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Journal of Consumer Marketing Country of origin factors influencing US consumers' perceived price for multinational products Jung Ha-Brookshire So-Hyang Yoon
Article information: To cite this document: Jung Ha-Brookshire So-Hyang Yoon, (2012),"Country of origin factors influencing US consumers' perceived price for multinational products", Journal of Consumer Marketing, Vol. 29 Iss 6 pp. 445 - 454 Permanent link to this document: http://dx.doi.org/10.1108/07363761211259250
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Users who downloaded this article also downloaded: Khalid I. Al-Sulaiti, Michael J. Baker, (1998),"Country of origin effects: a literature review", Marketing Intelligence & Planning, Vol. 16 Iss 3 pp. 150-199 http://dx.doi.org/10.1108/02634509810217309 Ronald Drozdenko, Marlene Jensen, (2009),"Translating country-of-origin effects into prices", Journal of Product & Brand Management, Vol. 18 Iss 5 pp. 371-378 http://dx.doi.org/10.1108/10610420910981855 Gerard P. Prendergast, Alex S.L. Tsang, Cherry N.W. Chan, (2010),"The interactive influence of country of origin of brand and product involvement on purchase intention", Journal of Consumer Marketing, Vol. 27 Iss 2 pp. 180-188 http:// dx.doi.org/10.1108/07363761011027277
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Country of origin factors influencing US consumers’ perceived price for multinational
products Jung Ha-Brookshire and So-Hyang Yoon
University of Missouri, Columbia, Missouri, USA
Abstract Purpose – In response to the popularity of multinational products with limited information on countries of origins, this study aims to explore factors influencing consumers’ perceived prices for multinational products. Design/methodological approach – The study performed a 2 (COP) £ 2 (COM) within-subjects randomized experimental research, using the USA and China as the countries of parts (COP) and the countries of manufacturing (COM) for cotton apparel. A total of 77 US consumers participated. Hierarchical multiple regression analyses were performed. Findings – Consumers’ income level was important for perceived prices on apparel products made in the USA and/or of US cotton. Expertise was also important for higher pricing of apparel made in the USA of US cotton, while familiarity with COO labeling laws negatively affected perceived prices when apparel was made in China. Perceived sustainability had the largest impact on consumers’ perceived prices for apparel made in the USA of Chinese cotton. Research limitations/implications – The study used a limited sample size and the data were collected through experimental studies. Generalization must be done with caution. Practical implications – Apparel businesses may want to declare COP, if this country could provide cues to high quality, high price, or excellent design. Apparel businesses that would like to promote US products may want to target those who have a high sense of self-efficacy and educate consumers with COO labeling rules and regulations. Originality value – The findings offer significant factors affecting consumers’ perceived price on multinationl products, providing business practice recommendations surrounding COP and COM.
Keywords Country of origin, Perceived price, Multinational products, Hybrid products, United States of America, China, Consumer behaviour
Paper type Research paper
An executive summary for managers and executive
readers can be found at the end of this article.
Introduction
Today’s economy is extremely complex and intricately
interwoven with multiple key players in multiple countries.
Products that we see in the marketplace are the results of
multinational collaborations and trades. Camry, a Toyota
automobile, is a no longer a Japanese product as most Camrys
currently sold in the US are built in the US and all 2012
model Camrys will be assembled in the US (Timmins, 2011).
By contrast, a significant number of the parts used in a Ford
or General Motors car are made in foreign countries and
imported to be assembled into final products in the US. This
does not make it easy to conclude whether or not a Camry is a
Japanese or US product. Similarly, a question arises regarding
how many foreign parts are allowed in a Ford or General
Motors car while still allowing it to claim to be a US product.
To some consumers, a Toyota Camry would be still a
Japanese product, just as a Ford would be a US product. The concept of country of origin (COO), the country where
products or services were manufactured, has recently
expanded to country of parts (COP), country of
manufacturing (COM), country of brand (COB), and
country of design (COD). Each COO offers different
information, and consumers could use these more specific
designations to evaluate product attributes based on different
COO information. Consumers are interested in knowing
COM to ensure products are safe and made in a safe manner.
Others want to know COM to exercise their support for
domestic economy and local communities. COP helps
consumers make appropriate judgments of a country’s
involvement in the overall manufacturing process, while
COD and COB help communicate added values contributed
by a country that is well known for excellence in the product
category. The consumers demand for products made in the USA
supports past studies on the COO effect. The COO effect
refers to a consumer’s dependency on COO when formingThe current issue and full text archive of this journal is available at www.emeraldinsight.com/0736-3761.htm
Journal of Consumer Marketing
29/6 (2012) 445–454
q Emerald Group Publishing Limited [ISSN 0736-3761]
[DOI 10.1108/07363761211259250]
This project was completed in part through research grants, Margaret Mangle Research Catalyst Award and Seeding Interdisciplinary Research Collaboration Fund by the College of Human Environmental Sciences, as well as Faculty Research Grant by the Center for the Digital Globe, awarded to the first author at the University of Missouri.
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opinions on the quality of a product (Han and Terpstra,
1988). For example, when consumers see a product “Made in USA,” compared to a product “Made in China,” they may
perceive the US product to be higher in quality and value.
Particularly when price is unknown, certain product attributes, such as brand name or COO, are useful for
consumers to form their own opinion on what the product price would be, in return, impacting purchase intention
(Bettman et al., 1998; Zeithaml, 1988). Given the relationship between COO and consumers’
perceived price, the study was designed to explore factors influencing consumers’ perceived prices for multinational
products. Using the US and China as COP and COM for cotton apparel, the study assessed the effect of consumers’
demographic characteristics, prior knowledge, and perceived sustainability on their perceived price. The study presents a
literature review of the COO effect and social responsibility, the COO effect and perceived prices, and information
processing theory, followed by the research methods. The results are discussed and the study concludes with
contributions, implications, limitations, and future research opportunities.
Literature review
COO effects and social responsibility
The literature shows that COO plays a major role in
consumers’ decision-making processes and influences how consumers view and evaluate product attributes (Samiee,
1994). The term COO effect refers to a consumer’s dependency upon COO when forming opinions on the
quality of a product (Han and Terpstra, 1988). The previous research suggests consumers’ demographic characteristics and
the economic development level of the country of origin are important factors in the COO effect. For example, Schooler
(1971) found US female consumers evaluated foreign products higher than US male consumers did. Similarly,
Wall and Heslop (1986) also found Canadian consumers have a more positive attitude towards foreign products than
Canadian male consumers do. Younger consumers tend to evaluate foreign products more favorably than older people do
(Bailey and Pineres, 1997). Educated consumers with higher income were more likely to accept foreign products than
consumers with limited education and lower income were (Bailey and Pineres, 1997).
The past research also suggests that consumers rate products as higher quality if those products were produced
in countries that are more economically developed and politically free (Wang and Lamb, 1983). Particularly,
consumers have pre-conceived ideas for different countries
and these stereotypical images of the countries affect consumers’ evaluation on product quality. One of the
interesting findings on stereotype and the COO effect is that consumers prefer products from their own country because
they believe domestic products have the highest quality and pose the least risk (Hooley et al., 1988). This idea stems from ethnocentrism, the belief in the inherent superiority of one’s own ethnic group or culture (Hooley et al., 1988). Ethnocentrism, coupled with 9/11 and the economic recession in 2008, fueled patriotism among US consumers,
resulting in the heightened popularity of the “Buy Made in USA” campaign. These consumers focus on helping domestic
economies and local communities, and, by purchasing US-
made products, they believe they help fellow Americans (Lee
et al., 2003). In this light, the COO effect has been discussed
in the socially responsible consumer behavior literature (Ha-
Brookshire and Norum, 2011). Investigating the COO effect, however, is no longer a simple
task. Many of today’s businesses are now producing their
products all over the world, using raw materials produced in
multiple countries. Thus, hybrid or multinational products
(or products with more than one country of origin) are
common in today’s marketplace place. Yet, most industries
use a “one-country” origin designation that usually refers to
the country where the product is manufactured. This practice
makes it difficult to determine which country is a true country
of origin for a multinational product. Therefore, some researchers have argued that multi-level
COO must be declared to reflect today’s complex supply
chain systems (Bilkey and Nes, 1982). In this light, the
concepts of country of design (COD), country of assembly
(COA), country of parts (COP), and country of manufacture
(COM) were introduced as they could be useful for
consumers’ value judgments (Essoussi and Merunka, 2007;
Insch and McBride, 1998). COD refers to the country where
the final product was initially conceptualized and designed..
COP points out the country where component parts are
manufactured. COA describes the country where the product
is partially or fully assembled, but not ready to be sold to the
end consumer COM refers to the country where the final
product is manufactured. These multi-level COO determinations were found to affect
consumers’ evaluations on the product quality (Chowdhury
and Ahmed, 2009). Compared to a single-country COO
designation, the multi-level COO determinations are also
expected to help consumers better evaluate the contributions
of different countries, so they could choose the products that
fit their purchasing goals by using more accurate information.
For example, if one sees the US as a COP even if COM is
China, he or she may form different perceptions on the
product’s social and environmental impact than a simple
“Made-in China” label. Thus, multi-level COO designations
could help consumers better exercise their socially responsible
consumption than single-country origin determinations.
Despite the important impact of multi-level COO
determinations, COM represents COO in the US
marketplace (Samiee, 1994). Particularly for the textile and
apparel products, COO marking rules enforced by the US
Federal Trade Commission (2011) require that products
display the country where the most significant assembly
process occurred (or COM) as a COO on the finished
product (United States Department of Agriculture, 2011).
Translating COO effect into prices
Among many variables, price is usually discussed in the
literature as an influential extrinsic cue in relation to
consumers’ evaluations of product alternatives and their
purchase decisions (Veale and Quester, 2009). Studies found
that consumers use price as a predictor of quality, particularly
when they have limited knowledge of product offerings (Veale
and Quester, 2009). Consumers often formulate a natural
ordering of products according to a price scale, believing the
higher quality products are more expensive and products of
lesser quality are cheaper; or the higher-priced products have
higher quality and lower-priced products have lesser quality
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(Lee and Lou, 1996). This price/quality relationship is
described as the price-reliance schema (Lee and Lou, 1996). Although the relationship between quality and price has
been highly discussed, how price influences the COO effect has rarely been. To fill this gap, Drozdenko and Jensen (2009)
recently attempted to translate the COO effect into prices and
found that US consumers were willing to pay a 37 percent premium for US-made shoes and a 105 percent premium for
US-made toothpastes, compared to the same products made in China. The authors continued that the more consumers
were exposed to negative news concerning Chinese products, the price premiums US consumers were willing to pay
increased. Similarly, Ha-Brookshire and Norum (2011) found that US consumers were willing to pay over a 17 percent
premium for a shirt made of US-grown cotton, compared to cotton without the COO display. All of these studies,
however, have focused on consumers’ willingness to pay, rather than how much consumers believe that these products
should cost, that is, perceived price.
Perceived prices and information processing theory
Although previous literature review shows that COO is an important extrinsic cue for consumers’ purchase intention
and purchase behavior, the relationship between COO and perceived price has been little explored. Perceived price is
defined as what a consumer gives up or sacrifices in order to obtain a product (Zeithaml, 1988). Thus, when actual price is
unknown, consumers may use other available product attributes, such as brand name or COO, to form their own
opinion on what the product price, and therefore, quality would be (Bettman et al., 1998). That is, when consumers face new product attributes, they generate perceived price and perceived quality, in return, impacting perceived value and
purchase intention (Zeithaml, 1988). The thesis that consumers use various cues to construct their preferences is
explained by Bettman’s (1979) information processing theory of consumer choice. Based on the notion that decision makers
have limitations on their capacity for processing information, information processing theory suggests that consumers do not
always make perfect decisions. Rather, consumers make decisions based on the limited information available in a given
situation. Information processing theory further explains that an act
of preference construction is highly dependent on context and individual characteristics. Prior knowledge is one of the
important factors in consumers’ preference construction as it is believed to facilitate the acquisition of new information as
well as the use of existing information (Rao and Monroe,
1988). Prior knowledge is known to have two dimensions: familiarity and expertise (Alba and Hutchinson, 1987).
Familiarity is defined as the number of product-related experiences accumulated by a consumer, and expertise refers
to the ability to successfully perform product-related tasks, such as quality, price, and value evaluation. Thus, prior
knowledge is defined as information held in memory about product alternatives as well as consumers’ ability to perform
product-related tasks (Rao and Monroe, 1988). From the familiarity perspective, consumers are more likely
to use extrinsic cues if new product attributes are unfamiliar to them, while they are less likely use extrinsic cues if they are
more familiar with new product attributes (Rao and Monroe, 1988). The role of familiarity with new product attributes gets
enhanced if consumers have expertise in such product
attributes (Rao and Monroe, 1988). That is, consumers
who are familiar and have expertise in new product attributes
are better able to assess product quality and value through an examination of intrinsic cues. However, consumers who are
unfamiliar with new product attributes with little expertise in such attributes are more likely dependent on extrinsic cues for
their product evaluation.
Research questions
Given that the COO effect exists and COO, particularly multi-level COO, is an important extrinsic cue for today’s
consumers, who want to know where products are made to exercise their support for domestic economy and local
communities, the study aimed to explore factors influencing consumers’ perceived prices for multinational products,
which are extremely common in today’s marketplace. First,
considering its impact on the COO effect, consumers’ demographic characteristics were included in the study as
potential factors consumers may consider when forming perceived price. Following the information processing theory,
prior knowledge was included in this study as a possible influential factor of consumers’ perceived price. Both
familiarity and expertise were considered to characterize prior knowledge. Finally, the perception of the social and
environmental impact, or perceived sustainability, of the
product, suggested by multi-level COO designations, was considered a new product attribute, impacting perceived
price. Figure 1 illustrates the study’s conceptual model.
Methodology
2 3 2 within-subject randomized experimental design For the purpose of the study, a 2 (COP) £ 2 (COM) within- subjects randomized experimental research was designed. In this study, COP and COM were of interest to represent the
multi-level COO designations for hybrid products. It was believed that a separate COP designation along with COM
would affect how consumers perceived price. Two-level COO designations were used because the COO effect tends to
become weaker if the COO construct is broken down into too
many dimensions (Tse and Lee, 1993). Cotton shirts were used as the study manipulations. Cotton is an apparel product’s
major part. In addition, cotton meets over half of the world’s apparel needs and almost everyone owns cotton apparel,
regardless of income, gender, and age (Kadolph, 2011). For both COP and COM, the US and China were selected
for a few reasons. First, these countries are two of the top cotton producing countries in the world. Second, over 50
percent of today’s cotton produced in the US is shipped to
China to be further processed into apparel, making China the leading importer of US-grown cotton (United States
Department of Agriculture, 2011). Third, China is the leading cotton apprel exporter to the US, supplying over 27
percent of the entire cotton apparel imported to the US marketplace in 2008 (Cotton Incorporated, 2009). Thus, it
was reasonably assumed that a significant portion of US cotton exported to China comes back to the US as final
apparel products. Yet, the final products bear only a “Made In
China” label, undermining the contribution of US cotton. This phenomenon was particularly important for the study
design, because many of today’s US consumers are seeking “Made In USA” products to help domestic economy, show
patriotism, and demonstrate their social responsibility.
Country of origin factors influencing US consumers’ perceived price
Jung Ha-Brookshire and So-Hyang Yoon
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Sample
After approval from the Institutional Review Board,
participants were recruited through advertisements in
university news media and a local newspaper in spring
2011. A large retailer’s gift card for the amount of $5 was
given to participants as an incentive. Totally, 77 participants
were recruited and completed the study. Because the study
was designed to be a set of randomized experiments with each
participant as a block, it was possible to collect all 77
responses per cell created by the combination of two COP
and two COM. This design met the sample size requirements
suggested by Hair et al. (2006). First, the minimum sample
size per cell was greater than the number of dependent
variables, perceived price. Second, the sample size of 77
exceeded the minimum sample size per cell, 20, for repeated
measures design. Third, 77 responses per cell ensured equal
sample size per cell. Overall, 54 out of 77 participants were women and the rest
were men. This was expected as the recruitment statements
included the phrase “apparel shopping behavior” and women
seemed more interested in this study than men. A total of 56
participants indicated themselves as Caucasian, 10 as Asian
and Pacific Islander, 7 as African American, and 4 as others.
Participants ranged from 18 years old to 69 years old, with an
average age of 30.6 years. A little over half of the participants
were single or divorced and the rest were either in a
relationship or married. Approximately half of the
participants had some college or high school education,
while the rest had college degrees or graduate education.
Finally, over half of the participants indicated that they had
over $30,000 as household income. Table I shows the study
sample characteristics.
Stimuli
Four cards were created to represent four different sets of
COP and COM of an apparel product. Each card was 3
inches wide and 2 inches long, and contained the following
information in black lettering on a white background: . 100 percent Cotton from USA. Made in USA; . 100 percent Cotton from USA. Made in China; . 100 percent Cotton from China. Made in USA; and . 100 percent Cotton from China. Made in China.
Variables
The price of a cotton shirt estimated by each respondent
served as a dependent variable in this study. The dependent
variable, perceived price, was measured by a single question
asking the participant to estimate the retail price for each of
the four types of cotton shirt with different COP and COM
combinations.
Nine predictor variables were included in this study, following
the study’s conceptual model. The first block of predictor
variables, demographic variables, served as control variables
in our model. Demographic variables included the
participants’ age, gender, marital status, education level,
and household income.
Figure 1 Conceptual model
Table I Characteristics of the study sample
Characteristic Frequency Percentage
Gender Male 22 29.9
Female 54 70.1
Ethnicity Caucasian 56 72.7
African American/Black 7 9.1
Asian and Pacific Islander 10 13.0
Hispanic/Middle Eastern/Other 4 5.2
Age 21 and Under 24 31.2
22 to 34 31 40.3
35 to 44 6 7.8
45 to 54 9 11.7
55 to 64 5 6.5
65 and Over 2 2.6
Marital status In a relationship 20 26.0
Single/Divorced 39 50.6
Married 18 23.4
Education level Some high school education 1 1.3
High School degree 4 5.2
Some college education 34 44.2
College degree 22 28.6
Some graduate education 8 10.4
Graduate degree 16 20.8
Income Less than $10,000 18 23.4
$10,000-$29,999 17 22.1
$30,000-$59,999 16 20.8
$60,000-$99,999 15 19.8
$100,000-$119,999 7 9.1
$120,000-$199,999 3 3.9
$2000,000 above 1 1.3
Note: Total number of participants ¼ 77
Country of origin factors influencing US consumers’ perceived price
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The two dimensions of prior knowledge, familiarity and
expertise, were included as the second block of predictor variables. Familiarity was then divided into two: familiarity
with COO labeling laws and familiarity with the concept of sustainability. Familiarity of COO labeling laws was measured
to assess the participants’ procedural knowledge, while the
familiarity of the concept of sustainability was intended to examine whether or not the participants possessed conceptual
knowledge related to the study objectives. Conceptual knowledge refers to a person’s representation of major
concepts (Reber and Reber, 2001). It is the kind of knowledge that cannot be learned by rote. It must be
learned by thoughtful, reflective learning, and may be transferred between situations. Procedural knowledge is
knowing the method of manipulating a specific condition or the technique for implementing a task. It is knowing how to
control the relevant factors for examining some phenomenon (Reber and Reber, 2001). Responses were recorded on a five-
point Likert scale ranging from “not familiar at all, or 1” to “very familiar, or 5.”
Expertise was measured by the scale of self-efficacy as it is commonly used in the literature to assess one’s expertise
(Schwarzer and Jerusalem, 1995). Self-efficacy is defined as the confidence in one’s coping ability across a wide range of
demanding or novel situations (Bandura, 1994). A 30-item scale was adopted from Sherer et al. (1982) and Schwarzer and Jerusalem (1995) to examine the participants’ overall confidence or belief that they could perform what they set out
to do, or expertise. The third and last block of predictor variables was
perceived sustainability for each stimulus card. Perceived sustainability was designed to assess the participants’
subjective judgment on the impact of sustainability of each stimulus when they were exposed to such stimulus. The
participants were asked to rank each stimulus in the order of the least sustainable to the most sustainable option among the
four cards.
Data collection procedures
Upon arrival at the university laboratory, participants were asked to complete surveys including demographic
characteristics and prior knowledge. Then, the experiment began with the statement, “we are showing you four different
cards that represent different country of origins of a cotton t- shirt in random order. Assuming all others are equal, please
think about which option would be the most or least sustainable to the environment and society, and organize the
cards in order from the most sustainable to the least
sustainable. Please take as long as you wish.” Most participants took two to three minutes to respond to the
initial instruction. This perceived sustainability of the product was recorded from 1 to 4, 1 being the least sustainable to 4
being the most sustainable. Next, the four cards were mixed again and presented to the
participants. This time, participants were presented with the statement “now, we found out that a typical cotton t-shirt sold
in major stores in the US is made out of 100 percent cotton and has a label of ‘Made in China.’ The average price of this
shirt is $40. Compared to a $40 shirt, how much do you believe that other options would cost at a retail store? Please
indicate one retail price for each option while considering the sustainability impact of each card.” This procedure was done
to obtain perceived price of each card, using a cotton shirt
with a “100 percent cotton, Made in China” label as a
control. The control card represents what consumers see in the marketplace under the current COO rules. The retail
price of $40 was set to represent the medium quality, average- price cotton apparel products in the US marketplace.
Participants took approximately two to three minutes to complete this task for all four cards. The responses were recorded as perceived price.
Data analysis
Four sets of hierarchical multiple regressions were performed.
Petrocelli (2003) clarified hierarchical multiple regression analysis is useful and powerful when researchers want to test
theoretical assumptions and examine the influence of several predictor variables in a sequential way. By doing so, the
relative importance of a predictor can be evaluated based on how much each predictor variable could add to the prediction of a dependent variable, over and above other important
predictors. For the purpose of the study, hierarchical multiple regression analysis was deemed ideal as the technique would
provide the relative importance of demographic characteristics, prior knowledge, and perceived sustainability
on the participants’ perceived prices for four different combinations of COP and COM profiles of cotton shirts. In
addition, the relationships between independent and dependent variables were hypothesized based on theoretical assumptions and past research. Regression coefficients and
changes in R2 were examined throughout the analysis.
Results
Perceived price for products Made in USA with US
cotton
The mean perceived price for this card was $56.9 with standard deviation of 25.2. As indicated in Table II, nine
predictor variables accounted for 28.0 percent of total variance in dependent variable, perceived price. Among the demographic variables, the respondents’ gender and income
showed statistically significant impact on the price estimate. First, men (standardized b ¼ 20.19; p , 0.10) and affluent (standardized b ¼ 0.37, p , 0.01) consumers provided a much higher perceived price for the product with this type of
COM and COM designation. The incremental R2 for the entire demographic variables was 19.3. Second, participants’ expertise showed a statistically suggestive effect on perceived
price (standardized b ¼ 0.21, p , 0.10) with an incremental R2 value of 4.1, after accounting for demographic variables. Third, perceived sustainability of this product has a statistically significant impact on perceived price
(standardized b ¼ 0.23, p , 0.05) with an incremental R2 of 4.6, after accounting for demographic and prior knowledge
variables. In sum, income, perceived sustainability, gender, and expertise were important factors for the participants perceived price for an apparel product made in USA with US
cotton.
Perceived price for products Made in China with US
cotton
For an apparel product made in China with US cotton, participants estimated it to be $46.9 with a standard deviation
of 17.6. In addition, nine predictor variables accounted for 31.7 percent of the total variance in perceived price. First,
participants’ income level showed a statistically significant
Country of origin factors influencing US consumers’ perceived price
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positive impact on perceived price (standardized b ¼ 0.37, p , 0.01), with an incremental R2 value of 18.5. Other demographic variables were not found statistically significant.
In terms of prior knowledge, interestingly, participants’ familiarity with COO labeling laws showed a statistically
significant, yet negative effect on their perceived price for this product (standardized b ¼ 20.23, p , 0.05), after accounting for demographic variables. That is, the more
familiar the participants were with the COO laws, the lower they estimated the value of the product if it was made in China even if US cotton was used. Perhaps, participants put
more weight on costs related to manufacturing than on raw materials costs, and thus, they thought the price should be
lower if the product is made in China with high-price raw materials. Finally, perceived sustainability also showed a statistically significant impact on perceived price
(standardized b ¼ 0.27, p , 0.05) with an incremental R2 of 5.9, after accounting for demographic and prior knowledge variables. Overall, income, perceived sustainability, and
familiarity with COO labeling laws were important influencers of perceived price for an apparel product made
in China with US cotton.
Perceived price for products Made in USA with Chinese
cotton
The mean price estimate for an apparel product made in USA with Chinese cotton was $46.1 with a standard deviation of
18 and nine predictor variables accounting for 37.2 percent (the highest of the four cards) of total variance in perceived price. First, participants’ income level showed a statistically
significant positive impact on perceived price (standardized b ¼ 0.24, p , 0.05), with an incremental R2 value of 17.5. Other demographic variables were not found statistically significant. Different from the first two cards, prior knowledge
showed no statistical significance on their perceived price, after accounting for demographic variables. Instead, perceived sustainability showed a statistically significant impact on
perceived price (standardized b ¼ 0.40, p , 0.01) with an incremental R2 of 15.4, after accounting for demographic and prior knowledge variables. This finding suggested perceived sustainability is the single largest influencing factor on perceived price for the product made in USA with Chinese
cotton. In short, income and perceived sustainability were important factors for perceived price for an apparel product made in the USA with Chinese cotton.
Perceived price for products Made in China with
Chinese cotton
The mean price estimate for an apparel product made in China with Chinese cotton was $38.2 with a standard
deviation of 13. This price estimate was below the control price of an apparel product with a COO label of “Made in China” without any information on the origin of raw
materials. In addition, nine predictor variables accounted for only 19.2 percent (the lowest of the four cards) of total
variance in perceived price. Age was the only demographic variable with a statistically suggestive positive impact on perceived price (standardized b ¼ 0.27 p , 0.10), with an incremental R2 value of 7.6. Other demographic variables were not found statistically significant. Instead, prior knowledge was found to be significant for their perceived
price with an incremental R2 value of 9.4, after accounting for demographic variables. More specifically, participants’ familiarity with COO labeling laws showed a statistically
suggestive, yet negative effect on their perceived price (standardized b ¼ 20.21, p , 0.10). Participants’ familiarity with the concept of sustainability showed a statistically suggestive positive effect on perceived price (standardized
Table II Results of hierarchical multiple regression for perceived prices
100% Cotton from
USA Made in
USA
100% Cotton from
USA Made in
China
100% Cotton from
China Made in
USA
100% Cotton from
China Made in
China
Mean of perceived pricesa (standard deviation) $56.9 (25.2) $46.9 (17.6) $46.1 (18.0) $38.2 (13.0)
Demographicsb
Age 0.06 20.07 0.18 0.27 *
Gender (Female) 20.19 * 20.18 20.15 0.00
Marital status (married) 20.10 20.01 20.09 20.22
Education 0.10 0.15 0.03 0.05
Income 0.37 * * * 0.37 * * * 0.24 * * 0.07
Incremental R2 (%) 19.3 * * * 18.5 * * * 17.5 * * * 7.6
Prior knowledgeb
Familiarity with COO labeling laws 20.05 20.23 * * 20.12 20.21 *
Familiarity with sustainability 0.15 0.16 0.18 0.25 *
Efficacy 0.21 * 0.17 0.13 0.08
Incremental R2 (%) 4.1 7.2 * 4.4 9.4 *
Sustainabilityb
Perceived sustainability 0.23 * * 0.27 * * 0.40 * * * 0.17
Incremental R2 (%) 4.6 * * 5.9 * * * 15.4 * * * 2.6 Total R2 (%) 28.0 31.7 37.2 19.5
Note: n ¼ 77; aControl price was $40 for a cotton shirt with the “Made in China” label; bEntries are standardized regression coefficients; *Indicates p , 0.10; * *Indicates p , 0.05; * * *Indicates p , 0.01
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b ¼ 0.25, p , 0.10). Different from the rest of the three cards, perceived sustainability had no impact on perceived
price, after accounting for demographic and prior knowledge variables. Overall, age, familiarity with COO labeling laws and
familiarity with the concept of sustainability were important
influencers of perceived price for an apparel product made in China with Chinese cotton.
Conclusions and managerial implications
In response to the large quantity of multinational products
with limited information on countries of origins, the study
explored factors influencing consumers’ perceived prices for multinational products. Particularly, given the US imports
over 90 percent of its apparel from the rest of the world and China is the leading exporter of such products, the study used
the US and China as the countries of parts and
manufacturing to assess consumers’ perceived prices. Demographic variables, prior knowledge, and perceived
sustainability were included in the study as potentially
influential factors for consumers’ perceived price. The hierarchical multiple regression results from a 2
(COP) £ 2 (COM) within-subjects randomized experimental research of 77 participants in the US showed several
interesting findings. First, even for a product made in
China, consumers believe it would be more costly if the label includes the US as the origin of the cotton origin and less
costly if the label includes China as the cotton origin. This
indicates that where raw materials were produced does matter to consumers’ perceived prices, even if the country of
manufacturing is the same. Thus, businesses may want to
declare the origins of the countries in which raw materials produced, if this country could provide cues to high quality,
high price, or excellent design. This added information to the current COO would help raise the value of the products in
consumers’ mind. The government also may want to consider
establishing requirements of declaring COP in addition to COM, as some products without COM could be deceiving or
confusing to consumers. Second, the results showed the different factors affecting
consumers’ perceived prices for products with multi-level
COO designations. For example, male consumers with high income, who believe they have expertise, tend to have higher
perceived sustainability on products made in USA with US
cotton, resulting in higher perceived price for such products. Consumers with little knowledge of COO labeling laws tend
to have higher perceived sustainability on products made in
China, regardless of fiber origins. Thus, businesses that would like to promote US products may want to target those who
have a high sense of self-efficacy and educate consumers with COO labeling rules and regulations. The more they are
familiar with COO labeling laws and the more confident they
are in themselves, the more consumers would value US products.
Third, the study finding showed the explanatory power
(15.4 percent) of perceived sustainability on products made in the USA with Chinese cotton is very powerful. In addition, it
was 3.4 times greater than that on products made in USA with US cotton. Today’s marketplace in the US is full of
cotton apparel made in China with US cotton, rather than
made in the USA with Chinese cotton. This trend can be seen by the trade data, showing the US rarely imports Chinese
cotton while it exports a great amount of cotton to China
where most cotton is processed into apparel before being re-
exported back to the US. Given the fact of the abundance of
products made in China with US cotton in the US
marketplace, this finding offer important implications for businesses whether they should communicate COP, COM, or
both. Finally, overall, demographic variables had the most
explanatory powers over perceived price across the study
stimuli, ranging from 17.5 percent to 19.3 percent.
Particularly, except for products made in China with
Chinese cotton, consumers’ income was the most or second most important factor for their perceived price of products
with US involvement as COP, COM, or both. Prior
knowledge or perceived sustainability have relatively lower
power than demographic variables, and this finding poses challenges to businesses as to how to influence consumers for
additional values that COP might provide. After all, if
consumers do not have high income, the value of
sustainability alone may not be significant enough to change consumers’ purchase behavior.
Limitations and future research opportunities
As most other research, this study also has limitations and,
therefore, future research opportunities. First, although the
study findings showed interesting consumer profiles for
products with different COP and COM combinations, the study did not examine why consumers have such high
perceived value for US-made products using US raw
materials – almost twice as high as Chinese-made products
using Chinese raw materials. If we could understand why this phenomenon occurs and what type of consumers overvalue
US-made products, businesses, policy makers, researchers,
and consumer advocacy groups would be able to help inform
consumers of the fair value of US-made products. This would help consumers be less affected by fraud or deception that
may occur from incomplete COO labels and less turned off by
the high price of US-made products. Second, although experimental research design was useful
to keep participants fully engaged in the study and produce
good quality data from the participants’ responses, because of
the laboratory setting, some participants might have provided what they perceived to be socially acceptable answers. Thus,
further studies in a natural shopping environment are
recommended, where researchers are not intrusive and
participants may not feel judged by answers they provide during the study. Third, a greater sample size in a larger
population is recommended to help generalize the study
findings. Finally, given the fact that US-made products have
different meanings for consumers from different countries and cultures, cross-cultural studies investigating the effect of COP
and COM on perceived prices of domestic products and
foreign products would be fruitful to further our knowledge
on the COO effect.
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About the authors
Jung Ha-Brookshire, PhD, is an Assistant Professor in the Department of Textile and Apparel Management at the
University of Missouri. Her research interests include global
supply chain and sourcing strategies, sustainable production
and consumption of textile and apparel, and firm/industry
identity issues. Jung Ha-Brookshire is the corresponding author and can be contacted at: [email protected]
So-Hyang Yoon, PhD, is a research fellow at the Center for
Digital Globe in the School of Journalism, University of Missouri-Columbia. Her research interests include marketing
communication, branding strategies, consumer behaviors in
multicultural settings, participatory behaviors, and the roles
of communication in social engagements.
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Executive summary and implications for managers and executives
This summary has been provided to allow managers and executives a rapid appreciation of the content of this article. Those with a particular interest in the topic covered may then read the article in toto to take advantage of the more comprehensive description of the research undertaken and its results to get the full benefits of the material present.
Plenty evidence exists to show that consumer purchase
decisions are significantly influenced by country-of-origin
(COO) effects. Various studies have found that demographic
characteristics and the level of economic development within
the COO are especially significant. Of particular relevance is
research indicating a more positive attitude towards foreign
products among females, younger consumers and educated
individuals earning high salaries. In comparison, males, older
consumers and less educated, low earning people displayed a
lower tendency to accept these products. Many nations have become stereotyped and consumers
typically rely on these images to evaluate products from
certain countries. There is also a strong indication that people
regard products as being of higher quality when they are
manufactured in more economically advanced nations. COO
research has likewise noted that domestic products are
typically regarded as being superior to those manufactured
abroad. For individuals with ethnocentric tendencies, this is
likelier still. The notion of COO being a simple construct has
traditionally prevailed. However, this is no longer the case
because it has become the norm for many organizations to
source materials and manufacture their products in different
countries around the world. It is consequently feasible to
regard many products as “hybrid or multinational” in nature. Nevertheless, the propensity remained in certain industries
to use COO as a reference to where the product was made.
This resulting lack of clarity prompted academics to clamor
for a “multi-level COO” and has given rise to additional labels
that include country of design (COD), country of assembly
(COA), country of parts (COP) and country of manufacture
(COM). Use of multi-level COO definitions can impact on how
consumers measure product quality, some academics have
discovered. The assumption is that people are able to more
accurately assess how different nations have contributed.
However, in the US the issue is complicated by stipulations in
certain industries that COO should refer to the COM or the
country responsible for the “most significant assembly
process”. The “Made in” label may not be fully informative
and consumer decisions could well be different if they, for
instance, know which country supplied the parts. Providing
additional information is also likely to help those whose
consumption is driven by a desire to behave in a socially
responsible manner. Plenty research has identified that consumers frequently use
price as a quality indicator. When knowledge of products is
limited, this extrinsic cue becomes even more relevant.
Consumers invariably assume that positive correlation exists
between price and quality levels. The relationship between
price and the COO effect has in comparison received little
attention. However, studies have found a willingness among
US consumers to pay substantially more for product made in
the US as opposed to the same goods manufactured in China.
These and other studies producing similar findings addressed
consumer willingness to pay rather than their perception of
how much the products should cost. In this context, it is supposed that consumers who are
unaware of the price may use brand name or COO
information to determine their perceived price and to
evaluate product quality. Prior knowledge in the shape of
familiarity and expertise are used in a similar vein. According
to different research sources, people with prior knowledge of
new product attributes are more likely to use intrinsic cues to
judge quality and value. A reliance of extrinsic cues is
characteristic among consumers lacking familiarity or
expertise. Ha-Brookshire and Yoon address consumer perceived
prices for common multinational products and aim to
identify which factors influence their evaluations. Subjects
were recruited through newspaper and university news media
campaigns. Given the focus on clothing shopping activities,
that 54 of the 77 participants were women did not surprise.
Various ethnic groups were represented in the sample
containing respondents aged between 18 and 69. Cotton shirts were selected for the research in which
subjects were exposed to one of four COP-COM designs. The
selection of China and the US for COP and COM was
determined by their involvement in cotton manufacturing,
apparel production and the import and export of the raw
materials and products. Participants were exposed to cards depicting four types of
cotton shirt with different combinations of COP and COM.
They were asked to estimate the retail price of each one. The
study considered a range of demographic variables along with
familiarity and expertise. Familiarity was used in relation to
COO labeling regulations and to the concept of sustainability.
In addition, subjects had to rank the cards in order based on
levels of perceived sustainability and consider this while
determining the retail price. The control card used stated that
the shirt contained 100 percent cotton and was made in
China. This reflected current COO laws and what customers
see in the marketplace. The $40 price tag was deemed
appropriate for this quality of product sold in the US. Analysis revealed that shirts:
. Made in the US with US cotton had a mean perceived
price of $56.9. perceived price was most influenced by
income, perceived sustainability, gender and expertise. . Made in China with US cotton were on average perceived
to cost $46.9. Variables which mainly impacted on
perceived price were income, perceived sustainability
and familiarity with COO labeling laws. . Made in the USA with Chinese cotton had an average
perceived price of $46.1. Income and perceived
sustainability were the most important factors. . Made in China using Chinese cotton had a mean
perceived price of $38.2. The main determinants of
perceived price were age, familiarity with COO labeling
laws and familiarity with the sustainability concept.
Consumers seem to believe products made in China will cost
more when the label identifies the US as the origin of the
cotton used. When China is specified at the COP, the product
is assumed to be cheaper. Therefore, companies should
perhaps include COP information on labels when the country
in question is associated with superior quality or design and
Country of origin factors influencing US consumers’ perceived price
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high price. The likelihood exists that consumer would value
products more highly in such circumstances. Marketers are encouraged to educate consumers about the
regulations which govern COO labeling. This can help in their
promotion of US products, since individuals without
knowledge of these regulations appear to rate goods made
in China as being more sustainable. Targeting those high in
“self-efficacy” is recommended. Demographic variables were overall more influential than
perceived sustainability on perceived price of product where
the US was either or both COP or COM. A high income
appears particularly significant. However, marketers face a
challenge where lower earners are concerned. Ha-Brookshire
and Yoon assume that purchase behavior among these
consumers may not change on the basis of sustainability value alone.
That perceived sustainability is higher for shirts made in the US with Chinese cotton is another potential dilemma. Since most cotton apparel sold in the US is manufactured in China using cotton from the US, companies face a difficult decision of what COO information to relay on clothing labels.
Future research could identify reasons for the high perceived value of products made in the USA. Larger sample sizes and cross-cultural studies comparing domestic and foreign products are also suggested.
(A précis of the article “Country of origin factors influencing US consumers’ perceived price for multinational products”. Supplied by Marketing Consultants for Emerald.)
Country of origin factors influencing US consumers’ perceived price
Jung Ha-Brookshire and So-Hyang Yoon
Journal of Consumer Marketing
Volume 29 · Number 6 · 2012 · 445–454
454
To purchase reprints of this article please e-mail: [email protected]
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This article has been cited by:
1. Gargi Bhaduri, Jung Ha-Brookshire. 2015. Gender differences in information processing and transparency: cases of apparel brands’ social responsibility claims. Journal of Product & Brand Management 24:5, 504-517. [Abstract] [Full Text] [PDF]
2. Subir Bandyopadhyay. 2015. Investigating Quality Perceptions of International Services by Chinese Consumers. Thunderbird International Business Review n/a-n/a. [CrossRef]
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