RESEARCH PROJECT REPORT

ON

THE EFFECT OF COUNTRY-OF-ORIGIN ON GLOBAL BRANDS IN THE INDIAN MARKET

Submitted By:

Prafull Sharma (21)

Sachin Chandra

Ankit Sharma

Srikant Shankar

Rajat Dhingra

EPGDIM 09-11

Indian Institute of Foreign Trade

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Table of Contents

EXECUTIVE SUMMARY

CHAPTER 1. INTRODUCTION

1.1 Country Of origin basics(COO)

1.2 Brands country of origin image and brand equity

1.3 Indian economy 1.4 COO Effect and Product Involvement in India 1.5 Objectives Of the study

CHAPTER 2. LITERATURE/ CONCEPTUAL SUPPORT

2.1 Definition of COO

2.2 Product evaluation

2.3 Social identity theory

2.4 Factors To consider

CHAPTER 3. METHODOLOGY & DATA COLLECTION

3.1 Steps Undertaken

3.2 Questionnaire Construction

3.3 Research Instruments

3.4 Sampling Design

3.5 Target Population

3.6 Target Market

3.7 Sample Size

CHAPTER 4. DATA COLLECTION

4.1 Introduction

4.2 Understanding the COO effect

4.3 COO effect still matters

4.4 Stereotypes abound

4.5 Potential market strategy

4.6 Social identity theory

4.7 COO effect on buying habits

4.8 Impact of dimensions of consumers knowledge on COO effect

4.9 Cognitive, affective and normative component of COO

4.10 COO effect

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CHAPTER 5. DATA ANALYSIS AND INTERPRETATION

5.1 Importance of COO

5.2 Qualities of a good brand

5.3 Important factors under consideration

5.4 Few products under study

5.5 Brand name as a cue of COO

5.6 Difference as perceived

5.7 Marketing factors influencing buying of products

5.8 Major findings of the study

5.9 Factor analysis

5.10 Result and discussion

CHAPTER 6. RECOMMENDATION

6.1 Inferences and recommendations

CHAPTER 7. CONCLUSION

7.1 Concluding observations

7.2 Limitations of the Study

7.3 Further Scope Of The Study

REFERENCES

BIBLIOGRAPHY

ANNEXURE

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Executive Summary

While national reputations for products vary from country to country, consumers tend to generalize their attitudes and opinions across products from a given country, based on their familiarity and background with the country and their own personal experiences of product attributes. Favorable country perceptions are known to lead to favorable perceptions of associated attributes such as product quality indicating thereby, that consumer evaluations are governed by influences other than the quality of the product.

Indian consumers have seen many brands both domestic and international in the past decade and have formed a perception about them in their minds both because of the prior experience with the brand and the technological advancements that have changed the outlook of those products.

The current research work is aimed towards understanding the consumer attitudes and behavior towards local and foreign brands against a background of increasing prevalence of foreign brands and stereotypes of countries of origin. The area of survey was New Delhi aiming the undergraduates and postgraduate students with product category defined as the consumer durable products.

Country of origin has an impact on consumers mind and is one of the important factors that they consider while evaluating the products vis-à-vis competition. Consumer ethnocentrism is also a factor which is very much prevalent in Indians. The study found that the Indians have an affinity towards made in India products, and have all the cues about foreign products, but prior utility of Indian products are embossed in the minds. The specific product categories which have certain COO effect have emerged as market leaders in India and other brands from the same origin are expecting to make an impact in future.

COO plays an important role in product evaluation, especially in consumer durable brands, and hence marketers must use this cue while promoting their products or entering as a new business in Indian market. The study is of strategic relevance to foreign companies entering the Indian market and is to use their own foreign country brand names for a successful venture in India.

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CHAPTER: 1

INTRODUCTION

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Introduction

1.1: Country Of origin (COO)

Products with foreign brand names are frequently associated with the country-of-origin (COO) of the brand. The promotion of such brands means, either emphasizing the COO as has been the case with “American Jeans”, “Marlboro” cigarettes, “Italian pasta”, and French perfumes such as “Chanel” or alternately, ignoring the COO depending on the perception of consumers in the foreign country market. Numerous firms have used positive associations with the COO to good advantage in the marketing of goods, as for example, the favorable association of Germany with beer, Sweden with cars, and Japan with microelectronics. However, if the COO stereotype is negative, it can pose formidable barriers for marketers attempting to position their goods within a foreign market. In yet other cases, there are product categories not distinctively associated with any COO image as in the case of the car industry, where it has been less easy to market global brands such as “Mercedes”, “Audi”, “Toyota”, “Jaguar” for which brand images have developed quite apart from their COO, and which do not use their national COO association in their promotion and marketing strategies.

In the process of buying, consumers are not only concern about the quality and price of a product but also other factors such as the brand’s country-of-origin. Many consumers use country-of-origin stereotypes to evaluate products for example, “Japanese electronics are reliable”, “German cars are excellent”, “Italian pizza are superb”. Many consumers believe that a “Made in . . .” label means a product is “superior” or “inferior” depending on their perception of the country. Brands from countries that have a favorable image generally find that their brands are readily accepted than those from countries with less favorable image. Since country of origin could be one of the influencing factors in determining consumers’ choice, the purpose of this study is to explore the effects of brand’s country-of-origin image on the formation of brand equity with respect to Indian consumers.

1.2: Brand’s country-of-origin image and brand equity

Information-processing theory posits that consumers use product cues to form beliefs and evaluations about a product, which in turn influence their purchase behaviors. Generally, the country-of-origin is considered as an extrinsic product cue. Consumers are known to develop stereotypical beliefs about products from particular countries and the attributes of those products. Therefore the country of origin image has the power to arouse importers’ and consumers’ belief about product attributes, and to influence evaluations of products and brands. The country of origin denotes the home country for a company or the country that consumers infer from brand name. One of the first conceptualizations of the country-of-origin phenomenon was that of Nagashima (1970). He defined the image that consumers associate with a given country-of-origin as:

. . . the picture, the reputation, the stereotype that businessmen and consumers attach to products of a specific country. This image is created by variables such as representative products, national characteristics, economic and political background, history, and traditions.

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1.3: Indian Economy:

The gradual trend towards liberalization of the Indian economy during the past decade has served as a major factor in its progressive shift towards a global economy and the entry of foreign brands from Europe and US into this market. In fact the 1990s decade and beyond have been characterized by major structural changes in the Indian consumer market’s evolution, including those of increased competition, product availability in terms of both quality and quantity, as well as increased levels of awareness and propensity to consume. A large and rapidly growing urban middle and upper class consumer market made up of 300 million, which approximates one-third of its present population, constitutes the market for branded consumer goods, with the latter estimated to be growing at 8 percent per annum. In fact, demand for several consumer products has been growing at 14 percent per annum (India Market Demographics Report, 2007). While rising incomes and shifts in consumer tastes and preferences are evolving predictably as a trend, Indian consumers are faced with increasingly complex sets of choices across all categories of consumption.

A host of foreign branded goods are now freely used as well as easily available. A related trend contributing to these shifts has been the reduction in trade barriers due to trade agreements, and the globalizing influence of associations such as the WTO with the result that the Indian economy, the third largest in Asia, is expected to grow at 7-7.5 percent in the year ending March 2009 (CMIE, 2007). The concomitant decrease in import duties of goods, has paved the way for entry of companies among others, from Germany, France, US, Korea, Japan, and China. The main strategies of these companies have included strategic alliances with domestic Indian companies to provide Indian consumers greater variety with regard to foreign branded goods. Thus, foreign companies like Hyundai (S. Korea), Daewoo (S. Korea), General Motors (US), Ford (US), are prevalent in the Indian car market, while TV brands range from Sony ( Japan), Samsung (S. Korea), LG (S. Korea), to local brands such as “Videocon” (India), and “BPL” (India). Similarly, the washing machine market is dominated by “Whirlpool” (US), and the refrigerator market by brands such as “LG” (S. Korea), “Godrej” (India), “Voltas” (Indian conglomerate). In the consumer non-durables product categories such as chocolates, tea, coffee, and detergents the competition from foreign brands has been relatively less, and there is a predominance of local products as in the case of tea (Taj Mahal), coffee (Tatacafe), detergents (Nirma), toothpastes (Babool, Dabur, Vicco along with Close-up, Pepsodent), and ice creams (Vadilal, Kwality). Foreign brands in the Indian market have thus begun to compete for both market share and the psychological mind share of consumers, even while widening the range of brands under consideration.

The Indian market now holds a position of strategic eminence with several foreign retail chains setting up their stores. Opportunities in the retailing sector are seen to be increasing with the emergence of fast food chains like McDonalds, Dominos, Wendy’s, department stores, electronics goods and exclusive retail outlets like those of Nike and Adidas. While shopping malls have made themselves conspicuous in the metros, smaller cities,

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and non-metros of population sizes up to 100,000 are also following suit (Images Retail, Feb 2004), with growing discretionary consumer incomes. Although COO image measurements in Asian country markets have been attempted in past, there is a lack of concrete information on consumer attitudes, preferences and market place behavior with regard to foreign brand names in these markets. The present research was, therefore, conducted to obtain a better understanding of attitudes and preferences of Indian consumers with regard to foreign versus local brands, and to evaluate their relative strengths in terms of differentiating features. In addition, the extent to which consumer ethnocentrism accounts for a positive bias toward local domestic brands and a negative bias against products originating from foreign countries was also examined, to identify if there was any strong domestic country bias in the choice of brands.

These findings would be of interest to companies in their formulation of foreign marketing strategies by offering a better understanding of how the foreign brands are likely to be perceived in relation to domestic products and those originating from other competing countries in this market.

1.4: COO Effect and Product Involvement in India:

 Consumers evaluate goods based on intrinsic factors such as taste, design and specifications of the product as well as extrinsic cues of the items which comprises of price, brand name, guarantees and warrantees. These components have varied effect on high involvement product in contrast to low involvement product which consequently influences consumer preferences.

 In India, with its huge share of complexity in terms of culture, linguistic differences, socio-political diversity, economic development, the COO effect on product involvement is transparent and lucid. Extrinsic views come into forefront in terms of low involvement product. Singularly intrinsic factors play a major role in case of high involvement product such as automobiles, electronics and luxury items. The Indian consumers depend highly on their preferred choices and are equally judgmental on the COO effect in case of high involvement product than when it comes to choose any low involvement product. Hence here the global brands have ample opportunity to play mesmerizing concepts in the Indian consumer’s mind. With the advent of globalization, free and open market concept, the modern Indian men and women like to consider themselves trendy and fashionable and obviously are more liberal towards global brands experimenting on diversified COO products rather than their older generation.

1.5: Objectives of Study

To investigate consumer attitudes in India towards local and foreign brand names, against a background of increasing prevalence of foreign brand names and stereotypes of countries of origin.

The effect of foreign brands in India and the formidable barriers for marketers attempting to position their goods within a foreign market.

Relative attitudes of consumers toward foreign brands with the level of consumer ethnocentrism, and arrive at the marketing strategy implications for foreign companies entering the Indian market.

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CHAPTER: 2

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LITERATURE REVIEW

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2.0 LITERATURE REVIEW:

2.1: DEFINITION OF COUNTRY OF ORIGIN:

THE COUNTRY OF ORIGIN EFFECTS HAVE BEEN DEFINED IN MANY WAYS IN THE LITERATURE. ACCORDING TO WANG AND LAMB (1983)1, COUNTRY OF ORIGIN EFFECTS ARE INTANGIBLE BARRIERS TO ENTER NEW MARKETS

IN THE FORM OF NEGATIVE CONSUMER BIAS TOWARD IMPORTED PRODUCTS. INSCH (2003)2 IN HIS RESEARCH EXPLAINED THAT COUNTRY-OF-ORIGIN CONSTRUCT INTO THREE COMPONENTS: COUNTRY OF DESIGN, PRODUCT ASSEMBLY AND PARTS MANUFACTURE

TYPICALLY, THIS IS THE HOME COUNTRY FOR A COMPANY. COUNTRY OF ORIGIN IS INHERENT IN CERTAIN BRANDS. IBM AND SONY, FOR EXAMPLE, IMPLY US AND JAPANESE ORIGINS, RESPECTIVELY (SAMIEE, 1994)3.

BILKEY AND NES (1982)4, DEFINE THE PRODUCT’S COUNTRY OF ORIGIN AS “THE COUNTRY OF MANUFACTURE OR ASSEMBLY”. IT REFERS TO THE FINAL POINT OF MANUFACTURE WHICH CAN BE THE SAME AS THE HEADQUARTERS FOR A COMPANY.

2.2: PRODUCT EVALUATION:

SCHERON (1995)5 CONDUCTED A STUDY IN JAPAN WITH THE SIMPLEST OF MANIPULATIONS. SHE FOUND OUT THAT THE SIX MODERATING VARIABLES WHICH DEFINE THE IMPACT OF COUNTRY OF ORIGIN ARE IDENTIFIED AS:

1. PRESTIGE OF RETAIL OUTLET

2. PRICE LEVEL

3. LEVEL OF WARRANTY

4. PRESTIGE OF BRAND

5. PRODUCT FAMILIARITY AND

6. COUNTRY OF ASSEMBLY. SHE REPLICATED NAGASHIMA (1977), RESEARCH WORK WHICH DEFINED THE VARIOUS FACTORS AND DIMENSIONS OF PERCEIVED PRODUCT QUALITY. SHE DEVELOPED A STRUCTURAL MODEL ON THE HALO MODEL AND SAID THAT THE IMAGE OF THE COUNTRY IS ANTECEDENT TO THE PERCEIVED QUALITY. ALSO WHEN THE BRAND AND THE REPUTATION OF THE RETAILER ARE EVALUATED MORE POSITIVELY, THE COMMERCIAL ENVIRONMENT BECOMES MORE POSITIVE AND HENCE INCREASE THE PERCEIVED QUALITY OF THE PRODUCT.

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FIG 2.1: METHODOLOGY USE BY SCHERON

2.3: SOCIAL IDENTITY THEORY

JIN (2004)6 EXAMINED THE USEFULNESS OF THE BRAND ORIGIN CONCEPT IN SHAPING THE PERCEPTIONS OF INDIAN CONSUMERS. GUIDED BY RECENT ADVANCE IN SOCIAL IDENTITY THEORY AND SOCIAL MOTIVATION THEORY, A DYNAMIC ITERATIVE MODEL OF BRAND ORIGIN RECOGNITION IS PROPOSED. SIX HYPOTHESES WERE TESTED USING A SAMPLE OF 145 CONSUMERS FROM WEST OF INDIA.

THE RESULTS DEMONSTRATED THAT MOST CONSUMERS CAN RECOGNISE THE BRAND ORIGIN CORRECTLY BUT THE POWER OF RECOGNITION DECREASES WHEN THE BRAND HAS A LONG HISTORY OF ‘‘LOCALIZATION’’. DISTINGUISHED TRAJECTORIES OF CONSUMER PERCEPTIONS OF FOREIGN BRANDS AND DOMESTICS BRANDS WERE PROJECTED, AND THIS ALLOWED ONE TO EXTEND EXISTING COUNTRY OF ORIGIN (CO) RESEARCH TO BRAND OF ORIGIN RESEARCH.

THE RESULTS IMPLIED THAT BRAND ORIGIN IS A USEFUL CONCEPT FOR COMPANIES ENGAGING IN AN EMERGING MARKET SUCH AS INDIA. BUT THE CHANGING NATURE OF THE CONCEPT REQUIRES CAREFUL STEERING AND NURTURING IF COMPANIES WANT TO ATTACH A POSITIVE VALUE TO ITS BRAND VIA BRAND

ORIGIN ASSOCIATION.

HIS HYPOTHESIS IS SHOWN IN THE FIGURE BELOW.

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FIG 2.2: HYPOTHESIS OF JIN’S STUDY

HE FOUND THAT BRAND ORIGIN IS AN IDENTIFIABLE FEATURE FOR INDIA, CUSTOMERS. IN OTHER WORDS, CONSUMERS ASSOCIATE BRANDS WITH COUNTRIES WHERE THE BRANDS ARE ORIGINALLY DEVELOPED RATHER THAN WITH THE COUNTRIES IN WHICH THE PRODUCTS ARE CURRENTLY PRODUCED. AND THE ASSOCIATION BECOMES WEAKER OVER TIME AS THE BRANDS ARE PRODUCED LOCALLY.

THE RESULTS, THEREFORE, SHOW THAT IN AN ERA OF INCREASING GLOBALIZATION, BRAND ORIGIN MAY BE A USEFUL REPLACEMENT FOR THE MORE GENERAL CONCEPT OF CO GIVEN THAT THE CO FOR ONE SINGLE PRODUCT BECOMES MOST LIKELY PLURAL I.E. MULTI-NATION ORIENTATED. BRAND ORIGIN SERVES AS A SIMPLIFICATION OF THE INCREASINGLY COMPLICATED CO CONCEPT.

2.4: FACTORS TO CONSIDER

D’ ASTOUS (1999)7 PRESENTED THE RESULTS OF A SURVEY CONDUCTED AMONG 194 RETAIL SALESMEN OF ELECTRONIC EQUIPMENT AND 190 MALE CONSUMERS. ACCORDING TO SALESMEN, COUNTRY OF ORIGIN IS A MUCH LESS IMPORTANT ATTRIBUTE FOR SHOPPERS OF VIDEO-CASSETTE RECORDERS AND THEMSELVES THAN BRAND REPUTATION. FOR THE PURPOSE OF COMPARISON, BOTH SALESMEN AND CONSUMERS PROVIDED DIRECT EVALUATIVE JUDGEMENTS OF 13 COUNTRIES ON THEIR DESIGN AND ASSEMBLY CAPABILITIES, OF THREE VCR BRANDS AND OF THE QUALITY AND PURCHASE VALUE OF NINE VCR CONJOINT PROFILES VARYING SYSTEMATICALLY WITH RESPECT TO COUNTRY OF DESIGN, COUNTRY OF ASSEMBLY, BRAND, PRICE AND WARRANTY. SALESMEN'S DIRECT IMPORTANCE WEIGHTS WERE FOUND TO DIFFER GREATLY FROM CONJOINT DERIVED WEIGHTS IN THAT, IN THE LATTER CASE, COUNTRY OF ORIGIN CUES HAD A SIGNIFICANT AND, WITH REGARD TO QUALITY PERCEPTIONS, GREATER IMPACT THAN THE OTHER ATTRIBUTES.

IN THE EXPLORATORY RESEARCH, A KEY INFORMANT APPROACH IS USED IN ADDITION TO SELF-REPORTS TO ASSESS THE IMPORTANCE OF COO INFORMATION IN CONSUMER PURCHASING DECISIONS. SPECIFICALLY, THIS RESEARCH IS BASED ON A SURVEY OF RETAIL SALESMEN OF ELECTRONIC EQUIPMENT (TELEVISIONS, VCRS, ETC.) AND CONSUMERS. SALESMEN ARE PRIVILEGED OBSERVERS OF CUSTOMERS' BUYING BEHAVIOR AND AS SUCH

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CAN BRING USEFUL INSIGHTS INTO THE ISSUE OF COO IMPORTANCE. MOREOVER, SALESMEN TRANSMIT INFORMATION TO CONSUMERS AND INFLUENCE THEIR PURCHASE BEHAVIOR. THEIR PERCEPTIONS ARE THEREFORE IMPORTANT FOR THE DESIGN OF MARKETING STRATEGIES. SALESMEN'S PERCEPTIONS ABOUT THE COO ISSUE ARE COMPARED TO RESULTS FROM THE CONSUMER SURVEY.

THIS RESEARCH LEADS TO SOME IMPLICATIONS FOR GLOBAL MARKETERS WHO BELIEVE THAT COO IS A SALIENT ATTRIBUTE OF THEIR PRODUCTS. INSTEAD OF RELYING SOLELY ON GENERAL PUBLIC MEDIA TO PROMOTE THEIR PRODUCTS DIRECTLY TO CONSUMERS (E.G. ADVERTISING), PART OF THE PROMOTION EFFORT SHOULD BE DIRECTED AT EDUCATING SALESMEN ABOUT THE RELATIONSHIP BETWEEN THE COUNTRIES WHERE PRODUCTS ARE DESIGNED AND/OR ASSEMBLED AND QUALITY. SUCH AN APPROACH MAY INDEED REINFORCE THE VIEWS IMPLICITLY HELD BY THE SALESMEN. THIS WOULD MAKE COO

INFORMATION MORE RELEVANT DURING THE SELLING PROCESS. FOR INSTANCE, MARKETERS OF ELECTRONIC PRODUCTS WHOSE PRODUCT IMAGE SUFFERS BECAUSE OF THEIR ASSOCIATION WITH A LOW PRESTIGE BRAND NAME SHOULD CONSIDER USING SALESPERSONS AS ALLIES TO CONVINCE CUSTOMERS OF THE HIGH QUALITY OF THE PRODUCT DERIVING FROM THE COO (E.G. TECHNOLOGICAL SOPHISTICATION OF WORKERS) WHENEVER THE PRODUCT IS MADE IN A DEVELOPED COUNTRY.

KHAN (2007)8 DID A RESEARCH ON MARKET ENTRY USING COO. THE PURPOSE OF THE RESEARCH WSS TO EXPLORE COUNTRY OF ORIGIN (COO) EFFECTS AMONG PAKISTANI ELITE CONSUMERS AND TO USE THAT KNOWLEDGE AS AN INTELLIGENCE BASE FOR SMES CONSIDERING ENTRY INTO PAKISTAN. PRINCIPLE COMPONENT ANALYSIS IS CONDUCTED WITH AN ELITE PAKISTANI SAMPLE USING A COO LIKERT TYPE STYLE SCALE.

FOUR COMPONENTS WERE IDENTIFIED THAT CORRESPOND WITH CONSUMERS PERCEPTIONS OF PRODUCE

ATTRIBUTES. THE ELITE SEGMENT OF PAKISTAN PERCEIVES COO IMAGE, PRODUCT QUALITY AND LUXURIOUS IMAGE OF PRODUCT AND PRICE AS DISTINCT ATTRIBUTES WHEN MAKING A PURCHASING DECISION. THIS STUDY PROVIDES A BASIS FOR SMES TO GATHER FURTHER DETAILED INTELLIGENCE WITH REGARDS TO CONSUMER PERCEPTIONS OF PRODUCTS AND POTENTIAL DEMAND IN PAKISTAN.

THE OBJECTIVES OF THE STUDY WERE:

. TO INVESTIGATE COO EFFECTS ON PAKISTANI ELITE CONSUMERS’ PERCEPTIONS OF PRODUCTS; . TO IDENTIFY COMPONENTS OF COO EFFECT THAT ARE IMPORTANT TO ELITE CONSUMERS; . TO INVESTIGATE THE IMPACT OF DEMOGRAPHICS ON THOSE COO COMPONENTS; AND

. TO PROVIDE AN INTELLIGENCE BASE FOR SMES CONSIDERING ENTRY INTO PAKISTAN.

A SAMPLE WAS SELECTED TO REPRESENT ELITE CONSUMERS. HERE RESPONDENTS WERE UNDERTAKING EITHER BACHELORS OR MASTERS DEGREES IN BUSINESS ADMINISTRATION, AT THE INSTITUTE OF BUSINESS ADMINISTRATION (IBA) SITES OF KARACHI UNIVERSITY IN SUKKUR AND KARACHI. THE SAMPLE CONTAINS A HIGH PROPORTION OF PEOPLE WHO ARE LIKELY TO BECOME FUTURE MANAGERS AND RICH CONSUMERS AND SO THEY REPRESENT THE EMERGING ELITE SEGMENT.

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HE FOUND THAT COO EFFECTS BOTH CONSUMER BELIEFS WHEN PURCHASING A FOREIGN PRODUCT AND PRODUCT EVALUATION AFTER THE PURCHASE. IF THE PRODUCT DOES NOT COME UP TO THEIR EXPECTATION OR CONSUMERS ARE NOT SATISFIED THIS COULD DETER THEM FROM BUYING THE PRODUCT FROM THAT COUNTRY IN THE FUTURE. THE SME’S THEREFORE MUST DELIVER WHAT THEY PROMISE. FOR

INSTANCE, IF THE PRODUCT IS NOT RELIABLE OR IS OF POOR QUALITY, THEN RELYING ONLY COO WILL

NOT GAIN A POSITIVE IMAGE AMONGST CONSUMERS. THEN THEY WILL FORM A NEGATIVE PERCEPTION NOT ONLY OF THE PARTICULAR PRODUCT BUT ALSO OF THE ASSOCIATED COUNTRY. THE FINDINGS OF THIS STUDY SUGGEST THAT USING COO INFORMATION FOR LUXURIOUS OR EXPENSIVE PRODUCTS COULD HELP COMPANIES GAIN COMPETITIVE ADVANTAGES IN THE PAKISTANI MARKET. ADDITIONALLY, IN THIS MARKET, QUALITY IS PERCEIVED AS AN ATTRIBUTE DISTINCT FROM COO IMAGE.

KOUBAA (2007)9 ALSO FOUND THE LINK BETWEEN COO AND BRAND IMAGE STRUCTURE AND EXPLORED THE IMPACT OF COUNTRY OF ORIGIN (COO) INFORMATION ON BRAND PERCEPTION. AN EMPIRICAL INVESTIGATION WAS CARRIED OUT AMONG JAPANESE CONSUMERS. TWO BRANDS OF ELECTRONICS WITH DIFFERENT LEVELS OF REPUTATION WERE INVESTIGATED.

RESULTS SHOWED THAT COO HAD AN EFFECT ON BRAND PERCEPTION. THIS EFFECT DIFFERS ACROSS BRANDS AND ACROSS COUNTRIES OF PRODUCTION. BRAND-ORIGIN APPEARS TO BE OF SIGNIFICANT IMPACT ON CONSUMER PERCEPTION. BRAND IMAGES ARE FOUND TO BE MULTIDIMENSIONAL. THEIR STRUCTURES DIFFER ACROSS BRANDS AND ACROSS COO.

MARKETING ACTIONS SHOULD BE CUSTOMIZED ACROSS BRANDS WITH DIFFERENT LEVELS OF REPUTATION. BRAND IMAGE SHOULD BE ASSESSED AS A MULTIDIMENSIONAL CONCEPT INCORPORATING MULTIPLE FACETS. CONSUMERS ARE INFLUENCED BY THE BRAND-ORIGIN. MARKETERS SHOULD BE AWARE OF THIS

ASSOCIATION.

THE QUESTIONNAIRE CONTAINS SCALE MEASURING CONSUMERS’ ATTITUDES TOWARD SONY AND SANYO AS PRODUCED IN THE FOUR STUDIED COUNTRIES AND WHEN NO COO IS MENTIONED. THE SCALE ENCLOSES 15 ITEMS MEASURING THE PRODUCT QUALITY, RELIABILITY, DURABILITY, STYLE, MARKET PRESENCE, ETC. RESPONDENTS WERE ASKED IN THE END OF THE QUESTIONNAIRE TO DELIVER SOME PERSONAL INFORMATION RELATED TO THE GENDER, AGE, OCCUPATION AND YEARLY SPENDING FOR ELECTRONICS. 200 RESIDENTS (STUDENTS, EMPLOYEES, AND HOUSEWIVES) FROM AN URBAN AREA IN THE CITY OF KOBE (JAPAN) PARTICIPATED IN THIS INVESTIGATION. INVESTIGATION WAS DONE BY THE RESEARCHER.

A SPACE MAP WAS ORIGINATED FOR THE TWO BRANDS AS PER COUNTRY OF PRODUCTION:

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FIG 2.3: SPACE MAP BY KOUBAA

THE KEY FINDINGS WERE THAT COO DID INFLUENCE CONSUMERS’ OVERALL PERCEPTION OF BRANDS. INFLUENCES WERE DIFFERENT ACROSS HIGHLY REPUTED BRANDS AND LESS REPUTED BRANDS. BRAND-ORIGIN IS FOUND TO BE OF SIGNIFICANT IMPACT ON BRAND IMAGE PERCEPTION. THE EFFECT OF COUNTRY IMAGE ON BRAND IMAGE IS SO STRONG. IT MAY OVERCOME THE POWER OF WELL-KNOWN BRANDS IN SHAPING BRAND IMAGE IN CONSUMER MIND. MARKETERS SHOULD CUSTOMIZE THEIR ACTIONS ACROSS BRANDS AND ACROSS COUNTRIES OF PRODUCTION. BOTH, BRAND’S LEVEL OF REPUTATION AND COUNTRY IMAGE IMPACTS SHOULD BE TAKEN INTO ACCOUNT WHEN ELABORATING MARKETING OPERATIONS FOR BINATIONAL PRODUCTS. BRAND IMAGE HAS SEVERAL FACETS IN CONSUMER’S IMAGINATION. IT IS FOUND TO BE MULTIDIMENSIONAL. DIMENSIONS DIFFER ACROSS COUNTRY OF PRODUCTION AND ACROSS BRANDS. MARKETERS SHOULD LOOK ON WHAT DIMENSION(S) TO PROVIDE FOR CONSUMERS FOR EACH BRAND PRODUCED IN A SPECIFIC COUNTRY.

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CHAPTER: 3

METHODOLOGY & DATA COLLECTION

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3.0 Methodology:

It is the way to solve the research problem systematically. In other words research methodology could be termed as a study aimed to gain knowledge, about research process. Research Design of the study is descriptive study, hence the research design chosen

descriptive design. Collection of raw data is very important for the research and hence it allows the managers to see the real life scenario & then take a decision as per the data obtained. There are several implications in this statement:

The researcher gets a clear picture of the Market Scenario. He/she can examine the available information in the form of data to help in

decision making. Analysis of data makes life much simpler and is a necessary work of every

manager. Thus choice of right methodology where true response & market situation to

certain parameters can be found is critical to the project.

Thus to obtain the projected objectives following steps were undertaken:

3.1 Steps Undertaken:

Knowing the market, market players, country of origin effect & products through technical articles, research journals & secondary study (Internet, books, and articles). It was carried out for one week to have sufficient details, market outlook & products under consideration in terms of competitors & their market in Indian context.

After this an online survey as a pilot test was conducted through a questionnaire, so as to have the feel of market, how people react to different brands and there perception on the effect of country branding while purchasing a product.

Then based on information gathered, a final questionnaire was framed separately for the target population.

Based on questionnaire developed, a survey was conducted for two weeks, finally collected data from survey is analyzed & based on analysis, suitable recommendations for the changing industry and consumer perception is suggested.

3.2 Questionnaire construction:

To introduce easy classification of parameters, questions were categorized as follows:

Questions were generally of two types:

Questions, which could be answered by ticking against the right option. Questions which need simple yes or no, or some open ended questions.

These questions were basically included to check the place of different brand’s in customer’s mind, the effect of country of origin in the mind of the consumers and the working of different brands in India and industrial intricacies so as to have a clear picture of consumers’ perception while buying different category of products.

3.3 Research Instruments: The research was carried out using above-mentioned questionnaires, which was filled by respondents.

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To carry out analysis of collected data, an array of statistical tools were explored using SPSS 15.0 statistical analysis software& Microsoft Excel.

Following tools were used while carrying out analysis:

Frequency tables, Bar Graphs, Factor Analysis.

3.4 Sampling Design:

Primary data was collected from potential customers or prospects of various educational and commercial areas in the Delhi region.Secondary data was collected from the various marketing and consumer behavior journals, research articles & various magazines.

3.5 Target Population:

College going students. (Age Group 18-25)Post Graduate Students (Age Group 25-35)

The rational behind the agreed target population was because these are those consumers who have used the products, and are going to start their own families in future. The knowledge of Indian and Foreign brands are more in this age group and hence the ease of filling up the questionnaire with brand specific questions.

3.6 Target Market.

The market is very huge for the products categories taken and hence the major market was of young people which are aware of many brands in the market and are also acts as influencers at home while the family decides the product and evaluate the brands based on various aspects associated. They are more knowledgeable in this era of brand proliferation and have cues associated with every product category.

Market Visited:

Commercial Market Educational InstitutesLajpat Nagar Delhi University (North Campus)Malviya Nagar Qutab Institutional AreaGaffar Market IIFTTable 3.1: Market Visited

3.7: Sampling Size:The required data was collected through a pretested questionnaire administered on a combination of simple random and judgement sample of 120 educated respondents. Judgement sample selection is due to the time and financial constraints. The study is based on a survey of 120 respondents through a questionnaire covering different areas in Delhi region. So, 120 were taken as an effective sample. The data obtained from the study were analyzed by using Factor Analysis for identification of the key features preferred by the respondents in a product. Factor analysis identifies common dimensions of factors from the observed variables that have a high correlation with the observed and seemingly unrelated variables but no correlation among the factors. Principal Component Analysis is the commonly used method for grouping the variables under few unrelated factors.

However the researcher thought it proper to run the data under varimax rotation to reduce, if there was any chance of co -linearity among these factors. Variables with a factor loading of

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higher than 0.7 are grouped under a factor. A factor loading is the correlation between the original variable with the specified factor and the key to understanding the nature of that particular factor. When developing new products marketers would like to be able to judge the consumer’s response to their offer before it is introduced. One way to deal with the situation is to perform concept tests. Here the customer is presented with a description for a new product and is asked about the likelihood of purchase. The various associations with a product are broken down in to levels. Once the utilities of the attribute levels are known, it is possible to specify a new product that should have a maximum desirability.

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CHAPTER: 4

DATA COLLECTION

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4.1 Introduction

Imagine for a moment that the $95 dress shirt you are wearing today was actually produced for a large upscale retailer in the United States by a mega company based in Hong Kong (China). On further research you find that the shirt was actually manufactured in Singapore with fabric from Pakistan and buttons from Japan. Better still, it could have been manufactured in any of 25 countries where this Hong Kong based company has branches. This is a truly global shirt that has probably traveled farther than many of us international marketers have.

This scenario sheds light on the fact that in the current state of globally integrated supply chains, knowledge about the country of origin or country of manufacture is not as transparent. The logical question that follows is: Does the country of origin still have an impact on product quality, on perception and acceptance?

4.2 Understanding the Country of Origin Effect

If you are a seasoned business decision maker you probably remember the early days of Japanese cars and consumer electronics when the products originating from Japan were seen in a far less favorable light than they are today. The common perception at the time was that if the product originated in Japan it had to be cheap stuff! Gradually over the past three decades the quality of Japanese engineering began to be appreciated and the big Japanese manufacturers changed from "me-too" manufacturers of cheaper products to global brand and technology leaders.

Fast forward to the 21st Century, and you will notice that a key market battle in the consumer electronics industry is now being fought between Japanese and Korean brands. Fifteen years ago Korean VCRs and microwave ovens scored substantially below German and Japanese brands on all product attributes including quality. Today the story may be quite different.

Country of origin is defined as the country with which a particular product or service is associated. The country could be the country of manufacture (COM), in the case of products, or the country where the headquarters are located, in the case of both products and services. Country of origin effect (COE) can be defined as any influence that the country of manufacture, assembly or design has on a consumer’s positive or negative perception of a product. However, the concept of country of origin is increasingly complex.

For products manufactured using components made in various countries and assembled in yet other countries, determining the true country of origin of the product is becoming increasingly difficult. For example, BMW cars targeted for the U.S. market are manufactured in South Carolina rather than in Bavaria; Michelin tires are also manufactured in South Carolina; and many software products used by U.S. businesses are developed in India.

As a result of the expansion of multinational firms, companies sell the same products under identical brand names in different countries throughout the world. These products actually have widely differing national origins, not necessarily that of the COO of the parent company. Sony products, for example, can just as easily be “made in Japan,” “made in France,” or “made in Italy.” The question remains: Does COO still matter?

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4.3 Country of Origin Effect Still Matters

Country of origin information constitutes a product trait that is external to the product itself. It serves as a surrogate for product quality, performance, reliability, prestige and other product characteristics that cannot be directly evaluated.

Various researches have demonstrated that consumers tend to regard products that are made in a given country with consistently positive or negative attitudes. These origin biases seem to exist for products in general as well as for specific products, and for both end-users and industrial buyers alike. The nature and strength of origin effects depend on such factors as the product category, the product stimulus employed in the research, respondent demographics, consumer prior knowledge and experience with the product category, and consumer information processing style. Country image and perceptions that influence consumer evaluation of product quality, risk, likelihood of purchase, and other mediating variables are formed through a myriad of experiences and information acquired by consumers. Familiarity with a country's products, shopping behavior, demographics and psychographics all affect the buyer perceptions. These perceptions have been shown to depend on the type of manufacturing process (product design versus product assembly) as well as the level of technological complexity (complex versus simple product).

Country of origin biases have been found for both developed countries and less developed ones. Generally speaking, products from lesser developed countries are perceived to be riskier and of lower quality than products made in more developed countries. In general, products manufactured in highly industrialized countries are perceived as being of higher quality and having greater prestige than those manufactured in developing countries.

Consumers from highly developed countries tend, in general, to evaluate their own country’s products more favorably than products from other countries. The opposite is true for consumers in developing countries and newly industrialized countries who rate their own country’s products as inferior to products from developed countries.

Once customers are aware of COO, their familiarity with the brand, level of involvement in the purchasing decision, and existing preference with domestic products becomes relevant, as do product and market level influences such as type of product and brand image.

Product categories in which COO is generally given greater importance include perfumes, wines, cars, high-fashion clothes, consumer electronics and software. For all these products, country specific stereotypes exist. COO effects are less pronounced in products in which technology is widely diffused across the globe. These products adopt a quality standard that is uniform across the globe, hence country of origin does not have a significant impact.

4.4 Stereotypes Abound

Throughout the COO research studies one finds a relatively small number of stereotypical images that are fairly consistent across nationalities: the image of the robustness of German products, the image of France being associated with luxury products, and the image of Korean products as being cheap. Positive image stereotypes are also held in the world for Iranian pistachios and rugs, Polish vegetables, Israeli oranges, Columbian coffee, English tea, Swiss chocolate and Russian Caviar, French perfume, Chinese silk, Italian leather, Japanese Electronics and Jamaican Rum.

36

All are stereotypical perceptions based on experience, hearsay or myth. Some research studies also indicate that consumers in different countries respond differently to country-of-origin cues. Here are some examples:

Japanese goods are rated favorably by consumers in all countries. Canadian goods, although often thought comparable to American goods on

performance characteristics, are considered technologically imitative.

In China, if it is western it is in demand, even at prices three or four times higher than domestic products. 

Korean consumer electronic and automobile brands are much more appreciated in Asia but have not yet translated into a strong positive country of origin effect for the rest of the world where its products are marketed.

For Russians, country of origin is more important than the brand name as an indicator of quality. Goods produced in Malaysia, Hong Kong or Thailand, are still suspect in Russia.

People from Australia might like French perfume but not French cameras or even French wine since Australia produces heavier wines.

In the absence of other product information, the country of origin of a product or service affects consumers’ evaluation of that product or service. Along with other extrinsic cues such as brand name and warranty, COO information is used by consumers to reduce the inherent uncertainty associated with the purchase of products. As they acquire additional information the country-of-origin impact is reduced.

Dealing with Country of Origin Stereotypes

Marketing managers must understand COO perceptions as they relate to the product category in target-country markets. They must deal with the stereotypical myths by providing information and developing marketing strategies appropriate to achieve corporate goals. COO and COM effects have implications for standardization of marketing programs, for positioning the products, selecting the image in advertising, and even plant location decisions.

Here are some recommendations for dealing with COO-related stereotypes:

Know What to Stress in Your Marketing Communications. In the event that country of origin has negative connotation for their products, multinationals often decide to de-emphasize manufacturing origin and emphasize country of brand. When Volkswagen first started building its Rabbit model in Pennsylvania in 1970s, consumers rushed to buy the last imports of the model from Germany. Following its global transplants, the company has avoided emphasizing where the product is actually made. For example, Daimler-Benz emphasizes its corporate home rather than country of origin while promoting its products.

In the Untied States, Colombian coffee is touted as a certification of quality. Toblerone chocolate stresses its European origins despite the fact that it is a Philip Morris (Kraft Jacobs Suchard) brand. Haagen-Dazs chocolate-dipped ice cream is really a product produced locally in the United States although its name suggests an association with Europe, which affirms the quality association with European chocolate.

Promote National Pride. Feelings of national pride—the “buy American’ effect, for example—can influence attitudes toward foreign products. Toyota, which manufactures one of its

37

models entirely in the India, recognizes the phenomenon and continues to point out how many component parts are made in India in some of its advertisements.

Emphasize Product Quality or Value Rather Than Price. Marketers have a tendency to reduce prices to counter the negative COO. This strategy always backfires because it reinforces the existing negative prejudices that the product is cheap and of lower quality. It is better to invest in developing a better product at a reasonable price rather than a better product at a lower price to overcome negative country of origin effect. Developing relationships with reputable dealers and/or intermediaries also reduce the impact of negative COO or COM effect.

Experience shows that it is possible to change the consumer mind-sets and perceptions over time. For example, Japanese marketers over the last 35 years have substituted an image of high quality for the cheap image that was generally held in the 1950s and 1960s. The image of Korean electronics improved substantially in the United States once the market gained positive experience with Korean brands. Strong global corporate brands like Sony, General Electric and Levi’s developed via effective positioning. Integrated marketing has done wonders for both marketers and customers in reducing the impact of mythical country of origin stereotyping.

The country, the type of product, the image of the company, and company’s brand all have an effect on whether the country of origin will engender a positive or negative reaction. It is important to remember that even though negative COO effects do not disappear overnight, country perceptions do change over time. The key is to develop market strategies to reinforce the positive COO impact and de-emphasize the negatives. Develop quality products, building solid relationships with quality distributors, and promote the corporate brand image.

4.5 Potential market strategy

Small businesses entering a new market could use COO at the introduction stage of product life cycle (PLC) or to gain a quick entry method in the foreign market as suggested by Bamner (2007) as used by Danish companies abroad. However, such strategies could be directly applicable for these businesses entering emerging economies. The importance of using COO intelligence in the beginning of the PLC or as a market entry method is that it allows the company to penetrate the market and position the product in a quicker way than brand name strategy. As COO give the product an immediate identity in the market whereas a product without or lacking COO linkage would achieve the distinctive profile. The alternative strategy of developing a brand image would be feasible but it requires a longer lead-time and more resources to develop. Nes (1982) presents a caveat that companies must take into consideration that the national image features contained in the COO image are suitable for the specific type of product and the targeted national segments: this is the sort of intelligence is required regarding COO importance amongst the target market. Thus intelligence about how the concept is structured concerning the COO image with respect to various products attributes such as expensive/luxuries and non-expensive products is required.

COO also serves as a cue to evaluate performance and specific product or service attributes so that consumers infer product attributes based on their perceptions of country stereotype and their experiences with products from that country (Bilkey and Nes, 1982).

4.6 Social identity theory

Brand origin recognition is a complicated process. People tend to associate brand origin to certain characteristics of the brand such as quality, price, and values. This can be partly explained by social identity theory (Koubaa, 2007). In other words, there is a tendency of

38

using extrinsic cue (such as countries or places) to replace intrinsic features (such as price or performance), while compounded by other factors such as familiarity of the consumers with the brands or countries. Social identity theory defines self in terms of personal identity and social identity. Individuals shift their focus from personal to social identity, which influences their perceptions, cognitions, evaluations, and attributions about issues and events. Individuals want to make sense in the increasingly complicated world and one way of doing this is from the shift to social identity, the categorization from which they belong to and to be recognized as part of. In the context of India, the country has had a long tradition of a caste system, which is gradually being replaced by a class system where social disparity and inequity are increasing. Given such difference in social identity and desire, it is perceivable that different consumers classify brand origin with a different degree of success related to their knowledge level of different countries, their social status, and their income level as suggested in Ahmed and d’Astous (2001).

Fast forward 80 years to the swinging 60s and the "Country of Origin" effect was prominent once again, as Japanese technology was booming. Simply by sticking a "Made in Japan" label on a stereo, sales could increase by a third.

4.7 ‘Country of Origin' makes big impact on buying habits

Today, to the world at large, brands such as Sony are seen to be inherently Japanese and the perception of Japan as technologically advanced, innovative and quality controlled has been largely driven by pioneering Japanese brands such as Sony. This is now a key driver in the success of many other Japanese electronics and automobile brands, such as Toyota.

Similarly, for many product categories, the link between the perception of an individual brand and the perception of the country of origin is intrinsic whether deliberate, by chance or through the passage of time. From a marketers' perspective, the country of origin is a tried and tested tool to create differentiation in the marketplace and create an enduring relationship with the target audience.

Olivier Auroy, General Manager, Landor, told Emirates Business(2007): "First and foremost, consumers look at prices, especially in Dubai. We did a survey on what influences consumer choices and according to the people we met in Carrefour, Spinney's and Union Corp, pricing is the most important driver. Summer bargain, Ramadan promotions... Pricing is the biggest influencer. "However, having said that, I would like to emphasize that destination branding is also very important, as it often influences consumer behavior. Some countries have a strong brand image and drive positive reactions. Any products related to these countries will benefit from their positive connotations.

"For example, in the mind of the consumer a product from Japan equals quality, while a product from Germany symbolizes reliability and a product from France means sophistication. Consumers will decide to buy the product with these connotations in mind. This is why destination branding is so important, as good destination branding will add value to all product and services coming from a particular country."

The relation grows more and more intimate as the world shrinks, and negative branding can hurt sales. A good example is the French protest against the Olympic flame in Paris. As a result, Chinese consumers organised demonstrations in front of Carrefour in Shanghai and decided to boycott all French products. Giving another example of the impact of negative branding, Auroy said: "Take a look at what happened to China recently. The "toy story" sent really bad vibes all around the world. All of a sudden, all Chinese products were considered as low quality and dangerous. The political tensions with Tibet did not help either, as China became the villain and anything coming from that country was considered bad.

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"A person working in a supermarket in Dubai explained to me what happened with the Fuji apple. In the middle of the toy story turmoil, consumers were reluctant to buy Chinese apples. Nevertheless, one of these apples was still selling well because it had a Japanese name: Fuji. The Japanese connotation of the brand name Fuji counteracted the negativity of the Chinese origin. As we can see, it is a complex equation."

Hermann Behrens, CEO of The Brand Union Middle East, agreed. "It is widely recognized that country of origin has an impact on the purchase decision and many studies have shown that consumers have a preference for products that originate from certain countries that they have existing perceptions of," he said. "For example, Mercedes, BMW and Audi are all very different automobile brands but our perceptions of these centre around advanced technology, premium engineering, the perfect balance of art and science, precision and assurance - many of the values and attributes that are inherent in our perceptions of Brand Germany."

This is likewise with luxury Italian brands such as Armani, Gucci and Prada, again three very different luxury goods brands but each encapsulating an aura of style, elegance and sophistication, Behrens said. They all have a unique Italian resonance that crosses cultures and while these brands leverage on the notion that Italy (Milan) is one of the style capitals of the world, Brand Italy capitalises on being the home of some of world's most premium fashion houses.

Some countries will be more credible on some specific food products: German sausages, French cheese, Italian pasta, Swiss chocolate, Swedish roll-mops, Russian caviar, American ketchup and Japanese sushi. In many ways, these products are quite elaborate - elaboration means recipe, and recipe means culture and heritage. The positive connotation around a product is the result of a long history.

Explaining the point, Auroy said: "Let's take the example of two products: beef and mango. In Dubai, the choice is pretty straightforward. You can buy beef from Argentina, New Zealand, Australia and Pakistan. You have four categories of meat: low category, medium-low category, medium-high category and high category. The main importers can provide the supermarket with the four categories but they won't be credible in all four categories. Based on studies, the majority of consumers will easily buy a medium-low beef from New Zealand and will have difficulties to buy a high category beef from Pakistan.

"However, in the fruit department, a Pakistani mango will be more credible than an Australian mango. Nationality matters. You can measure it when it comes to grapes. Consumers are judging equally grapes from Chile, South Africa, USA and Italy, a reflection of what is happening on the wine market globally. All these nations are credible and they all communicate a positive image. In South Africa, if the grapes are branded Sultana or Ceres, it is even better."

4.8 Impact of dimensions of consumer knowledge on country of origin effectsBrand familiarity

Where consumers are confronted with a familiar brand name they tend to reach evaluations quickly and directly without much effortful external search, because they are familiar with the brand’s attributes. In such situations no further search for and processing of information is necessary. Thus it seems reasonable to assume that consumers who are familiar with a particular brand will not rely on country of origin, or attribute information, to any large extent, in evaluating that brand.

Objective product class knowledge

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From the above considerations it would seem to follow that if the specific brand under consideration is familiar, a consumer’s level of objective product class knowledge may not have any great impact on his/her use of the country of origin cue. However, where the particular brand is not familiar, objective product class knowledge is likely to influence a consumer’s evaluation and choice processes. Where attribute information is readily available and/or where the situation warrants the search for such information, consumers with high levels of objective product knowledge can be expected to base evaluations on intrinsic attributes rather than extrinsic cues such as country of origin. However, extensive product attribute information is often not readily available in choice situations, nor is the search for it always warranted. In such situations, and if the brand is unfamiliar, consumers may rely on other extrinsic product information cues, such as country of origin, price, or warranty. Unlike price and warranty, country of origin is a fairly complex cue whose meaning must be learnt for different product classes. Objective product class knowledge is likely to contain some information relating to countries of origin of the product and should therefore facilitate the use of the cue. Thus, in situations where product attribute information is not readily available or obtainable and where the brand name is unfamiliar, consumers with higher levels of objective product knowledge can be expected to rely more on the country of origin cue than consumers with low levels of product knowledge.

Subjective product class knowledge

While objective product class knowledge is likely to influence information processing strategies, subjective product class knowledge is more likely to affect consumers’ confidence in using information stored in the memory. As such information is likely to relate partly to countries of origin, consumers with high levels of subjective product knowledge can be expected to be more confident in using the country of origin cue. Thus consumers with higher levels of subjective product knowledge are likely to rely more on country of origin than consumers with low subjective product knowledge.

4.10 COO Effect

JD Power Study Shows Country Of Origin A Major Factor For BuyersDespite the fact that import vehicles make up nearly 49 percent of the US auto market, the country of origin still plays a crucial role in consumer choice of which make and model to purchase, according to the JD. Power and Associates 2007 Escaped Shopper StudySM released today. The study provides a comprehensive evaluation of why consumers may consider one model, but ultimately purchase another.

Nearly 80 percent of new-vehicle buyers limit their consideration set to include only domestic models or only import models. Among those who cross-shop for both import and domestic models, consumers who ultimately buy a domestic frequently do so because they simply decide they do not want an import. Buyers of domestic new-vehicles also frequently decide against import brands for financial reasons, most often citing that the import didn’t offer aggressive rebates or other incentives.

Conversely, import buyers who reject a domestic model more frequently point to perceived vehicle attribute deficiencies as key reasons for rejection, such as concerns for reliability, gas mileage or poor resale value.

Anderson Analytics

As per Anderson Analytics, USA where they have recently released findings from an online survey of over 1,000 U.S. students across 375 colleges and universities. It appears that while students love the latest fashion labels and covet the newest

41

technology, they have no idea of where in the world it originated. Anderson Analytics’ survey found that nearly 60 percent of students thought that Samsung, the Korean electronics firm, was Japanese and almost half thought German sports brand Adidas was American.

Mobile phones topped the list of most misidentified country of origin. Fifty-three percent thought Finnish mobile company Nokia was Japanese. Luxury brands benefit the most from promoting country of origin, said Tom Anderson, managing partner at Anderson Analytics.

“Marketers need to realize that country of origin can have a positive impact on their brand equity, particularly if they are a luxury goods or automobile manufacturer,” said Tom H. C. Anderson, Managing Partner, Anderson Analytics. “But if no action is taken to educate the new generation of American consumers, this impact may be lost.” Fewer students gave Japanese brand Lexus top ratings when they mistakenly thought it was a U.S.-made car.

Brand KeysAs per Brand Keys Inc., a customer engagement and loyalty research consultancy, the recent study found that when it comes to consumers ages 18 to 24, a brand's country-of origin is unimportant, however it is still relevant in luxury categories. The study suggested that in the world of the Internet, geographic boundaries are less relevant than they once were, especially to younger consumers. They looked into its Customer Loyalty and Engagement Index to identify which categories are most influenced by partisan positioning.They found that the Top 5 categories still heavily influenced by a country-of-origin positioning are: wine, luxury automobiles, watches, vodka and bottled water. "Engagement metrics provide the percent contribution that country of origin makes to loyalty, sales and profitability," said Robert Passikoff, president of Brand Keys. "That makes it possible to know whether a nationalistic marketing positioning will work for you before committing your budget and brand to such a strategy."

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CHAPTER: 5

DATA ANALYSIS & INTREPRETATION

43

5.0 Data Analysis & Interpretations:

The research was undertaken so as to understand the current outlook of Indian consumers and to know the

effect of country-of-origin on consumer attitudes and preferences when it comes to decide on purchasing

consumer durable goods. Also, it was aimed to know the relative attitudes of consumers toward foreign

brands with the level of consumer ethnocentrism, and suggest what a company should take into

consideration while they decide on entering in the Indian market.

Questionnaire Data Analysis:

5.1 Importance Of Country Of Origin

Fig 5.1 depicts the importance of COO on purchasing evaluation of sample and the effect of origin on the

final decision.

COO On Product Label

53%

19%

17%

12%

0%

10%

20%

30%

40%

50%

60%

Always look Often Occasionally Never

COO On Product Label

(Fig 5.1: Look at product label to see COO)

Similarly, when it comes to see the consumer’s state of mind towards looking specifically toward product

Made-In-India, the responses were different and are as shown below.

- 36 -

Look For Indian Made Product

10%

60%

26%

4%

0%

10%

20%

30%

40%

50%

60%

70%

1

No. Of Respondents

Per

cen

tag

e Always lookOftenOccasionallyNever

(Fig 5.2: Look For Indian Made Products- All figures in percentages)

Interpretation:

From both the graphs above, the sample surveyed was conscious about the

country of origin.

73% of people looked at COO quite frequently, whereas 70% of the people look

for Indian made products, which shows the young generation in India which is

bombarded with so many brands and products at this moment, evaluate the

products based even on the basis of COO and have a flavor towards home made

products.

This was despite the increasing presence in the Indian market, of foreign brand names

from countries such as S. Korea, Japan, and China, in addition to previously existing

brands.

These findings were indicative of the fact that COO was an important decision-making

factor in consumer decisions affecting purchase behavior of brands in the Indian market

since most consumers considered it as an influencing variable.

- 37 -

Age and COO:

The diagram below shows the impact of Age on considering COO as a cue for buying a

product.

0014

001

12

122

34

2

9

31

21

05101520253035

18-25 25-30 30-35 >35

Age Group

Age and COO

Always

Often

Occasionally

Never

(Fig 5.3: Age and COO impact)

Interpretation:

The young generation is aware of new brands and products available in the Indian

market, and hence the need to check out COO on the product they buy

83% of the people below 25 year of age looked at the COO quite often. This

percentage kept on increasing with increasing age brackets and ended with all the

people looking at COO as an influencing factor for buying products. This shows

that COO is a major factor may be not initially in the younger age. But with an

ageing factor it increases further and moves on to be an important factor which is

considered by most of the people.

- 38 -

5.2: Qualities Of A good Brand:

A good brand is defined by every person as a differentiating factor which a particular

name or brand gives to the person, which is having certain benefits and advantages to

him/her.

Qualities Of A good Brand

48%

19%

19%

14%

Brand Visibility

Brand equity

Brand Promise

Brand countryAssociation

(Fig 5.4: Qualities of a good brand, All figures in percentages)

Interpretation:

Half of the population agreed that the brand country actually defines the quality of

a brand. The brand association with a country gives the buyer sufficient clues on

whether the product is suitable for buying or not.

Brand equity and promise respectively are other factors in deciding the brand

quality, which were selected by 38% of the respondents, explaining that the

importance of intangible association with a brand is still very important.

Brand visibility was not considered by many respondents, which explains that

young people have an open mind by which they accept not visible brands too, and

are ready for evaluation with a risk taking ability.

- 39 -

5.3: Important Factors Under Consideration While Purchasing

This response shows the basic nature of a consumer as it tells us about the motive of his/her

buying. The various factors considered are very general and are considered by most of the buyers

in consumer durables. The factors and responses are:

(Fig 5.5: Frequency chart on quality)

The quality factor is an important one for every buyer, and with a mean of 5.2, it

indicates that it has an importance which is divided equally among the sample surveyed.

The frequency of occurrence was more towards 4 and 5, with 2 being the least score

given and 9 being the highest.

- 40 -

(Fig 5.6: Frequency chart on Price)

Price as we all know has some role or the other to play in the mind of the consumers,

especially when they evaluate two brands from different countries. We saw that price

played an important factor in the minds of the sample, as with mean=6.2, the sample was

skewed more towards higher price consideration, with maximum responses between 7

and 8 and lowest being 4 and the highest being 9.

(Fig 5.7: Frequency chart on Service)

Services offered by consumer durables have been an issue of the past, and now everyone

promotes themselves as a service provider and not as a product provider. Sample

surveyed had a mixed view towards services as the confusion of services offered by one

company cannot be differentiated with the other one, and hence cannot be considered

while evaluating for a particular brand of a particular country. Hence a mean of 4.9 with

1 being the lowest rank given and 8 being the highest.

- 41 -

(Fig 5.8: Frequency chart on Status)

Since the sample taken was of young people who are graduates or more, the probability

of considering a brand which is trendy and have a status symbol was very high. And here

the mean is 7.8, which is very high among the sample and hence status plays an important

role while people acquire a specific brand. Highest score was 10 and lowest was 2.

(Fig 5.9: Frequency Chart On Indian Vs Global Brands)

- 42 -

It’s a bell shaped curve with a mean of 5.7, and it shows that the sample surveyed keeps

in mind the country of origin and evaluate it with there home made products, as some

people are pro home made products and some are open to foreign products. But since the

sample is young and are in an age of brand proliferation, the people are open to any brand

which gives them the brand equity both in terms of products and country of origin.

5.4: Few Products Under Study:

The threeproducts taken for study were Cars, washing machine and consumer electronics.

All the three are high involvement products from Indian families context and hence have

same evaluation process. The products one uses has an impact in the mind of the user and

hence the same brand or country-product is considered again, the next time the family

goes out for buying.

Car:

Preferred Car Brand

18%

28%

3%

36%

14%

2%

0%

5%

10%

15%

20%

25%

30%

35%

40%

1

Car Brands

Pe

rce

nta

ge

s

Tata

Hyundai

Chevrolet

MarutiSuzukiHonda

Other

(Fig 5.10: Preferred car Brand, All figures in percentages)

- 43 -

Washing Machine:

Washing Machines Preference

18%

38%

29%

11%

4%

Whirlpool LG

Samsung Videocon

IFB

(Fig 5.11: Preferred Washing Machine Brand, All figures in percentages)

Consumer Electronics:

Preferred Consumer Elctronics Brand

34%

5%

12%

45%

3%2%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

1

Brand Name

Per

cen

tag

es

Onida

Samsung

Haier

Videocon

LG

Others

(Fig 5.12: Preferred consumer Electronics Brand, All figures in percentages)

- 44 -

Interpretation:

In Cars, the preferred brands contributes more than 50% to cars made in India or

having Indian Companies manufacturing them, similarly in washing machine, the

Korean Brands LG and Samsung got more than 50% responses, explaining the

leadership of made In Korea Products In Indian consumers minds.

Even in consumer electronics brands, the Korean brands got maximum responses

followed by Indian brand Videocon. This shows the Made In Korea products have

high acceptability in Indian market, and hence the leadership.

0510152025303540

Brands

Car Brand Preferred By Genders

Males

Females

(Fig 5.13: Preferred car brand by different genders)

- 45 -

0510152025303540

2 41 6 14 54 3

OnidaSamsung Haier Videocon LG Others

Brands

Consumer Electronics Brand By Genders

Male

Female

(Fig 5.14: Preferred consumer Electronics Brand by genders)

Interpretation:

The figures above shows that males preferred the Indian brands more than

females when it comes to purchasing a car, whereas in consumer electronics, apart

from the Korean brands which are the favorites always, Videocon which is an

Indian brand was the second most preferred brand for females, perhaps because

the family uses it at present and hence the preference factor.

- 46 -

5.5: Brand Name As a Cue Of COO:

This explains that the name or Brand expresses the country of Origin and hence acts as a

cue for consumer while they evaluate the products based on other features. If Sony is

Japanese, and Videocon is Indian, the basic difference occurs in the way consumers see

the core competency of a country is.

Brand Name as a cue of COO and Purchase Intention

64%17%

19%

Yes

No

Cant Say

(Fig 5.15: Brand name as a cue of COO, All figures in percentage)

Interpretation:

Two-third people saw the COO of a brand while they intend to purchase a product

category, while rest were not sure or confused whether it actually is required or

not.

The young generation is aware of the brands under consideration and have fairly

exposed themselves to the countries which manufactures the products under the

specified brand name.

- 47 -

0

5

10

15

20

25

30

35

40

45

50

27 56 33 3

Germany Japan India OthersCountry Of Car Manufacturer

Brand Name And COO Cues with Auto Purchase

YesNoCant Say

(Fig 5.16: Brand name as a cue of COO for Car Purchase)

While close to 50% of the respondents are certainly in favor of Japanese cars if

they have to see the brand name with COO as cue for various features in the

products, almost equal no. of respondents saw the same of German and Indian car

manufacturers.

- 48 -

0

5

10

15

20

25

30

35

China Korea Japan OthersCountry Name

Brand Name Giving COO Cues and Consumer Electronics Purchase

Yes

No

Cant Say

(Fig 5.17: Brand name as a cue of COO for consumer electronics)

In consumer electronics, though Japan and Korea are the countries which actually

define the market in India, the other country brands like China, Taiwan etc. are

trying hard to get a major chunk of market share in India. So the COO cue plays

an important role while people decide on buying products under consumer

electronics basket.

- 49 -

5.6: Difference as perceived (Indian V/s Global Brands):

Indian V/s Global Brands

0%

10%

20%

30%

40%

50%

60%Price

Quality

Availability

Status

Services

Aspirational value

Trendy

Variety/AssortmentPrice

Quality

Availability

Status

Services

Aspirational value

Trendy

Variety/Assortment

(Fig 5.18: Differences while evaluating an Indian brand v/s a Global brand)

Interpretation:

While the brands apart from Indian ones are compares majorly on the price which a consumer

pays to acquire them, the other major factor is the status which a consumer obtains when he/she acquires

the product. Currently the Indian consumer is very status oriented, especially the young population of

India. Even the marketers are focusing in giving a status symbol with every purchase they make, and

hence the need for status as a social symbol for prosperity and success.

- 50 -

0510152025303540

Features

Age and Comparing Domestic and Global Brands

18-25

25-30

30-35

>35

(Fig 5.19: Age and Comparison of domestic and Global brands)

Similarly from the graph above, we see that for respondents in the age category 18-25 years, the

factors which play a major role are status, trendy and price, whereas as the age bracket increases the

major factors are of price, services etc. Hence the demographics play a major role when it comes to

compare a domestic brand vis-à-vis a global brand as the perception and expectations are different at

different ages.

Hence from the above two graphs, we see that various features keeps changing with age, and

hence the differences which a marketer can create in the mind of these young people is of COO, which

will remain with them till these people start there own families in future and will help the companies gain

a special space in the mind of these people. The status symbol which is the most important factor in their

minds can be created with COO labeling and hence with these people deciding the products they will use

in future, the need of the hour for the marketer is to create the features with keeping in mind the country

of origin factor.

- 51 -

5.7: Marketing Factors Influencing Buying Of Products:

There are various factors that companies adopt while marketing their products in a specific

market. In India, the marketing factors generally used give a specific outlook to any product or company.

But the factors which influence the consumers can vary and should be kept in mind by organizations

specifically those ones which are planning to enter the Indian market.

Marketing Factors

56%

42%36%

38%

7%

PriceAdvertisementsProduct FeaturesCompany's ReputationOthers

(Fig 5.20: Marketing Factors influencing the purchase behavior of consumers)

Apart from the price, which has always been a factor in evaluating a product, the other

factors are advertisements, features and most importantly, company’s reputation. The

reputation can be because of previous experience which the consumer must have seen for

past so many years, or due to the country which the company belongs to. The cues are

very simple, but it creates a reputation in the mind of the people, as Japanese electronics,

Korean white goods etc. So, they play a major role.

Also, if we see the behavior of people based on the income group they belong to and the

marketing factors, we see that, with people who have lesser income, they tend to look

- 52 -

more at the price of a product, whereas people with comparatively higher income, they

look more towards the features and company’s reputation.

05101520253035

Factors

Marketing Factors and Income Groups

<1 lacs

1 lac - 3 lacs

3 lacs- 6 lacs

>6 Lacs

(Fig 5.21: Marketing Factors an Income group influencing the purchase behavior)

As shown in the graph above, we see that with people in income group higher than 6 Lacs

PA, the company’s reputation plays the most important role and is equivalent to the effect

of price on them. So, income factor influences the buying behavior based on company’s

reputation, and hence marketers should take care of this factor.

5.8 Major Findings Of The Study:

In the stipulated time, the market has seen a lot of foreign products entering the Indian market. Whether

its in luxury segments, or general consumer durables. BMW is sold more than Mercedes in India, and IFB

- 53 -

with its front door differentiation has gained more acceptability at Indian homes, which is forcing

companies like Samsung and LG to come with the similar range for Indian consumers. The major

findings of the research are as below:

• Consumers look for country-of-origin of a product as shown in the survey, as more than 70% of

the respondents were in favor of looking at it before buying.

• COO as a factor for evaluation before buying products has increased and is visible in people who

are in upper age brackets.

• While evaluating a brand, the brand country association plays the most important role as almost

half of the respondents accepted to look at this feature of the product

• While quality and services are the important factors which the Indian consumer keeps in mind

before buying products, the youth in India is more concerned towards the status in the society,

which defines the product brand and category one would like to buy.

• While Indian brands are hot favorites in Car purchase for Indian consumers, Korean brands are

considered as the best ones for consumer electronics and washing machines, giving a clear

indication of COO (Brand Korea) to be a leader in the mind of the consumers.

• When comparing Indian origin products with global products, the major factors which

differentiate are Status, Price and Trendy, and hence the marketers must look after these feature

while entering in the Indian market apart from COO which they might wish to encash on.

• Apart from price, the other factors of marketing are advertisements, features and most

importantly, company’s reputation which can be derived from COO which would define the

products in Indian market.

5.9 Factor Analysis: (Factor Reduction Technique):

Consumers were examined for their level of ethnocentrism through an inventory of 17 attitudinal

statements comprising an ethnocentrism scale with “1” (least positive) and “5” (most positive). The

average rating across all 17 items was 3.34 indicating that Indian consumers were ethnocentric with

regard to purchase preferences of “foreign” or “Indian” brands. The highest rating (4.6), was for item No.

4, “Indian products are not highly advertised”, while the lowest (1.75), was on item No. 13, namely “No

imports should be allowed”.

- 54 -

A factor analysis performed on the 17 statements indicated five factors. An examination of individual

item variables contributing to these factors suggested the various factor loadings, as defined in the table

below.

Variables Description

VAR00001 It is prestigious to buy foreign makes

VAR00002 Indian products are inferior to foreign brands

VAR00003 Access to foreign products is limited

VAR00004 Indian products are not widely advertised

VAR00005 Indians should buy only Indian brands

VAR00006 Only those products not available in India should be imported

VAR00007 Advertising foreign brands is non-Indian

VAR00008 A true Indian should buy only Indian brands

VAR00009 We should buy products manufactured in India

VAR00010 It is best to purchase Indian products

VAR00011 There should be very little trading of goods

VAR00012 Indians should not buy foreign products because it hurts Indian business

VAR00013 No Imports should be allowed

VAR00014 It may not be good for me, but I prefer to support Indian products

VAR00015 Foreigners should not be allowed to sell their products in India

VAR00016 Foreign products into India should not be taxed heavily

VAR00017 Indian consumers who buy foreign brands are putting Indians out of work and

employment

Table 5.1: Variables defined

Factor matrix and their corresponding factor loading after the varimax rotation are presented in Table-5.2

for further interpretation.

  F5 F4 F3 F2 F1

VAR00001 0.891 Prestige

VAR00002   0.921 Availability

VAR00006 0.921

VAR00003  

VAR00004 Advertising Impact 0.671  

VAR00007 0.749

VAR00005 Made In India 0.718  

- 55 -

VAR00008 0.985

VAR00009 0.891

VAR00010 0.833

VAR00011 Nationalism 0.891

VAR00012 0.985

VAR00013 0.787

VAR00014 0.762

VAR00015 0.787

VAR00016 0.985

VAR00017 0.948

Table-5.2 Loading of Selected Variables on Key Factors & Their Grouping

(Loading Criteria>0. 7)

The COO credibility of foreign brands was also a significant factor influencing consumer attitudes and

preferences. The relatively high overall rating of 3.35 on the CETSCALE, reinforced the credibility given

to Indian brands, with the high levels of “nationalism” as revealed in the factor analysis of Indian

consumers. It could be inferred that the combined effect of the “Made in India” and “Nationalism” factors

as well as “availability” are working to the benefit of Indian branded goods even as foreign direct

investment levels by companies have been increasing and have risen over the past decade.

Factor Analysis is the commonly used method for grouping the variables under few unrelated factors.

However it was thought it would be proper to run the data under varimax rotation to reduce, if there was

any chance of co-linearity among these factors. Variables with a factor loading of higher than .75 (>0.75)

are grouped under a factor.

A factor loading is the correlation between the original variable with the specified factor and the key to

understanding the nature of that particular factor. When developing new products marketers would like to

be able to judge the consumer’s response to their offer before it is introduced. One way to deal with the

situation is to perform concept tests. Here the customer is presented with a description or a situation and

is asked about the likelihood of purchase.

5.10: Results and Discussion

Indian consumers, though is knowledgeable and has all kind of facilities to evaluate things and decide on

the brand of any specific COO to buy, but the results revealed that, the Indian consumer is high on

ethnocentrism. The marketers of foreign companies must take into consideration this fact and design a

strategy which would help them for a sustainable growth in Indian market, in which they can include the

factors of nationalism, availability etc. for the benefit of Indian consumers. There are various attributes

- 56 -

that should be taken into account while a company hink of entering the Indian market, with the products.

These attributes can be grouped under five factors.

Factor- 1 is termed as Core Product. These are the core part of a product, which are common

expectation of any consumer in India while making a purchase decision and should be considered by the

companies while marketing there products. The factors are a combination of things which favors Indian

companies and employees and also making Indians not buy the products not manufactured in India.

F1 F2 F3 F4 F5

Nationalism Made In India

Advertising

Impact Availablity Prestige

         

VAR00011 VAR00005 VAR00004 VAR00002 VAR00001

VAR00012 VAR00008 VAR00007 VAR00006

 

VAR00013 VAR00009

   

VAR00014 VAR00010

VAR00015

 

VAR00016

VAR00017

Table: - 5.3 Factor Analysis table With All factors

Factor- 2 shows the Made-In-India factor, which gives an importance to buy product manufactured in

India and also making it the best thing to buy Indian products.

Factor- 3 clearly indicates the combinations of two attributes which are Indian products are less

advertised and advertising foreign brands is Non-Indian, Hence the name Advertising Impact.

Factor-4 includes attributes such as availability of all products and talking of right quality of products

available in India, and hence called as Availability Factor. Though the products are not inferior, but the

availability is a major issue in India, and hence coming up with new companies, which can take care of

these factors, is very important.

Factor-5 is the prestige issue, which is seen in the young population of India, and also in this study

which considered young people for the survey, as in general they consider the products which are from

other countries than India; there comes a prestige issue which makes them more considerate towards

buying the same brands in future too.

The five factors discussed above are the proposed factors which should be taken into consideration by any

organization both existing and the new ones wanting to enter Indian market

As the volume of world trade continues to increase and the international market place becomes more

competitive, it is important that marketing managers take into account the fact that consumer attitudes

- 57 -

toward a specific product or brand can be substantially changed, either favorably or unfavorably, through

the COO image of the brand, which has an effect on influencing the brand preference of the consumer.

This is all the more important when consumer ethnocentrism per se, figured as a priority, as is the case for

Indian consumers who appeared to be amenable towards buying domestic brands, with high degrees of

“nationalism”, as evidenced through the CETSCALE. Apparently, the consumption of imported products

and brands was not considered as unpatriotic or non-nationalistic. Consumer ethnocentrism can therefore,

at best be said to have strong explanatory power even when nationalism is a positive contributory factor.

CHAPTER: 6

RECOMMENDATIONS

- 58 -

6.1 Inferences &Recommendations:

Indians have seen a past where there were very few Indian brands available and they had to

decide on buying one of those brands. But with an open economy, the things have changed

and the increase in international business and formation of trade agreements has given Indian

consumers a variety of brands to choose from. The research tried to understand the consumer

attitude and preference, while keeping in mind the ethnocentricity prevailing in India, and

recommend some strategies which should be kept in mind while existing or new foreign

brands try to gain the space in the mind of the consumers.

1. Existing brands, both domestic and foreign ones have created a positive image in the

mind of the consumers. The purchase decisions still depend largely on the brand

which the person had used in past. The country-of-origin plays an important factor at

the moment, as young people are more technology savvy and have seen many brands

in this century. So, marketers trying to get a major share of the market, or even new

brands entering the Indian market must tap these young people, as they soon will go

in an age bracket, where they will start earning and start their own families.

2. The companies, entering the Indian market must follow an ideal route of entry

through an Indian partner, as Indians have already seen the Indian counterpart, and

with the Joint venture or franchisee route, the foreign partner will get an edge where

they can promote the products and get an easy route to get the end user.

3. The COO cues, which affect the buying behavior of consumers, like in the case of

consumer durable products, the marketer must see the other companies operating in

India with the same country, as the cues can be negative at times, and might effect the

business if they wish to enter the Indian market.

4. At the same time companies with positive COO image in India, can encash the

opportunity and reach the consumers with an ease and at a faster pace. Hence, using

COO image in the right way is very important in India, like any Japanese carmaker

can enter India easily, as from our research, the sample was very positive towards the

image of Japan as a car manufacturer.

5. Entry in Indian market should in no way affect the Indians as a whole, like in terms of

employment opportunity or kill the government controlled organizations as it might

give a negative image in the economy and the threat might lead to some unavoidable

circumstances and lead to closure of business.

6. Consumers in India have seen a lot of brands in past, and as per our research, the

knowledge level is very high especially in young people, as they are using a brand

from a specific country, and that image has formed an attitude of the consumer

- 60 -

towards the COO of that product category. Hence, to obtain substantial space in the

market, they must focus more on COO cues as it is an important thing consumers

look after before purchasing products.

- 61 -

CHAPTER: 7

CONCLUSION

- 62 -

7.1 CONCLUDING OBSERVATIONS:

The model of this research is supported. Country of origin is an extrinsic cue that can affect consumers’ attitude towards a product. COO has been an important feature for Indian consumers and the product features are identified through them. Furthermore, attitude has significant effect on purchase intention. Because of the positive relationship between attitude and purchase intention, country of origin also affects the purchase intention of consumers.

Findings of this research provide marketing implications to foreign companies which have entered Indian consumer goods market on their various strategies, as well as the ways to construct a better country image. An ethnocentric population makes it difficult for a new player to enter Indian market as already a lot of international brands in consumer durable goods and are unperturbed by the new brands which have entered in recent past. The marketers must view the demographic changes which have occurred in past decade and formulate a strategy to handle the ethnocentric Indian population.

Status obtained with a particular brand possession is an important cue for Indian consumers and hence COO has a positive impact as the brand association forms certain perception in their minds and hence the perceived advantage with it.

In this study, it was found that brand origin is an identifiable feature for Indian customers. In other words, consumers associate brands with countries where the brands are originally developed rather than with the countries in which the products are currently produced. We also found that brand evaluations are related to consumer’s income, and as such higher income groups show preference towards foreign brands compared to domestic available brands.

The findings also suggest that objective product-country knowledge can, under certain circumstances, increase consumers’ reliance on country of origin in judging a product, particularly if the brand name of that product is unfamiliar, like general perception of Japanese electronics and Korean white goods, etc.

The study is of strategic relevance to foreign companies entering the Indian market and is to use their own foreign country brand names for high involvement products whether through joint ventures or licensing. The results suggest that while market opportunities for foreign brands in the Indian market exists, Indian manufacturers too, need to reconsider their own product quality improvements and offer quality products at competitive prices to halt the foreign brands entry in the market. Since countries too, have their images perhaps not far removed from the marketer’s concept of brand image, the challenges Indian companies confront in developing Indian brands are two fold, first, to develop strong brand images and second, to enhance the “country-of-origin” image. Indian manufacturers of consumer durable products would need to cope with the competitive climate and overcome it by considering strategies of cooperation with foreign manufacturers. Such strategies, which are already prevalent in the Indian market, include licensing arrangements or, alternately foreign collaborations in the form of joint ventures so as to be able to sell under foreign brand names associated with higher “status” and “esteem”. This would help in enhancing prestige associations in the minds of Indian consumers. It also signals to Indian manufacturers that in terms of product positioning,

i

their direct competition is not inexpensive products, but rather premium quality brands. Another method of raising the brand equity of Indian products is for companies to use state of art technologies to manufacture high quality products, so that these are in no way inferior to foreign established brands, but are competitively priced, along with providing better value for money.

Foreign companies in the meantime can capitalize on the mileage that is gained in the foreign markets, through positive positioning on the “technology” and “quality” attributes. While the present research examined domestic and foreign product categories on an aggregate basis, in the case of consumer durables.

7.2 LIMITATIONS OF THE STUDY

1. Sample size is limited to 120 educated investors in the city of Delhi only. The sample size may not adequately represent the national market.

2. This study has not been conducted over an extended period of time having different economic factors. The market state has a significant influence on the buying patterns and preferences of consumers.

3. Respondent’s bias can never be taken care of and are important aspect while analyzing anything.

4. The area of research was limited to Delhi only due to time and financial constraints.

7.3 FURTHER SCOPE OF STUDY

1. Similar study can be done on low involvement products and also in the B2B market, where perception changes with the country’s image very fast.

2. Developments in technology influence the behavior of buyers. Hence, the impact of technology on promoting the COO effect on various products.

3. A study is required to examine the effect of new companies entering Indian market and selling the products taking help of their country’s reputation.

4. In this study, the sample was consisted of consumers surveyed were college going students; this may create bias to the result. In future research, a larger sample size with more equalized number of subjects from different age groups should be employed.

ii

REFERENCES

iii

References:

1. Wang, C. and Lamb, C. (1983), “The impact of selected environmental forces upon consumers’ willingness to buy foreign products,” Journal of the Academy of Marketing Science, Vol. 11 No. 2, pp. 71-84.

2. Insch, G.S. (2003), “The impact of country-of-origin effects on industrial buyers' perceptions of product quality ”, Journal of Management International Review, pp. 7-16

3. Samiee, S. (1994), “Customer evaluation of products in a global market,” Journal of International Business Studies, Vol. 25 No. 3, pp. 579-604.

4. Bilkey, W.J. and Nes, E. (1982), “Country of origin effects on product evaluation”, Journal of International Business Studies, Vol. 8 No. 1, pp. 89-99.

5. Cheron, Emmanuel and Propeck, Jan (1997), “Brand origin in an emerging market: perceptions of Indian consumers,” Journal of International Business Studies, Vol. 26 , pp. 17-35.

6. Jin, Zongqui, Chansarkar, Bal (2006), “Customer evaluation of products in a global market,” Asia Pacific Journal of Marketing and Logistics Vol. 18 No. 4, 2006 pp. 283-302.

7. D’Astous, A. and Ahmed, S. (1997), “The importance of country images in the formation of consumer product perceptions”, International Marketing Review, Vol. 16 No. 2, 1999, pp. 108-125..

8. Khan, H. and Bamner D (2007), “Market entry using country-of-origin intelligence in an emerging market”, Journal of Small Business and Enterprise Development Vol. 14 No. 1, 2007 pp. 22-35.

9. .Koubaa, Y. (2007), “Country of origin, brand image perception, and brand image structure”, Asia Pacific Journal of Marketing and Logistics Vol. 20 No. 2, 2008 pp. 139-155

ii

BIBLIOGRAPHY

iii

1) Books:

1) Badri M., 1995, “Decision support for global marketing strategies” Product & brand Management Vol 4 No. 5 pp. 49-64

2) Kotler P, Marketing Management: analysis, planning, implementation and control.10th edition. Englewood Cliffs, New Jersey: Prentice Hall,Inc,2000

2) Journals & Articles:

1) CMIE (2007), Economic Intelligence Service, Centre for Monitoring Indian Economy, Bombay.

2) Images Retail (2004), “Off the beaten track: retail goldmines abound in smaller towns”, February. pp 23-27.

3) Paswan A. and Sharma D. “Brand-country of origin (COO) knowledge and COO image: investigation in an emerging franchise”, Journal of Product & Brand Management Volume 13 · Number 3 · 2004 · pp. 144-155

4) Yasin N. and Noor M. “Does image of country-of-origin matter to brand equity”, Journal of Product & Brand Management Vol.16/1 (2007) pp. 38–48

5) Chen H. and Pereira A. “Product entry in international markets: the effect of countryof- origin on first-mover advantage”, Journal of Product & Brand Management, VOL. 8 NO. 3, 1999, pp. 218-231

6) Jin Z. and Chansarkar B.” Brand origin in an emerging market: perceptions of Indian consumers”, Asia Pacific Journal of Marketing and Logistics Vol. 18 No. 4, 2006 pp. 283-302

3) Websites:

1) http://en.wikipedia.org/wiki/Country_of_origin(Visited On date: 23 Jan 2009)

2) “Tripathy S.,” The impact of COO and consumer ethnocentrism on Chinese consumer”, Online (http://www.protagonize.com/story/the-impact-of-country-of-origin-and-consumer-ethnocentrism-on-chinese-consumer, Visited On Date: 12 Jan 2009)

3) http://www.vikalpa.com/pdf/articles/1987/1987_july_sep_59_64.pdf (Visited on Date: 10 Dec 2008)

4) www.emeraldinsight.com- Publishers Website (Visited every week for research journals)

4

5) http://zawya.com/printstory.cfm?storyid=ZAWYA20080703051014&l=051000080703 (Visited On date: 21 Feb 2009)

6) http://www.autospies.com/news/Latest-JD-Power-Study-Shows-Country-Of-Origin-A-Major- Factor-For-Buyers-21002 (Visited On date: 21 Feb 2009)

5

ANNEXURE I : QUESTIONNAIRE

DEAR SIR / MADAM,

GLOBALIZATION HAS OPENED NEW VISTAS TO MILLIONS OF INTERNATIONAL PLAYERS TO ENTER THE INDIAN MARKET AND REAP THE BENEFITS OF PURCHASING CAPACITY OF INDIANS. BUT DO THEY WORK ON UNDERSTANDING THE CONSUMERS PERCEPTION OR IT’S THE BRAND VISIBILITY AND THE COUNTRY OF ORIGIN WHICH MAKES THE CONSUMER SELECT A BRAND BEFORE THEY THINK OF BUYING ANY PRODUCT CATEGORY?

I AM CURRENTLY ENGAGED IN A STUDY ON THE EFFECT OF COUNTRY-OF-ORIGIN

ON FOREIGN BRAND NAMES IN THE INDIAN MARKET .IN THIS CONNECTION I REQUEST YOU TO READ THE FOLLOWING ITEMS CAREFULLY AND ANSWER THEM. THE ANSWERS YOU GIVE WILL BE HELD CONFIDENTIAL AND USED PURELY FOR ACADEMIC PURPOSE. PLEASE PUT A TICK MARK IN THE SQUARE CORRESPONDING YOUR CHOICE. I THANK YOU FOR YOUR TIME.

PART A: Personal Data

1.1) NAME (OPTIONAL):

1.2) GENDER: MALE F EMALE

1.3) AGE IN COMPLETED YEARS:

18-25 25-30 30-35 A BOVE 35

1.4) ACADEMIC QUALIFICATIONS:

SCHOOL FINAL G RADUATE P OST – GRADUATE P ROFESSIONAL DEGREE

6

1.5) MARITAL STATUS:

MARRIED U NMARRIED W IDOW W IDOWER D IVORCED

1.6) FAMILY OCCUPATION:

RETIRED G OVERNMENT EMPLOYEE S ALARIED B USINESS

1.7) ANNUAL INCOME IN RS:

BELOW RS 1, 00, 000 R S1, 00,001 – 3, 00,000

RS 3, 00,001–6, 00,000 A BOVE RS 6, 00,000

PART B: Please read the following and give your views:

2.1) WHAT ARE THE QUALITIES OF GOOD BRAND, AS PERCEIVED BY YOU? KINDLY MENTION SOME OF THEM IN THE TABLE BELOW.

BRAND VISIBILITY BRAND EQUITY BRAND PROMISE BRAND ASSOCIATION

7

2.2) “HOW OFTEN DO YOU LOOK AT THE PRODUCT LABEL TO SEE THE MANUFACTURER’S COUNTRY-OF-ORIGIN BEFORE YOU PURCHASE CONSUMER GOODS?”

ALWAYS LOOK

OFTEN

OCCASIONALLY

NEVER

2.3) “WHEN PURCHASING A CONSUMER DURABLE WOULD YOU SPECIFICALLY LOOK FOR INDIAN MADE PRODUCT?”

ALWAYS LOOK

OFTEN

OCCASIONALLY

NEVER

2.4) RATE THE FOLLOWING NEEDS ON A SCALE OF 1-10, WHERE 1 LEAST, 10 MOST WANTED

1. QUALITY 2. PRICE 3. SERVICE 4. STATUS 5. INDIAN OR GLOBAL

8

2.5) WHICH OF THE FOLLOWING BRANDS’ WASHING MACHINES WOULD YOU PREFER AND RANK THEM IN A ORDER – WHIRLPOOL, LG, SAMSUNG, VIDEOCON, IFB.

RANK1 RANK2 RANK3 RANK4 RANK5

2.6) WHICH CAR BRAND WOULD YOU PREFER?

TATA HYUNDAI

CHEVROLET MARUTI SUZUKI

HONDA O THERS… (PLS. SPECIFY)

2.7) WHICH CONSUMER ELECTRONICS BRAND WOULD YOU PREFER?

ONIDA V IDEOCON

SAMSUNG LG

HAIER O THERS… (PLS. SPECIFY)

2.8) DO YOU USE THE BRAND NAMES (WASHING MACHINE, CAR AND CONSUMER ELECTRONICS) SELECTED ABOVE?

YES

NO

2.9) DOES NAME/BRAND MAKES A DIFFERENCE IN THE CHOICE OF PRODUCTS, AS THEY SIGNIFY THE COUNTRY OF ORIGIN OF THE PRODUCT?

YES

NO

CANNOT SAY

9

2.10) HOW DO YOU COMPARE AN INDIAN BRAND VIS-À-VIS GLOBAL BRANDS?

PRICE A SPIRATIONAL VALUE

QUALITY T RENDY

AVAILABILITY V ARIETY/ ASSORTMENT

STATUS

SERVICE

2.11) DOES COUNTRY OF MANUFACTURER AFFECT YOUR BUYING BEHAVIOR?

YES

NO

CANNOT SAY

2.12) WHICH COUNTRY BRAND OR COUNTRY OF ORIGIN IS IN YOUR OPINION A PREFERRED ONE IF YOU HAVE TO BUY FOLLOWING THINGS?

AUTOMOBILE ELECTRONICS WHITE GOODS

2.13) DO YOU COMPARE INDIAN BRANDS AVAILABLE IN ABOVE MENTIONED PRODUCT CATEGORY WHILE DECIDING ON YOUR PURCHASES? (LIKE: MARUTI, VIDEOCON, TATA ETC.)

YES

NO

2.14) WHICH OF THE MARKETING FACTOR INFLUENCED YOUR CHOICE MOST?

PRICE

ADVERTISEMENT

10

PRODUCT FEATURES

COMPANY’S REPUTATION

OTHER (S) PLEASE SPECIFY.....

2.15) RATE THE ETHNOCENTRISM VARIABLES ON A SCALE OF 1-5, WHERE 1 LEAST, 5 MOST POSITIVE

ITEM VARIABLE 1 2 3 4 5

IT IS PRESTIGIOUS TO BUY FOREIGN MAKES

INDIAN PRODUCTS ARE INFERIOR TO FOREIGN BRANDS

ACCESS TO FOREIGN PRODUCTS IS LIMITED

INDIAN PRODUCTS ARE NOT WIDELY ADVERTISED

INDIANS SHOULD BUY ONLY INDIAN BRANDS

ONLY THOSE PRODUCTS NOT AVAILABLE IN INDIA SHOULD BE IMPORTED

ADVERTISING FOREIGN BRANDS IS NON-INDIAN

A TRUE INDIAN SHOULD BUY ONLY INDIAN BRANDS

WE SHOULD BUY PRODUCTS MANUFACTURED IN INDIA

IT IS BEST TO PURCHASE INDIAN PRODUCTS

THERE SHOULD BE VERY LITTLE TRADING OF GOODS

INDIANS SHOULD NOT BUY FOREIGN PRODUCTS BECAUSE IT HURTS INDIAN BUSINESS

NO IMPORTS SHOULD BE ALLOWED

IT MAY NOT BE GOOD FOR ME, BUT I PREFER TO SUPPORT INDIAN PRODUCTS

FOREIGNERS SHOULD NOT BE ALLOWED TO SELL THEIR PRODUCTS IN INDIA

FOREIGN PRODUCTS INTO INDIA SHOULD NOT BE TAXED HEAVILY

11

INDIAN CONSUMERS WHO BUY FOREIGN BRANDS ARE PUTTING INDIANS OUT OF WORK AND EMPLOYMENT

THANK YOU VERY MUCH FOR YOUR KIND CO-OPERATION AND FOR TAKING TIME TO COMPLETE THIS QUESTIONNAIRE.

12

ANNEXURE II:

DEMOGRAPHIC STATISTICS

Gender

72%

28%

Male

Female

Age Groups

52%33%

11% 4%18-25

25-30

30-35

>35

13

Academic Qualifications

3%

31%

56%

10%School Final

Graduate

Post Graduate

Professional Degree

Annual Income

67%

18%

11% 4%<1 lacs

1 lac - 3 lacs

3 lacs- 6 lacs

>6 Lacs

14

ANNEXURE III.

MISCELLANEOUS TABLES USED FOR ANALYSIS

STATISTICS

QUALITY PRICE SERVICE STATUSINDVSGL

O

N VALID 120 120 120 120 120

MISSING 0 0 0 0 0

MEAN 5.2333 6.9250 4.8667 7.7750 5.6500

STD. ERROR OF MEAN .16344 .12534 .14778 .15942 .15994

MEDIAN 5.0000 7.0000 5.0000 8.0000 5.0000

MODE 4.00 7.00 4.00 8.00 5.00

STD. DEVIATION 1.79042 1.37298 1.61887 1.74636 1.75207

SKEWNESS .267 -.120 -.300 -1.699 .408

STD. ERROR OF SKEWNESS .221 .221 .221 .221 .221

SUM 628.00 831.00 584.00 933.00 678.00

PERCENTILES 25 4.0000 6.0000 4.0000 7.0000 4.0000

50 5.0000 7.0000 5.0000 8.0000 5.0000

75 6.7500 8.0000 6.0000 9.0000 7.0000

QUALITY

FREQUENC

Y PERCENT

VALID PERCENT

CUMULATIVE PERCENT

VALID 2.00 6 5.0 5.0 5.0

15

3.00 14 11.7 11.7 16.7

4.00 26 21.7 21.7 38.3

5.00 24 20.0 20.0 58.3

6.00 20 16.7 16.7 75.0

7.00 16 13.3 13.3 88.3

8.00 8 6.7 6.7 95.0

9.00 6 5.0 5.0 100.0

TOTAL 120 100.0 100.0

PRICE

FREQUENC

Y PERCENT

VALID PERCENT

CUMULATIVE PERCENT

VALID 4.00 3 2.5 2.5 2.5

5.00 19 15.8 15.8 18.3

6.00 24 20.0 20.0 38.3

7.00 30 25.0 25.0 63.3

8.00 26 21.7 21.7 85.0

9.00 18 15.0 15.0 100.0

TOTAL 120 100.0 100.0

SERVICE

FREQUENCY PERCENT

VALID PERCENT

CUMULATIVE PERCENT

VALID 1.00 5 4.2 4.2 4.2

2.00 2 1.7 1.7 5.8

16

3.00 16 13.3 13.3 19.2

4.00 27 22.5 22.5 41.7

5.00 26 21.7 21.7 63.3

6.00 22 18.3 18.3 81.7

7.00 19 15.8 15.8 97.5

8.00 3 2.5 2.5 100.0

TOTAL 120 100.0 100.0

STATUS

FREQUENCY PERCENT

VALID PERCENT

CUMULATIVE PERCENT

VALID 2.00 5 4.2 4.2 4.2

3.00 1 .8 .8 5.0

4.00 1 .8 .8 5.8

5.00 3 2.5 2.5 8.3

6.00 6 5.0 5.0 13.3

7.00 22 18.3 18.3 31.7

8.00 37 30.8 30.8 62.5

9.00 35 29.2 29.2 91.7

10.00 10 8.3 8.3 100.0

TOTAL 120 100.0 100.0

INDVSGLO

17

FREQUENCY PERCENT

VALID PERCENT

CUMULATIVE PERCENT

VALID 2.00 2 1.7 1.7 1.7

3.00 8 6.7 6.7 8.3

4.00 22 18.3 18.3 26.7

5.00 31 25.8 25.8 52.5

6.00 25 20.8 20.8 73.3

7.00 12 10.0 10.0 83.3

8.00 7 5.8 5.8 89.2

9.00 13 10.8 10.8 100.0

TOTAL 120 100.0 100.0

18