Managing Country-of-Origin Perceptions /International Marketing 10th/

Both Japan and South Korea saw their products rise in esteem over a relatively short period of time. Now Japanese products score higher than U.S. or German products in some countries, including China and Saudi Arabia. In recent years, a number of countries, including Portugal, Estonia, and Poland, have employed branding experts to help them project a better image. Finland even undertook a campaign to enhance its image as a center of high-tech innovation, hoping that a better national image would help its high-tech companies in the U.S. market. But countries must realize branding is more than hype, it must be backed by reality. Consequently, major changes in country brand image can take 20 years to achieve.

Firms that suffer from a negative country of origin commonly settle for lower prices to offset perceptions of lower quality. However, there are a number of strategies that can improve buyer perception of the quality of products that suffer from a negative country-of-origin effect:

  • Production may be moved to a country with a positive country-of-origin effect. If this is too difficult, key parts can be sourced from such countries. Kia’s Sor-ento is assembled in Korea but relies on high-profile brand-name components from European and U.S. suppliers to boost its image overseas.
  • A negative country-of-origin bias may be offset by using a channel that distributes already accepted complimentary products. A study determined that consumers dining in a Mexican-themed restaurant were significantly more likely to buy Mexican wine than were consumers in other restaurants.

Communication and persistence can eventually pay off. When Arçelik attempted to introduce its Beko brand washing machines to the French furniture chain Conforama, the French sales staff objected to displaying the Turkish product. Then Valerie Lubineau, Beko’s head of marketing in France, revealed that the firm had been manufacturing Conforama’s respected in-house brand for years. Eight months later, the new Beko machines were outselling their European rivals. Firms that consistently provide good products and service can even change buyers’ attitudes toward their country of origin. A study showed industrial buyers who were experienced with suppliers from Latin America rated these countries higher than buyers who had had no such business dealings.

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Buyer behavior is affected by the national origin of products and services. Many consumers are relatively indifferent to where a product is made. Other consumers favor goods produced in their home country. Country of origin (COO) refers to the nation where a product is produced or branded.  Origin is usually indicated by means of a product label, such as “Made in China”. When consumers are aware of a product’s COO, they may react positively or negatively. For example, many people favors cars produced in Japan, but would be less upbeat about cars made in Russia. Most people feel confident about buying clothing made in Italy, but would be less receptive to clothing from Mexico. Such attitudes arise because consumers hold particular images or conceptions about specific countries. Consumers assume that Japan produces high-quality cars and that Russia makes low-quality cars. While such beliefs are often rooted in reality, many are simplified opinions, false stereotypes or effect the slowness of accepting change.

Buyer reactions to COO are influenced by various factors.  First, COO stereotypes vary depending on the origin of the judge and on the category of the product being judged.  For instance, while Japanese cars are disdained by Indians, they are prized by Russians. While people in Brazil love Japanese consumer electronics, they spurn Japanese apparel.

Second, opinion varies depending the national origin of the firm and the location where its product is actually made. Many consumers love German Volkswagens, even if the car is produced in China, Poland, or some other location outside Germany.

Third, as the capacity of countries to perform well in specific industries improves, the COO phenomenon varies over time. Until recently, for example, few Westerners would have visited India to undergo surgery.  However, many now perceive India as an excellent value for obtaining medical care for various conditions, and spend the time and money to travel there to receive heart operations, cosmetic surgery, and other procedures.

Finally, the tendency of consumers to discriminate against foreign products varies by demographic factors.  For example, senior citizens and people with limited education tend to shun products that originate from abroad.