Label Lessons from Thailand

My research showed that this Thai label is easy to understand, as it provides a simple 1-5 rating that is clearly explained at the top. Although most Thai usually only understand this amount of information from the label, Thai salespeople reported that customers are content with that information.

The original EnergyGuide label was revised in 1994, with the new label (above) currently appearing on about half or more of white goods in U.S. appliance stores. U.S. salespeople reported that few customers bother to look at the label and that those who do look have a hard time understanding it.

I found that, after just 3 years of operation, the Thai appliance labeling program is having a significantly greater impact on the consumer appliance market than the 20-year-old U.S. program. Thai salespeople reported that more than 60% of consumers ask about or look at the label. The corresponding number for the United States was just 20%.

The Thai's greater interest in their energy label is related to their heightened concern with the energy efficiency of their appliances. Energy efficiency was reported among the top three purchase priorities by 28% of Thai appliance consumers, compared to just 11% of U.S. consumers. My in-store tests of label comprehension showed that the U.S. EnergyGuide label fared poorly.

For example, the average time that it took for a consumer to understand the label was more than 40 seconds. Observations during the interview and debriefing afterward indicated that most consumers found the EnergyGuide label difficult to understand. Because of poor text labeling, one-third of the consumers interpreted the cost figure in reverse and thought that the label showed annual savings rather than operating cost. Fewer than half of the 100 consumers could use a single label to tell whether a model was more efficient than average, and fewer than half were able to interpret that the horizontal scale on the label represented a relative scale of energy use.

The Thai appliance label was more effective at helping consumers to identify efficient models. However, both labels suffer from the problem of too much detailed product information, which hinders comprehension. The Thai label has a simple rating system at the top and much detailed product information below. While most Thais were able to grasp the 1 to 5 efficiency rating system, the vast majority felt they either did not understand the label (22%) or understood it only somewhat (63%). In spite of this problem, though, the Thai label is effective.

Salespeople are the essential link in both appliance labeling programs because they exert a significant influence on consumer purchase decisions. However, in most appliance transactions, salespeople in both countries have an incentive to sell units that have additional features and use more energy. This is because they get larger commissions on more expensive products.

I concluded that the two appliance labeling programs have different goals. The goal of the U.S. program is to provide consumers with information that will help them to make appliance purchase decisions. This approach does not work well, largely because the label is presented in a technical, data-intensive format rather than a more user-friendly format.

In contrast, the goal of the Thai program is to persuade consumers to buy a more efficient appliance--one that will save money and protect the environment. To support the program, the Thai government has implemented a massive nationwide advertising campaign. In fact, the television advertisements promoting the appliance energy labels are part of a utility marketing effort that is the largest nationwide television advertising campaign in Thailand.

The U.S. Environmental Protection Agency has been working with the Federal Trade Commission and U.S. appliance retailers to improve the effectiveness of the federal appliance labeling program. Over the past year, the EPA has started to apply its highly effective Energy Star endorsement label to the top tier of efficient appliances in hundreds of stores around the country. The Federal Trade Commission may soon expand this initiative by allowing manufacturers of the most efficient products to print the same green Energy Star logo as an endorsement mark on the existing yellow EnergyGuide appliance labels.

For more information about the study, including a 15-page executive summary, contact me at IIEC-Asia, 8 Sukhumvit Soi 49/9, Bangkok 10110 Thailand. Fax:+66-2-381-0815; E-mail: ptdupont@loxinfo.co.th.

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