In a new academic research paper exploring the effect of elite consumers perceptions of luxury and functional products across eleven countries, Dr Hina Kahn of the UK's Newcastle Business School found that country of origin (COO) has an increasingly significant effect on consumers' buying behaviour.
Kahn's research, which centred on the opinions and purchase behaviours of 250 managerial and professional consumers in Pakistan, noted that some countries' products are far more likely to sell than others.
National likes and dislikes
The consumers surveyed overwhelmingly preferred luxury and functional products from Japan, France, Switzerland, USA, Italy, and Pakistan. Conversely, products from China, Taiwan, Korea, Germany, and Britain were the least popular.
Even though consumers surveyed perceived European brands as being generally good quality, this view did not reflect in their actual buying behaviour, with many preferring to buy Japanese or Korean products instead of European products. Among the reasons cited for this was that European products don't come with a guarantee, spare parts are difficult to find, and they are more than expensive Japanese and Korean products that usually have at least a one year warranty.
Measuring consumer preference
For the study, luxury and functional products were measured for attributes such as purchasing for everyday use, special functions or parties, gift for friends or family, and product quality including country of origin. Consumers were asked which country's products they would choose for each such occasion. The responses were then used to measure the importance of COO for each occasion.
Research has shown that COO can influence the consumer's decision to purchase. For example, consumers from developed countries tend to prefer products from developed nations. Similarly, consumers from less developed countries tend to prefer products from developed nations.
COO's impact on luxury brands
A study by Piron in 2000 examined consumers' perceptions of the country-of-origin effect, connected with purchasing intentions of 'conspicuous' and 'inconspicuous' products. The study reinforced the importance of the COO effect as it investigated consumers' purchasing intentions regarding public/private and luxury/necessity products. Its findings suggested that a product's country of origin had a stronger effect when consumers consider luxury products.
Research suggests that country of origin serves as a cue from which consumers make inferences about products and their attributes. The COO cue triggers a global evaluation of quality, performance, or even more specific product and service attributes. Consumers infer product attributes (such as quality, safety or reliability) based both on country stereotypes and on past experiences with products from specific countries.
Countries equal categories
Country images may influence product evaluations in a negative or a positive way. The cognitive processes which lead to these evaluations have been studied extensively in various studies. Findings suggest that consumers use the country of origin cue symbolically, as an associative link.
For example, Denmark is associated with agriculture, France is associated with fashion and design, and Germany is associated with technology and engineering. Certain products are considered to be more 'ethnic', more typical of some countries than of others, and producers often attempt to benefit from these mental linkages by referring to their country of origin in the marketing of their products.
Reversing the stereotype
But, Kahn argues, even though country stereotypes are often deep rooted in the consumer's mind, they can still be reversed. Negative country images may be improved through advertising or national export promotion campaigns that seek to enhance both the general image of the country and its national product image.
Indeed, recent global press coverage about the poor safety and quality record of products made in China (ranging from childrens' toys to car tyres), with dozens of high-profile global product recalls, suggest that the nation could benefit from a publicity campaign of this kind to help reserve the national stereotype that now exists in many consumers' minds.
Appealing to fun and fantasy
Research into consumer needs and motivation for consumption behaviour also suggests that consumers associate fantasy, fun and emotions with the consumptions of some products. Consumers tend to use personal or subjective criteria such as taste, pride, desire for adventure, and desire for expressing themselves, in their consumption decisions. These kinds of consumption are based on individual tastes and intangible product benefits. In other words, many of the consumer's motives for purchasing particular products or services are emotional in nature rather than being strictly practical.
Of course, consumers' specific needs can be classified as being either 'functional' or 'symbolic'. Functional needs are related to specific practical consumption issues, while symbolic needs are related to self-image and social identification. Functional brands satisfy immediate and practical needs while symbolic brands satisfy symbolic needs such as self-expression and prestige (and practicality is purely incidental).
In emerging markets, the paper's author suggests, ownership of foreign products serves as a social status symbol. Interestingly, COO was not an important factor when determining purchasing decisions. Instead, these consumers gave more importance to other attributes of the product which enhance their social status in the society, followed by brand name, product quality, COO and product price.But elite consumers appear to use COO information in a more structured way, although still partly conforming to the priorities used by their less wealthy counterparts.
Dr Khan, programme leader for Business with Marketing at Newcastle Business School, explained: "The research has important implications for marketing professionals in targeting the growing Pakistani market. Responses from the consumers, who represent an embryonic professional class in Pakistan, indicate that COO impacts on their decision making with regards to purchase intentions for luxury or expensive products." Kahn concluded that, in finding out which countries enjoy a favourable image among consumers, companies from those countries can profit from their positive image and gain competitive advantage.
The full research paper, which examines and quantifies consumer desires in various segments and categories, has been made available on request from Newcastle Business School in the UK - click here.