Introduction
The concept of ‘country of origin’ has consistently provided a formidable and reliable reference point for the consumer when it comes to product selection, in likelihood due to the fact that it is synonymous with such concepts as quality, craftsmanship and expertise. Despite the dilution and convergence of markets, it is ironic that this concept retains a strong and pronounced role in determining product and brand selection in same product categories. This paper explores whether globalisation has reduced the significance of the phenomenon of COO effects in marketing, and whether the tension created by the two forces will mean that COO is a creature of regionalism, or whether it will continue to provide a relevant and human dimension to characterisation of products, and in what situations it will be invoked as a selling proposition. The paper also examines the historical development of the concept of clustering and how COO can be used effectively in the Information Age.
The first part deals with the definition of Country of Origin (COO), conspicuous consumption, the decision-making process, and aspects which influence the effectiveness of COO. In analysing 6 journal articles, listed in the Bibliography, emphasis will be placed on categorising findings based on different thematic issues considered in the articles.
The second part argues that whilst some recent companies have based their success on factors other than COO, the phenomenon of clustering, as articulated by Porter, has remained a significant aspect of competition and markets. Lastly a postscript points out the limitations of COO research to date.
1. Defining COO
COO as a process
Al-Sulatiti and Baker (1998) argue that in today’s robust and cosmopolitan marketplace, any attempt to define the COO of products can be a complicated task. Considering that product inputs originate from a range of countries, ‘country of origin’ becomes misleading as it no longer embodies a closed and exclusive process encapsulated in one country. The author acknowledges that component sourcing from multiple destinations has blurred the accuracy of “made in” labels meaning that COO now represents “the country of assembly” or “the final point of manufacture” usually taking place at the headquarters of a company.
COO as a stereotype
In contrast to Al-Sulatiti and Baker (1998) definition of COO as a process consisting of various stages from manufacture to sale, a different approach to defining COO was taken by Sohail (2005), who argues that in certain circumstances COO may act as a source of country stereotyping, directly affecting consumer’s attitudes towards the brand instead of through attribute ratings. However, such an approach is also consistent with Al-Sulatiti and Baker (1998) findings since it also acknowledges that COO effects can take the form of “intangible barriers to enter new markets in the form of negative consumer bias toward imported products.” In this sense, it could be acknowledged that both approaches are viable since managers need to consider the history of category association before using COO to raise consumer awareness of their products. If the country’s product history is negative then it may be preferable to avoid COO in brand programming .
Although Al-Sulatiti and Baker (1998) present a narrower definition pertaining to manufacture and assembly, such an approach is just as valuable as the practical stereotyped view of COO. Since this approach acknowledges the fundamental reality that COO historically represented a local production process, it may currently represent assembling, re-branding, or fusing of components not directly associated to the COO. Considering offshore production, this highlights the concern that the affiliation of certain products with their COO may breach their claim to COO.
2. Conspicuous Consumption and its effect on COO
Piron’s research (2000) establishes a further dimension to the debate on COO since it highlights the positive association between purchasing risk and the emphasis placed on COO. This phenomenon is attributed to the notion that high involvement association in purchasing decisions leads to a more pronounced COO, as consumers consider a variety of features to ensure the value of their purchase.
Public v. Private Consumption
Among the many factors that influence the level of significance attributed to COO in product selection, is whether the product is intended for conspicuous consumption. Piron (2000) argues that for consumption to be conspicuous, it must become “a social event, publicly witnessed by other consumers.”
This distinction between the purchase of private and public products determines the degree of social risk, hence allowing COO to play a more prominent role in the final decision. Since COO may define the image the consumer wishes to express, it means that the COO must be congruent with the personality and self-perception of the consumer. Piron (2000) maintains that there is a connection between COO and a consumer’s self-image and its expression in the public eye.
Luxury v. Necessity Products
Piron’s findings suggest that when purchasing luxury products COO has a stronger effect than price in product quality assessment. As luxury items involve greater monetary risk it generally equates to a higher degree of involvement in product selection. However, because necessity items command less risk there is less customer involvement and hence COO plays a less significant role.
3. The Significance of COO in the Decision-Making Process
COO & Pre-Trial Perceptions
Chiou (2003) presents a competing hypothesis, maintaining that the major predictor of COO effects is not its purpose, but rather the degree of interaction between a product and consumer. In most purchasing situations where consumers are presented with the opportunity for a post purchase test, it is questionable whether the effect of COO on pre trial perceptions will remain after trial .
Familiarity
Chiou (2003) also argues that increased product market familiarity results in increased product market expertise. Unlike Piron (2000) who looks at the purpose of a particular product, Chiou’s approach is more substantive since it acknowledges that COO effects do not occur independently of the buyer decision process. Thus, COO will play a role in the decision if it is something that is familiar and positive in the mind of the consumer at the time of purchase.
4. Variations in the Effectiveness of COO
Culture
Gurhan-Canli and Maheswaran (2000) argue that COO effects vary across countries and may be caused by culture-specific factors that can be measured by Hofstede’s framework.
Individualism v. Collectivism measures the extent to which people within a society are either integrated into strong, cohesive groups or conversely where ties between persons are loose.
Lo (2004) argues that the greater the in-group identification, the greater the social value allocation in favour of that group. This can be observed as one member’s purchase can be adopted by others in the group. In-group orientation operates on a local level, where consumers resort to nationalism and buy products originating from their country. Thus a fairly weak positive association between collectivist cultures and an emphasis on COO can be extrapolated.
With the Masculinity v. Femininity dimension, a masculine culture is recognised when the dominant values in society include assertiveness, the acquisition of money and a focus on caring for others and the quality of life. A weak association can be established between a materialistic masculine society, where quality and COO play the most significant role, in comparison to a feminine society where product consumption is minimised and emphasis is on environmentalism and product functionality as opposed to image.
With the third dimension, High and Low Uncertainty Avoidance indicates the extent to which a society feels threatened by uncertain and ambiguous situations and hence attempts to avoid them through providing greater assurance in their personal and business lives. If a society has high uncertainty avoidance, countries which are culturally different would be viewed with suspicion, and their products would not be purchased so as to reduce the perceived threat by the values and ideas of other cultures. Given the pace of globalisation, it is anticipated that countries epitomising high uncertainty avoidance will be challenged, as cultures become intermeshed and transparent.
With High Power Distance v. Low Power Distance, power distance is the extent to which a society accepts the unequal distribution of power in organisations. Citizens in a high power distance society may place emphasis on COO as segregating societal differences and defining different social structures.
Demographics
Sadiq (2005) argues that other factors influence the effectiveness of COO such as consumer demographics :
- Older consumers and females have been found to provide higher ratings for foreign products
- Those with college educations viewed foreign products more positively
Once again, whilst it may be true that educated consumers are less likely to fear foreigners, this should be considered in conjunction with the argument of Gurhan-Canli and Maheswaran (2000) that groups with low uncertainty avoidance utilise COO since they are likely to take risks. However, Chiou’s (2003) argument warns that cautious should be exercised when categorising.
Proximity
Sadiq (2005) also proposes that the proximity of the sourcing country to the importing country, in physical and cultural terms, is influential on consumer perceptions . Closer proximity stimulates more favourable perceptions for that country’s products which are similar in economic and political realms. . The concept of proximity may be explained in light of Gurhan-Canli (2000) ideas, since the greater distance (geographically, economically and culturally), equates to a higher level of uncertainty avoidance.
5. Why Some Countries ‘Do it Better’
The development of COO effects has become so embedded in the creation of brands and products, that it is possible to say that regardless of how effective the globalisation process is, COO effects will remain as a constant characteristic in global marketing. Indeed, COO can be described as a phenomenon due to the fact that it finds substance in Porter’s (1998) findings on ‘clustering’. Clustering is premised upon geographic concentrations of product success gained from local knowledge, relationships and motivation that distant product rivals cannot match.
Porter (1998) maintains that cluster businesses affect competition in 3 ways by increasing the productivity of companies based in the area, driving the direction and pace of innovation and stimulating the formation of new businesses which expand and strengthen the cluster.
Based on this idea that clusters are an evolutionary phenomenon resulting in specialised expertise (e.g. Italian shoes), it could be argued that once a cluster forms, a self-reinforcing cycle establishes to promote its growth, such that local institutions become supportive and foreign locations simply cannot compete with such a high level of expertise. This seems to explain why COO is a continuing global marketing phenomena which cannot be ignored or disassociated from perceptions of brands and products attributes. The assumption is that COO continues to play an important role since some countries have established clusters and are able to market a certain good or service in a way which transcends the efforts of any other foreign country. It is this very characteristic of clustering and its ‘self-reinforcing’ nature which explains why some countries are able to make things ‘so much better’.
6. Globalisation and COO’s Diminishing Significance?
6.1 Reality of Globalisation
An alternative argument as to COO effects, in conjunction with globalisation is that COO is assuming a less important role. The basis of this argument is premised on the notion that the conceptual use of COO in product marketing is flawed. This is evident as a product can source its inputs and processes from various countries. Consumers are becoming conscious that COO can be misleading and have no real value in product assessment, since cheap labour in developing countries is a reality inevitably forcing products to be assembled offshore.
Therefore consumers are presented with other aspects to evaluate products including elements such as ecological sustainability, physical features, augmented services, and technological features.
7. Conclusion: A Contingent Model for successful use of COO
From one perspective, it could be argued that COO is merely a composition of stereotypes which have been crystallised by popular culture and reinforced by simplistic experiences by customers. From one perspective, Porter’s (1998) highly reputable framework encapsulating cluster formation indicates a very real and formidable link between location and product-category. This paper reveals that it is a combination of true core competencies possessed by a region as well as the role of popular culture immortalising such images which has created a climate where COO claims will have more legitimacy in some instances and not in others.
The findings reveal that COO will not be appropriate in the selling of all products. Only countries with a clear and recognised competency in the product category, whether established through popular culture or through the phenomenon of clustering (most likely it will be attributable to both) as a historical or potentially emerging competency, should emphasise COO as a criteria which can be invoked by the buyer in the buying process. If there is no such historical or potential association between the product-category and COO, then a company would be better off highlighting other criteria such as features and benefits in order to attract customers. Far from adding to brand equity, if such companies were to use COO for their product categories, they would be creating negative images and associations with their products . |
