The relevance of Country of Origin as a means to achieve consumer desired end goals

The relevance of Country of Origin as a means to achieve consumer desired end goals Abstract The focus of this study is to explore if a product s country of origin (COO) is still relevant in 21 st century. Integrating Means-End-Chain (MEC) theory as a guiding lens, the findings of this study suggest that the COO concept is still relevant for elites; who can afford to buy made in and that COO acts as a mean through which elites achieve their desired psychological and inter-personal consumption end goals. The data were gathered through thirty in-depth laddering interviews conducted among elites in Sri Lanka. The results suggest that product COO remains a relevant attribute for elite consumers. However, the importance of COO varies across hedonic vs. utilitarian product types and purchase occasions (personal use vs. gift buying). According to COO preferences, four patterns of means end chains were identified, which segmented the elites as ethnocentric-value-seekers, esteem-enhancers, similarity-avoiders and sentimentalists. The present study contributes towards a deeper understanding of COO effects and provides valuable insights into how relevance gap effects can be minimized. This is achieved through utilising COO as a means to achieve the desired end goals of consumer s by focusing on lucrative niches in emerging markets such as Sri Lankan elites. Key words -: Country of origin effects, Means-end chain (MEC), Elite consumers, Laddering interviews, Sri Lanka 1

Introduction Country of origin (COO) effects, refer to the mental facsimiles, reputation and stereotypes associated with goods originated from each country of interest (Strutton, True, & Roddy, 1995, p.79). To-date, a large number of researchers has investigated COO effects across different product types and consumer segments (Bhaskeran & Sukumaran, 2007; Roth & Dimantapoulos, 2009). These studies conclude that the COO of a product significantly influences consumer purchase decisions. Studies such as those conducted by Demirbag, Sahadev, & Mellahi, 2010; Phau and Chao, (2008); Sharma, (2011) and Verlegh & Steenkamp, (1999) suggest that COO affects consumer product evaluations. In contrast to these findings, researchers such as Liefeld, (2004); Samiee (2011); Samiee, Shimp, & Sharma (2005) & Usunier (2006) conclude that COO does not influence consumer purchase decisions and many consumers are not aware of the country where the products they purchase are made in. These conflicting findings have challenged the academic credibility, real-world relevance and the role played by COO as a cue that facilitates consumer purchase decisions. However, with the intention to resolve this tension in the current COO literature, Magnusson, Westjhon and Zdravkovik (2011) argue that although consumer knowledge of brand origin is often mis-calibrated, consumers perceptions of brand origin still matter (Magnusson, Westjhon and Zdravkovik, 2011, p. 454). Against this backdrop, we aim to investigate the extent to which COO is relevant to consumers and how consumers in an emerging market (Sri Lanka) perceive the COO of a product. To achieve our aims and objective, we utilise the means-end- chain theory (MEC theory) developed by Gutman (1982), which explains, how a product service selection facilitates the achievement of desired end states, through representing major consumer processes that link values to behaviour (Gutman, 1982, p60). Means End Chain (MEC) theory MEC theory is based on two assumptions. First, it assumes that values or desired end states of existence (Rokeach, 1973), play a significant role in guiding choice patterns. Second, MEC theory assumes that people cope with the diversity of products that are potential satisfiers of their values, by grouping them into sets or classes so that they can reduce the complexity of their choice (Gutman, 1982). Thus, the MEC model comprises elements that represent major consumer processes, linking values to behaviour, and provides a theoretical conceptualisation of the abstraction of consumer product knowledge. This conceptualization is based on three levels of abstraction; attributes consequences and values (Gutman, 1982; Nunkoo & Ramkisson, 2004; Wu & Fu 2011). Aim and objectives Utilising MEC theory as a guiding lens, we aim to explore the real-world relevance of product COO on consumer purchase decisions and the extent to which COO preferences vary across different product types and purchase occasions. The research objectives of this study are therefore as follows: 1) To explore the importance attached to COO and the role played by COO in elite Sri Lankan consumer s purchase decisions 2) To obtain a deeper understanding of elite Sri Lankan consumer s COO preferences and to explore the rationales influencing such preferences 2

3) To investigate to what extent consumer COO preferences and associated MECs differ according to the: product type (Hedonic vs. Utilitarian products) and purchase occasion (personal use vs. gift buying) 4) To identify clusters of elite consumers based on their COO preferences and associated MECs Literature review Researchers have indicated that the importance attached to COO has declined recently (See Samiee, 2011; Samiee et al., 2005 and Usunier, 2006). Contrary to these findings, other researchers have concluded that for consumers in emerging nations, product COO is still an important indicator of product quality, workmanship and status etc. (see for example, Batra, Ramaswamy, Alden, Steenkamp, & Ramachander, 2000 & Khan, Bamber, & Quazi, 2012). Moreover, Venketesh & Swamy (1994) suggest that even though consumers in developing/emerging nations want to embrace global consumption, not all consumers have the power to do so. However, as per Khan & Bamber (2008) and Khan et al., (2012) the elites who enjoy high standard of living with a high disposable income have the ability to consume products made in foreign countries (Khan & Bamber, 2008; Khan et al., 2012). Thus, the present study will be conducted with a sample of elite consumers in an emerging market, Sri Lanka. Although smaller than many developed nations and other emerging markets such as China and India, a significant portion of Sri Lanka s population have high levels of disposable income and high living standards (Rodrigo, Khan, & McLeay, 2011). The knowledge gained on COO preferences of Sri Lankan elites will thus be advantageous for marketers seeking lucrative new markets to sell their products in effectively (Rodrigo et al., 2011). In the present study, elites are defined as Sri Lankan consumers who enjoy a high standard of living, disposable income and have the ability to consume products made in foreign countries. (Khan et al., 2012; Khan & Bamber, 2008). Research methodology Data were gathered using thirty MEC based, laddering in-depth interviews (see Reynolds and Gutman, 1988 for details) conducted in Sri Lanka. The judgmental/purposive sampling technique was employed to select the respondents. This enabled the researcher to select the most appropriate respondents using a screening questionnaire that conformed to the research requirements. Thus, respondents who enjoy a high standard of living (with at least 75000 LKR per month) were selected for interview. Moreover, two product types (hedonic 1 vs. utilitarian) and two purchase occasions (buying products for personal use and buying products as a gift for a friend) were considered. A pre-test was carried out to determine the product type using HED-UT scale developed by Voss, Spangenberg, & Grohmann (2003) and the respondents were asked to rate four products (clothes, perfumes refrigerator and washing machine) according to the HED-UT scale. The results indicated that elite Sri Lankans perceive clothes and perfumes as hedonic products, while refrigerators and washing machines are deemed as utilitarian products. Data collection technique 1 According to Khan, Dhar, & Wertenbroch,(2004) hedonic products are purchased and consumed to satisfy consumers desire for sensory pleasure or to satisfy their symbolic needs that are related to the their sense of themselves and others perceptions of them. Whereas, Utilitarian products are purchased and consumed primarily to satisfy practical or functional needs of consumers, such as solving consumption-related problems that a consumer may encounter. 3

MEC based laddering interviews were conducted with direct elicitation techniques (see Reynolds and Gutman, 1988) to reveal elite consumers COO preferences and underlying rationales behind such preferences. This involved semi-structured in-depth interviews, along with the interviewer probing in order to elicit attribute-consequence-value chains or ladders (Reynolds and Gutman, 1988). Here, the interviewer repeatedly questioned the respondent why an attribute (in this study COO), consequences, or a value is important, until saturation is gained. Compared to closed question survey based approaches, MEC based laddering interviews are advantageous because they allow for sufficient respondent reflection on the relevant attributes, consequences and values for their decision-making (Dietz, Fitzgerald, & Shwom, 2005). Data analysis technique The data gathered during the interviews were analysed using the standard MEC analysis procedure developed by Gutman (1982). This involves three key stages, namely; (1) content analysis, (2) development of implication matrix and (3) development of hierarchy value maps. All data were analysed manually. Research findings The preliminary findings of the MEC analysis revealed that consumer COO preferences vary according to the perceived self-relevance attached to products and occasions. For example, when self related meanings are activated, (e.g. when buying foreign products for personal use) internal values such as self-esteem enhancement and self-respect had a key influence on consumers COO preferences. Conversely, in situations where more external and mutually beneficial motives were activated (e.g. when buying a perfume as a gift for a friend), the interpersonal and external values such as; enhance warm relationships with others and being respected by others had a key influence on elite consumer s COO preferences. Four patterns of MECs were identified according to the COO preferences. This in turn enabled us to segment the elites as ethnocentric-value-seekers, esteem-enhancers, similarity-avoiders and sentimentalists. A brief description of each of these segments is presented in Appendix I. Research limitations and future research Since this study is qualitative in nature and the sample is limited to thirty respondents, the findings cannot be generalized across the entire Sri Lankan elite population, and hence require further substantiation. The outcomes of this qualitative study will help to develop hypotheses for quantitative research that is being conducted at present. The results of the quantitative research will not only help generalize the findings, but also throw more light on Sri Lankan consumers COO preferences and buying behaviour. Originality /value The findings of this study clearly indicate that the COO is still a relevant attribute in consumer purchase decisions. However, it was found that the COO preferences differed according to product type, purchase occasions and desired end goals. Hence, the results of this study advance the body of knowledge on COO effects and suggest that COO is still relevant for Sri Lankan elite consumers. The results provide new insights on how COO cues are perceived by consumers as a means to achieve their desired end goals across different product types and purchase occasions. 4

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Consumer segment Ethnocentric value seekers Similarity avoiders Esteem enhancers Appendix I Consumer segments identified in the means-end-chain analysis Description These respondents indicated a strong preference for products made in Sri Lanka (locally), particularly for their personal use. These elites were motivated to buy products made in Sri Lanka due to the value for money and the national pride inherent with products made in Sri Lanka. Similarity avoiders demonstrated a strong bias towards products made in foreign countries when buying products for personal use and as a gift. These consumers perceive that a product with a strong foreign COO helps them to differentia themselves from general consumers. Hence, similarity avoiders indicated that use of products with Strong foreign made in label (for example perfumes made in France) helps them to develop a unique everyday image that cannot be duplicated. Esteem enhancers also demonstrated a preference towards foreign products than those made in Sri Lanka. The ability of COO to communicate their status and elitedness was more important for these consumers. The majority of esteem enhancers also indicated that buying products with a prestigious COO adds value to their personality and enhances their self-respect. Sentimentalists Sentimentalists demonstrated a mixed preference for both local and foreign made products. Self-fulfilment and excitement were more important for these elites than other values. When buying product with a strong COO as a gift, these consumers demonstrated a high sensitiveness towards the ability of a product to convey love and gratitude to the receiver. They further believed that it enable them to develop warm relationships with the gift recipients (family and friends). 7