Asian Americans online

Asian American Online: An Analysis of Growing Consumer Market for Luxury Items

A Study Based on Data from the Florida State University Multicultural Marketing Project

Asif Shaikh ass11d@my.fsu.edu April 27, 2012

Asian Americans online Abstract

In this current era of technology and convenience-driven consumerism, the internet has been increasingly used for marketplace transactions throughout the world. Prior studies and researches indicate that Asian Americans are the fastest growing market in terms of population, buying power and online purchases. However, little research has compared the online shopping preferences among various cultural groups in purchasing luxury items. This is significant, because several studies have not only identified the global increase in luxury brand consumption but also have found luxury products are the largest part of merchandise in the e-commerce environment. This study finds that Asian Americans are more likely to purchase luxury products online than any other ethnic group. In this paper the survey method has been used to collect data from among a sample of 2843 respondents comprising of Hispanics, African-Americans and Asian-Americans. This study used ANOVA to analyze the survey responses from four ethic/cultural groups in the United States: Asian Americans, African Americans, Hispanics and non-Hispanic Whites.

(Census 2010, ACS; 2001-2009; Gitlin, 2010, Marketing charts, 2010;Edmondson, 1997; media audit, 2008) (Hung, Chen et al., 1992) (Sung and Jeon, 2009; Foreman, 2011; Palmeiri, 2006).

Asian Americans online Asian American Online: An Analysis of Growing Consumer Market for Luxury Items

Introduction The evolution and advance of internet media as a convenient shopping place in recent decades has forced marketers to direct their businesses online. Since ethnic diversity in the United States has remained a cornerstone of lively debate among academicians, business and political leaders (Shim and Gehrt, 1996), it is significant to explore online shopping trends among the ethnically diverse U.S. population. There is significant evidence available to believe that the Asian population is growing faster than any other cultural group in the United States. According to the 2010 Census, while the total U.S. population grew by 9.7%, from 281.4 million in 2000 to 308.7 million in 2010, the Asian population increased more than four times faster than the total U.S. population (U.S Census, 2010). Growing by 46 percent from 10.2 million to 14.7 million in one decade (U.S Census, 2010), Asian Americans now represent 5.6% of the total U.S population. There are other attributes of Asian Americans according to Census 2010 and the annual American Community Survey (ACS) reports (2001 through 2009), that make Asians a major prospective consumer market. For example, Asians enjoy the highest median household income of all groups, almost $10,000 ahead of non-Hispanic White households, and is far in excess of Hispanic and African American median income. In addition, 57.5% of employed Asian Americans who are 25 or older have a higher degree. This proportion is 60 percent more than whites (U.S. Department of Labor, July 2011) According to the Selig Center at the University of Georgia, Asian-American purchasing power in 2009 reached $509 billion, representing an 89% increase in purchasing power since

Asian Americans online

2000, and nearly twice the purchasing power growth rate for the total U.S. population during the same period (Gitlin, 2010). Their average annual expenditure is the highest worth $58,376 compare to all cultural groups (U.S. Bureau of Labor Statistics, 2010). Current statistics have also found that Asian Americans shop online more than any other ethnic group with over 70% shopping online (Marketing Charts, 2008). Thus, the large and growing Asian American online market cannot be ignored by web marketers attempting to expand their revenues and consumer base. For the number of purchases done online, Asians were ahead with 46% shopping online making 12 purchases or more per year which is huge (Media Audit 2008). Also in terms of tendencies toward brand loyalty, Asian American consumers form a desirable market (Edmondson, 1997). Clearly, prior studies and researches indicate that Asian Americans are the fastest growing market in terms of population, buying power and online purchases etc (Census 2010, ACS; 2001-2009; Gitlin, 2010; Marketing charts, 2010; Edmondson, 1997; media audit, 2008). However, little research has compared the online shopping preferences among various cultural groups in purchasing luxury items online. This is significant to know because several studies have not only identified global increase in luxury brand consumption (Hung, Chen et al., 1992) but also have found luxury products as largest part of merchandise in e-commerce environment (Sung and Jeon, 2009; Foreman, 2011; Palmeiri, 2006). Separate studies have also found Asians as a diverse and nuanced (Beres,2006) consumer group who have a penchant for luxury shopping (Radha and Paul, 2006). It is therefore appropriate to examine the e-relationship between largest part of ethnic online consumer group (i.e., Asian Americans) and largest part of e-merchandise (i.e., Purchase of luxury items).

Asian Americans online Significance:

The study and its subsequent findings are significant in identifying Asian Americans as a prospective consumer market from other cultural groups. This study hopes to provide insights into how marketers can adapt their online content to successfully target online Asian Americans. This study focuses on investigating the online shopping of luxury items by Asian American with a comparative outlook from other ethnic groups in United States. To serve the purpose, this study uses a survey research method. The present study constitutes a fresh perspective on a subject that is important both for academia and for marketers. This paper will first explain the literature review on the key research findings in Asian Americans as a consumer groups for luxury items. It will then detail the research hypothesis and scope of this study. The methodology, sampling and survey questions will be explained followed by survey results. The responses are then discussed and analyzed using ANOVA and other quantitative/statistical measures. In the end conclusions are drawn and recommendation for future research is made. Literature Review While there is an increasing firm focus on online U.S. consumers, few academic studies have investigated ethnic/Hispanics attitudes toward web content (Korgaonkar, et al., 2001) and U.S Hispanic Consumer E-Commerce preferences: expectations and attitudes toward web content (Singh et al, 2008). The literature is available on Hispanic but there are very few studies on Asian American market that directly address the relationship between luxury brands and Asian Americans as online consumer group. The broad objective of this study is to fill this gap in the academic literature through an analysis of Asian American online consumer web particularly on luxury shopping.

Asian Americans online Online Shopping and Asian Americans

Internet has become an increasingly common medium for consumer marketplace transaction throughout the world. While the web is a new avenue for research, there has also been some preliminary research on the online behaviors of ethnic populations. This includes Zainul, et al.s (2004) discussion of Muslims and e-commerce, Morton, et al.s (2003) research on how shopping online reduces price discrimination for minority groups, Morrison & Oladuunjoyes (2006) research on Asian American business leaders computer capabilities & web usage patterns and U.S. Hispanic consumers attitudes influence their interaction with web advertising (Korgaonkar, et al., 2001). The study conducted by Glen (2007) called Asian Americans as diverse and nuanced ethnic consumer group known as wealthy, brainy and highly tech-savvy demographic having a penchant for luxury shopping. This study (Glen, 2007) focused on attributes of Asian Americans which make them as most sought after market for retailers. In the current technology and convenience driven retail environment, e-commerce is posing an indispensable complimentary distribution channel for offline retailers (Okonkwo, 2005). In 2008, Marketing Charts reported on new numbers from Media Audit showed that online shopping for most minority groups in the US has significantly increased. The Asian American group was ahead of the other cultural groups with 70% shopping online. eMarketer (2008) have done a study on internet usage for 2008-2013 showing some interesting contrasts in comparison to the Media Audit report. In the eMarketer report, Asians have the highest internet penetration of all groups in the US. In 2009 73.5% of Asians are online which is higher than the White group at 67%. This high frequency of online shopping within this group,

Asian Americans online

requires reallocation of marketing efforts towards Asian groups for a higher return on investment than mainstream audiences and a lower cost-to-sale ratio for online products. Luxury Shopping Online It is important to know the factors which influence consumers buying decisions. Hung et al. (1992) attempted to explore relationship between purchase intention of luxury brands and phenomenon of luxury brand consumption. They (Hung et al., 1992) that vanity has a role in influencing purchase of luxury brands. Sung and Jeon (2009) attempted to classify internet users by fashion lifestyles, the research used Anova and descriptive analysis to describe why different segments buy luxury products online. It is important to recognize that most luxury brands in the consumer goods categories originate in just a handful of countries, namely France, Italy, Switzerland, the U.K. and U.S.A. These countries command more than four-fifth of the global consumer luxury goods sales (Pambianco, 1999). Foreman (2011) found in his study that mens luxury market has grown in recent years. Luxury branding is also an e-business opportunity and challenge to build relationships with individual consumers. The Internet has become an essential part of the branding and marketing strategies of organizations, ranging from fast moving (e.g. UniLever), to luxury goods (e.g. Chanel and Dior). Peterson et al. (1997) commented that the Internet may provide an efficient medium for accessing, organizing and communicating information, while Chaffey (2000) focuses on the Internets interactivity potential and on the opportunity to build relationships with individual consumers. Palmeiri (2006) envisioned luxury products to be sold online rather than from physical stores and that internet business would cannibalize sales.

Asian Americans online

As the Internet is changing the marketing landscape, forcing companies into new ways of competing, a critical issue for luxury goods marketers is not whether an online presence is necessary, rather, how to use the Internet and translate such use into economic value (Porter, 2001). These circumstances naturally call for an investigation to examine whether undifferentiated or differentiated target marketing is necessary to reach Asian American. Research Hypothesis and Scope of the study The study compares among different ethnic groups in United States the internet usage and the subsequent decision of buying different luxury items. More specifically, this research focuses on Asian Americans choices for online purchase with regard to purchase of luxury items. The aim of this study is to comprehend the relationship between luxury products and Asian-Americans as consumer market. This is to identify the likelihood of growing online consumer group in purchase of luxury items. The research hypothesis developed on the existing evidences and presumption is: H 1 : The Asian Americans are more likely to purchase luxury items more than any other ethnic group The scope of luxury items in this study is limited to electronics and cosmetic products only. However Asian Americans are further classified in (a) Asian Americans born in U.S (B) Asian Americans residing in U.S but not born. The ethnic groups in comparison to Asian Americans include African-Americans, Hispanic whites and Non-hispanic whites.

Asian Americans online

Since the research on understanding the relationship between Asian Americans and luxury products in comparison with other ethnic group is scarce this study has specified scope of analysis based on the questions from the survey respondents. The Following research questions have been considered in analyzing survey responses: Q #1 what are the reasons for online purchase and luxury brands by Asian American in comparison with other ethnic groups? Q # 2 What is the frequency of using online shopping websites like e-bay and Amazon for making online purchases in comparison with other ethnic groups? Q # 3 what is the preference of purchasing luxury items (cosmetics and electronics) online instead of physical store? Methodology: In this paper, a quantitative survey research method is used. Data collection is made from a large-sample through web-based consumer survey to measure these constructs between March 9th and March 19th of 2012 .The survey consisted of a series of questions related to consumer behavior & preferences (both shopping physical or online), media habits & consumption (both traditional and social) and attitudes & values and questions relating to demographics (ethnicity & cultural background). Sampling: The sample was provided by Research Now, using the e-Rewards panel. The e-Rewards panel is sourced by invitation only. Sponsor companies offer links to join the panel to customers after an online transaction has completed. Panel members fill out profile information, and after basic questions have been answered (age, gender, etc.), are added as active members. Respondents completed the survey by clicking on a link in the email invitation, which connected them with

Asian Americans online

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the online questionnaire. The average length of the survey was 16.4 minutes. Approximately 90% of the total respondents qualified to participate in the study. Of those qualified responders, 62% completed the questionnaire. Incentives were variable according to survey length, and were awarded in e-Rewards currency, which was then redeemable for merchandise from sponsor companies. For this survey, respondents who were screened out received $.25 and those who completed the survey received $3.50, both in e-Rewards currency. A total of 2843 survey respondents completed the survey. Respondents were required to be minimum 18 years and maximum 75 years old. The Sample was targeted to respondents in the USA, with specific targeting to Hispanic, Non-Hispanic Whites, African American and Asian American. Quotas were implemented to match census breaks for nested age, gender and region. The actual number of completed surveys for each group was as follows: Hispanic (N= 880), Non-Hispanic Whites (N=473), African American (N=496), and Asian American (N=994). Survey Questions and Analyses This study utilized questions from the online survey regarding purchasing online which also included a list of factors influencing consumers buying decisions such as convenience, saving, avoiding the crowds, or making them feel special. The question asked respondents to respond on a scale of How much do you agree or disagree with each of the following? Respondents then selected any number from zero to five, where zero meant the respondent completely disagreed and five indicated that the respondent completely agreed. The survey questions also included the preference of purchasing luxury brands such as cosmetics and electronics online instead of in physical store. In addition, an open ended question was asked about respondents frequencies of online purchases. The question was About how many times in the past three months have you purchased luxury brands online?

Asian Americans online

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Another question asked, How often do you do each of the following? And choices were using ebay and Amazon. Respondents then selected any number from zero to two, where zero meant never, one meant sometimes and two meant very often. The data files were split in to age brackets (18-34, 35-54, 55+) to analyze deep insights of cultural groups online purchasing behavior. In addition, ethnic recode (ethnic without language preference) and acculturation proxy (Hispanics and Asians born and not born in US) were used to see the results of cultural groups because immigrants in total Asian American population are approximately 64% (Marketing to the Emerging Majorities, July 2001). The respondents were put into one of these categories (Hispanic, non-Hispanic White, African American, and Asian American) based on their original quota groups. For the analysis, a mean response for each cultural group was calculated for each reason. The mean scores of each group were then compared using an ANOVA test for equality of means depending on the most appropriate test statistic for each reason. Results In general, Asian Americans are likely to purchase online more than Hispanics, nonHispanic Whites or African Americans. Asian Americans had the highest mean response

preferring online purchase due to saving, avoiding the crowds, and purchase luxury brands due to make them feel special. Asian Americans had the highest mean response for purchasing luxury items (cosmetics and electronics) online and using e-bay and Amazon. However, Hispanic Americans had the highest mean score for frequency of purchasing luxury brands online in past three months. However, a comparison of the means for shopping online due to convenience,

Asian Americans online

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ANOVA
Sum of Squares Df Mean Square F Sig.

I shop online for the convenience of it (Please indicate how much you agree or disagree with each of the following statements.) I shop online to save money (Please indicate how much you agree or disagree with each of the following statements.) I shop online to avoid the crowds (Please indicate how much you agree or disagree with each of the following statements.) I purchase luxury brands because they make me feel special (Please indicate how much you agree or disagree with each of the following statements.) Use e-bay (How often do you do each of the following?) Use Amazon (How often do you do each of the following?) Cosmetics (Check the items below that you prefer to purchase online instead of in physical store.) Electronics (Check the items below that you prefer to purchase online instead of in physical store.)

Between Groups Within Groups Total Between Groups Within Groups Total Between Groups Within Groups Total Between Groups Within Groups Total

9.201 5313.307 5322.508 49.406 6045.144 6094.551 38.284 6826.263 6864.547 118.028 6554.742 6672.769

3 2741 2744 3 2740 2743 3 2737 2740 3 2687 2690

3.067 1.938

1.582

.192

16.469 2.206

7.465

.000

12.761 2.494

5.117

.002

39.343 2.439

16.128

.000

Between Groups Within Groups Total Between Groups Within Groups Total Between Groups Within Groups Total Between Groups Within Groups Total

3.442 1246.422 1249.864 11.371 1211.670 1223.041 .702 291.446 292.149 7.116 675.365 682.481

3 2816 2819 3 2816 2819 3 2816 2819 3 2816 2819

1.147 .443 3.790 .430 .234 .103 2.372 .240

2.592

.051

8.809

.000

2.261

.079

9.890

.000

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using e-bay and luxury item (cosmetics) found no statistically significant differences among Asian Americans, African Americans, Hispanics and non-Hispanic Whites. Post Hoc Tests In post hoc pair comparisons, Asians Americans were the highest and African Americans were the lowest in online shopping due to saving. Asians Americans were the highest and Hispanics were the lowest in online shopping due to avoiding crowds. Asians Americans were the highest and non-Hispanics Whites were the lowest in purchasing luxury brands due to make them feel special. Asians Americans and non-Hispanics Whites were the highest and African American were the lowest in using e-bay. Asians Americans were the highest and Hispanic were the lowest in using Amazon. Hispanics were the highest & Asians were the second highest and non-Hispanic Whites were the lowest in frequency of purchasing online in the past three months. Asians Americans were the highest and African American were the lowest in purchasing cosmetics online. Asians Americans were the highest and non-Hispanic Whites were the lowest in purchasing electronics online. Results in age brackets When the data files were split in to age brackets (18-34, 35-54, 55+), a comparison of the means for shopping luxury brands due to make them feel and using Amazon found statistically significant differences in all age brackets. Whereas, in age bracket of 35-54, shopping online due to saving and purchasing electronics found statistically significant differences. In age bracket of 55+, using e-bay found statistically significant differences. In general, Asian Americans are likely to purchase online more than Hispanics, non-Hispanic Whites and African Americans in age brackets of (18-34, 35-54)

Asian Americans online Post Hoc Tests

I shop online to save money (Please indicate how much you agree or disagree with each of the following statements.) Ethnic without Language Pref African American Hispanic NHW Asian Sig.

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I purchase luxury brands because they make me feel special (Please indicate how much you agree or disagree with each of the following statements.) Ethnic without Language Pref NHW

Subset for alpha = 0.05 N 477 851 463 953 .212 .066 1 3.13 3.24 3.24 3.40 3.40 3.48 .301 2 3

Subset for alpha = 0.05

N 450 845 462 934

1 1.48

Hispanic African American Asian Sig.

1.85 1.85 2.10 1.000

1.000

.941

I shop online to avoid the crowds (Please indicate how much you agree or disagree with each of the following statements.) Subset for Ethnic alpha = without 0.05 Language Pref Hispanic NHW African American Asian N 850 462 478 951 1 2.82 2.87 2.98 2.98 3.10 2

Use Amazon (How often do you do each of the following?) Ethnic without Language Pref Hispanic

Use e-bay (How often do you do each of the following?) Ethnic without Language Pref African American Hispanic NHW Asian

Subset for alpha = 0.05 N 874 490 1 1.11 1.12 1.22 1.25 2

Subset for alpha = 0.05 N 490 874 471 985 1.000 1 .69 2

.77 .78 .78 .879

NHW Asian

471 985

Sig. .090 .203 Sig. Cosmetics (Check the items below that you prefer to purchase online instead of in physical store.) Ethnic without Language Pref African American NHW Hispanic Asian Sig. Subset for alpha = 0.05 N 490 471 874 985 .154 1 .09 .10 .12 .10 .12 .13 .073 2

.828 .313 Sig. Electronics (Check the items below that you prefer to purchase online instead of in physical store.) Ethnic without Language Pref NHW African American Hispanic Asian Sig. Subset for alpha = 0.05 N 471 490 874 985 .212 1 .35 .37 .39 .48 1.000 2

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In post hoc pair comparisons for shopping luxury brands due to make them feel special, Asians Americans were the highest and non-Hispanic Whites were the lowest in age brackets (18-34, 35-54). However, African Americans were the highest and non-Hispanic Hispanics Whites were the lowest in age bracket of 55+. In using Amazon, Asians Americans were the highest in age brackets (18-34, 35-54), whereas Hispanics and African American were the lowest in respective age brackets. However, non-Hispanic Whites were the highest and Hispanics were the lowest in age bracket of 55+. In shopping online due to saving, non-Hispanic Whites were the highest and African Americans were the lowest in age bracket of 35-54. In shopping electronics online, Asian Americans were the highest and African Americans were the lowest in age bracket of 35-54. In using e-bay in age bracket of 55+, non-Hispanic Whites were the highest and African Americans were the lowest. Results with Acculturation proxy In general, Asian Americans not born in US are likely to purchase online more than Asians Americans born in US, Hispanics born and not born in US, non-Hispanic Whites and African Americans. However, a comparison of the means for shopping online due to saving, shopping luxury brands due to make them feel special, using amazon and preferring electronics online only found statistically significant differences among all cultural groups. Discussion Our results generally supported the hypothesis that Asian Americans are likely to make purchase online more than any other cultural group. As mentioned in the results section, what was surprising, however, was to see that Asian Americans not born in US are likely to make purchase online instead of physical store due to saving and making them feel special reasons.

Asian Americans online

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They prefer purchasing electronics online instead of physical store and often use Amazon for online shopping. When not using acculturation proxy, Asian Americans were the highest among all the questions selected for this study except the frequency of purchasing luxury brand online in past three months. Hispanics had the highest and Asian Americans had the second highest frequency to purchase luxury brands online for last three months. In age brackets (18-34, 35-54), Asian Americans are likely to make purchase online for luxury brands than any cultural group. According to census 2010 and other researches, Asian Americans are the highest in population growth, median household income, annual expenditure and education. These results supplement that Asians Americans purchase online more than any other cultural group. Asian Americans are from a collectivist society and save money for their families. It is a possibility that they purchase online due to savings and use often e-bay and Amazon for online deals. Asians Americans are wealthy people so it is a possibility that they purchase luxury brands to make them feel special. Limitations and Future Research It is necessary to note a few limitations of this study. The web survey sampling

technique used in this research does not technically constitute a simple random sample of the population under study because: 1) the respondents completed the survey on invitation only basis 2) respondents age and locations were not distributed as they are in the population. The scale used in this survey also did not specifically addressed the questions as it measured the degree of agreement to disagreement or frequency of use in terms of sometimes, never and often. More specific questions and responses may provide more concrete data to conclude.

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Future studies should take a random sample and ask more specific questions to ask respondents rather than use a scale might be more effective for answering this type of question. Finally, the survey questions used for this study were part of a larger survey. Because of this, only a few pertinent questions were used. An entire survey dedicated to this study would surely have produced more concrete results. Nevertheless, the research finding lay the

foundation for further future research in exploring the nature of relationship between luxury brands purchase online and consumer groups. In addition, future research should also addresses the social context of the online buying decisions of Asian Americans. The current study was limited in scope in terms of inclusion of luxury brands. However, the classification of Asian Americans born in U.S and those not born in U.S further stratified the data and enhanced understanding of market growth even within a consumer group. Further studies may extend the findings of this study and bring more concrete result using advanced statistical measures.

Asian Americans online References

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Asian Americans online Special Issue on Marketing Science and the Internet (Winter, 2000), pp. 22-42 URL: http://www.jstor.org/stable/193257 Palmieri, J. E. (2006). Neimans luxury online. WWD, 192(103),

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doi:10.1108/13612020910939897