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Int. J. Entrepreneurship and Small Business, Vol. 3, Nos. 3/4, 2006

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The country-of-origin effect on the purchase intention of apparel: opportunities and threats for small firms Demetris Vrontis* and Alkis Thrassou Marketing Department, School of Business Intercollege, P.O. Box 24005, 1700, Nicosia, Cyprus E-mail: [email protected] E-mail: [email protected] *Corresponding author

Claudio Vignali School of Tourism and Hospitality Management Leeds Metropolitan University City Campus, Leeds LS1 3HE, UK E-mail: [email protected] Abstract: This article distils the findings of an extended literature review to determine the degree and nature of the country-of-origin effect in the clothing industry. It subsequently extrapolates on the existing theories to ultimately develop a provisional model of the strategic marketing options, constraints and opportunities available to small firms in this market in relation to the country-of-origin effect. The conclusions are that the effect has a universal and diachronic existence, though its manifestation into actual consumer attitudes and preferences varies considerably. The dissimilarity of consumer behaviour both between and within individual markets is a result of specific combinations of collective and personal parameters. Small firms are expectedly powerless to substantially affect these primarily macroenvironmental forces. However, extended analysis and vigilance in combination with small firms’ inherent flexibility and adaptability provide the foundation for some degree of influence and for the beneficial utilisation of periodic and permanent environmental and consumer-attitude changes. Keywords: country of origin; small firms; consumer behaviour; consumer attitudes; marketing; clothes; apparel. Reference to this paper should be made as follows: Vrontis, D., Thrassou, A. and Vignali, C. (2006) ‘The country-of-origin effect on the purchase intention of apparel: opportunities and threats for small firms’, Int. J. Entrepreneurship and Small Business, Vol. 3, Nos. 3/4, pp.459–476. Biographical notes: Dr. Demetris Vrontis studied in the UK and obtained a BSc (Hons) degree in Business from the Manchester Metropolitan University (MMU), a PGCE (HE) from MMU, a VTC from Henley Management College, an MBA (Distinction) from the University of Hull and a PhD in International Marketing from MMU. He is currently the Associate Dean of the School of Business at Intercollege University in Nicosia, Cyprus. Dr. Vrontis is an Associated Faculty for Henley School of Management in the UK, a Visiting Professor for Vorarlberg University in Austria and a Visiting Fellow at Leeds Metropolitan University in the UK. Before joining Intercollege (1997–2003) Copyright © 2006 Inderscience Enterprises Ltd.

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D. Vrontis, A. Thrassou and C. Vignali Dr. Vrontis was a Senior Lecturer at the Manchester Metropolitan University Business School (MMUBS). His prime research interests are on international/global marketing, marketing planning, branding and marketing communications, areas that he has widely published. He has authored seven books on international, global marketing and strategic marketing planning, and is the Editor of the EuroMed Journal of Business and a member of several editorial boards. Dr. Alkis Thrassou obtained a BEng (Hons) degree in Civil Engineering with Construction Management and PhD in Strategic Marketing Management from the University of Leeds (UK). From 1996 until 2002 he has worked as Business and Project Manager for an engineering firm in Cyprus, leading teams of professionals through various types and sizes of construction projects. In 2002, he joined the Marketing Department of Intercollege, Cyprus, involving himself in various scholarly activities, lecturing on marketing-related subjects to both undergraduate and postgraduate students, and undertaking research in the fields of general marketing, construction firms, small firms, services and consumer behaviour. He retains strong ties with the industry and is also the President of the Board of Directors of MGK Estates Ltd. (a public, land development company). Claudio Vignali joined the Leeds Metropolitan University in 2003 as the Arnold Ziff Chair in Retail Marketing Management. He has written a plethora of articles and books in the field of Marketing. Prior to joining Leeds, he was the head of the consumer section at Manchester Metropolitan University. He is the editor of three academic journals and also serves as adviser on a number of journals.

1

Introduction: country-of-origin image

The rising importance of the global market over the past 40 years have brought on an increase of interest into the causes of competitive advantage of one product over another Among the many factors believed to have an impact on international competitiveness, in relation to that of the country-of-origin is of considerable relative weight and great interest (Al Sulaiti and Baker, 1998). Morello (1984) describes the emergence of the country-of-production image: “Before 1918 nobody knew where the products came from. That year Germany lost in the First World War. In order to punish the German industry and at the same time warn European consumers, German producers were required to label their every exported product with a ‘Made in Germany’ mark. Soon it became a sign of quality.”

As early as 1962 researchers stated that ‘made-in’, as a fifth element of the marketing mix, can have a tremendous influence on the acceptance and success of a product over and above the specific advertising and marketing techniques used (Dichter, 1962). Following the intense business internationalisation and globalisation, products’ country-of-origin image has become one of the key factors in creating and maintaining competitive advantage. This is even more true for products and services with which consumers are less familiar (da Silva, 1999).

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Despite consumers’ frequent and numerous remarks that a product’s country-of-origin is not important (Papadopoulos and Heslop, 1993; Hugstad and Durr, 1986) they will readily use country-of-origin as an important factor in quality evaluation. This is markedly so with such products as cars, household appliances, computer technology, apparel, and cosmetics and similar. Therefore, it is not surprising that a number of studies undertaken in the past 30 years corroborates the hypothesis that country-of-origin image influences a purchase decision, since it is a concept which reflects and describes basic consumers’ perceptions of the quality of a product coming from a certain country and people from that respective country (Ozretić Došen and Previšić, 2001). The most frequently used definition of the country-of-origin image is that which defines it as ‘the picture, the reputation, and the stereotype that businessmen and consumers attach to products from a certain country’ (Johansson, 2000). Products from positive image countries are perceived as being of higher quality compared to those from negative image countries and which are, therefore, usually underrated. Negative country image sets a barrier to entering and positioning in the international market, while a positive one facilitates business internationalisation (Ozretić Došen and Previšić, 2001). Products’ image is created by way of product’s cues or information about products, country-of-origin being one of them. Cues can be divided into intrinsic and extrinsic. Intrinsic cues are those product attributes that are intrinsic to the product in the sense that they cannot be changed or manipulated without changing the physical characteristics of the product. Examples of intrinsic cues are design, taste, sound, fit, and shape. Extrinsic cues comprise attributes which are not physical (Olson and Jacoby, 1983). Some examples of extrinsic cues are brand name, packaging concept, store image, price. Country-of-origin may be classified as an extrinsic cue since the ‘made in’ label can be removed from a product without altering its physical characteristics (Eroglu and Machleit, 1988). The image of countries, in their role as origins of products, is one of the extrinsic cues that may become part of a product’s total image (Papadopoulos and Heslop, 1993). The two most frequently cited models used to explain the influence of country-of-origin image on product’s quality evaluation are the ‘Halo Model’ (Johansson et al., 1985) and the ‘Summary Construct Model’ (Min Han, 1990). The Halo hypothesis suggests that consumers rely on country-of-origin image only when unfamiliar with products. Johansson et al. provided proof for it when they conducted a multidimensional research into car properties (price, safety, horsepower, country-of-origin, etc.) from the USA, Japan and Germany. Their results showed that in this particular case there occurred no country-of-origin effects. It corroborated the thesis that the effects of country-of-origin image may be used only as a surrogate when respondents lack sufficient knowledge of products. On the other hand, consumers familiar with a specific product class will rely less on the ‘made in’ label. Furthermore, favourable or unfavourable experience with products or brands from a particular country may distort evaluations of other products or brands from the same country (Johansson et al., 1985). Min Han advocates the Summary Construct Model. This comprises a file of information about various brands from one country that consumers develop over time. Such a file, stored in the consumer’s memory in the form of an overall evaluation of products from a certain country, is used every time a certain country’s brand is being evaluated. Min Han (1990) asserts that when consumers are not familiar with a country’s

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product, they infer product information from country image and beliefs that stem from experience and learning. Placing this in the context of apparel, a hypothesis may be formed that when a consumer is not familiar with apparel from a particular country, their perception of the product will be influenced by the total of beliefs regarding that country and/or that country’s products.

2

The elements forming general country-of-origin image

Although there is no doubt that country-of-origin image influences consumers’ perceptions of a product, thus having also an impact on the purchase decision and the use of a product or service, there still exists no method or procedure to reliably measure that influence. Reasons for such a situation should be looked for in the multidimensionality and complexity of the concept of country-of-origin image and the number of different influences regarding its formation. Some of them are: •

country-of-origin and countries of production



stereotypes



ethnocentrism



interrelationship between country-of-origin image and other product’s attributes



demographic, social and economic factors



changing influence in the course of time.

Based on the findings of the researches mentioned earlier, it is possible to make a summary of the conclusions of the past 40 years’ research in the field of country-of-origin image. •

Besides tangible characteristics comprising the product’s intrinsic cues, country-of-origin label, as one of the extrinsic cues, provides consumers with additional information about product quality (Eroglu and Machleit, 1988; Papadopoulos and Heslop, 1993).



‘Made in’ label gains more importance in decision-making the less information exists about a product (extrinsic or intrinsic cues). Therefore, country-of-origin image effect is inversely proportional to available information (Johansson et al., 1985; Min Han, 1990; da Silva, 1999).



Country-of-origin image is the key factor that influences consumers’ perception of a product. Quality of unfamiliar foreign brands is inferred through country image. This bears important implications especially in relation to marketing communications since positive country-of-origin image may be used as a powerful marketing tool (Bannister and Saunders, 1978). Marketing communications is naturally and equally important in the opposite case since it will still be the most major tool in minimising negative country-of-origin effects.

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Consumer’s evaluation of country-of-origin and production image changes if they use products from a specific country more extensively (experience) or if in time the quality of a certain country’s products changes (Ahmed and d’Astous, 1993).



Effects of country-of-origin image may differ depending on consumer’s demographic and social status and economic strength. Generally, it can also be said that respondents with higher level of education pay more attention to country-of-origin image (Al-Hammed, 1988; Dornoff et al., 1974).



Ethnocentrism and patriotism may have an impact on home products evaluation, with some consumers tending to prefer their own country’s products (Baumgartner and Jolibert, 1977; Wall and Heslop, 1986; Darling and Kraft, 1977), while others tending to prefer imported products (Beaudoin et al., 1998).



Products coming from less developed countries may be liable to negative country-of-origin image, most probably due to a relatively short history of production, unlike developed countries’ products which usually have positive product quality image (Gaedeke, 1973; Bannister and Saunders, 1978; Khachaturian and Morganosky, 1990; Cordell, 1991).



Type of product (expendable or durable) has an impact on the influence intensity of country-of-origin image. Generally, consumers tend to reflect more on country-of-origin when deciding to acquire durable or luxury goods (Archarya and Elliot, 2001).

3

Country-of-origin image and experiences in the apparel industry

In the history of research on the influence of country-of-origin image, apparel products have been used to corroborate various hypotheses regarding the mentioned phenomenon. The increased interest in the influence of country-of-origin image, as one of product’s extrinsic cues, has been followed by the interest in the way apparel consumers perceive country-of-origin when evaluating product quality and place of purchase. The following is a chronological literature review of the most important researches in the field of country-of-origin image where the object of research was apparel. In the first recorded research ever into country-of-origin image, Schooler used a simple manipulation in which he showed Guatemalan students a piece of fabric bearing fictitious country-of-origin label (Guatemala, Costa Rica, Mexico, El Salvador). The study showed that products made in less developed countries, like El Salvador and Costa Rica, were ascribed lower quality while home products and Mexican products were ascribed higher quality. Schooler used this study to prove that there is an influence of country-of-origin image on consumers’ perception of product quality (Schooler, 1965). Schooler and Sunoo tried to examine consumers’ perception of Asian, African, Latin American and European products by evaluating the views of 320 American students regarding apparel from different continents. The conclusion of the study was that there was no bias against products bearing a regional origin label (for example, ‘made in Asia’, ‘made in Latin America’) (Schooler and Sunoo, 1969).

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In 1971 Schooler undertook a research into consumers’ perception of products coming from different countries and regions (the USA, West Germany, Czechoslovakia, Chile, India, Nigeria, North America, Asia, and Latin America). Results obtained from a sample of 866 adult Americans showed that consumers valued products of Germany more than those from Asia and India, while products of the USA were rated better than those of Western Europe. Schooler furthermore concluded the following: •

The older age group consumers rated the products of Asia, Africa, West Germany and North America lower than the younger age group.



Females evaluated foreign products higher than males.



Consumers with a higher educational level are more in favour of foreign products.



The group composed of ‘non-white’ people evaluated products of Latin America and Asia better than the group of white people.



The white group evaluated the products of the USA better than ‘non-white’.

Schooler (1971) used this study to support the hypothesis of the influence of country-of-origin image on consumers’ perception of product quality and to deduce some evidence of socio-demographic differences among consumers regarding the importance of country-of-origin image. Gaedeke (1973) tried to examine the opinion of US consumers towards imported products (including textile) from different developing countries (the Philippines, Hong Kong, Argentina, Brazil, Taiwan, Mexico, South Korea, India, Singapore, Turkey, Indonesia) and the USA. Results obtained from a research on 200 respondents (students) showed that American textile products were rated the highest, while products from developing countries were rated lower. The research lent support to stereotypes about consumers perceiving products of developing countries to be of lower quality. Dornoff et al. (1974) tried to examine consumers’ perceptions of imported products and the influence of socioeconomic characteristics on consumers’ perceptions. The research was done on 400 American respondents and on various types of products including fashion merchandise. The study showed that American consumers were neutral towards French fashion merchandise, that no differences existed among the males’ and females’ opinions and that more educated consumers are more in favour of imported products. Darling and Kraft (1977) researched the impact of the ‘made in’ label on Finnish consumers. The research on 303 Finnish respondents showed that there existed a striking ethnocentrism with Finnish consumers in all categories of products including apparel. Baumgartner and Jolibert (1977) tried to measure French consumers’ perception of their own country’s products’ quality and those imported from different countries: the USA, Germany and Great Britain. A sample of 108 French respondents showed that French consumers had a very strong preference for ‘made in France’ products. It applied to all categories of products (playing cards, life insurance, and cough syrup) including apparel. Niffenegger et al. investigated the product images of American, French and British products among British retail managers. A sample of 92 professional British retail managers was used to measure their vision of products in terms of price, value, advertising, reputation, design, and style and consumer profile. The study indicated considerable differentiation in the perception of quality, technical advancement and price,

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and further showed demographic trends of perception. Furthermore, Niffenegger et al. (1980) study showed there existed ethnocentrism among British consumers and a bias towards their domestic textile products. Kaynak and Cavusgil (1983) examined Canadian consumers’ opinion of products from 25 different countries. Products were from different categories including apparel. Study on a sample of 197 Canadian consumers showed that country-of-origin image might function as a surrogate when there is a lack of information about products, including apparel. The research showed that the less is known about the brand and product the greater impact the origin-of-product has on a consumer’s decision to buy. Hugstad and Durr (1986) investigated the importance of country-of-manufacture to American consumers. Products used were durable (cars, cameras) and expendable (car tyres, shoes, shirts) from different countries (Japan, China, Korea, Taiwan and the USA). Study on a sample of 341 American consumers showed that they were most apprehensive towards products from China, Korea and Taiwan, that is to say, they considered them to be unreliable in terms of product quality. On the other hand, they perceived apparel of their own country to be of the highest quality. Heslop and Wall (1985) examined the differences between males and females on the basis of country-of-origin product image. A total of 635 respondents in Canada were asked to evaluate the quality of apparel and shoes from 13 different countries. The results of Heslop and Wall’s study indicated the ethnocentrism of Canadian consumers and supported the stereotype regarding the quality of Italian products and the risk involved with Eastern Europe and the Far East products. Al-Hammed (1988) investigated the Saudi Arabian consumers and resellers’ attitudes towards different types of products (carpets, airconditioners, household appliances, designer clothes) from different countries (the USA, Japan, Germany, Sweden, Belgium, Spain, Malaysia, Hong Kong, Korea, Taiwan, UK). The results on a sample of 300 consumers and 193 Saudi resellers showed price to be the most important attribute to be considered when buying all kinds of products, including clothing. Ettenson et al. (1988) tried to examine the effect of country-of-origin image in relation to a ‘made in’ campaign. The study was based on 55 students at the University of Maryland where the respondents were asked to assess the importance of the attributes of style, cut, fabric quality, content, price and brand when deciding to purchase. All the products were American and respondents were administered the questionnaire before and after the introduction of the ‘made in the USA’ campaign. The results of the study demonstrated that contrary to previous findings, the effect of country-of-origin was relatively small both before and after the launching of that campaign. From these findings it can be concluded that price and quality may have a stronger effect on consumer than country-of-origin information. Furthermore, the authors suggested that clothing retailers should be cautious in using patriotic themes in promotion since their effectiveness need not necessarily be positive. Khachaturian and Morganosky (1990) investigated consumers’ quality perceptions of apparel from different countries. The influence of three independent variables (country-of-origin, store type and brand name) was measured in relation to the dependent variable of perceived quality using the following formula: Q = aCOO + bST + cBN

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where: Q COO ST BN

= perceived quality = country of origin = store type = brand name

Using the above formula, the results largely corroborated previous researches’ findings in relation to consumer perceptions: clothing made in the USA and Italy was perceived as having the highest quality, specialised stores received the highest ratings, and associating a brand with less industrialised countries could potentially lower its quality image. Patterson and Tai (1991) examined country-of-origin impact on the apparel perception of Australian consumers. The authors investigated consumers’ attitudes towards apparel from New Zealand, Australia, China and Southeast Asia, on a randomly chosen sample of 174 respondents from New South Wales. Respondents were asked to evaluate products in terms of quality of workmanship, fashionableness, fabric quality, price, maintenance, durability, overall quality and value for money. The results revealed the following: •

Some 50% of Australian consumers were ready to pay a bit more for Australian products if the quality of products was equal.



Australian consumers perceived China and Southeast Asia apparel to be of lower quality in terms of all the examined attributes. Therefore, they expected prices of that particular apparel to be lower compared to the apparel from other countries.



Apparel from Australia, New Zealand and UK was evaluated better than those coming from Asian countries on almost all attribute dimensions.



Australian consumers expected the price of apparel from Australia, New Zealand and the UK to be higher due to its better quality.



The effect of country-of-origin image was not as strong as it might have been expected and varied with respondents’ age and their migrant/non-migrant status.

Wall et al. (1991) determined the effects of country-of-origin when combined with brand name and price on consumers’ evaluation of quality, risk, value and likelihood of purchase. The authors examined 40 Canadian respondents’ opinions of apparel quality from Canada, Hong Kong, Italy, South Korea, Taiwan and the USA. The results indicated that country-of-origin was related to the assessment of product quality, but when it came to evaluating purchase likelihood, country-of-origin seemed not to be important. Liefeld et al. (1993) studied the effect on two different products taking into account both intrinsic and extrinsic cues. A sample of 326 Canadian respondents was chosen to measure the importance of extrinsic (country-of-origin, price, brand name) and intrinsic cues (appearance, content, design). The results revealed that extrinsic cues varied in importance depending on the products. Smith (1993) tried to examine American consumers’ perceptions towards manufactured goods that were labelled regionally. On a sample of 224 American students the author determined consumers’ perceptions towards products made in Africa, Latin America, Asia and Western Europe. The results of the

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study showed that Asian products were rated better than others, while African and Latin American were rated better than those from Western Europe. This study’s findings substantially differed from the ones in almost all previous researches. Lin and Sternquist (1994) investigated the effects of information cues, country-of-origin and store prestige on Taiwanese consumers’ perception of quality and price. The sample consisted of 265 Taiwanese consumers. They were asked for their opinion of apparel (sweaters) made in Italy, the USA and Taiwan and which was sold in three types of stores (high-prestige stores, moderate-prestige stores, general stores). They were asked to assign price and quality to women’s sweaters, depending on the type of store and country-of-origin. The findings indicated the following: •

The country-of-origin was the only cue that influenced the Taiwanese consumers’ perception of sweater quality.



The country-of-origin did not influence the Taiwanese consumers’ perception of price.



Respondents evaluated the ‘made in Italy’ sweater the highest and that labelled ‘made in Taiwan’ the lowest.



The cue of store prestige was not significantly related to price estimates and quality evaluation related to sweaters.

Since neither country-of-origin nor store prestige was found to have an effect on price estimates, the authors concluded that their study might support the hypothesis of a country-of-origin effect on consumers’ perceptions of quality. Beaudoin et al. (1998) made a research to determine if young trendsetters and fashion followers differed in their attitudes depending on products being imported or domestic (the USA). The sample consisted of 283 respondents from Florida aged 18–25. Young trendsetters and fashion followers were asked to express their opinion of different apparel attributes: fit, durability, care, good price, quality, choice of colour, comfort, attractiveness, fashionableness, brand name, and adaptability to various occasions and choice. The results of the study showed that trendsetters were more in favour of imported apparel. In their opinion, imported apparel is more durable, of better quality, offering wider choice of colours, more attractive and modern, and of a more appealing brand name. Fashion followers considered imported apparel to be more attractive and more modern than the domestic one, but the latter to be easier to maintain, more comfortable and offering a better price. Goudge and Ivanov (1999) conducted a study in Macedonia to examine the effects of country-of-origin image, brand name and price on consumers’ behaviour. One hundred twenty respondents were administered a questionnaire that investigated their attitude towards various countries-of-origin and two different jeans brands (VERSACE, MAVI). Four versions of the questionnaire were used: 1

MAVI jeans were presented as jeans from Turkey and then from an unknown location.

2

MAVI jeans were presented as jeans from Turkey and then from Italy.

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3

VERSACE jeans were presented as jeans from Italy and then from an unknown location.

4

VERSACE jeans were presented as jeans from Italy and then from Turkey.

The results of the study showed the following: •

Number of MAVI jeans buyers would increase if MAVI jeans were made in Italy and not in parent country (Turkey).



Number of VERSACE jeans buyers would decrease if buyers were not certain that VERSACE jeans were made in Italy.



Number of VERSACE jeans buyers would significantly decrease if they were made in Turkey instead of Italy.



Perception of product’s price would be different if VERSACE jeans were made in Turkey instead of Italy, in which case buyers would expect a lower price.

In this study the authors showed that the strength of VERSACE brand name could be sufficient to reduce the negative influence of brand name image in case the country-of-origin was unknown, but insufficiently strong to reduce the negative impact of country-of-origin image of a developing country (Turkey). Kaynak et al. examined Bangladeshi consumers’ perceptions of the quality of products imported from nine countries and Bangladesh. The study was conducted on a sample of 196 respondents from the capital of Bangladesh, Dacca. Attributes of electronic equipment, household and fashion products (textile, suits, jackets, shirts) were evaluated. The study showed that Bangladeshi consumers consider apparel from the USA, England and Germany the best, while that from Bangladesh and India the worst. The study showed that country-of-origin image has a significant impact on Bangladeshi consumers’ perception of product quality. Bangladeshi consumers consider apparel products from developed countries to be of good quality and reliable, while products from developing countries to be less appealing and of low quality (Kaynak et al., 2000). Archarya and Elliot (2001) examined the effects of country-of-production, country-of-design, price and brand name on quality perception and consumers’ intention to buy different kinds of products. A complex multifactor analysis examined 248 Australian respondents’ opinions of these elements in relation to a number of products (tinned pineapple, jeans, and cars) from different countries (the USA, Japan, Korea, and Australia). The study results indicated the importance of country-of-origin (production) image on jeans consumers’ perception of quality and showed that except country-of-design image, brand name and price, country-of-origin also plays a decisive part with many consumers in perceiving product quality and their decision to purchase. Table 1 gives a short chronological review of studies undertaken to examine the effect of country-of-origin using textile and apparel.

The country-of-origin effect on the purchase intention of apparel Table 1

Chronological review of researches on the country-of-origin image effect in the field of textile and apparel

Year 1

1965

469

Authors

Supporting the country of origin hypothesis

Schooler

Yes

Market

Ethno-centrism

Other cues used in researches

Guatemala

2

1969

Schooler i Sunoo

Yes

USA

3

1971

Schooler

Yes

USA

Yes

4

1973

Gaedeke

Yes

USA

Yes

5

1974

Dornhof i sur.

Yes

USA

6

1977

Darling i Kraft

Yes

Finland

Yes

7

1978

Baumgartner, Jolibert

Yes

France

Yes

8

1980

Niffenger

Yes

UK

Yes

9

1983

Kaynak, Cavusgil

Secondary

Canada

10

1985

Hugstad, Durr

Yes

USA

11

1985

Heslop i Wall

Yes

Canada

12

1988

Al Hammed

Secondary

Saudi Arabia

Price

13

1988

Ettenson i sur.

Secondary

USA

Brand

14

1990

Khachaturian i sur.

Yes

USA

Brand

15

1991

Patterson,Tai

Yes

Australia

16

1991

Wall i sur.

Yes

Canada

17

1993

Liefeld i sur.

Secondary

Canada

18

1993

Smith

No

USA

19

1994

Lin i Sternquist

Yes

Taiwan

20

1998

Beaudoin

Yes

USA

21

1999

Goudge i Ivanov

Yes

Macedonia

Yes

22

2000

Kaynak i sur.

Yes

Bangladesh

23

2001

Archarya i Elliot

Yes

Australia

4

A provisional model for small firms’ strategic response to the country-of-origin effect in the apparel market

Perceived risk

Brand, Price

Outlet

Brand, Price

Brand, Price

Producing such a model requires the development of three sets of parameters: 1

the principal elements that form the country-of-origin effect

2

the ways and degree to which these might affect small firms differently than larger firms, and consequently

3

the strategic marketing options available to small firms.

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4.1 Principal elements that form the country-of-origin effect This first set of ten elements is derived directly from the above-presented literature review: 1

Experience

2

Knowledge

3

Stereotypes

4

Ethnocentrism

5

Political and/or cultural relationship between country-of-origin and country-of-purchase

6

General country-of-origin image

7

Specific-to-product-in-question country-of-origin image

8

Brand image

9

Country-of-purchase political, social and economic factors

10 Target segment specifics. The above are ultimately – to a lesser or greater extent – perceptions in relation to attributes such as quality, durability, style, design, fit, value for money etc. Irrespective, though, of the degree to which these perceptions adhere to reality, perceptions are ultimately the consumers’ subjective realities. Therefore, they are principal factors in the consumer purchase and pre-purchase-evaluation-of-alternatives stages of the decision-making process, and should play a critical role in the design of small firms’ marketing strategy and approach.

4.2 Ways and degree to which these might affect small firms Towards the investigation of the ways each one of these elements might affect small firms differently than larger firms, orthodox small firm theory provides a solid basis for logical extrapolations to reach explicit conclusions. Consumer experience of products from specific countries-of-origin is a result of purchase and use and therefore small firms should expect that their market’s knowledge will be a result of mass consumption consequent to the sales of the larger companies who in effect largely control this parameter. Consumer knowledge is a result of experience, but also word-of-mouth and marketing communications. The extent to which these can be controlled by small firms in relation to country-of-origin perceptions is directly proportional to the resources available, and this inevitably is also very limited. Stereotypes are usually inherent to collective consciousness and difficult to change unless knowledge, experience and marketing communications conspire towards the opposite. Even so it is usually a time-consuming process which is again restrained in the case of small firms as presented above.

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Similarly, ethnocentrism, is also difficult for small firms to affect in any substantial manner and should be understood and utilised passively. Political and/or cultural relationship between country-of-origin and country-of-purchase is another element practically impossible for small firms to control. In this case however, it is possible for firms to react in ways that potentially, though possibly circumstantially, the country-of-origin effects will benefit them (see also Section 4.3). General country-of-origin image is perhaps within the capabilities of larger firms to partially control but for all practical purposes beyond small firms’ capabilities. Specific-to-product-in-question country-of-origin image bears similar problems for small firms as the ‘general country-of-origin image’, ‘stereotypes’ and ‘ethnocentrism’ elements. Nevertheless, bearing in mind that this is a perception towards a more narrow range of goods/services, the ability to affect it is inversely proportionally greater. In the case of apparel though, it will expectedly still be very limited as the product range is not narrow while its importance to consumers is considerable. Brand image allows for considerable small firm control depending on three parameters (see Section 4.3). It is also doubtful though, whether brand image can substantially be separated from country-of-origin image. The latter sometimes being the result and not the cause of the former. Country-of-purchase political, social and economic factors are of course well outside the control of small firms and again can only be passively monitored. Target segment specifics constitute the last but strategically valuable element for small firms since well-performed segmentation, targeting and positioning processes will allow the maximum control over (most likely) a small but satisfactory market segment whose country-of-origin perceptions can be nurtured towards satisfying firm-specific business objectives. Based on the above, it is possible to rank the ten elements in relation to the degree to which small firms can control them, or at least utilise them to their benefit, especially if these vary in nature over time. Thus, starting with the most difficult to control: •

Country-of-purchase political, social and economic factors



Ethnocentrism



General country-of-origin image



Stereotypes



Knowledge



Experience



Political and/or cultural relationship between country-of-origin and country-of-purchase



Specific-to-product-in-question country-of-origin image



Brand image



Target segment specifics.

The ranking is, of course, also partially dependent on the specific country-of-origin and country-of-purchase, as well as the specific product within the apparel product category.

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4.3 Strategic marketing options available to small firms The third and final set of parameters necessary to produce the model is the strategic marketing options available to small firms. These can be extrapolated from the above, which indicate that: country-of-purchase political, social and economic factors (1), ethnocentrism (2), and general country-of-origin image (3), are out of the influence of small firms. This does not imply that firms are expected to be indifferent to these elements. On the contrary, firms should apply constant monitoring of these macro-environmental factors, and should at all times be able to utilise their understanding of these, either aggressively or defensively, depending on the relative competitive advantage or disadvantage they provide. Their effect even so, can only be received passively. Stereotypes (4), knowledge (5), and experience (6), are interrelated and interdependent. The strategic marketing options available to small firms in relation to these will depend on: (a) whether the target markets have already developed them for the products and/or country-of-origin in question. The less their development, the greater the potential exists for influencing them. (b) Whether there are large competing firms that sell similar products from the same country-of-origin. The more large firms exist, the less able smaller firms are to influence, and (c) the resources available to the firm towards influencing the development of knowledge, experience and ultimately stereotypes. Political and/or cultural relationship between country-of-origin and country-of-purchase (7) is an element practically impossible to control by small firms. Their strategic utilisation of the phenomenon though, should not necessarily be passive since this is a phenomenon subject to dynamic macro-environmental changes and therefore by nature most active, though often in time-scales business firms are unaccustomed to operate in. Proper external environment monitoring though, in combination with the small firms’ advantage of flexibility and manoeuverability may allow for quick and decisive responses to country-to-country relationship changes for maximum benefit. These may occur either through positive, usually politics-based changes in the attitude towards the country-of-origin (e.g., Serbian market’s positive attitude towards Greek products during and after the bombings of former Yugoslavia by international allied forces in the 1990s), or the utilisation of negative changes (e.g., US market’s negative attitude towards French products before the 2003 invasion of Iraq) towards competing products of other countries-of-origin. The degree of utilisation is related also to the ability of the firm to monitor these changes, to comprehend their potential and to react immediately while the conditions allow it. The probability is that such changes will be periodical, but a strong-enough and sustained-enough condition may form permanent changes in consumer perceptions. It should furthermore be noted that attitudes towards the country-of-origin do not necessarily reflect attitudes towards its products. In relation to specific-to-product-in-question country-of-origin image (8), and though in a different case the potential for control might be considerable, in the case of apparel it is limited. Consequent to its size, strong image-dependency, and consumer knowledge of the subject, this product category (apparel) cannot be easily repositioned in the mind of consumers in terms of country-of-origin.

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Brand image (9) allows for considerable small firm control depending on three parameters: (a) that the (positive) brand image is strong enough to compete against any (negative) country-of-origin image, (b) that the brand is exclusive to the small firm, or at least that it is not the subject of overshadowing and contradicting marketing communications by larger firms, and/or (c) that the small firm has the choice of brand prior to the formation of its marketing strategy i.e., choice of brand being part of strategy. It is once more noted that brand image cannot always be separated from country-of-origin image and that the latter sometimes is the result and not the cause of the former. Target segment specifics (10) refers to any potential uniqueness of the small firm’s target segment, that might separate it, even shield it from the collective perceptions of other segments. This separation may be geographic, cultural or other and it may be nurtured, sustained and enhanced by the small firm(s) serving that segment. In effect this will have the most powerful impact in the case where small firms are pursuing a niching strategy, either alone or in collaboration with other small firms. This would entail the concentration on small but distinct and easily controlled segments with which marketing communication can be easily established and would be most effective. This last point surfaces another strategic option: that of collaboration between small firms. With their size being the most obvious deterrent in significantly influencing country-of-origin perceptions, a united and well-coordinated front that pulls together the resources of a number of small firms may be the ultimate antidote both to the dominance of large firms and the power of collective consumer market perceptions. Finally, Figure 1 brings together and schematically portrays the main strategic options presented above, to develop a provisional model for small firms’ strategic response to the country-of-origin effect in the apparel market.

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Figure 1

Provisional model for small firms’ utilisation of the country-of-origin effect

1. 2. 3.

Country-of-purchase macroenvironmental factors Ethnocentrism General country-of-origin image

Passive but continuous monitoring

4. Stereotypes

5. Knowledge

Aggressive or defensive utilisation of conditions

Already developed?

YES

Large competitive firms offering products from same countryof-origin?

6. Experience

More difficult to influence

NO

Easier to influence

Resources available?

7. Country-oforigin and countryof-purchase relationship

Adopt “reflex” marketing to utilise circumstantial changes in relationship

8. Product-specific country-of-origin image

10. Target segment unique and exclusive to firm’s marketing communications?

Permanent changes

Possible permanent advantage/ disadvantage

Easier to influence

Wide/generic use

More difficult to influence

+ve/-ve brand image annihilates –ve/+ve countryof-origin image?

Brand exclusive to small firm?

Temporary advantage/ disadvantage

Narrow/specialised use

Brand choice preceding strategy formulation? 9. Brand image

Temporary changes

YES

NO

Easier to influence More difficult to influence Easier to influence

YES NO

Are other firms’ marketing communications overshadowing?

NO YES

YES

Easier to influence

NO

More difficult to influence

SMALL FIRM COLLABORATION OPTION TO ACHIEVE COMMON GOALS THROUGH COMBINED INFLUENCE

More difficult to influence

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