1. Introduction
1.3 Research Purposes
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1.3 Research Purposes
Before reviewing the literature on 'Country of Origin Effect' I will expose the chosen variables used to analyze the influence of Country of Origin on the purchase intention. The following research questions have been asked in order to understand the correlation between the used influencing variables and the purpose of this study.
The research questions follow the purpose of this research which is to understand the factors that will influence the purchase decisions of French wine in Taiwan. In brief, the purpose of the study is to measure to what extent the image of France in consumers' minds may influence their decision to purchase French wine.
Three research questions are proposed:
1. How does consumer's perception (country image) about France influence the purchase intention of French wine ?
2. Does age, gender and level of education of consumers may influence their purchase intention of French wine ?
3. How does the level of knowledge about wine play a role on the purchase intention of French wine among Taiwanese consumers?
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CHAPTER II LITERATURE REVIEW
The globalization of markets and the proliferation of international agreements madeincreasingly important to understand the factors that influence business success at an international level. Since the mid-60s, researchers seek to better understand the role of the ‘Country of origin effect’ in the process of internationalization.
The concept of country of origin image has been studied from different points of views. In sociology and management, there are numerous studies on the relationship between management and culture in an international environment (Adler and Doktor, 1986, Hofstede, 1980). While marketing research has focused on the impact of country of origin on product evaluation.
The relationship between the perception of a country image and the perception of the products has been much studied over the last thirty years (Reierson, 1966;
Gaedeke, 1973 Krishnakumar, 1974; Schooler, 1971 , Bilkey and Nes, 1982). In 1982, in their literature review Bilkey and Nes were able to say that there is a positive relationship between a country's image and the consumer’s evaluation of its products (Crawford and Lamb, 1981; Wang and Lamb, 1983). They also raised several methodological problems found in previously published studies, which researchers have addressed since. Studies in the 70s were considered too simplistic as they where using a single variable which we know now does not reflect the reality (Ahmed, d'Astous and Zouiten, 1993). Also, researchers have now use multi-variable approaches to better simulate reality.
These studies have also been criticized for their lack of scientific rigor (Papadopoulos and Heslop, 1993; Samiee, 1994), relying in particular on convenience samples composed of students (Wall and Heslop, 1986).
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2.1 Definition of the terms 'Country of Origin Image' and 'Country of Origin Effect'.
In early researches, images of country of origin were deduced from images of products originating from these countries. We could thus consider that the image of the country of origin was a latent construct (Nagashima, 1970, 1977). These definitions have been adopted by many researchers during the first twenty years of research on the subject. Here are some examples:
- The image of the country of origin refers to the reputation, the stereotypes that professionals and consumers attach to products of a specific country. This image is created by such variables as typical products, national characteristics, economic and political past, history and traditions (Nagashima, 1970).
- The image of the country of origin refers to general perceptions of consumers regarding the quality of products made in this country (Reierson, 1966; Bilkey and Nes, 1982; Han, 1989; Hong and Wyer, 1989).
- The image of the country of origin is caused by the body of knowledge and representations associated to products originating from that country (Narayana, 1981).
- The image of the country of origin is the set of perceptions that consumers have on products originating from a particular country. These perceptions are based on their initial assessment of the country’s production and its strengths and weaknesses in business (Roth and Romeo, 1992). From these definitions, it is clear that the image of the country of origin and the image of the products originating from that country are strongly linked, almost inseparable. However, it is possible to differentiate the two and measure the relationship between the country's image and the product’s
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The term ‘Country of Origin Effect’ can be seen as part of the intangible barriers that regulate the relations between different countries. It is also taking part in the purchasing behavior of consumers putt in contact with the products of these countries, etc.. (Wang and Lamb, 1983). The term "barrier" is used to stress the effect that the "country of origin" has on the consumers minds. Indeed, that effect is caused by positive or negative images of a country (Bilkey and Nes, 1982). These images will be based on the consumer’s own opinions regarding the quality of a product, but also on the brand image or services from that country, as well as based on its personal beliefs . (Han and Terpstra, 1988). Nebenzahl, et al. (1997) speak of visions leading to establish a generalized stereotype associated with that country.
The advantages of understanding the "country of origin effect" variable can be counted among both consumers and producers. For customers, taking this variable into account allows a gain of time and reduce their efforts spent on evaluation process (Han, 1989; Johansson et al., 1985; Johansson and Nebenzahl, 1986). For producers, understanding the controllable and uncontrollable factors of the country of origin effect can bring them light on the choices to be adopted for export (Papadopoulos and Heslop, 2002; Pisharodi and Parameswaran, 1994)
In accordance with other studies, such as those of Pisharodi and Parameswaran (1992), the country of origin effect is considered a multi-dimensional constructs that incorporates not only the evaluation of products originating from a given country but also the general attitudes towards this country. Thus, Häubl (1996: 77-78) distinguishes two dimensions of country of origin: the general perception of the
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country measured by the affective appraisal (emotions, feelings) and the cognitive appraisal (evidence-based) as well as the country’s appraisal related to a specific category of products originated from that country.
2.2 Chronological literature review on the ‘Country of Origin Effect’
The country of origin effect has been the subject of many research and international marketing studies for about three decades. According to Papadopoulos and Heslop (2002), the scientific contributions to the subject are nearly 766, including 361 journal articles published over the year period 1952-2001. More recently, Usunier (2005) brought the number of publications in academic journals to over 400, this figure can go up to 1000 contributions if we include conference papers and dissertations on the subject. Usunier (2006) offers a chronological presentation of the evolution of research on the effect of "country of origin" by distinguishing three main periods. I will take the same chronological division for my analysis.
2.2.1 Mid-1960’s to 1982 : Premises of research on the ‘country of origin effect’
During this period, research on the ‘country of origin effect’ are in their genesis.
Schooler (1965) was the first to demonstrate the importance of country of origin while studying its effects on fruit juices. The author proposed to a sample of Guatemalan students to evaluate fruit juices from which the indicated country of origin was different (El Salvador, Costa Rica, Mexico and Guatemala). He realized that the evaluation of respondents directly varied depending on the country of origin indicated on the box, while in fact they were identical juices. For example,
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compared to the one from Mexico and Guatemala. As a conclusion, Schooler (1965) reported the strong probability that the sample students had "overall negative attitude towards the people of El Salvador and Costa Rica". In other words, they were influenced by stereotypes towards these countries.A year later, Reierson (1966) conducted a survey on American students by questioning them on the quality of products from different countries. His conclusion was similar to that of Schooler : in their evaluations of foreign products, American consumers relied on country-image stereotypes.
It will take until 1968 to assist the first quasi-experiment meant to highlight the effect of "country of origin effect". It is the work of Schooler and Wildt (1968) through which the authors proposed to evaluate sample opinion on two identical glasses: one with the words "Made in USA" and the second "Made in Japan". The authors concluded that, as both products were identical, the differences in evaluation were related to prejudice against the country of manufacture of these products. The two authors expressed the "bias" induced by the country of origin.
During the same period, other studies emerged such like those of Nagashima (1970 and 1977). The work of this author is still referred today, most particularly because of his measurement scale listing twenty items and five dimensions of a product.
Nagashima’s scale was made to help measure the country of origin image of a product or brand.
The five dimensions used by Nagashima are: price and value, service and engineering, advertising and reputation, design and style and consumer profile.
Nagashima has conducted two studies where he questioned Japanese and American businessmen about products manufactured in the United States, England, Germany,
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France and Japan. Both studies provided longitudinal research on the effect of
"country of origin". The results especially showed that Japanese businessmen where drowned to French products because their image about the country was associated to the " beautiful, unique, expensive and luxurious."Nagashima, (1977).
All the studies listed above are focused on an unique variable that only takes under evaluation the ‘country of origin’ of products, which inevitably leads to overestimation of the effect of "country of origin ". During the next period, scholars agree that consumers do not only take into account the ‘country of origin’ during the decision process and that other variables come into play.
2.2.2 1980’s to early 1990’s : Beginning of research with multiple co-variables.
According to Usunier (2006), this second period marks the current research on the
"country of origin effect’. Bilkey and Nes (1982) conducted the first literature review on the subject since the work of Schooler and Wildt (1968). They noted the existence of a significant influence that a country of origin has on product evaluation in general (Gaedeke, 1973) and on different classes of products (Reierson, 1966; Nagashima, 1977).
Finally, the influence of moderating variable began to be considered, such as sociodemographic variables (age, education and income) which can modulate the evaluation of products originating from different countries (eg, work Schooler, 1971). However, Bilkey and Nes (1982) proved to be extremely critical on the scope of results cited in the original studies: indeed, the attribute "country of origin" was always considered as isolated, as if it was the only factor of influence on consumer ‘s evaluations of products. This was overestimating the influence of country-of-origin
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on consumer’s purchase decisions: in the absence of other information about the attributes of a given product, consumers felt "forced" to use the single attribute available, namely the "country-of-origin". This is particularly true when consumers are not familiar with the product (Erickson et al., 1984).
Bilkey and Nes (1982) insisted that other attributes must also enter into play: they may be intrinsic, ie integral part of a product (eg, color, taste, performance, etc. .), or extrinsic, ie the potential sources of information presented to the consumer before consumption (eg, price, brand image or the location of sale). With this new attributes taken into consideration, the relative importance of "country-of-origin" attribute should therefore be reduced. It is from this period that the research grew, becoming larger and more complex ("multi-attribute").
2.2.3 From the 1990’s to today’s research.
This last period was marked by many literature reviews and meta-analyzes on the effect of "country-of-origin". Among the most significant contributions, I have to mention those of Samiee (1994) as he proposes an integrative model that involves not only the image of the "country-of-origin" (country stereotypes) but also its history, which creates a less reductive vision of reality. I should also mention two meta-analyzes that are still reference work today on "country-of-origin effect"
research. Namely the work of Peterson and Jolibert (1995) and that of Verlegh and Steenkamp (1999) . Finally, we saw emerging during the last decade interest on research of regional products and the impact of the region of origin image, and not strictly the country-of-origin (Koert et al. 2003). I will further develop these points in the following section.
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2.3 The Impact of Country of Origin Image on consumer’s purchase intent : examples of used models.
The country of origin or rather its image is part of marketing variables that consumer uses during purchasing decisions. So when Samiee (1994) refers to the effect of "country of origin", he refers to "Country-of-Stereotyping Effect", ie a bias caused by consumers when evaluating product on the basis of the country of origin of the brand or the country of manufacture of the product. This bias is due to the previous experience they had with products from these countries : from travels, their level of knowledge about the country, political opinions, ethnocentric tendencies or simply fear of the unknown in front of product from unfamiliar origin.
But how does this bias acts ? What is the mechanism that explains the influence of the country of origin image during product’s evaluation ? Several models have been proposed by researchers, but the most important are those of Han (1989), Obermiller and Spangenberg (1989) and Samiee (1994). I will present them further in detail.
2.3.1 The influence of the sociodemographic variables.
Among the sociodemographic variables that may modulate the effect of country of origin, we can include gender, age, place of residence, income level and education level. Many studies on the effect of "country of origin" discussed the differences in the perceptions of foreign products by consumers gender. Liefeld, (2004) notes that while evaluating imported clothing, men and women do not use the same way the attributes of these products, including the country of origin. In some studies, it has been shown that women perceive foreign products more positively than do men (Schooler, 1971; Wall and Heslop, 1986; Wall et al., 1988). But for other authors, no
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moderating effect of gender was demonstrated (Anderson and Cunningham, 1972;
Graby, 1982 Schaefer, 1997).
Like gender, age is another demographic variable that may influence consumer behavior on foreign goods. Indeed, some studies have shown that as they ages, consumers are less willing to consume products from abroad (Schooler, 1971;
Bannister and Saunders, 1978; Graby 1982, Johansson et al., 1985) . This finding is linked with the respondents' degree of ethnocentrism, which is assumed to increase with age (Shimp and Sharma, 1987; Sternquist and McLain, 1991).
Finally, two other demographic variables that I will discuss here are the level of income and level of education. It seems that the higher the income of the consumer, the higher the attitudes towards foreign products are positive (Wall et al. (1991).
Along the same lines, Wall and Heslop (1986) conclude that with the increase of income, the consumer is less inclined to buy domestic products.
Similarly, the effect of country of origin decreases with increasing level of education. Already in 1971, Schooler had noticed that respondents who studied longer would generally evaluate much better products from Africa, Eastern Europe, India, Germany and Western Europe. Wall and Heslop (1986) also noted that attitudes towards foreign or imported products were more positive among consumers with a certain level of education. Finally, Morgansky and Lazarde (1987) in their study on the relationship between perception of point of sale and origins of products, came to the same conclusion: the level of consumer education influences favorably the perceptions of product quality, including foreign goods (imports).
2.3.2 The influence of consumers' perception of the country of origin (country image).
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For this study we follow the definition of consumers' country perception’ as
‘beliefs about the characteristics, attributes and behaviors of a certain group’(Hilton and von Hippel, 1996, p.240). Country of origin following the affective process is a stereotype-driven attitude that will influence the product assessment through negative or positive emotional associations and perceptions about the country (Verlegh and Steenkamp, 1999). The perceptions held by consumers can be on countries, individuals, products, brands, companies and are affecting their behavior and assessments. Obermiller and Spangenberg (1989) use the theory of information processing in order to provide a theoretical framework in which the influence of country of origin may be accomplished by cognitive, affective and normative processes. For the purpose of this study we will only look at the affective process by which country perceived image directly influences consumers purchase decision.
Analyzing the influence of country perceived image on consumers purchase intention will help to the understanding of Country of Origin-linked evaluation.
The individual factors presented in the model of Obermiller and Spangenberg (1989) consist of : perceived stereotype associations between country of origin and product attributes; trust in the information on the country of origin and especially trust in consumers knowledge of the country; and the presence of other information from the country. The authors start from the observation that in many research, the labels "country of origin" influence product evaluations or beliefs about the quality of a product. The influence of the label "Country of Origin" is the result of a stereotype processe explained as follow: the perception of a county's image influence product evaluation as from its origin the consumer deduce the level (high or poor) of attributes that in turn affect the purchase intent and quality evaluation of the product.
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2.3.3 The influence of the degree of involvement (knowledge) towards the product.
Han (1989) proposed to schematize the influence of country of origin Image with two analytical models: the first model presents the country image acting as a
"halo"which occurs when consumers are not familiar with products from a certain country; the second model presents the country image as a "summary" in a context of high consumer familiarity with the products. Therefore, the key point in the analysis of Han (1989) is focused on the variable of "familiarity" which will determine the order of appearance of the country of origin image, the beliefs and attitudes toward the product. Both models were tested on two products (TVs and cars) with the method of structural equation and were statistically validated.
Before Han (1989), many research on the effect of country of origin were explicitly or implicitly assuming the image of the country as a "halo" when evaluating the quality of products from an unknown foreign brand. We can cite the work of Bilkey and Nes (1982) and Erickson et al. (1984). Johansson et al. (1985) were the first to speak of "halo" about a country's influence on the formation of consumer’s beliefs. The main point of view expressed in this work is as follows:
Consumers use the country of origin image when evaluating foreign products because they are unable to detect the actual quality of the product. Indeed, products possess intrinsic attributes (physical) such as design or taste, and extrinsic attributes (symbolic) such as price or brand name (Olson and Jacoby, 1972). Eroglu and Machleit (1988) believe that the country of origin of a product is a part the of extrinsic attributes. Research shows that individuals at first drown toward extrinsic attributes, such as price and origin to deduce a product quality in the absence of other
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