Last updated on August 16th, 2012 at 11:50 am
New research published in the Journal of International Marketing shows that consumers are willing to pay a premium for products made in countries with favorable reputations.
“Our findings show that consumers not only prefer and assign a higher value to branded products from a country of origin with a favorable country image but also are willing to spend more money to obtain them,” say study authors Nicole Koschate-Fischer, Katharina Oldenkotte and Adamantios Diamantopoulos, in an article appearing this month in the American Marketing Association’s (AMA) Journal of International Marketing.
The authors ran four experiments in which participants (college students in Germany) revealed how much they were willing to pay for branded products coming from different countries.
One study, for example, compared Evian bottled water from France, a nation shown to have a more favorable reputation, and Evian bottled water from Turkey, a nation shown to have a less favorable reputation. On average, respondents showed they were willing to pay the equivalent of $1.28 for Evian coming from France vs. $1.04 from Turkey.
The study also looked at the U.S. shoe brand Nike. When participants were told the Nike’s they were considering were made in America they were willing to pay more for them than when they were told they were made in South Korea. Further experiments, however, showed that the price differential becomes less substantial the more familiar consumers are with the brand in question, regardless of where the brand originates.
The findings can help marketers in their pricing decisions. For example, if marketers are pricing a product that comes from a country with a favorable reputation, they may consider charging a premium for it. They may also want to highlight the product’s country of origin in advertisements. Conversely, if marketers are promoting a product from a less favorable country, they may benefit from highlighting product attributes rather than its origin. The authors also suggest companies consider the impact on price and consumers’ willingness to purchase if they are thinking of relocating manufacturing to a country with a less favorable image.
More of the study’s findings can be found in the article “Are Consumers Really Willing to Pay More for a Favorable Country Image?” in the March issue of AMA’s Journal of International Marketing.
AMA is the professional association for individuals and organizations that are leading the practice, teaching and development of marketing worldwide.