother decided he wasn’t eating enough. She resolved to feed him a proper meal. She asked him if he liked pork chops. He assured her he did. She made a beautiful meal of pork chops. He refused to even take a bite. She demanded an explanation. His response: “I said I like them. I didn’t say I would eat them.”

Bill April 28, 2012 at 10:11 am

This is from JD Powers on buying habits for cars:

“Detroit automakers have long abandoned their “Buy American” campaigns, but the public’s interest in bringing more manufacturing jobs back to the U.S. seems to be paying off. Nearly one in seven people who bought new cars last year said they avoided foreign-badged cars specifically because where they were made, according to a J.D. Power study published Thursday.

That was the highest level since the study began in 2003.

At the same time, the number of car buyers who declined to purchase a domestic model because it was made in America dropped to an all-time low 6 percent.

A “buy-American sentiment” that has been growing since the onset of the Great Recession of 2007 may be partly responsible, along with the rising quality and reliability of U.S.-made cars, said Jon Osborn, research director at J.D. Power.”

Here’s the link: http://bottomline.msnbc.msn.com/_news/2012/01/26/10245062-growing-number-of-car-buyers-steer-clear-of-imports?lite

Cliff April 28, 2012 at 10:27 am

Toyotas are the cars most “made in America”

Bill April 28, 2012 at 11:02 am

Cliff,
Why do you think Toyota advertises this?

Badka May 26, 2012 at 9:46 pm

How much fun it is to read about Sterling NY, the town I visited as a child with my falimy. My grandfather was Hugh B Dugan and my father was Hugh Carlyle Dugan and my brother is Sloane Dugan. So many falimy names! Such fun we had hopping in Grandpa Dugan’s old car where we could peek through the floor boards and see the ground on our way to to Uncle Allen and Aunt Francis’s farm. Good stuff for a little “city girl” living in Nutley NJ.Thanks for such fond memories,Susan Dugan Burgermaster

Norman Pfyster April 28, 2012 at 11:54 am

“Foreign-badged” cars probably spawn as many or more US jobs as “US-badged” cars made largely in Mexico or Canada. I say that cautiously because many cars assembled in the US use parts from elsewhere.

Seth April 28, 2012 at 12:09 pm

Greg G – That’s a great example of a design problem in a market research.

Hei Lun Chan April 28, 2012 at 10:06 am

Why is the link headlined, “Buying Responsibly”? What’s so responsible about not buying from foreigners?

Noah Yetter April 29, 2012 at 12:21 pm

Every good American is obligated to be a xenophobic racist. Didn’t you get the memo?

The Anti-Gnostic April 30, 2012 at 11:38 am

Just curious, what was your position on the GM/UAW bailout?

Mike April 28, 2012 at 10:08 am

I see no contradiction. If I would prefer to buy American to non-American, but have zero preference between the thousands of pairwise comparisons between non-American manufacturers, it is not clear to me what the appropriate answer to the vague question of the importance of a country’s manufacturer is. I find these sorts of vague polls, as misleading at best.

MIchael Foody April 28, 2012 at 11:01 am

I think the fault of the study is that it seems to treat buying American as a nationalistic decision, I’m sure that factors into people’s thinking but I think normally people buy American because the American brand is synonymous with quality. German Engineering is still a thing people talk about for a while Japanese cars were stigmatized as being inferior to American cars. Other countries are respected in particular for different specialities. Swiss watches, Irish Linen. Chinese manufactured goods have a bad reputation as disposable, low quality, and in same cases dangerous. Some of this is guilt by association, some of it is a reasonable heuristic, some of it propaganda, and some of it is an outdated echo of a real past difference.

Seth April 28, 2012 at 12:10 pm

Market results will always be a better sorter of our actual preferences than market research.

Bill April 28, 2012 at 12:20 pm

Re: Market results will always be a better sorter of our actual preferences than market research.

If that were true, then you wouldn’t need or pay for market research, would you.

The market would be telling you without the research.

Unless you want to be in synch with market preferences, or want to design to meet those preferences.

Which came first: the chicken or the egg.

The Original D April 28, 2012 at 4:00 pm

You would certainly pay for market research before deciding to create a product. But oftentimes it’s wrong. Hence a lot of products flop.

There are a few companies like Apple that are so good at creating markets that they ignore market research for the most part.

Bill April 28, 2012 at 5:08 pm

So, the firms that would succeed would be those who did not conduct market research.

Interesting finding.

Or, could it be that those who did conduct market research were RELATIVELY more successful than those that didn’t.

NL_ April 28, 2012 at 2:27 pm

I’m surprised only half will express the preference, given how relatively unchallenged this particular form of anti-foreign sentiment is in this country (tinged as it is with subtle racism; “foreign” means Mexico, India or China, not Canada, Australia or the UK). It’s also free to express solidarity with some concept of voluntarily purchasing holier products (as though xenophobia is the holier option than cosmopolitan purchasing). But actual paying more money costs, so the principled stand suddenly has a cost. It’s free to express it, but has some cost to practice it. Most people are comfortable with their own internal contradictions, seeing their moral views as a spectrum rather than as a binary choice.

Of course, people are used to being hectored, nagged and pestered into certain opinions purely for the signaling. Recycling, buying organic, buying American, going to church, helping the latest victims of some far-off disaster, or whatever. People will actually engage in many of these behaviors, especially if they expect some actual benefit to them (e.g. organic tastes better). But the number of people who have learned to parrot the right sentiments and opinions is always to be much higher than the folks who have actually internalized the behavior. Which makes sense, since the number of people who recoil at not recycling is much lower than the number of people who recoil at anti-recycling opinions. Nagging produces an opinion shift much better than it produces a behavior shift.

JWatts April 28, 2012 at 8:39 pm

“tinged as it is with subtle racism; “foreign” means Mexico, India or China, not Canada, Australia or the UK”

I think that statement says more about your biases than the average American’s biases. I’m pretty sure that most American’s consider Jaguar’s, Mini’s and Land Rover’s as foreign cars; and indeed any recognizably British or Australian product as foreign. You might have a point with regards to Canada, but that has far more to do with the fact that manufacturing and branding between the US and Canada is deeply interwoven.

Benny Lava April 28, 2012 at 2:36 pm

Not surprising. Americans’ have a similar divergence in political polling. Americans want lower taxes, reduced deficits, and increased spending. But all three cannot coincide simultaneously. So the political hand wringing we see today about budgets is a reflection of this American paradox. Neither the Democratic nor Republican parties have a credible plan to close the deficit in the near term (within 5 years). Most of the federal budget is Social Security, the Military, Medicare, and Medicaid. Yet Americans typically think cutting waste, direct foreign aid, and food stamps will not only close the deficit, but close it with enough head room to cut taxes, all the while not touching the top 4 spending conduits.

Americans would prefer to buy American if that meant buying it in the same sore, for the same price, and the same quality as an identical good.

bluto April 28, 2012 at 5:36 pm

That’s exactly it. Wal-Mart is great for this sort of comparison of what people actually buy, American made is worth about a 10-15% premium to consumers no matter what they claim in surveys.

John Bennett April 28, 2012 at 7:05 pm

Most Americans accept the verdict of the market–given sufficient quality, they let price determine what they buy. They may not have an elaborate understanding of the competitive market, but they accept its evidence–it comes down to price for quality. I don’t think most people are brainwashed. They see the evidence.

bob May 2, 2012 at 10:13 am

Anyone that has studied psychology will tell you that peope are pretty bad at knowing why they make decisions. What you hear is rationalizations, which are very different.

If people knew what they wanted, and why they want it the world would be dramatically different. Chances are most of us would be happier.

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