Marketing complete and revised again Essay

 

 

 

 

 

ABSTRACT

Successful marketing strategies are required to market products from developing countries to the developed countries like European countries. The purpose of this paper is to find out the effect of country of origin, political conditions and possibility of risk on the success of products from a developing country like India to the industrialized world like Europe. This paper also explores the buying behaviour of consumers about products from India. Effects of country of origin and political conditions on the buying behaviour of consumers are investigated on theoretical grounds too. This study tests data empirically that is obtained with the help of survey in which consumers were asked to evaluate wristwatches from various countries, including the Indian-made Titan. Data is analysed with the help of a recursive system in which all the steps involved from the product evaluation to buying intention are involved. Certain implications are given for useful strategies that Indian manufacturers should use to be successful in developed countries.

 

 

 

 

 

 

 

 

 

 

 

Table of Contents

Chapter One: Introduction ………………………………………………………….4

Chapter Two: Literature Review .…………………………………………………..6

Chapter Three: Methodology……………………………………………………….37

Chapter Four: Discussion ……………………………………………………………46

Chapter Five: Conclusion……………………………………………………………51

Chapter Six: Recommendations…………………………………………………….53

References

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CHAPTER ONE

INTRODUCTION

Problem Statement

The emergence of a market orientation in India has raised the urgent question of competitiveness of its products in European markets. Early indications are not positive, with products suffering from low quality and poor service. The Indian watch company “Titan” is a newcomer in a field dominated by well-established Western makes (Bulova, Nato, Rolex and Squelette, for example) but its price, which is about 50% of comparable makes, has secured sales in new markets.

Aim of the Study

The aim of this study is to find out the success or failure of Titan watches in European market.

Objectives of the Study

The objective of the study is to cover the following areas:

·         Effect of country of origin

·         Country image

·         Impact of Consumers’ Choice on Products of Developed Countries

·         Country by Performance Risk Interaction
·         Product Quality, Market Presence, and Buying Behaviour

·         Target Market Characteristics
Research Questions

What are the recommendations for the makers of Titan and other products targeted for export to the West in terms of developing a successful marketing strategy?

Purpose of the Study

This introduction of the Titan provides the opportunity to test the accumulated country-of-origin (CO) knowledge under conditions of controversy. Furthermore, studying consumers’ reactions to the Titan may generate answers to critical questions on the market potential and marketing challenges for Indian products in the West. To accomplish this task, a model of the buying process that a consumer would go through in purchasing a watch is first constructed. Identification of the major dependent variables allows assessment of the different ways in which different customers may be influenced by a product’s country of origin.

Importance of the Study

An advanced perspective of country-of-origin effects at different decision-making points is presented by estimating the strength and magnitude of the Indian affiliation on the dependent variables, channelled mainly through the respondents’ ratings of India as a producer of watches. By also incorporating measures of true product attribute levels and customer familiarity, a more accurate measure of country-of-origin effects is achieved. Furthermore, the analysis addresses political convictions and their influence on decision-making and likelihood of purchase vis-à-vis the Titan and India.

Scope of the Study

Both the measurement technique as well as the results will further the understanding and knowledge of future East-West collaboration.

Organization of the Remaining chapters

The second chapter provides information about the relevant literature that has been published in past.

The third chapter provides information about the methodology used in this study.

The fourth chapter provides discussion on the results obtained from the data gathered.

The fifth chapter provides conclusion on the discussion and the last chapter provides some recommendations based on the results, discussion and conclusion of this study.

 

 

 

 

 

 

 

 

 

 

CHAPTER TWO

LITERATURE REVIEW

To reflect the buying process in the context of a controversial source country, the researcher develops the overall framework of the core consumer buying process. Within that framework, the researcher positions the country-of-origin concept but places it in the context of target market characteristics. The result will be an overall model of country-of-origin effects on buying preferences for products from a controversial source country.

As the manufacture of products and the quest for consumers become increasingly global activities, international marketing research takes on greater importance. One such area, the study of country-of-origin effects (COO), seeks to understand how consumers perceive products emanating from a particular country. The COO phenomenon mirrors the global marketplace’s increasing complexity. For example, research (Bilkey and Nes 1982) attempts to examine how consumers respond to products exported from another country; designed in one country yet manufactured in another; manufactured in more than one location; and manufactured in one country but branded in another.

Attention has been given in the marketing literature as to why COO influences purchase decisions. Several explanations have been offered including product category involvement, knowledge of a particular country, and patriotism. The purpose of this research is to offer a new perspective on country-of-origin effects. Here, COO is examined in terms of the fit between countries and product categories. By relating country images to product category characteristics, decision makers can better understand preference formations for their products. This information provides insight into what underlies consumers’ attitudes toward products manufactured in particular countries. Managers can benefit by having a better understanding of when promoting a product’s COO is beneficial and when it is not, as well as identifying the dimensions along which country image should be improved.

Research has often contrasted consumer reactions to products originating from countries differing in overall quality. For example, Hong and Wyer (1989) manipulated country favourableness by the extent to which a country was noted for high or low quality products The concept of country quality is really what makes the COO effect take place. While COO is only one clue consumers may use in evaluating brands (Bilkey and Nes 1982); Johansson, Douglas and Nonaka (1985), it typically affects the evaluation of product attributes (e.g., Erickson, Johansson and Chao (1984); Han (1989).  For example, Johansson, Douglas and Nonaka (1985, p. 1) state that “The use of country of origin as a proxy and surrogate for other information suggests that prior experience or familiarity with a particular product class or brand may influence the impact of country of origin on evaluations.”

Past COO research has often treated country quality as a summary construct, rather than as a defined set of dimensions from which quality is inferred (e.g., Crawford and Garland 1988); Hong and Wyer 1989); Howard 1989)). In fact, country image may be the more appropriate summary construct, of which perceived quality may be just one dimension. The little research conducted to date indicates country image is really a multidimensional construct (Cattin, Jolibert and Lohnes 1982; Jaffe and Nebenzahl 1984; Han and Terpstra 1988; Johansson and Nebenzahl 1986; Nagashima 1970, 1977; Narayana 1981; White 1979).

However, research on country image has made little attempt to link image dimensions to product categories. While it has been postulated that COO varies by product category (cf. Kaynak and Cavusgil 1983), only one study (Han and Terpstra 1988) has investigated product-country relationships. Research by Kaynak and Cavusgil (1983) has shown that country quality perceptions (measured as a summary construct) may vary across product categories. For instance, in one study Japanese electronic products received high quality evaluations while Japanese food products received low ones. Thus, while overall product-country quality stereotypes do occur, managers would be better served to know why such stereotyping exists. A consistent or favourable product-country match would occur when the perceived strengths of the country are important product benefits or features. Are the Japanese perceived to be strong in manufacturing and workmanship, qualities better suited for electronics than food? Whatever the exact explanation, both Japanese managers and their competitors would benefit from knowing what underlies consumers’ attitudes toward Japanese electronic and food products.

Thus, understanding the dimensions of country image and how it can be operationalized is important for managers whose products and those of their competitors are manufactured around the world.

Country Image Defined
One of the first studies to look at country image perceptions was Nagashima’s (1970) survey of U.S. and Japanese businesspeople. Nagashima (1970, p.68) defined country image as:

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

Narayana’s (1981, p. 32) definition of country image is quite similar–“the aggregate image for any particular country’s product refers to the entire connotative field associated with that country’s product offerings, as perceived by consumers”.

From a marketing perspective, a definition of country image is needed that relates more specifically to product perceptions, as some researchers have attempted to do by defining country image as consumers’ general perceptions of quality for products made in a given country (Bilkey and Nes 1982, p. 89-99; Han 1989, p. 222-29). As such, the author proposes the following definition:

Country image is the overall perception consumers’ form of products from a particular country, based on their prior perceptions of the country’s production and marketing strengths and weaknesses.

This definition brings country image closer to the means consumers use in assessing products. What consumers know (or think they know) about a country’s manufacturing ability, flair for style and design, and technological innovativeness, seems much more congruent with product perception formation than do other, less production and marketing-oriented factors.

Country Image Operationalized
Eight studies were identified that assessed country image. Each study measured the country image construct using scaled items that were either grouped according to mean scores (Nagashima 1970, 1977). Other studies measured the country image through factor analytic techniques (Cattin et al. 1982; Han and Terpstra 1988; Jaffe and Nebenzahl 1984; Johansson and Nebenzahl 1986; Narayana 1981; White 1979). Thus, means and standard deviations of the scaled items, or the zero-order correlations of the items, would be required to conduct a meta-analysis (Hunter, Schmidt and Jackson 1982; Hunter and Schmidt 1990). Only one study reports the item means (Cattin et al. 1982), and only one reports the correlations (White 1979).

Close examination of the country image research findings revealed certain dimensions consistent across the majority of these studies (i.e., consistent across various national subjects and their perceptions of countries). Four dimensions of country image became apparent–innovativeness, design, prestige, and workmanship. These dimensions met the following criteria: (1) were consistently found in previous research; (2) related to perceptions of a country’s production and marketing strengths and weaknesses; and (3) either intuitively and/or based on previous research, are applicable to a broad range of product categories. An advantage of identifying country image dimensions is to generate consistency for conceptualizing and operationalizing country image in future studies. This will yield greater comparability of research findings, and subsequent generalizability of COO. The country image dimensions are defined as:

Innovativeness          Use of new technology and engineering advances

Design                       Appearance, style, colours, variety

Prestige                     Exclusivity, status, brand name reputation

Workmanship       Reliability, durability, artisanship, manufacturing quality.
(Cattin et al. 1982)
From this review, two important conclusions can be drawn. First, country image appears to be a multidimensional construct. As such, it is unclear that a single measure of overall quality can be deemed equivalent to country image. Yet, COO studies have frequently used a single measure of product quality rating in order to understand the impact of “made-in” stereotypes (e.g., Crawford and Garland (1988); Hong and Wyer (1989); Howard 1989).

Second, the dimensions found to underlie country image are all production and marketing oriented. This could be an artefact of the initial fifty adjectives and phrases pre-tested by Nagashima (1970) in the first country image study. However, the basis for Nagashima’s research (Osgood 1952; Osgood, Suci and Tannenbaum 1957) was behavioural rather than applied marketing research. An alternative and more plausible explanation is that consumers’ perceptions are formed by relating to a product what they know about a country’s ability to produce goods and services. This gives further credence to the country image definition proposed earlier.

Having defined country image and identified four dimensions for operationalizing the construct, we now turn to the relationship of country image perceptions to product categories and subsequent purchase intention.

Impact of Consumers’ Choice on Products of Developed Countries

In positioning a product, management combines marketing mix elements to optimize the product’s profit contribution over time. With the advent of intense international trade expansion and worldwide production capabilities for a growing list of goods, the country of production has become an important producer-controlled mix variable for the firm. The traditional motivation for foreign production has been to enhance the firm’s competitive advantage, either by acquiring access to valuable markets or resources, or by diversifying the firm’s portfolio of risks (Daniels and Radebaugh 1989). But despite mandatory country of origin labelling policies in the United States, little attention has been given to the impact of foreign sourcing on consumer evaluation and choice.

The motivation to foreign source is evidenced by the magnitude of cross border internal market exchange. In recent years, intra-firm trades of U.S.-owned multinational firms have constituted between 17% and 23% of U.S. imports (Hipple 1990). Theoretically, industries that are especially indicated for foreign sourcing are those that are vertically integrated process industries, knowledge intensive, or quality assurance dependent (Casson 1985; Williamson 1985). Specific products that should be particularly suitable for offshore production are those with high labour content, predictable sales patterns, low transport cost to value, low duty on entry to the target market, and standardized specifications and manufacturing technology (Moxon 1982).

Some Information about Foreign Sourcing Practices of U.S. Firms

Few empirical tests of the foreign sourcing practices of U.S. firms have been conducted, but in conformance with theoretical expectation, electronics firms were found to initiate foreign processing in defensive response to competition from overseas. This suggests that labour cost savings and duty-free re-entry to the U.S. (under 806/807 Tariff Provisions) were vital to preserve a position in products which were no longer innovative (Moxon 1975). However, contrary to theory, more recent findings indicate that foreign sourcing increases with both product innovation and technological intensity, and no relationship is indicated between foreign sourcing and vertical integration (Cho 1990; Kotabe 1990). These contradictory findings suggest that factors outside the product domain may influence sourcing decisions. Indeed, home-country culture and public policy were found to play a role in sourcing decisions of Japanese and German firms serving the U.S. market (Kotabe and Omura 1989). And relevant to this study, Keegan (1989) suggests that consumers’ evaluations of country-of-origin should play a role in sourcing.

The existence of the country-of-origin cue, to which the buyer can attach meaning, has spawned a stream of consumer and industrial buying research on country effects. Country of origin is an extrinsic product cue, a class of intangible product traits, which include a product’s brand, price, and warranty. Unlike physical characteristics, a change in these cues has no direct bearing on the product’s performance. Nonetheless, they can still act as risk mitigants or quality cues for consumers who may be either unable to evaluate tangible traits of competitive offerings or unwilling to expend search effort. Other extrinsic cues have been shown to influence consumer judgments. Rao and Monroe (1989) provide a mete analysis of thirty-six studies that demonstrate the perceived quality effects of brand name and price on consumer’s evaluations.

Either of two competing models may explain the operation of country of origin on product evaluation. In the halo model, country image affects beliefs about tangible product attributes, which in turn affects overall evaluation. This model has been supported (Erickson, Johansson and Chao 1984; Johansson, Douglas and Nonaka 1985). Alternatively, Han (1989) demonstrated that when consumers are not familiar with a country’s product, a summary construct model operates in which consumers infer product information into country image, which then influences brand attitude. Whichever the case, the country-of-origin cue leads the consumer to greater cognitive elaboration about tangible product traits. This is particularly true when the consumer knows the country of origin in advance of having to make a formal product evaluation (Hong and Wyer 1989, 1990).

Starting with Schooler’s (1965) seminal study, evidence to date generally supports the existence of country-of-origin effects. Consumers express preferences for products from some countries over those of other countries. Those origin preferences may be product-dependent (Etzel and Walker 1974; Kaynak and Cavusgil 1983); hierarchical by country (Schooler 1971); reflect a positive home country bias compared to similar countries (Chao 1989b; Schooler 1965); or reflect a negative home-country bias, if the home country is less developed than alternative sources (Tan and Farley 1987). These preferences apply to industrial buyers as well (Cattin, Jolibert and Lohnes 1982; Nagashima 1970, 1977).

Country of origin has been characterized as a multidimensional construct that evokes various product-trait-related responses. Buyers may profile countries’ goods by criteria such as price, styling, quality, or availability. These profiles may shift as buyers’ perceptions change with increased exposure to the country, or as the dimensions of the products from the countries actually change (Nagashima 1970, 1977). Further, buyers’ attitudes toward a country of origin can be influenced by marketing promotion and by the retailer through which the product is sold (Chao 1989a, 1989b; Reierson 1967).

Finally, country-of-origin responses may vary by consumer segment. Aversion to foreign products is more likely among the less educated and politically conservative (Anderson and Cunningham 1972), and among older consumers and workers who feel threatened by imports (Shimp and Sharma 1987). In addition, while some consumers may systematically reject a foreign product, others respond favorably at a reduced price (Schooler and Wildt 1968).

Country-of-Origin Main Effect
LDCs stand for Less Developed Countries.
ICs stand for Industrialized Countries.
Economic level of the producer country is investigated as a determinant of country-of-origin differences in the belief that consumers esteem products from prosperous countries and derogate those from poor countries. This preference is inferred from the realized cross-border demand for manufactured goods, whereby ICs export over three times the value in manufactured goods as LDCs, despite LDCs having over eight times the population of ICs (United Nations 1989). Consumers are expected to use evaluation-based inferencing (see Alba and Hutchinson (1987)) to reason that product quality correlates with the economic level of the producer country.

Evaluation Consistency across Country Class
Industrialized countries have long histories of product manufacturing and innovation, as indicated by the industrial output of ICs, which exceeds that of LDCs by twenty-one times (World Bank 1989). Thus, most positive consumer associations of specific products with countries are expected to involve ICs-Swiss watches, Italian leather goods, French fashions. As a result of these specializations, ICs may be perceived to have expertise in certain products which does not transfer to other products (Etzel and Walker 1974; Nagashima 1970). Therefore, consumers’ rankings of ICs’ ability to produce quality should vary according to product. Conversely, consumers will have fewer product-specific thoughts about LDCs, and whatever quality hierarchy for LDCs that the consumer evokes is likely to be more rank-order consistent across products than that for ICs. Moreover, the impact of country by product specialization among ICs should increase the response range of IC product evaluations relative to those of LDCs.

Country by Brand Interaction
Relative to country of origin, brand is hypothesized to be a superordinate informational cue representing a larger chunk of information with more precise meaning. The market belief in this proposition is indicated by the visual dominance of brand over country in packaging and promotions. Relative to country, claims and associations of makers of famous brands will have higher source credibility because of the maker’s implied warranty. Thus, we might expect country effect to be diminished when the product in question is produced by a famous maker, either because the country cue is not sought, or if found, may be considered redundant. Conversely, country may take on greater importance when the brand is unfamiliar and thus provides no information.

In a recent study, country showed greater effect strength than brand (Han and Terpstra 1989). But in that study, brand manipulation was of internationally traded brands, which would fall within the same treatment level in this study.

Country by Performance Risk Interaction
Prior research indicates that country-of-origin preferences can be product specific, but products chosen for testing have seldom been selected as representing any particular trait construct. An exception is Baumgartner and Jolibert (1977), who found that country effects varied across different types of product risk-performance, financial, social, and psychological (Jacoby and Kaplan 1972).

Product-Country Matches
Few studies to date have systematically examined what underlies a consistent or favourable match between products and countries. A product-country match should occur when important dimensions for a product category are also associated with a country’s image. When there is no such linkage, a mismatch between the product category and country should exist. Consider the following examples by Osgood (1952) and Osgood, Suci and Tannenbaum (1957) about consumer product and country perceptions regarding the image dimensions design and prestige. First, France may be associated with good design and prestige, while Hungary is perceived as very weak with regard to design and prestige. Further, design and prestige may be important features when consumers consider shoe purchases, but relatively unimportant for the purchase of beer. A product-country match would occur when the perceived strengths of a country are important product features or benefits for the particular product category. Hence, a product-country match for [French shoes would be evident. An unfavourable product-country match would occur when the important product features are not the perceived strengths of the country. Hungarian shoes would appear to be an unfavourable match. A favourable mismatch would occur when the image dimensions for a country are positive, but they are not important for the particular product category. Such would be the case for French beer.   Likewise, an unfavorable mismatch would occur when an image dimension is both an unimportant product feature and not perceived strength of the country. Hungarian beer would likely be an unfavorable mismatch.

Understanding favourable or unfavourable (mis)matches can be very beneficial to managers. Such information can be used, for instance, to select or omit specific product or country information in their marketing communications. A favourable match would indicate to managers the dimensions on which they should promote their product’s benefits. In addition, it suggests that a brand that positively correlates with the country-of-origin would be beneficial. Likewise, the presence of an unfavourable match would indicate that country-of-origin information should not be part of the communications strategy. In fact, it may be the case that negative COO effects could occur when the promoted product benefits are not consistent with the country’s perceived strengths.

Evidence suggests that country image perceptions may vary across product categories. Nagashima (1970, 1977) asked respondents to recall what products first come to mind when they think of a specific country. However, his study does not give any insight into what underlies a favourable match between a country and a product class. In other words, the dimensions associated with a particular country were not related to specific product categories.

Some studies have made a more specific attempt to determine the quality perceptions of different product categories across various countries. For instance, Kaynak and Cavusgil (1983) had respondents rate the quality of four product classes across twenty-five different countries. Howard (1989) had respondents rate the quality of six product lines across nine countries. From these studies, product-country match can only be inferred by perceptions of product quality.

Han and Terpstra (1988) assessed the association between five image dimensions and two product categories (automobiles and televisions). They found that country image ratings are not consistent across the five dimensions (e.g., German autos are rated high on prestige, but low on economy). This suggests that country image is specific to the dimensions being measured. They also found that country image ratings tend to be consistent across product categories (e.g., both Japanese autos and televisions have moderate levels of prestige). Since country images on specific product dimensions appear to be generalizable across product categories, Han and Terpstra (1988) concluded that general country images may exist. However, their study was limited to U.S. consumers’ perceptions of two products and four countries (Germany, Japan, Korea, and U.S.). Further research is needed to investigate whether country image variation across product categories exists for a wider range of both countries and products and whether these perceptions exist for consumers outside of the United States.

The cross-national component of COO is important. Research has shown that country image perceptions may vary depending upon the consumer’s nationality. Nagashima (1970, 1977) and Narayana (1981) found differences in country image perceptions between Japanese and American consumers. Crawford and Garland (1988) found differences in quality perceptions across West German and American consumers. Cattin, Jolibert and Lohnes (1982) found that stereotyping differed among French and U.S. purchasing managers. Thus, research that investigates country image and COO needs to consider the perceptions of consumers in more than one country.

As national boundaries are becoming more permeable to economic activities and a growing number of companies are being engaged in more intensive competition in the global marketplace, the research in the fields of international management and marketing takes on greater importance than ever before. Accordingly, the effect of country-of-origin (COO) on consumer evaluation of products, one of the important facets in the international management and marketing fields, is gaining increased attention from academicians as well as practitioners.

The primary theme of COO effects involves the issue of how consumers perceive products originating from a specific country. Over the past three decades, considerable research has been conducted in the area of country image and has produced mixed empirical results (Li, Fu, and Murray, 1997). Some studies have posited that COO is an important informational cue in consumers’ evaluations of products and have empirically demonstrated country equity in their studies (Brodowsky, 1998; Heslop and Papadopolous, 1993; Hun and Terpstra, 1988). On the other hand, other studies have shown minor or no impact of country image (Johansson, Douglas, and Nonaka, 1985).

Economic Development Level and COO Effects
Of various dimensions of country image identified in the COO literature, the economic development level of a country seems to be one of the most significant factors that affect the consumers’ perceptions of product quality and buying behaviours (Baughn and Yaprak, 1993; Crawford and Lumpkin, 1993). Gaedeke (1973) has found that products from more developed countries generally receive more positive evaluations than the products from less developed countries. According to Heslop and Papadopoulos (1993, p.69), “consumers will be more positive toward products from countries which they perceive to be more industrially developed, because these countries are judged to produce goods with greater ‘product integrity’, which they are seeking (to buy).”

Insight on Aggregate Images of Products in the U.S. Market
Much of the COO literature has focused on two countries, the U.S. and Japan, because of their important roles in the world economy and their huge market size. Particularly, the U.S. market has received much attention from marketers and researchers since competition among products in the market has become more intensified as the number of foreign products increased. Measuring country image based on product attributes, many past studies have claimed that Japan enjoys better a country image than both the U.S. and many other countries in many country markets (Han and Terpstra, 1988). Damanpour (1993) has noted that a great deal of studies have shown that U.S. consumers assign greater confidence to Japanese products than those of other major industrial countries. He has further argued that the U.S. consumer considers Japanese products to be reliable, innovative, and technologically advanced. Shimp et al (1993) showed a clear competitive edge for “made-in Japan” products in terms of its enviable position of being simultaneously perceived as a producer of high-quality and low-priced goods. In the study conducted by Heslop and Papadopoulos (1993), the U.S. consumers rated Japanese product quality higher than those of other advanced countries’ products, including Sweden, Great Britain, and Canada, with respect to appearance, workmanship, performance, and price/value.

However, although consumers perceive a particular country’s products to be high quality, they do not always purchase that country’s products. Bilkey and Nes (1982) have posited that there is a tendency for consumers to evaluate their own products more favourably than foreign-made products. Consumers’ preference for domestically produced products over imported ones has been empirically demonstrated in many previous studies (Dickerson, 1986; Narayana, 1981). In contrast, Heslop and Papadopoulos (1993) have concluded that domestic preference is not universal. They have further pointed out that U.S. consumers’ relative views of their own products have fluctuated in the past several years, being quite negative at times. Summarily, Heslop and Papadopoulos (1993) have contended that domestic preference will be higher under the following conditions: when the level of industrialization is high; where the market is filled with the products of foreign manufacturers (open economy), and when economic vulnerability is perceived by consumers. The U.S. is one of the most advanced countries, filled with imported products from many countries, and “buying American” is extensively campaigned in the popular media (Tolchin ; Tolchin, 1988).

Product Quality, Market Presence, and Buying Behaviour
Cross-national studies of the perceptions of COO are important because of their managerial implications for global and multinational companies. Indeed, the success or failure of a company largely depends on the attitudes of those who are in a position to make purchasing decisions. It is well documented that there is a significant relationship between a consumer’s purchasing behaviour and his/her attitude structure. For example, product quality influences the consumer’s behavioural responses via psychological responses. Depending on the consumer’s beliefs about product and categorization, the consumer shows approach or avoidance responses.

In addition to product quality, a high market presence, comprising such factors as wide choice of models and sizes, recognizable brands, much advertising, and “easy to find”, positively influences consumers’ purchasing behaviour. Many researchers have demonstrated that consumers have positive attitudes and behaviour towards superior product quality and a high market presence (Mascarenhas and Kujawa, 1998; Kim and Chung, 1997).

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Impact of Partitioned Country of Origin on Consumer Behaviour Regarding Bi-National Products

A bi-national brand is now a ubiquitous phenomenon. Consumers commonly purchase General Electric refrigerators made in Mexico, Sony telephones manufactured in Malaysia, and Honda Accord sedans assembled in America. These are brands manufactured outside the country that originally manufactured the brand (Chao 1993; Ettenson and Gaeth 1991; Han and Terpslra 1988). Proliferation of such bi-national brands requires a new perspective in dealing with country of origin (Coo) concept. Traditionally, Coo concept was treated as equivalent to the “made in” concept (Head 1988; Thorelli, Lim, and Ye 1989). Studies dealing with Coo focused on images of manufacturing countries. Bi-national brands, however, brought us to consider a new concept called “country of brand (or Cob)”. Cob means country image derived from the country in which the brand name originated. For a bi-national brand, a country from which the brand originates is no longer the country in which the brand is manufactured. In assessing a bi-national brand, consumers may utilize the image of the brand’s country. Suppose there are two unfamiliar brands, and one brand originates from Japan and the other from the Philippines. If all others are the same, most consumers would develop more positive initial perceptions toward the Japanese brand than the Philippine brand. This suggests that Cob might have an effect on the image of brand. While Cob is a relatively new concept in the area of Coo studies, an analogous concept, country of design, has been explored by Chao (1993).

Besides Cob, another sub-concept needs to be further partitioned out from Coo. Coo has been commonly defined and measured at a specific product class level (Chao 1993; Cordell 1992; Eroglu and Machleit 1989; Han 1989; Han and Terpstra 1988; Hooley. Shipley and Krieger 1988; Lawrence, Marr, and Prendergast 1992; Thorelli, Lim, and Ye 1989; Wall, Liefeld, and Heslop 1991). Roth and Romeo’s (1992, p. 477-97) definition is a good example. In their study, they define Coo as “the overall perception consumers form of products from a particular country, based on their prior perceptions of the country’s production and marketing strengths and weaknesses (Roth and Romeo 1992, p. 480).” Studies based on this approach always employ certain products or product categories and measure Coo at the level of specific product categories (We call this Cmpi or Country of Manufacture Product specific Image). However, this traditional approach of Coo covers only a limited domain. A more general facet of country image remains uncovered (Johansson 1989; Parameswaran and Yaprak 1987). Consider an Iraqi carpet from the viewpoint of American consumers. While American consumers may evaluate the manufacturing ability of carpets by Iraq as very high, they may not evaluate the country or people of Iraq as high. In assessing an Iraqi carpet, consumers may be affected not only by the carpet manufacturing ability by Iraq, but also by the overall country image of Iraq. German automobiles assessed by Israeli buyers can be another example (Johansson 1989). To deal with this rather basic yet more general domain of Coo, a group of researchers suggests measuring Coo at the overall country image level (Hooley, Shipley, and Krieger 1988; Lawrence, Marr.Prendergast 1992; Parameswaran and Yaprak 1987). The definition of Coo at the overall country image level (which we can call Cmoi or Country of Manufacture Overall Image) is well illustrated by Bannister and Saunders(1978, p. 562-70). They defined: “generalized images created by variables such as representative products, economic and political maturity, historical events and relationships, traditions, industrialization and the degree of technological virtuosity will have effects upon consumer attitudes “. This approach does not tie Coo effect with a specific product or products produced in a specific country. Rather, it implies general images such as cultural, economical, or political images associated with a country have effects on consumer evaluation of products made in the country.

Along with the issue of types of country image, the relationship between brand image (Bi) and Coo (more specifically Cmpi) requires a new spotlight. The proliferation of binational brands made roles of brand image and Cmpi, in consumer evaluation of binational brands (Ebb), one ofthe foremost concems of many multinational companies (Ettenson and Gaeth 1991). According to a Wall Street Journal report, Chrysler dealers refused to carry Plymouth and Dodge K-Cars manufactured in Mexico because they feared American consumers would not purchase the brand once they realized that the cars are manufactured in Mexico (Nag 1984). Due to such a possible consumer backlash, multi-national companies take various precautionary approaches to protect their established brand image when they determine a sourcing country (Johansson and Nebenzahl 1986). However, relationships between Brand image and Cmpi in consumer evaluation of a binational product remain unclear (Ettenson and Gaeth 1991).

While Han and Terpstra (1988) and Wall, Liefeld, and Heslop (1991) reported that the Cmpi effect is stronger than brand image, Cordell (1992) reported that effect of brand image could be stronger or weaker depending on product types. More investigations are required for the interaction relationships between brand image and Cmpi.

The brand name is an image or extrinsic variable, which works as summary statistics in consumer decision-making (Erickson, Johansson, and Chao 1984; Han 1989; Huber and McCann 1982). As an extrinsic or image variable, brand name is commonly utilized as a proxy of quality evaluation or some other overall evaluations of a product whenever consumers do not have any specific ideas about the product (Jacoby, Olson, and Haddock 1971; Szybillo and Jacoby 1974). Categorization theory states “Things are in the same category if and only if they have certain properties in common. These properties define the category.” (Göktürk, 2004, p. 3) According to categorization theory, attitudes toward a stimulus are directly related to attitudes associated with the activated category (Alba and Hutchinson 1987; Fiske 1982; Sujan 1985). When consumers face a brand name associated with positive image, consumers will infer positive attitudes toward the brand. Even though a product is made in a different country to the one originally associated with the brand name, consumers may regard the product as belonging to the brand. Therefore, when the image generated from a brand name (i.e., brand image or BI) is good, consumer evaluation of a bi-national brand (Ebb) will be favourable. When brand image is bad, consumer evaluation of a bi-national brand, (Ebb) will be unfavourable.

Coo is considered as an image or extrinsic variable. Thus, Coo serves as a proxy of quality evaluation for consumers (Han 1989; Johansson 1989). Consumers are willing to pay premium prices for a product made in a specific country such as French perfumes, English china, German machineries, Italian fashions, and so on (Kapferer 1994). The effect of Coo on consumer evaluation of a bi-national brand is generally tied with image levels of the related country. In other words, when a country name in the Coo label is associated with a good image, consumer evaluation of a bi-national brand becomes favourable. When a country name in the Coo label is tied with a poor image, consumer evaluation of a binational brand becomes unfavourable (Cordell 1992; Roth and Romeo 1992; Wall, Liefeld, and Heslop 1991). In short, the effects of Coo on consumer evaluation of a bi-national product are positive.

As discussed early. Coo is divided into three sub constructs: Cmoi, which represents overall image of manufacturing country, Cmpi that represents specific product related image of manufacturing country, and Cob, which represents overall image of brand country. Because Cmoi and Cmpi are concepts derived from the traditional Coo concept, which deals with the image of manufacturing country, the effects of these two sub constructs of Coo on consumer evaluation of bi-national brands (Ebb) will be positive. The role of Cob on Ebb, however, requires an additional explanation because Cob is not related with manufacturing but with the origin of brand. According to Chao (1993), image of country of design has a positive effect on consumer evaluation of bi-national products (Ebb). Although country of design is not the same as Cob, they may overlap significantly in domains because many bi-national brands are designed in the country of brand. Therefore, it may be safe to assume that Cob’s role is similar to the role of country of design. Consequently, all three-sub constructs of Coo are hypothesized to have a direct positive effect on consumers evaluation of bi-national brands (Ebb).

Cmoi and Cmpi are related to each other the same way as a basic category and a subcategory are related to each other. In Cmoi, consumers’ knowledge about the category of a country is very limited and it can be said that they have very less information at a very basic level to put a country into a category depending on the country of origin. If a country is economically developed than the consumers just know that that country is at the top in the category. In Cmpi, consumers have in depth knowledge about the effect of a country of origin on a particular product.  According to categorization theory, when consumers know about the basic level category then they can have knowledge about the subcategory. (Mervis and Rosch 1981) so, when consumers listen a country name, they initially recall their general knowledge about that country (cmoi) and then they can focus on a particular product of that country (Cmpi). If the consumer’s general knowledge about a country is positive then the consumer will have positive image of any product of that country and vice versa.

Although Cob and Bi relationship is between a country and a brand, it can be considered as a basic category and subcategory relationship as in the Cmoi and Cmpi case. Cob, which represents general image of a country, can be considered as a basic category while Bi, which represents specific image of a brand originated from the country, can be considered as a subcategory. In a categorical knowledge structure, therefore, Cob is likely to be formed and thus retrieved before Bi. For example, upon facing a brand name, consumers will retrieve more basic and general Cob first, which affects forming of specific Bi later. More specifically, if consumers hear that an unknown brand is from a country for which high Cob is likely to occur, image of the unknown brand will go up immediately. On the contrary, if consumers hear that the unknown brand is from a low Cob country, image of the brand will drop instantly.

Consequently, Cob’s effect on Bi could be hypothesized as positive. Because both Bi and Cob have an effect on Ebb and Cob has an effect on Bi, Bi can be considered as a mediator. Based on this; Besides direct effects, brand image and Coo may have an interaction effect on consumer evaluation of a bi-national product. Two studies reported significant interaction effects between Bi and Coo on consumer evaluation of a binational brand. Specifically, Han and Terpstra (1988) found significant positive interaction effects in five out of six models in their study. Wall, Liefeid, and Heslop(1991) also found a significant result out of 12 tested models in their study. It is quite likely for consumers to purchase a brand with good images than a brand with poor images because a brand with good images can give more satisfaction, self-esteem, and prestige to them. Naturally, consumers will show more interests and higher involvement in brands with good images than in brands with poor images. Therefore, Coo information related to a brand with good images will be a much more important decision making factor than Coo information related to a brand with poor images. As a consequence, effect of Coo on consumer evaluation of bi-national products will be greater when the involved brand is associated with good images, and will be weaker when the brand image is poor. As discussed in the previous section, because Cmpi is regarded as a mediator of Cmoi’s effect on consumer evaluation of bi-national products, interaction between brand image and country image means interaction between brand image and Cmpi. Based on this; .Specifically, Cmpi’s effect is greater when Bi is high than when Bi is low.

In a normal situation, a brand name will be one of the first inferential cues consumers employ to evaluate a product. Consumers’ utilization of Cmpi information as an inferential cue will occur following the recognition of the brand name because consumers would find Cmpi information at the back or bottom of the product after noticing the brand name of the product. In case of Sony TV made in China, for example, a consumer will form his or her initial affective responses toward the TV set the moment s/he sees the brand name “Sony”. However, his or her affective responses toward the Sony TV set could be changed after s/he notices that the TV set is made in China, not Japan. This example shows, if other cues are absent or ignored, a consumer’s evaluation of a bi-national brand will be primarily determined by brand image rather than by Cmpi. From this viewpoint, Han and Terpstra’s (1988) finding in which Cmpi has much bigger impact on consumer evaluation of bi-national products needs a careful review. While the importance of brand image in consumer decision making is largely accepted without being challenged, effect of Cmpi is often questioned (Peterson and Jolibert 1995). Moreover, Han and Terpstra’s (1988) finding was based on a repeated measure design which is often criticized for a possible implication with threats of demand artefacts.

 

Conceptual Framework of the Core Consumer Buying Process

The Core Process
The conceptual framework is an integration and adaptation of three related strands of thought: first, the theory of extensive problem solving originally developed by Howard and Sheth (1969); second, the model long used by General Motors in its analysis of automobile purchases (see, for example, Engel, Wales and Warshaw (1971)); and third, the CAPP (Continuous Advertising and Promotion Project) analysis first developed by the Leo Burnett advertising agency (see Maloney (1966)).

These frameworks all postulate a sequential process in which the prospective buyer moves in hierarchical stages toward a gradually more refined choice set, accompanied by an increasing commitment to purchase (see Alba, Hutchinson and Lynch (1991); Bettman, Johnson and Payne (1991); Kotler (1991,p. 163); Schiffman and Kanuk (1991,p. 557)).

The hierarchy of effects focuses on the mental processes involved in trying a new product, with the consumer moving from advertising exposure and awareness successively towards a trial and repeat stage (Lavidge and Steiner 1961).

Howard and Sheth (1969) broadened the scope by introducing the concept of an evoked set for which evaluations of attitudinal beliefs were necessary before a final choice. The GM modelling introduced product-specific criteria by identifying a consideration set (consisting of models perceived to offer good value) and by introducing dealer visits as an intermediate level of commitment to purchase (see Engel, Wales and Warshaw (1971,pp. 250-60)). The CAPP analysis introduced explicitly the notion that marketing actions can have multiple and different effects at different stages of the hierarchy (Maloney 1966).

These concepts and previous research on product purchases (Peltola 1987) were used to construct a model of wristwatch buying. The process involves a quality rating of the watch make, followed by an assessment of the make’s value for the money, in which price and after-sales attributes are taken into account. This establishes a consideration set, which in turn might lead to a dealer visit, and finally purchase.

Country of Origin
The next step is to introduce the country-of-origin construct through which the Indian connection will be linked to the core process. The country-of-origin (CO) construct is operationalized as a rating of India as a manufacturer of watches (Baughn and Yaprak 1993; Johansson and Nebenzahl 1986). Such a product-specific approach is necessary in order to generate predictive direction for the construct. Since a country is good at some things and not at others (e.g., Indian leather versus Indian automobiles), the general country image is not a useful measure of the CO construct (although the image may well be an underlying causal driver of the perception of a particular country as a producer). Many of the earlier CO studies (e.g., Etzel and Walker (1974); Gaedeke (1973); Lillis and Narayana (1974); Nagashima (1970); Narayana (1981); Reierson (1967); Schooler (1965)) employed single-cue designs in which CO was the only manipulated variable which led to an overstatement of the CO effect relative to its actual impact in situations where other cues are present (Bilkey and Nes 1982). The multiple cue approach (Johansson, Douglas and Nonaka 1985; Hong and Wyer 1989; Davis, Kern and Sternquist 1990) is necessary if remedies are to be developed to overcome negative CO.

Despite the shortcomings of single-cue studies, they indicate that products from developed countries generally receive more positive evaluations than products from less developed ones (Gaedeke 1973; Schooler 1965). Studies including Indian and Eastern products have typically shown very low evaluations for them (e.g., Bannister and Saunders (1978); Chasin and Jaffe (1979)). A longitudinal study of Finnish consumer attitudes from eight countries from 1975 to 1990 found Indian products not only lowest ranked every year but also with a declining trend (Darling 1990). Wang and Lamb ( 1983) have proposed the existence of a hierarchy of countries based on their economic, social and cultural systems and their relative stages of economic development. A product from a country low in this hierarchy would be perceived to be of lower quality than a similar product from a country higher in the hierarchy.

Based on past research, one can visualize multiple effects from the CO construct. First, since the CO effect on evaluative beliefs has been shown to be consistently strong, a product’s rating should show the influence from CO (Johansson, Douglas and Nonaka 1985; Han 1989; Schooler 1965). Country images will affect the acceptable price differential between domestic and foreign products (Johansson and Nebenzahl 1986; Schooler and Wildt 1968) and lower prices have been shown to offset the bias from CO (Johansson and Thorelli 1985). Given the importance of price, the relative low price of the Indian watch will lead to a “Indian” effect, but this is not a true CO phenomenon, but a price effect.

The “consideration set” would most likely show a strong CO effect due to the impact of behavioural norms on the customer (Johansson 1989). An Indian watch would face some difficulty in drawing serious attention from consumers who care about their peer group if the group is opposed to India. Similarly, if dealerships would stress the Indian CO of the product, dealer visits would take on an important symbolic role.

At the last stage, one might again expect the CO effect to enter, since patriotic convictions about “buying American and European” might emerge (Han 1988). Respondents have indicated a willingness to buy domestic products even at a higher price to help the domestic economy, increase employment, and enhance national pride (Wall and Heslop 1986). Possible counter-argumentation by the farmer at the last moment can include individual anti-Indian feelings based on political and historical events (Carlzon 1987).

The consumer’s buying process is therefore conceptualized as a sequence of hierarchical stages, each of which may be influenced by the CO of the watch. One can think of the Indian CO indicator as a “red flag” (both literally and figuratively) which might affect the consumer at several levels in the decision-making process. The empirical analysis then is used to ascertain at which level the CO makes a significant difference over and above the other factors that influence the consumer. Of course, this relatively simple conceptualization does not say much about the actual mental processing the consumer goes through. For example, it is not clear if a significant CO “red flag” means that the consumer rejects technical specifications as “not trustworthy” or whether the CO indicator serves as a summary construct of omitted variables (cf. Han (1989); Hong and Wyer (1989)). However, for the purpose of assessing empirically the Indian CO effect, at this stage it seems more critical to identify where in the buying process the effect might be registered, its magnitude, and to what extent it is positive or negative. Later work might dwell into underlying behavioural mechanisms in more detail.

Target Market Characteristics
Modelling the effect of the Indian connection only through a main effect of the rating of the country as a producer of watches is too limited in the present context. Factors such as social status, ethnocentricity and political convictions may well enter the decision process interactively with the CO indicator (Shimp and Sharma 1987). Consequently, it is necessary to model individual differences among consumers and their likely impact on the process variables.

Although the list of potential variables is long, four major constructs can be identified from the literature. First is product familiarity. Unfamiliarity with brand or product can be expected to result in a hesitation to purchase as well as an unwillingness to include it in the consideration set (Alba, Hutchinson and Lynch 1991). Yaprak and Parameswaran (1986) noted greater utilization of CO in product categories where specific product information was not substantial. Given its recent introduction and low market penetration, the Indian watch can be expected to suffer from lower relative familiarity. As with price, however, this will result not in a true CO effect but simply in an effect of lack of familiarity.

A second important construct, related to familiarity, is the risk-taking attitude of the consumer. The speed of adoption of a new product depends crucially on the risk attitudes of individuals (e.g., Rogers (1983)). Hampton (1977) found a general increase in perceived risk for products made abroad. The finding by Schooler, Wildt and Jones (1987) of a strong impact of product warranty in influencing choices between foreign and domestic products points to a basic risk-averse nature of decision-makers. Since many consumers will perceive the Indian watch as new, risk factors will enter into the process significantly. Again, this is not a CO effect as such, but a new product effect.

The last two individual-level determinants do reflect the Indian connection explicitly. One construct represents the degree to which the consumer is ethnocentric and pro- Europe in outlook. One would expect at least some consumers to adhere to a norm of buying American and Eruopean, avoiding the purchase of a foreign-made watch regardless of its merits. Similarly, one would expect the political leanings of some consumers to colour their attitude towards an Indian watch, possibly generating an anti-Indian stand. Wang and Lamb (1980) found that their respondents were more inclined to purchase items from free nations than communist nations. Although some have found that Americans and Europeans generally favour trade with communist countries (Hisrich, Peters and Weinstein 1981), it does not necessarily mean that they would personally purchase goods from such nations.

A priori, it is not clear exactly where these constructs will enter into the process. The risk factor would seem to most likely increase in importance the further down the hierarchy the individual is. The risk-averse farmer might still consider a tractor, hut not necessarily visit a dealer. By contrast, pro-U.S. and Europe and anti-Indian sentiments might be more pronounced in the beginning, since they represent basic affects which will not be questioned. They may, however, also resurface at the last minute as the final decision is being made. The theory underlying the model is not strong enough to allow such specific hypotheses to be put forward with a great degree of confidence; therefore, estimates will be made of what relationships are significant in more of an exploratory manner.

The Complete Model
Some additional variables need to be introduced to complete the model. Price is a necessary factor in the “value-for-money” factor and the likelihood of purchase stages, but could conceivably also influence other components of the process. After-sales service needs to be included to augment the straight product rating and will accordingly be specified as a determinant of value-for-money. A logical antecedent to the product rating is a string of salient product attributes, but because of the large number of possible attributes, incorporating these in the analysis of the core process requires a separate study (Peltola 1987).

Country image is sketched in as a determinant of the CO rating, although image is not explicitly measured. Similarly, there is no explicit measurement of the brand images, and the role of these constructs is only tentatively indicated. The implication of their likely but unmeasured presence is that the equation with the determinants of the initial product-rating component is possibly underspecified, and the estimated parameters are not necessarily reliable.

 

 

 

 

 

CHAPTER THREE

METHODOLOGY

Case Study
This research is based on a case study of Indian Watch Company named Titan by Tata group of companies. India started manufacturing watches in 1961. Pandit Jawaharlal Nehru took this daring step to fulfil his dream of using Indian watches. So, the first watch company was established in 1961. Indians did not have any past experience of manufacturing watches so Japanese manufacturer, Citizen, provided assistance to India by offering training to Indian people in their Japanese watch manufacturing plant. The first Indian watch was manufactured in 1962. Since then, Indian watches are manufactured very successfully.
Titan watches came into being in 1987 as a result of a joint venture of Tatas and Tamil Nadu Industrial Development Corporation. There were two main strategies set by Tatas. They decided to manufacture only digital and analog watches and will not go for mechanical watches. Their second strategy was to set up a plant that would be able to manufacture watches that would be of different prices and designs. The main aim of this strategy was to gather the attention of consumers of all ages, choices and economical classes.
More than 20 million watches are required in India every year. Most of the consumers demand for watches of range up to Rs. 1000. Titan watches are said to contain the important features of famous brands at very economical cost. Titan watches are very popular in India and Middle Eastern countries. Titan also tried to gather some attention in the European market but it failed to get so because of the negative country of origin effect.
There is no doubt about the quality that Titan provides for a very economical price. Europe is famous for its famous watch brands such as Rolex. Swiss watches are considered as matchless. Titan watches are capable of competition with all the famous brands due to their high quality and low prices but Indian origin is hindering the success of Titan in European market.
This case study provides information about the effect of country of origin and also provides some useful recommendations that Indian manufacturers should consider to compete in the European business world.
Research Design
This research involves primary research method. Primary research method was considered as the best method to conduct the research because current data is obtained with this method. The survey approach was considered as the best approach for the collection of data because the answers obtained from the survey helped the researcher to make recommendations for the watchmaker, Titan, to get success in the European market. The survey approach was used to investigate empirically the association between CO variables and the various process variables indicated in the complete model. The target was the consumer likely to be in the market for watch of the kind manufactured by Titan.

Data Collection Procedure
The data were collected by personal interview. Individual interviews centred around a comparison of eight different makes of watches, made in six different countries: Titan in India; Bulova in U.S.A; Nato in Germany; Rolex in Switzerland; Squelette in Italy; Casio in Japan and Christi Oneil in Korea. The purpose of using other brands of different origins along with Titan is that the COO effect will be easily explained. Readers will be able to understand that Titan due to Indian origin had failed where as Rolex due to European origin was a success. Several of these makes (not India) are manufactured in other countries as well. Although the questionnaire did include questions about possible countries of manufacture, the study does not address issues of multinational production per se. The fact that not all respondents identified Titan correctly as an Indian watch is explicitly introduced in the data analysis.

The comparison between the makes was made based on one-sheet product descriptions of eight models shown to the respondents in a rotated sequence to avoid any order bias (Churchill 1991, p. 378). The watch model chosen was the standard used by the targeted consumers. The product descriptions were copies of the standard specification sheets provided by the manufacturer with only the brand name shown. The country of origin was not identified.

Making product descriptions available achieved the following benefits: first, the product stimulus was standardized, and the problem of selective recall avoided; second, product ratings could be based on more precise information; and, thirdly, it helped increase the external validity of the results in that the comparison task reflected the typical choice situation more closely.

Limitations and Boundaries

This procedure also had drawbacks. Respondents are asked to consider makes they may not have considered otherwise, leading to an upward bias for lesser-known makes such as Titan. On the other hand, many consumers could be expected to learn more about them once they were in the market for a watch. Another drawback is that there is a considerable amount of information to process. Much detailed technical information was provided (on approximately forty different issues). With eight comparisons to make, respondents are likely to engage in simplified processing. This means that the typical compensatory multi-attribute model might not be directly applicable (see, for example, Wright (1974,1975)). Given the complexity of the data analysis necessary to identify the decision rule used, this study concentrates on the resulting product rating and related overall assessment of the watch make (although attribute scores on various items such as perceived reliability and expected performance were collected). The choice is based on the consumer’s personal preferences, such as colour, ideology, dealer, or the watch’s country of origin (Peltola 1987).

Questionnaire
The survey questionnaire followed the conceptual framework closely. After a few introductory questions about the consumer and his/her watch, the comparisons among the eight models were made. The product spec sheets were shown one at a tune, and after recording several perceptual measures, the core process variables were measured with explicit reference to the make. This approach was taken because pre-tests showed that consumers had difficulty distinguishing among models and makes.

The main constructs were measured with standard rating scales and Likert-type “agree-disagree” scales. Each stage of the core process was measured using a seven-point scale; e.g., respondents were asked to rate a watch in terms of value for money from “very good” to “very bad.” Each respondent was also asked his/her belief of the make’s country of origin, his/her familiarity with the make, and his/her rating of the country as a manufacturer of watches. After the comparisons, the questionnaire elicited information about perceived countries of origin for each make. Then the respondents provided a self-evaluation on three batteries of Likert-type scales. One was a ten-item battery on ethnocentrisms, drawn from the scale first developed by Shimp and Sharma (1987) and further tested by Netemeyer, Durvasula and Lichtenstein (1991). A second was a set of thirteen risk items, drawn from Rogers’ (1983) study of innovations in farming. A third set of eight items measured the perceptions of the India. Finally, the consumers were asked to indicate their political leanings using two seven-point scales (“Liberal Conservative,” and “Pro-Democrat – Pro-Republican”).

Consumer attitudes were measured with the help of 7-point Likert Scale. Consumer perceptions of the Indian watches in comparison to other watches made in other countries were measured with the help of the 7-point Likert Scale. There were two poles of the Likert Scale ranging from least preferred to most preferred. The 7-point Likert Scale also measured the choice of consumers regarding the country of origin of the watch. Country image has four individual dimensions and these four dimensions were also measured with the help of the scale.

Sampling
Sample comprised of males and females that were found in the watch market. The researcher considered the watch market as the best research site because nearly all of the respondents had information about watches of different brands and origins. Most of them were young and highly qualified though some less educated and older people were also interviewed. The sampling was guided by a desire to approach consumers who would have access to the new Titan watch. Concentrating on a specific consumer community would hold constant factors such as dealership quality for the various makes or differences in use due to variations in usage conditions. The Titan and the other six makes were available in the respondents’ market area.

Of forty-six consumers, three were used to pro-test the questionnaire, leaving forty-three for the final sample. The data were collected in the form of a survey. All interviews took place in the respondent’s home.

In the pre-test of the questionnaire, two consumers who were known to own Titan watch were deliberately selected in order to make sure the relevant concerns were covered by the questionnaire. None of the final respondents had direct experience with Titan, making the sample more homogeneous. Therefore, the sample cannot yield evaluations based on experience or customer satisfaction.

Measures

Constructs related to respondent characteristics were specified further by identifying the dimensions of the underlying constructs and reducing their number using principal components analysis.

Two quite separate and more precise measures were derived from the battery of risk items. “Risknew” was computed as an average of items “I like the challenge that new things bring” and “I like to be one of the first to try a new product.” “Averse” is an average of “I feel much better when I know what I am up against” and “I prefer to wait and not buy until the products have been on the market for a while.”

For each of the forty-three consumers, a total of seven watches was evaluated generating a total of 301 observations (cf. Johansson, Douglas and Nonaka [1985]). Thus, non-brand-specific linkages can be observed using the full set of observations, while limiting the brand-specific and country-specific estimates to their respective watch observations.

Several dummy variables were created to facilitate the analysis. “Europe” was scored as “1” if the respondent believed the watch was of European origin. The ethnocentric “Pro-Europe.” variable was multiplied by “Europe” to generate a regression variable that would pick up the expected shift in the regression line whenever the consumer thought the watch was European. Similarly, “Correct” was coded as “1” when the respondent gave the correct CO for a watch. Then the CO rating for the country was multiplied by this dummy before entering the regression; i.e., the effect from the country rating will enter only with a correct identification. If the identification was incorrect, the rating for this incorrect CO was entered into the analysis. The rationale was that the assumed country’s rating would be the operative factor.

The dummy variable “Indian” was scored “1” for a watch that was thought to be of Indian origin. The dummy variable was multiplied into the two “anti-Indian” variables to produce regressors that would only enter when a watch was thought to be from India. It was also used to produce a new product risk variable, by multiplying with “Risknew,” the attitude towards trying new products, for those who thought the make was Indian. The same “Indian” dummy was used to specify the operative regressor for the “Trade” and “Nochange” variables. These “anti-Indian” variables can only be expected to enter when the assigned CO is the India.

To relate the risk variables to the problem of introducing new makes and persuading consumers to try an unfamiliar make, the “Averse” risk variable was multiplied by the familiarity measure, creating an interactive variable, which allowed risk aversion to be a negative factor for unfamiliar makes. Similarly, the new product “Risknew” measure was multiplied by a dummy indicating the Titan make, generating a variable which allowed for the (possibly positive) effect of consumers who like a challenge to respond favourably to a new brand. The correct India dummy also multiplied the “Risknew” measure. The purpose was to generate another variable that would enter only for those consumers who correctly identified Titan as an Indian watch.

Preliminary Data Analysis
ANOVA was used for the analysis of data. ANOVA was used to find out the effect of the independent variable(s) on the dependent variable(s). ANOVA included t-tests and correlation. The significance level was 5 % when ANOVA was performed.

Sample Profile

It was exciting to know that the number of male and female respondents was almost equal. There were 22 males and 21 females (see Table 1). It was also found that most of the respondents were high educated, 30 years or younger and possessed marital status of single. Ethnic profile also showed variations such as there was 33.6 percent European respondents, 47.8 % Chinese respondents and 18.6 % Indians. Purchasing Attitude

Respondents showed different attitudes towards the watch purchase. Indian respondents preferred to purchase Indian watches while respondents from other countries preferred to purchase European brands. So, majority of the respondents showed the purchasing attitude depending on the country of origin. Majority considered that European brands are highly successful and reliable.

The average number of watches owned by the forty-three respondents was over three and 3.4 years had passed since they last purchased a watch.

The first area of interest is the examination of the overall familiarity and evaluation of watches (see Table 3). The Titan is the least known and the lowest rated among the selected makes. The Rolex is best known and highest rated. Testing the difference in rating between the Titan and the other makes combined showed significance at the 0.000 level (one-tailed t). Also shown are ratings of countries as watchmakers. Again, India is very low (as is Korea). Testing the deviation of the Indian rating from that of the average country showed again significance level of 0.000 (one-tailed t).

Since the make’s country affiliation was not mentioned in the product descriptions, it was necessary to check on the CO awareness among the respondents. Not all respondents were expected to be aware of the Titan’s source country. Previous research would imply that consumers who know that the Titan is from India would rate the make lower than those who do not. The results are presented in Table 4.

Respondents split almost evenly. The differences in ratings are not in line with the simple hypothesis. The consumers who are aware of the connection to India tend to rate the Titan slightly higher than the other respondents (although not significantly so; the t-test yields a significance of .230). Furthermore, when it comes to the other core process variables, such as likelihood of purchase, the aware respondents are clearly more positive.

The explanation for this rather baffling result must be that some of the knowledgeable consumers rate both Titan and India fairly high, while others rate them low, making their combined average come out similar to that of the unaware respondents. This can be checked by running a small regression of the rating against both the awareness factor–with the hypothesized shift in means–and the country rating for those who know Titan is Indian. The result is presented in Table 5.

The results fall into place. The negative 2.6 coefficient shows that the Indian connection does make the expected difference, shifting the evaluation down for those aware of it, but then with a smaller upward countertrend–the positive .66 coefficient–for those who rate India as a relatively good watch maker. Both coefficients are clearly significant. The basic CO effect is to downgrade the watch as per the preconception, but for a few respondents the Indian connection is not an entirely negative factor.

For these relatively small consumers with high product ownership, watches play an important role. They rate Titan lower than average, as they do India as a watch manufacturer. About half of them are unaware of Titan’s country of origin, but for some who know this, the connection is not necessarily negative since they rate the country relatively high as a watch manufacturer. These results give quite good face validity to the data.

The relationships between the core process variables test for increasing purchase likelihood in this sequential model. The simple correlations between the core process variables are presented in Table 6. The correlations are generally high and in the expected direction. The decisions to consider a brand and to visit a dealer are closely related. Similarly, the probability that the brand will be bought is much higher once the brand is in the consideration set and a dealer is visited. The overall rating of a make is positively correlated with these latter process steps, but the correlations are lower. The empirical analysis that follows will determine what other factors (including the make’s country of origin) is influential in the buying process.

 

 

 

 

 

 

 

 

 

 

 

CHAPTER FOUR

DISCUSSION

India vs. Other Countries
It was confirmed from t-test that consumers prefer watches that are manufactured in European countries. They do not consider Indian watches as standard products and thus they do not show any positive buying behaviour about them.

It is quite visible from the results that Indian products face extreme difficulty in competing with products that are produced in developed countries. Indian consumers prefer to use Indian watches but this preference is not due to the positive country image. This may be due to the fact explained by Chao’s (1989) and Kaynak and Cavusgil’s (1983) that consumers evaluate their local products more favourably.

Each step of the process was estimated separately. The recursiveness of the model allows the use of ordinary-least-squares estimation to derive unbiased and efficient parameter estimates [Goldberger 1964, pp. 354-55]. in all the submodels estimated, the right-hand side included the same full set of regressors, but only those significant at the .10 level or better are reported (except for those variables related to India and Titan). The results are provided in Table 7.

The Product-Rating Sub-model
The first component of the complete process is the overall rating of the watch makes. In interpreting the results given in Table 7, it is important to remember that not only Indian watches are analyzed. Thus, the country rating refers to all the countries included, and price refers to prices on all the seven watches. The “Familiar ; Averse” interaction likewise refers to all watches. By contrast, the “Indian effect” is a dummy that only enters the equation for the Indian watch, as is also the case for the “Pro-India Trade” variable. The “Pro-Europe” variable enters only for a European-made watch.

The results demonstrate the strong negative product rating from the Indian connection, on the margin. The negative Indian effect is counterbalanced to some extent by the positive effect from those consumers who think that the Europe should trade with India to help improve the economic situation. There is a significant “Pro-Europe” effect, suggesting that those who prefer to buy European also rate European-made products higher. There is also a very significant familiarity effect, especially pronounced among the respondents who are risk averse. Since Titan scored low in familiarity, this one factor hurts its product ratings. As also, found by earlier research (e.g., Johansson, Douglas and Nonaka [1985]) with the product attributes not explicitly introduced in the model, there is a strong positive price effect. Higher priced watches are simply rated higher.

Titan suffers from two facts: being from India (only consumers who know about the association are behind the negative results) and being a less known make, regardless of CO.

The “Value-for-Money” Sub-model
The product rating is a significant positive influence on the perceived value for money, while price is a significantly negative influence (see Table 7). The service aspect, which helps define the augmented product, is also, as expected, a very strong positive factor.

The familiarity effect is a significant factor among the risk-averse people. Again, there is a straight “India effect,” this time positive. It suggests that on the margin, given the ratings and prices, the consumers who know Titan’s origin give it high scores in terms of value for money. Comparing the magnitude of the coefficient estimate (3.71) with the negative product rating (-2.34), the net effect is positive; i.e., consumers may rate Titan down but still consider it good value given its low price.

The political variable “Liberal” is a significant factor as well, although with an unexpected negative sign. The expectation was to find respondents identifying themselves left on the political spectrum more positive in their evaluations. The likely explanation is to be found in the shifts of cultural values on the liberal-conservative spectrum [Inglehart 1990]. Inglehart demonstrates that in the 1980s the non-economic dimension (abortion, national defence) started to dominate the economic dimension (public ownership, aid to developing nations) in determining self-ratings of political leanings, and that the relationship between the two dimensions has turned insignificant and even been reversed. Thus, the conservative consumers in the sample (who according to Inglehart may be against abortion and for national defence, but still wanting to support Third World countries) are the ones who on the margin consider Indian watches as good value for the money. In turn, consumers with liberal leanings may not be the best target for Titan.

The Consideration Set
Apart from the clear effect from the “Value-for-Money” rating, the results for the consideration set demonstrate the strong impact of familiarity. To be considered, a watch needs to be known to all consumers, not only the risk-averse ones (see Table 7).

There is some impact from a pro-Europe. sentiment, although not quite significant at standard cut-off levels. The same holds true of the negative effect from those exhibiting doubts about the changes in India. Again, there is a direct Indian effect, this time positive but not quite significant. This indicates that some consumers would have an interest in considering an Indian watch, over and above its perceived value for money.

Finally, there is a significant negative effect from the attitude toward trying new products. This variable affects the consideration set only when the consumer knows of the Indian connection. It suggests that even if someone would find it interesting to try a new product, they are not interested in an Indian product. This would suggest that middle-of-the-road buyers be targeted over those interested in new and challenging tasks.

The Dealer Component
The dealer step is dominated by the preceding consideration stage as shown in Table 7. The decision to consider a watch seems tantamount to deciding to visit a dealer. There is an added CO effect, indicating that consumers are more willing to visit a dealer offering watches from highly rated countries. The result for the “Risknew” variable suggests that the Titan dealer is more likely to be visited by a consumer who likes the challenge of a new product. Here the newness overshadows the Indian connection, affecting also consumers unaware of Titan’s origin. The Indian connection in itself is no factor in deciding to visit a dealer. Biases in terms of anti-India or pro-Europe do not seem to matter.

The Likelihood of Purchase
The dealer visit is a major factor in increasing the likelihood of purchase. The results in Table 7 also indicate strong and significant influence from familiarity with the make. Apparently, in the last analysis, regardless of the perceived product merits or value for the money, there is a significant tendency for the consumers to go with a true-and-tried make rather than an unfamiliar one.

While the finding above is discouraging for a new entrant, a more encouraging result for Titan and other Indian marketers in Europe is that there is an indication that the way consumers feel about supporting India through trade also influences their own purchase intentions. This result matches the results of earlier studies (e.g., Wang and Lamb [1980,1983]; and Hisrich, Peters and Weinstein [1981]) on favourable attitudes toward trade but suggests that consumers may also be willing to take positive steps on their own. The fact that price does not enter into the last stage may mean that the price that matters at this stage has to do more with credit conditions, trade-in, and other negotiable matters. Thus, the consumer feels reluctant to use list price as a decisive influence on his planned choice of watch.

 

 

 

 

 

CHAPTER FIVE

CONCLUSION

It can be concluded that Indian products are less preferred as compared to products that are produced in a developed country. Indian consumers also prefer products of developed countries but they also show positive purchasing behaviour about their local products due to the low-price and easily available factors. Patriotism also plays an important role in supporting local brands.

An examination of the overall results for the complete process model across stages reveals some critical findings. First, there is considerably more unexplained variation in the early stages of the process. Once the consideration set has been reached, the chances to influence the process diminish. After the consideration set, the consumer’s mind may well be made up. Second, familiarity has a pervasive influence throughout the process. This is reflected not only in the risk-reducing tendency on the part of the risk-averse consumers, but also in the reluctance among all consumers to consider unfamiliar makes. Although a universal factor, it nevertheless creates an obstacle for the new Indian watch’s acceptance.

Another recurring influence in the process is the CO. There is a significant change in the process when the watch is made in a highly rated country. This hurts all countries with low scores, including India. However, although Titan’s product rating is lower, consumers perceive it as good value for the money, and are likely to show a great interest in considering it.

The evidence of pro-Europe sentiment is more limited than expected, affecting only product ratings and the consideration set, but not purchases likelihood directly. Some influence from the attitudes consumers display vis-à-vis India is evident. Opinions on whether the Europe should support India through trade affect consumers’ ratings of products and their likelihood to purchase. Although consumers who like to take on the challenge of a new product are more likely to visit the Titan dealer, they do not like it as much when they recognize its origin.

 

 

 

 

 

 

 

 

 

 

 

 

 

CHAPTER SIX

RECOMMENDATIONS

It is highly recommended that managers should give country of origin importance for positioning their products in markets. Table 8 provides a model that may serve as a guide for firms to get benefits from country of origin effect. The table 8 provides very useful tactics that are based on essential elements of marketing mix.

This study investigated the role of country-related factors in the acceptance of a new entrant into an established product category. It attempted to isolate the differential impact that the Indian connection had on consumers’ buying at various stages of the process.

What are the recommendations for the makers of Titan and other products targeted for export to the West in terms of developing a successful marketing strategy? Even though the results show no strongly negative CO effects for Titan, the challenges are imbedded in the strong impact of tradition, familiarity and risk aversion. Titan is as any other new entrant faced with well-entrenched competition: to gain market share it needs to truly make a difference in product-value areas deemed necessary by the buyer. Doing so is not only important because of the price effect, but also even more so due to the overarching effects of familiarity and service. In light of the salience of these dimensions in the purchasing process, it will be very important to create a brand franchise. The Titan will have to become a familiar make on the firms. While this task is difficult before higher sales occur, it can be achieved by the use of promotional and distributive means. This study supports the common notion that entering the European market requires strong promotional support because customers are reluctant to purchase, or even consider, a product with which they are unfamiliar. Prospects with interest in a new product are not likely to turn into actual buyers until they experience the comfort of familiarity. At this time, most of the products from India lack this familiarity. Promotions could focus on existing (but in the Europe unknown) strengths, such as the fact that Titan is a very good watch manufacturer in the world. Alternatively, to reduce the risk exposure component perceived by the consumer, the Titan could be positioned as an additional watch to have–at a low price. Since the respondents of this survey had three watches on average, there may well be a large niche for such a position.

A simultaneous process should focus on the elimination of uncertainty factors within the evaluation and purchasing process. One way to do so is to maintain many dealerships with close-by service facilities, particularly when considering the time sensitivity of watch use. Perhaps there are new ways of expanding dealership reach and accessibility through alliances with current producers who already have a dealership network, or collaboration with distributors of other firm implements. Such a strategy would permit the skipping over of those dimensions of the core purchasing process in which Titan performs poorly, especially when outlet prestige has been shown to override CO effects (Sternquist and Davis 1986; Davis, Kern and Sternquist 1990).

The image of anything marked “made in a developing country” is usually low. Therefore, it may not be wise to emphasize such a CO and run the risk of being rejected before the actual quality of the product can be demonstrated (Morita 1987, p. 97]. It is the relentless pursuit for quality that enabled Japanese producers to shake the image of cheap and poor products. This was achieved through a coordinated national effort as well as company-wide quality control [Takai 1986]. Since the Japanese have been able to replicate this success in their subsidiaries abroad (without Japanese workers), the fundamental requirement of superior quality should also be within Titan’s reach [Garvin 1988, ch. 10]. Achieving a perceived image of high quality takes a long time, however. To accelerate the process, companies from emerging economies have sought partnerships to secure excellent design, quality, scale, and legitimacy for their products. For example, the Korean microwave industry became a global competitor in only ten years by joining forces with GE on the production side and J.C. Penney in distribution [Magaziner and Patinkin 1989]. Titan seems also to be a prime candidate for an alliance with a European manufacturer. For example, a Titan made under Rolex auspices in India could achieve much better market penetration in Europe, and also provide a desirable extension to the current Rolex watch dealers’ product line.

From the macro perspective, the discussions of awarding Most Favoured Nation (MFN) status to Indian imports may play a role in the pricing scheme for the watch. Clearly, lower tariffs may free up funds for further market penetration activities. However, caution is necessary since this study demonstrates the limited results of purely price-based competition. A debate has also emerged as to the best ways of supporting India. Technology and production-process expertise transfers may be the only ways to improve the quality of Indian products enough to compete in Western markets. However, it may take time before perceptions of quality reach much improved factual quality levels, especially if the product comes from an emerging market economy. Therefore, in addition to steps, which change actual quality, simultaneous measures need to address perceptions of quality and the decision processes outlined here if European customers are expected to respond quickly to the new product offerings from the East.

 

 

 

 

 

 

 

 

 

 

 

 

 

Table I: Profile of Respondents
Legend for Chart:

A – Characteristic
B – No. of Respondents (n)
C – Percentage (%)

A                                           B             C

Gender

Male                                      22       50.7
Female                                   21       49.3

Age

30 years and below                30       70.1
31 years and above                13       29.9

Ethnic Group

European                               45       33.6
Chinese                                 64       47.8
Indian                                                     5       18.6

Educational Level

Upper secondary and below   3        8.2
College/University               40       91.8

Marital Status

Single                                  23       53.0
Married                               20       47.0

Table 2: Purchasing Attitude of Respondents
Legend for Chart:
A – Country of Respondents
B – Prefer watches from developed countries (%)

 

C. Prefer Indian watches (%)

A                                                          B         C

India                                                  22.4      77.6

European                                           99.8         0.2

Chinese                                              19.4      80.6

TABLE 3 Country and Product Ratings, Familiarity (average scores on 7-point rating scales)
Make                       Rating                   Familiarity             Country                   Rating

Titan                      3.9                               1.5                      India                        3.9

Bulova                   6.5                               4.7                    U.S.A.                      6.1

Nato                       5.9                               4.6                    Germany                   5.5

Rolex                     6.5                             4.7                     Switzerland               6.1

Squelette               4.9                               2.7                     Italy                          4.1

Casio                     5.6                              4.3                     Japan                        5.0

Christi Oneil         4.6                                2.5                     Korea                        3.9
n = 43 “1” = Very bad, “7” = Very good

“1” = Not at all familiar, “7” = Very familiar

TABLE 4 The Titan-India Connection (average scores on 7-point rating scales for aware and unaware respondents)
Variable                Aware (n=19)        Unaware (n=24)    (no. of respondents)

Product Rating              4.2                   4.0

Value for Money             5.1                   4.8

Consideration Set           3.9                   2.9

Dealer Visit                    4.6                   3.4

Likelihood of Purchase  3.4                   2.7

Familiarity                      1.9                   1.2

TABLE 5 Regression Results for the Country-of-Origin Effect (Titan data–significance levels in parentheses)
RatingBel = 3.9 – 2.6 AWARE + .66 AWARE . RATING Sov

(.000)              (.000)

Adj. R2=.46

n=42

TABLE 6 Correlation Matrix of Core Process Variables
Legend for Chart:

A – Product Rating
B – Value for Money
C – Consider  Dealer

A          B          C         D

Value for Money              .68         —        —         —

Consider                          .58        .44        —         —

Dealer                             .56        .43        .91        —

Buyprob                         .64        .50        .89       .88

TABLE 7Estimation Results
Dependent Variable = Product Rating

Price                                .15            (.07)

Country Rating                .05            (.03)

India Effect[a]              -2.34            (.01)

Pro-Europe                    .15              (.00)

Pro-India Trade[a]           .36            (.05)

Familiar & Averse to Risk .05            (.00)

Adj. R2=.47
n=327
intercept=3.53

.18            (.00)

Dependent Variable = Value for Money

Price                                -.23            (.02)

Service                              .40            (.00)

India Effect[a]                 3.71            (.07)

Liberal[a]                          -.58            (.02)

Familiar & Averse to Risk .02            (.08)

Adj. R2=.31
n=319
intercept=2.18

.26            (.00)

Dependent Variable = Consideration Set

Country Rating                  .09            (.04)

India Effect[a]                4.60            (.14)

Doubts India [a]              -.29            (.24)

Avoid Risk of New
Products[a]                     -.62            (.05)

Pro-Europe                       .11            (.11)

Familiar                             .22            (.06)

Familiar & Averse to Risk.05            (.02)

Adj. R2=.41
n=319
intercept=1.01

.92            (.00)

Dependent Variable = Visit to Dealer

Country Rating                 .08            (.00)

Like New Risk & Titan    .08            (.13)

Adj. R2=.84
n=290
intercept=.29

.65            (.00)

Dependent Variable = Likelihood of Purchase

Pro-India   Trade[a]         .34            (.06)

Familiar                           .17            (.01)

Adj. R2=.82 n=278 intercept=.26

significance level in parentheses
a variables entering only if a watch was thought to be made in India

Marketing Mix
Positive
Negative
Product
‘Made in…’ should be emphasized
Brand name should be emphasized
price
Best price should be set
Low price should be set to bring the custmers
Place
High standard locations
Supply chain partners should be established
Promotion
Country image should be given special attention by sponsoring with the help of nation
Brand image should be given special attention. The manufacturer should sponsor the promotion with the brand name.
Table 8: Model for the management of country of origin effects

 

COUNTRY IMAGE

 

 

 

 

 

 

 

 

 

 

 

 

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