Do Country-of-Origin Labels Incur an Effect on Young Consumer Attitudes towards Fashion Luxury Brands - Dissertation Example

Research question:- Do country-of-origin labels incur an effect on young consumer attitudes towards fashion luxury brands? 1.1 Background:- International business and trade has increased more than any time in history which has led to consumers being increasingly bombarded with products and services from a variety of foreign companies. It is clear to all that consumers evaluate and take into consideration many different factors before a purchase is made and one main factor is the country where the product originated from. This is particularly noticeable in the high end fashion industry. Admittedly, there has now been a large body of research archived examining the impact that country-of-origin (COO) labels have on the product choices of consumers. However, most of the early research took into account only COO information and isolated other factors that may influence the evaluation of product choice. Such researches have been criticized for its flaws. After all, as well as COO, other factors such as product type, product warranty, component types and store prestige all come together to influence product choice. Marketers are aware that consumers are known to develop stereotypes beliefs about products from particular countries. It is for this simple reason that COO image has the power to stimulate both traders and consumer belief about product attributes and in turn may influence the evaluation of the product or brand. This is mostly noticeable in luxury fashion, particularly clothing, where consumers are quick to stereotype Italy and Paris as being high level quality whilst devaluating other countries such as china. From a COO viewpoint, there are several factors that have been explored when it comes to product evaluation and choice. A study by Shimp and Sharma (1987) highlights one particular factor which indicates that consumer ethnocentrism is a good example in which it has come to influence how consumers perceive products and brands from foreign countries. Both consumer patriotism and national hostility have been shown to impact a consumer perception of a product from a certain country. What’s more, this perception can be either a positive or negative viewpoint which in turn will influence choice. It is argued that when considering COO, the congruity theory should be very much considered as a key factor potentially affecting consumer behaviour and choice. To be more precise, when congruity theory is applied, it is argued that consumer behaviour will be affect not simply on brand name but as importantly which country the product was manufactured in, hence if the product is perceived to be congruent to the brand name or not. For example, consider two Italian brands, one being Prada and the other Missoni and hence both are well know the in luxury cloths industry and both Italian brands. If Prada was to include an item made in Italy and however Missoni to include a similar item made China, then according to congruity theory, since Italy is associated with luxury and product quality, therefore Prada should gain a more positive attitude when put alongside Missoni. The concept of Brand equity suggests the importance of a brand to a product. Although a brand is viewed by a consumer as simply a name or symbol to identify a product, a marketer however, views brand equity as to have great importance if managed correctly. It is believed that brand equity applies more to luxury fashion brands then to non-luxury brands. Most brand equity research focuses on the marketing mix variables such as advertising, price, distribution, and product quality as the contributing factors (Yasin, Noor and Mohammad, 2007, p.38). Not much attention is given to non-marketing mix factors such as country-of-origin. 1.2 Research Aim/Question The purpose of this dissertation is to examine the impacts country-of-origin (COO) has on luxury brands. The dissertation will focus on the UK clothing fashion industry and target young consumers. More to the point, it sees how quality is perceived by young consumers towards luxury clothing brands when COO is highlighted and whether that has any significant impact on product evaluation and choice. For instance, an Italian brand made in Italy may spark more positive interest then an Italian brand made in China. The concept on brand equity is very much underpinned within the luxury clothing industry where it sees designer clothing companies using brand equity to add significant value to their brands. This is used more within luxury clothing companies such as Prada rather than non-luxury companies such as Zara. As a result, the dissertation will discover whether there is a significant relationship between COO and brand equity but not over exhaust the topic to much but instead help to reinforce the COO effects on luxury brands. In addition, the dissertation aims to fundamentally examine the manner in which a luxury brands country-of-origin contributes to the development of brand equity. 1.3 Research objectives - To examine the impact of country of origin on young consumers quality perceptions of a fashion luxury brand. - To determine if country of origin has a significant impact on young consumer’s product evaluations and choice. - To examine the relationship between country-of-origin and band equity. Literature review 1.1 Consumer behavior Consumer behavior entails the psychological processes that consumers go through in the recognition of their needs, in finding ways of resolving these needs, when making purchasing decisions, when interpreting information, when making plans and when implementing these plans. By studying consumer behavior, firms are able to understand the psychology of how consumers think, feel, reason and select between different alternatives of brands. It also enables such firms to know the influence of environment on consumers (Parameswaran& Pisharodi, 1994). Consumer behavior is also essential in the understanding of how consumers shop and make other marketing decisions. Firms are in a better position of understanding how consumer knowledge or information processing limitation impact on decisions and marketing outcome. Consumer behavior is essential in the understanding of what motivates and helps in decision strategies between products with varying importance. The subject is more important in helping marketers to adapt and improve their marketing campaigns and marketing strategies to effectively reach the consumer (Durdana et al. 2009). Consumer behavior is applied in the marketing strategy to make better marketing campaigns; in public policy, in social marketing to get ideas to consumers instead of selling something and to make people to be better consumers. One of the questions that consumers ask themselves when making decision on buying a luxury fashion brand concerns the country of origin of the brand. Thus in the study of consumer behavior in the fashion industry there is need to consider the impact of country of origin on product choice of consumers of that particular group in order to understand which campaigns to adopt while marketing the product (Lorge, 1998). The belief about a country of origin of a product has a great influence on perception of consumers about the quality and luxury associated with such a product. Thus the understanding of consumer behavior in relation to product country of origin is essential when a firm is trying to market its product in international arena. Traditionally, luxury brands market has been associated with individuals aged between 30 and 50. However, this trend has changed and young people are entering in the luxury brand market. The need for materialism is no longer limited to the wealthy consumers but also includes the less well of young consumers who have a desire for fashion brands (Robin, 1998). Thus an understanding of how the young people in UK think and value products is essential for marketers of luxury fashion brands in UK. Since youths are vulnerable and can easily be attracted by advertising and promotions, understanding their consumer behavior are essential in adapting appropriate marketing strategy (Liu, 1999). Youths today are no longer lured by products that are just expensive, instead they want value for their money and they buy luxury products for self identity and well being. Buying certain brands enable some youth to display their own tastes and values or to fulfill their emotional needs such as pleasure, excitement and aesthetic beauty. Unlike elderly consumers who are driven by fundamentals of human development, youths focus on increasing their influence, power and wealth. 2.1 Brand Name Brand name is the identity given to a certain specific product, service or business. A brand can be in the form of a name, sign, symbol, color combination or slogan that differentiates on product, service or business from another one. Brand name affects the personality of a product, service or company. A great brand name usually has a strong force in branding, marketing and advertising (Keller, 2003). Such a brand name is able to differentiate one from his competitors and create emotional connection with his audience. In order to wield such power a brand name need to have a powerful positioning strategy. Such strategy ought to be able to touch the hearts and the minds of consumers in an extra ordinary way that has never been experienced before in the world. When branding a product, the firm need to take into consideration several issues such as comprehension, ease of pronunciation, memorability, positive and negative associations, competitors, trademarks and domain name possibilities. The consumption of fashion luxury brands in the international arena faces many challenges. Some of the challenges faced by marketers when marketing these brands include global consumer differences, tastes and preferences of multicultural consumers, need for variety of promotional appeals, breakthrough price barriers, brand awareness creation in new segments and overcoming stringent competition (Keller, 2001). Other challenges include niche market challenges, maintenance of superior quality, management of global supply chain, positioning the superiority of the brands and adapting to ever changing trends in the fashion sector. 3.1 Country-of-Origin effects Researchers in the marketing sector have long been interested in how the country of origin affects the perception and purchasing intention of consumers. Most studies have indicated that COO impacts on consumer perception and behavior through the image of the product’s COO. The image relates to the representation, the stereotype or the reputation of a specific country that consumers associate with the products. The image of a country is a result of series dimensions which positively qualify a nation in terms of its production profile (Peterson, 1995). Dimensions which influence the production profile of a country include innovative approach, prestige, design and workmanship. COO is defined broadly as a multidimensional construct whose main dimension includes factors that relate to the image of national versus imported products; the evoked image by the geographic origin of the brand; categories of merchandise that are known to derive from a certain country or provenance, the national image of producers and the influence of “made in” concept in the perception of the product. Research has shown that a strong brand name is not likely to overcome the negative effect of COO and hence marketers need to understand COO effect when marketing their products (Knight et al., 2000). Thus such marketers need to avoid direct comparison between products from unfavorable countries with those made in favorable countries regardless of their brand strength. There is also a strong association between country image and product quality when consumers are evaluating products. Research has also shown that positive brand image may be reduced if the product is assembled or designed in a country with a negative COO image. Some authors have thus suggested that luxury product purchase can be influenced by both COO and the brand name (Lee & Gopala, 1999). British consumers have been found to rely more on branding cues as opposed to COO. Furthermore, studies have shown that in UK brand origin is greater signifier of product quality than the COO. 3.1.1 Conceptualizing country of origin effects The concept of COO is not univocal and plain. The concept of COO was initially considered to be the made in country or the country of manufacture. Other concepts such as country of design have progressively emerged. Many global firms are increasingly manipulating brand names to suggest particular origins (Heslop & Nicholas, 1993). Therefore, COO is now considered to be the country which consumers typically associate with a brand or product irrespective to where they are manufactured. There are two contrasting views in relation to the impact of consumer knowledge on country of origin effects. First view is that consumers can use COO to infer the quality of the product if they have little knowledge about the product or product class. The other view is that consumers with greater product class knowledge facilitates and increase the use of extrinsic cues such as COO (Johansson, 1993). Research has found that consumers use COO to infer product attributes if they are not familiar with products of that country and as a summary construct that contains the sum of their product attribute knowledge if they are familiar with products of that country. However, some research have pointed out that consumers are less interested with the COO if they are familiar with a brand. In cases where the brand is not familiar, objective product class knowledge is likely to influence the evaluation and choice process of the consumer. Since extensive product attributes are rarely available for evaluating products, consumers use extrinsic cues such as COO to evaluate products. Consumers with higher levels of subjective product knowledge often use COO to evaluate products. 3.1.2 Consumer Ethnocentrism Consumer ethnocentrism provides consumers with a sense of identity, feelings of belonging and an understanding of what purchase behavior is acceptable or unacceptable to the in group. Under this model young person with ethnocentric views will tend to identify themselves with luxury products produced within the precincts of their country. They will thus tend to purchase homemade products in preference from those imported from other countries. The main driving force to ward consumption of local products is that it is acceptable in their group while foreign products are unacceptable. It is also argued that Consumer ethnocentrism is related to politico-economic conservatism, patriotism and dogmatism. Thus young people in UK who are conservative will tend to shy away from foreign sourced products and tend to buy local products to promote the economic status of their home companies. Some studies have found that Consumer ethnocentrism is negatively correlated to cultural openness (Jacoby, 1991). Thus consumers who are ethnocentric will be dogmatic but not open to foreign cultures and thus they will have negative attitudes toward foreign culture and products. Consumers with high ethnocentric behavior usually take unreasonable favorable evaluations of domestic products as opposed to imported products. Thus Consumer ethnocentrism will have a negative influence on the attitudes of consumers toward products from COO. Thus, if young people in UK perceive favorably that products from UK are superior to those from foreign countries, then foreign fashion luxury products are unlikely to get consumers in such group of consumers (O'Shaughnessy & Nicholas, 2000). 3.1.3 Consumer Animosity According to planned behavior theory attitudes toward an act positively affect behavioral intention. Consumers view the brand name, the label and identifying design characteristics such as color, logo, pattern and accessories as being valuable (Mudambi et al., 1997). Counterfeits are perceived as being inferior products and therefore luxury consumers tend to buy original products which they believe are genuine luxury brands. Thus they have animosity toward counterfeit products. Thus young persons who have animosity toward counterfeit luxury products will feel that by buying original genuine products, they gain admiration, recognition and acceptance by others. If consumers in a certain country have preference for original genuine products, they will have animosity to countries which have poor laws governing intellectual property rights which are often involved in production of counterfeit products that are perceived to be of inferior quality (Kevin et al., 2001). Thus a group of young individual who prefer genuine products may tend to have animosity to products produced in countries such as china where intellectual property rights are not well entrenched in legislation. Such young consumers may also harbor animosity to products labeled in languages that they perceive is spoken in countries associated with counterfeit products. 4.1 Brand equity Brand equity is a key indicator of the success of a brand. The monitoring of brand equity is an essential step in the management of a brand (Lawrence et al., 1992). Brand equity is still a complex phenomenon in the international context. It is multidimensional construct. Brand equity is the value that consumers associate with a brand as reflected in the dimensions of brand awareness, brand associations, perceived quality and brand loyalty (Mjumdar, 2009). 4.1.1 Relationship between Brand Equity and COO Many studies on brand equity have focused on the marketing mix variables such as product quality, advertising, price and distribution as key contributors to brand equity. Little attention has been paid to non marketing factors such as COO. Research has shown that many consumers use COO stereotypes to evaluate products. The “made in” label on products is an indication of either superiority or inferiority of the product according to some consumers. Countries with favorable image therefore have their brands being generally being accepted than those from countries with unfavorable image (Hong & Robert, 1999). Thus, COO has some contribution in creation of brand equity. The brand name of a product could thus be tarnished by inferior COO. Thus the brand equity of a product may be eroded when the COO of a brand change from a country towards which consumers have favorable association to a country towards which consumers have less favorable association. Several studies have also indicated that COO influence the perception of quality of products (Janda & Rao, 1997). Since perceived quality is an essential component of brand equity, COO is therefore essential in determining the brand equity. 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