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Translating country‐of‐origin effects into prices

54 citations0/0 files storedJournal of Product & Brand Management

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Consumer Behavior in Brand Consumption and Identification Consumer Behavior and Marketing Influence Consumer Market Behavior and Pricing

Abstract

Purpose The purpose of this paper is to examine the effects of country stereotyping, bad press, and consumer ethnocentrism on the prices a country can command and be competitive. Design/methodology/approach A total of 767 consumers were given prices for products in 11 different categories, then told each product was made in China. They were then asked how much more (if anything) they would be willing to pay if the product was made in Germany, the USA, or India. Findings Price premiums were significant for all categories, and increased for those scoring higher on a Consumer Ethnocentric Tendencies Scale (CET Scale). However, completing the CET Scale before answering price questions caused respondents to have a lower price premium for US products. The size of the price premium was also positively correlated with the amount of exposure to negative news concerning Chinese products. Research limitations/implications It is unknown how consumers would respond to categories not studied. Practical implications The cost of setting up government controls and industry oversight is expensive. However, the cost of negative news with product recalls is also expensive. Countries who avoid such negative news may be able to price their products 14 percent to 100 percent higher. Originality/value This study quantifies price premiums available to countries with a positive COO image. It also allows a manager to determine the feasibility of developing domestically produced products in specific categories, by identifying categories where consumers would pay a premium for domestically produced products.

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References

1987Consumer Ethnocentrism: Construction and Validation of the CETSCALE 1993Social Desirability Bias and the Validity of Indirect Questioning 1982Country-of-Origin Effects on Product Evaluations 1988Country-of-Origin Effects for Uni-National and Bi-National Products 2004Domestic Country Bias, Country-of-Origin Effects, and Consumer Ethnocentrism: A Multidimensional Unfolding Approach 1994Customer Evaluation of Products in a Global Market 1970A Comparison of Japanese and U.S. Attitudes toward Foreign Products 1994An Empirical Analysis of Latitude of Price Acceptance in Consumer Package Goods

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