and price level effect in the retail designer jeans market in Macedonia. A country of origin by brand name design was used to test the effects of brand name and ...
THE COUNTRY OF ORIGIN EFFECT IN NEWLY EMERGING EASTERN EUROPEAN COUNTRIES: A MACEDONIAN CONSUMER STUDY Darrell Goudge, University of Central Oklahoma Bobi Ivanov, University of Central Oklahoma ABSTRACT This study researched the influence of the interaction of country of origin, brand name, and price level effect in the retail designer jeans market in Macedonia. A country of origin by brand name design was used to test the effects of brand name and country or origin on buying intentions. Buyers are more likely to view designer jeans associated with developing countries positively if brand origin is repositioned in a fashion-oriented, developed country. Price expectation and willingness to pay are significantly lowered when brand origin is repositioned to a developing country, although a strong brand name may under certain conditions, offset this negative effect. INTRODUCTION As consumers are presented with a greater array of product choices in a global marketplace, their potential product selection will include a higher proportion of products from non-domestic sources. The Eastern European consumer market is one likely to experience the greatest changes in the near future. Studies conducted in this area in the past have focused on the differences between centrally controlled economies and free market economies (Atisien and Buckley 1985; Holzman 1983; Naor 1985; Samli 1986; Vlachoutsicos 1988). With the collapse of the Soviet Union in 1989 there have been dramatic changes occurring in the Eastern European marketplace. After years of domination by centrally controlled market forces, Eastern European consumers are now able to participate in the world market. These centrally controlled consumer markets were not only characterized by limited product selection but in many cases by the lack of any products to choose from at all. Most products available were produced domestically or by other centrally controlled economies. Today Eastern European consumers not only have products available, but many of these products are from foreign locations and carry brand names previously unfamiliar to them. How have these consumers reacted to the introduction of these products originating from foreign countries? In a competitive marketplace, branding is used extensively to differentiate one competitor's product from another. Brand names frequently convey location-based images to consumers in the international marketplace. Brand origin defined as "the place, region, or country to which the brand is perceived to belong by its target customers," (Kohli and Thakor 1996, p.27), expands the conventional concept of country of origin to encompass the perceptions the brand creates in consumers' minds. This perception may or may not be related to production or design facilitites. The perceived location from which a product comes from may create positive and negative images, based on consumers'
perceptions of that location (Kohli and Thakor 1996). The Previous Country-of-Origin Effect (COE) studies that included Eastern European countries have demonstrated that product images may influence or be influenced by country images (Papadopoulos, Heslop, and Beracs 1990). Studies in general on the Country of Origin Effect (COE) have shown that in some cases COE is more important in effecting product quality assessments than price and brand information (Wall, Leifeld, and Heslop 1991), in other cases COE only has a greater effect on brand name assessments (Ho and Sin 1988). Level of consumer experience has been shown to enhance the Country of Origin Effect (Maheswaran 1994) COE as a measure of product quality. Products perceived as coming from less developed countries are generally thought to be less attractive although the COE may be moderated by a well-known brand name (Cordell 1992; 1993). Consumers may be willing to tradeoff lower price for products where COE is negative (Cordell 1991; Iyer and Kalita 1997). Upper income consumers have also been found to give greater price premiums to imports from developed countries and greater price discounts on imports from developing countries (Huang 1994). Studies in general have found effects but the generalizability of country of origin effects has been limited due to the product and regional specific nature of the findings (Young, Sauer, and Unnava 1994). There have been numerous studies conducted on the topic of country of origin but few in the newly emerging free market economies in Eastern Europe (Lampert and Jaffe 1998; Swinder and Rao 1997) and none in the former Yugoslavian republics. While most Eastern European countries were part of the former Soviet Union, Yugoslavia never was part of the Soviet Union. Yugoslavia, located on the southwestern border of the Soviet Union, was centrally-controlled, but also maintained limited ties to the west and to the east, while treading a fine line with the powerful Soviet influence to the north. The former Yugoslav republic of Macedonia was selected as a data collection site. Macedonia is located in Southeastern Europe on the northern border of Greece, bordering Serbia, Bulgaria, and Albania. (See the Figure) (omitted) Macedonia is the poorest of the former Yugoslav republics with a per capita GDP of just $960. Following its emergence as an independent nation again, Macedonia fell into a recession, but since 1996 the economy has been slowly rebounding. There are adequate supplies of the necessities, but large durable goods purchases are beyond the capability of most Macedonians. Western European and American style clothing are very popular. Jeans are now worn by all ages of Macedonians for work and leisure. Levi is the most popular brand, followed by designer labels like Versace (Italian), and the Turkish brand Mavi jeans (Mavi means "Blue" in Turkish). Even though "designer label" jeans are an expensive discretionary purchase for most Macedonians, sales are increasing. Previous studies have shown that consumers in other countries preferred Italian brands to domestic brands for fashion clothing and were willing to pay premium prices for them (Hung 1994). Younger consumers have better value perceptions than older consumers of foreign produced goods (Cordell 1993; Hung 1994). Relative age is a factor influencing brand preferences and choice criteria in the retail designer jeans market (Young Sauer, and Unnava 1994).
HYPOTHESES H1: Intent to purchase will be greater for those products perceived to be from developed countries than for those products perceived to be from less developed countries. H2: The price consumers expect to pay will be greater for those products perceived to be from developed countries than for those products perceived to be from less developed countries. H3: The price consumers are willing to pay will be greater for those products perceived to be from developed countries than for those products perceived to be from less developed countries. H4: Intent to purchase will be greater for products from countries whose brand names are perceived to produce higher status products. H5: Intent to Purchase foreign products will be greater for younger consumers than for older consumers. RESEARCH DESIGN The purpose of this study is to test the effect of country of origin, brand name, and price upon consumer behavior for discretionary apparel purchases in the newly emerging free market economy of Macedonia. A written self-administered survey was designed to measure the effects of country of origin, brand name, and price on buying intentions. Since Macedonia does not produce designer jeans locally, all designer jeans available are foreign brands. An Italian brand (Versace) of designer jeans was selected as a premiumpriced, high status brand associated with Italian fashion from a developed country. Mavi designer jeans (a Turkish brand) was selected because of its popularity. Consistent with previous studies of consumers' perception of products from developing countries, Macedonian consumers perceive Mavi to be a lower status, lower-priced product. Brand name and Brand Origin were manipulated using four different versions of the questionnaire. Version one presented Mavi jeans as originating from Turkey and then from an unknown location outside Turkey (See Appendix). Version two presented Mavi jeans as originating from Turkey and then from Italy. Version three presented Versace jeans as originating from Italy and then from an unknown location outside Italy. Version four presented Versace jeans as originating from Italy and then from Turkey. No mention was made in each version of the brand name or locations used in other versions. To avoid translation problems and because most younger Macedonians speak English, but many older Macedonians do not, questions were written prominently in the Macedonian language with English in small type below. Questions were parallel translated to minimize the effect of language differences (Brislin 1970). Variables measured were: intention to purchase with original brand origin, intention to purchase with change of brand origin, brand familiarity, probability of purchase if brand name and origin were not visible when the product was worn, brand name importance, price
expected to pay, price willing to pay, price importance, and demographic information, such as gender, age, household income, household size, and marital status. (See the Appendix) SAMPLING PLAN Data were collected from representative consumers in Macedonia by written questionnaire. Fifty-eight percent of the two million Macedonians live in urban areas with approximately a half million in the capital city of Skopje. Potential respondents in various randomly selected locations in Skopje were approached by a field representative from Macedonia. The representative explained the purpose of the study and requested their help in gathering data by filling out a written questionnaire. Potential respondents were divided by age into two categories 14 to 32, and 33 and older. An equal number of surveys were collected from those in each age group. Consumer market research is still a relatively rare phenomenon in Macedonia, which made many potential respondents initially reluctant to participate. However most agreed to participate when the field representative explained the procedure and that answers would be kept anonymous. DATA ANALYSIS AND RESULTS The total sample size was one hundred twenty with thirty responses received from each of the four versions of the questionnaire. The sample was equally divided in two groups comprised of younger people below the age of 32 and older people over this age. The demographic questions in the questionnaire included the variables of gender (52.6% males and 47.4% females), age (mean of 23.69 for the younger respondents and mean of 45.63 for the older respondents), marital status (45.3% not married and 54.7% married), occupation (23.3% students, 10.0% students that also work, 59.9% workers, and 4.2% retired), household size (mean of 3.86 on range from 1 to 7), household working members (mean of 2.07 on range from 1 to 5), and monthly household income (5.9% below than $180, 31.4% between $180 and $360, 22.9% between $361 and $540, 25.4% between $541 and $720, and 14.4% above $720). Overall, completion rate of survey items was very high. Less than five percent of the surveys received had any questions unanswered. A check for variation in the sample revealed no significant differences between the four different groups on demographic variables. There was no significant difference between groups for brand familiarity.
TABLE I Means Comparison for Intention to Buy When Different Country of Origin is Introduced Percentage Willing to Buy Brand by New Location
Mavi Outside of Turkey
All Respondents After
Before
After
Before
After
mean
0.62
0.41
0.80
0.47
0.43
0.36
std.err.
(0.01)
(0.01)
(0.11)
(0.13)
(0.14)
(0.13)
0.056 0.93
0.20
0.87
0.36
1.00
std.err.
(0.01)
(0.00)
(0.11)
(0.01)
(0.13)
(0.00)
0.000a
significant at the .05 level
0.000a
0.000a
mean
0.90
0.37
1.00
0.43
0.80
0.33
std.err.
(0.01)
(0.01)
(0.00)
(0.14)
(0.11)
(0.13)
0.000a
0.001a
0.014a
mean
0.77
0.23
1.00
0.33
0.53
0.47
std.err.
(0.01)
(0.01)
(0.00)
(0.13)
(0.13)
(0.01)
p value a
0.671
0.30
p value Versace in Turkey
0.019a
mean
p value Versace outside of Italy
33 years or older
Before
p value Mavi in Italy
32 years or younger
0.000a
0.000a
0.054
Table II Means Comparison for Expected Price, Willing to Buy Price, Price and Brand Importance Brand Name
Mavi
Versace
Variable
Country of Origin Change
Outside Turkey to Outside Italy to Turkey Italy Italy Turkey
Expected Price
mean
1.97
2.03
3.83
2.60
std. err.
(0.22)
(0.23)
(0.24)
(0.29)
p value Willing to buy Price
0.998
mean
2.07
2.17
3.30a
2.63
std. err.
(0.22)
(0.23)
(0.24)
(0.29)
p value Price Importance
0.996
0.009a
mean
3.57
3.97
3.50
3.93
std. err.
(0.26)
(0.25)
(0.22)
(0.25)
p value Brand Importance
0.00a
.638
.668
mean
2.47
4.00
3.57
3.27
std. err.
(0.23)
(0.26)
(0.22)
(0.30)
p value
.644
.875
a
significant at the .05 level
An Analysis of Variance (alpha .05) of the four groups revealed that there were significant differences found between groups for Intention to Buy Brand in Original Country of Origin and Intention to Buy Brand in New Country of Origin (See Table One) for all respondents. Post Hoc comparisons were conducted using the Scheffe' method. The Sheffe' method was chosen because it is the most conservative in respect to Type I errors (Hair, et al., 1995). Those consumers who would buy Mavi made in Turkey increased significantly when presented with Mavi jeans made in Italy (H1). Versace jeans made outside Italy and in Turkey decreased intentions to buy. A division of respondents by age reflected the same results for older consumers except for the lack of a significant difference for Versace made in Turkey. Younger consumers were more likely to be influenced by the change in Brand Origin. Intention to purchase Mavi went up when
consumers were told that they would be made in Italy and down when they were told that Versace would be made outside Italy and in Turkey (H5). Price perceptions which were measured on an interval scale (See Appendix) were significantly different when Mavi and Versace products originated at an unknown location outside Turkey and Italy respectively (H3). Price perceptions did not change significantly for buyers who considered Mavi jeans originating outside Turkey, but were significantly lower for buyers who considered Versace jeans originating outside Italy (H2). The importance of price and brand did not show significant changes when country of origin was changed (H4). Hypotheses One, Two, Three, and Five were supported. Hypothesis Four was rejected. MARKETING IMPLICATIONS These results compare favorably with previous studies conducted on the Country-ofOrigin effects in other parts of the world. Based on the results of this study designer jeans marketers in Yugoslavia and the former Yugoslav republics with brand origins identified in less developed countries could benefit by repositioning their Brand Origin to a developed country that has a positive Brand Origin image for designer jeans. The strength of the fashion brand Versace may be enough to offset a brand origin at an unknown location outside Italy but a Brand Origin identified with a developing country may cause a significant reduction in buyers' intention to purchase Versace jeans. As the economy strengthens in this newly developing part of the world, opportunities to market more fashion-oriented products should be enhanced by a greater understanding of the role that Brand Origin plays in consumers' behavior. LIMITATIONS AND FUTURE STUDIES The study used a self-report format, which may not represent the actual consumer beliefs and values. While respondents were generally very cooperative, several expressed concern that the government might use the information for other purposes. For example, as there is pressure to reduce workforce size in many labor-intensive industries those who report high income levels or small household sizes may be concerned that they will be selected in the next round of layoffs because they are perceived to be able to afford the job loss. While every effort was made to ensure a probability sample, this is more difficult due to the infrastructure limitations present in a developing country such as Macedonia. Macedonian consumers may not be representative of other Yugoslavian and former Yugoslavian republics. Future studies will attempt to address these limitations.
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Samli, A. Coskun (1986), "Changing Marketing Systems in Eastern Europe: What Western Marketers Should Know," International Marketing Review, 3(4), Winter, 7-16. Swinder, Janda and C. P. Rao (1997), "The Effect of Country-of-Origin Related Stereotypes and Personal Beliefs on Product Management," Psychology and Marketing, 14:7 (October), 6 689-703. Thakor, Mrugank V. and Chiranjeev Kohli (1996), "Brand Origin: Conceptualization and Review", Journal of Consumer Marketing, 13:3, 27-42. Vlachoutsicos, Charalambos A. (1988), "Doing Business With the Soviets: What, Who and How?" Columbia Journal of World Business, 23:2, 67-79. Wall, Marjorie, John Leifeld, and Louise A. Heslop (1991), "Impact of Country of Origin Cues on Consumer Judgements in Multi-Cue Situations: A Covariance Analysis," Journal of the Academy of Marketing, Science, 19:2, Spring, 105-113. Young, Murray, Paul Sauer, and H. Rao Unnava, "Country-of-Origin Issues," in Global Marketing: Perspectives and Cases, 196-204. Fort Worth, TX: Harcourt Brace and Co. APPENDIX Survey Please complete the following survey by marking only one choice per question with the sign (X), unless otherwise advised. 1. Are you familiar with the jeans brand name Mavi jeans? ___(yes) ___(no) 2. Would you be willing to purchase Mavi jeans manufactured in Turkey? ___(yes) ___(no) 3. According to our knowledge the manufacturing of Mavi jeans will be transferred to from Turkey to Italy. Would you be willing to purchase Mavi jeans if they were manufactured in Italy? ___(yes) ___(no) 4. How important is the brand name of the jeans in your purchase? ___(extremely important) ___(very important) ___(little important)
___(very little important) ___(not important) 5. Would you be willing to purchase Mavi jeans manufactured in Italy if the country of manufacture was clearly stated on the label at the back of the jeans? ___(yes) ___(no) 6. Would you be willing to purchase Mavi jeans manufactured in Italy if the country of manufacture was not visible on the label at the back of the jeans? ___(yes) ___(no) 7. How important is the price in your jeans purchase? ___(extremely important) ___(very important) ___(little important) ___(very little important) ___(not important) 8. What price do you expect to pay for Mavi jeans manufactured in Italy? ___(less than $35) ___($35-$44) ___($46-$55) ___($56-$65) ___(over $65)
