International Marketing and Communication: Country of Origin 2009
In 1986, Theodor Levitt described the globalisation of markets as "the new reality" of powerful global corporations and the end of the multinational commercial world (1986:21). He pointed out a continuous drift in the corporation strategy from national adjustment to entire standardisation. Due to technology, the experience of "homogenizing modernity" overwhelms differences in national tastes and preferences. This does not mean "the end of choice or market segments", but "the beginning of price competition for quality products aimed at fewer but larger global market segments" (Levitt, 1986:23-24). While some speciality segments like Chinese food, German cars, Japanese electronics, etc., have expanded globally, they have significantly reduced consumption of similar products of other nationalities. This shows that differences will either vanish or expand globally. Levitt claims that, "without generalised homogenisation of tastes and preferences there would be no distinction in ethnicity or specialisation". "Vast differences in products and product features remain between different nations that have a heavy presence of national corporations" (Levitt, 1986:30-31). Levitt considers the remaining differences as a polite adjustment of multinational corporations to what they believe are fixed local preferences, which Levitt believes, would disappear under proper pressure of global standardisation.
At the present time, the latter statements by Levitt can only be proven to a certain extent. The globalisation of markets and their consequent standardisation have become widely advanced and indeed speciality segments have undergone essential growth. However the "fixed local preferences" and multinational marketing strategy still has not disappeared. As Cateora and Graham (1999:349) have indicated, "consumers tend to have stereotypes about products and countries that have been formed by experience, hearsay and myth". These stereotypes are fundamental for the "country of origin effect - any influence that the country of manufacture has on consumer's positive or negative perception of a product" (ibid., 1999:349). Doole and Lowe (2004) indicated that a buyer's evaluation of a product is affected by intrinsic and extrinsic cues. Intrinsic cues are based on gaugeable and generic attributes like quality, taste, design and performance. Extrinsic cues are for example brand name and country of origin. Due to the global standardisation and technological progress, intrinsic characteristics tend to a harmonisation and like Levitt stated, "when substantive content - the generic product - of competing vendors is scarcely differentiable, sales power migrates to all other differentiating ways in which buyers are likely to be influenced" (Levitt, 1986:75). Branding, packaging, advertising, corporate reputation and country of origin are the main managerial tools of marketing which can serve as the most powerful form of differentiation (ibid., 1986).
Although COO can have different meanings, all of them reflect the dynamic of the global business development with all its implications on countries, companies and consumers. This essay critically evaluates the COO's role for consumers and illustrates how it is used by companies to manage the image of their products. This paper explains how COO works, what role it plays for consumers, what are its limitations in the new global environment and what is the use of the COO concept as a marketing tool for image management.
Traditional research on COO concentrates on the Influence of "made in ..." labels on consumers. Brand names like "Swissair", "American Express", and "Deutsche Bank" refer explicitly to a particular place of origin. Other brand names like the French sounding "Champagne" (wine), Italian sounding "Rigatoni" (pasta), refer to a place of origin in a more subtle way. Products are also "linked to a place of origin in advertising and design" (Verlegh, 1999:162). For example German companies like to underline their origin through use of German slogans in foreign countries, e.g. Audi: "Vorsprung durch Technik", BMW: "Freude am Fahren". Although consumers do not always know where the specific product is produced, they are usually familiar with the COO of brands. Consumers know that Ford is American and Toyota is Japanese. The Germans are characterised as skilled engineers, with a talent for building cars and household appliances. The Japanese are associated with efficiency and precision in the production of high-tech electronics (Aaker, 1997 in Verlegh, 1999).
According to Martin and Nakayama (2006), in order to make sense of the world, people have to make generalizations. One of these is by means of stereotypes, which represent "individuals' cognitive associations and expectations about any societal (i.e. national) group (Fiske and Taylor, 1991), while national stereotypes are qualities (whether accurate or not) perceived to be associated with a nation's people" (Schneider, 2005 in Chattalas et al., 2008:54). Stereotypes' objectivity is very limited and like Hofstede said, they "are at best half-truth" (2001:14). A Positive or a negative association of a product and a country of manufacture like for instance reliable German cars and unhealthy American fast food could be a result of personal experience, hearsay or just an artificial image from advertising (Cateora and Graham, 1999). Verlegh and Steenkamp (1999) observe COO as an stereotype driven attribute, which leads to a process of linking emotional associations with particular nations (in Chattalas et al, 2008). Bruning (1997) suggests in his study two components of COO effect. The first component of COO relates to national loyalty or social affiliation. The second serves as a cue about intrinsic attributes of a product, when detailed information is missing.
Tajfel (1981) indicated, in the context of COO, that people categorise in at least two groups: "ingroup" - their own country and "outgroups" - foreign countries (in Verlegh, 1999:162). People tend to emphasise and overestimate the positive qualities of their own group. However, there are also exceptions when members of low-status groups show "outgroup favouritism" (Leyens et al. 1994 in Verlegh, 1999:162). Whereas many consumers would prefer to buy cars made in Germany for their well known quality, others will ignore this and prefer to buy cars made in their own country despite them being of inferior quality. This kind of decision could be based on the need to emphasise the buyer's national identity (Bruning's first component of the COO effect) and is a sign of ethnocentrism (Cateora and Graham, 1999). "National identity is established through the comparison of the own country with other countries" (Shimp and Sharma 1987 in Verlegh, 1999:162). Ethnocentrism is an "exaggerated tendency to think characteristics of one's own group or race superior to those of other groups and races" (Drever, 1952 in Hofstede, 2001:17). The literature suggests that ethnocentric consumers are more aware of the COO cue and often perceive "the consumption of imported products as socially undesirable and unpatriotic" (Balabanis et al., 2001 in Chattalas et al, 2008:58). Furthermore, researchers proved the effectiveness of advertising campaigns for locally made products such as "made in the USA", "buy Canada", and the like (Baumgartner and Jolibert, 1977; Bilkey and Ness, 1982; Erickson et al.,1984; Han and Terpstra, 1988; Hong and Wyer, 1989 in Bruning, 1997). At the same time a person with a low sense of national loyalty and high sensitivity to non-country specific cues, will unlikely be reached by this kind of promotion (Bruning, 1997). In this context Bruning (1997) examined the role of COO in the commercial air travel between USA and Canada after the ratification of the "open sky policy" in 1995, which made US-Canadian market more open to competition. His research on the reaction of Canadian travellers on the US service suppliers with a new marketing mix, has confirmed "the importance of the national loyalty as a component of the COO effect" (ibid., 1997:67). As the key management implications for the Canadian air carriers, Bruning pointed out the importance of understanding the role of national loyalty in favouring them over foreign opponents. This strategy could be realised through a joint campaign of Canadian airlines promoting the favouring national air carriers (ibid., 1997). However, there is also evidence of contradictory observations in developing countries - "reverse ethnocentrism", when consumers prefer imported branded products to domestic ones to avoid the risk of dissatisfaction through lower quality of products from developing countries (Agbonifoh and Elimimian; 1999; Batra et al., 2000; Ettenson, 1993; Marcoux et al., 1997, Okechuku and Onyemah, 1999; Wang et al., 2000 in Essoussi and Merunka, 2007). This observation confirms the above mentioned "outgroup flavouritism".
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- Artur Gleyberman (Author), 2009, International Marketing and Communication, Munich, GRIN Verlag, https://www.grin.com/document/141898