For many years, researchers have been trying to understand the impact of country of origin on consumer’s perceptions. For example, it has been firmly established that when consumers are unfamiliar with a brand, the country of origin can serve as a strong extrinsic cue during the evaluation process. (Intrinsic cues are part of the product, i.e. flavor or color, while extrinsic cues are related to but separate from the product, i.e. country of origin or branding.) It has also been established that consumers use country of origin to minimize their risk perceptions. Essentially, as Koschate-Fischer, Diamantopoulos and Oldenkotte (2012) note most country-of-origin research has focused on consumers’ “quality evaluations and intentions to purchase”.
However, before Koschate-Fischer et al, few researchers had examined whether country of origin influenced a consumer’s willingness to pay more for a product. Their research identified the following effects:
- Consumers prefer products from a country with a favorable image and are willing to pay more for those products.
- Consumers are more influenced by country of origin and pay higher prices for low involvement items, i.e. a candy bar or bottle of mineral water.
- Consumers with a favorable attitude for a brand are willing to pay a premium once the country of origin is revealed.
- Consumers not only show higher quality evaluations for products with favorable country of origins, but actually follow through and complete these purchases.
From a marketer’s perspective, Koschate-Fischer et al recommend the following:
- If your country of origin is favorable, use this advantage in pricing decisions.
- If your country of origin is favorable, emphasize this fact in your communication strategy, i.e. advertising or packaging design.
- If your country of origin is unfavorable, highlight other product features, particularly intrinsic cues, in your communication strategy.
- If your country of origin is favorable, consider carefully any decisions to locate production plants in countries with less favorable weightings; the cost savings may be outweighed by the lowered consumer perceptions about your product.
Koschate-Fischer, N., Diamantopoulos, A., Oldenkotte, K. (2012). “Are consumers really willing to pay more for favorable country image? A study of country-of-origin effects on willingness to pay”. Journal of International Marketing. 20 (1), pp. 19-41.