When I want to buy new shoes I go, in the following order for: made in Italy, made in Spain, made in Portugal/Brazil, when I go for wine is: Italy, French, Spanish and…., even for tomatoes sauce I have my preference I want sauce made from Italian tomatoes! I feel a specific product coming from a specific country is better made or has better taste, and If I think quality is better I am willing to pay more.
Country of Origin bias (COO) for example French perfume, German car associated with safety and high quality. how country made influencing valuation. Our perception of the country and associated with the product and give it more value.
A study on Product and Prejudice (Products and Prejudice: Measuring Country-of-Origin Bias in U.S. Wine Imports, Eileen L. Brooks) on wine showed that wine bottle labelled from Italy and France can raise their price (per bottle) more than 50% compared to wines from other countries (e.g. South American wine). The price is actually influenced by the COE ( Country of Origin Effect).
Customers view some countries associated with bad or good perception and that has an influence on prices.
What companies can do to take advantage of this COE is either to promote it or to mask. There are many example of products that promote the COO by making it a selling point for their product, stating in big characters the provenance for example on Olive Olive bottles if they are 100% from a country that has a good reputation for it (100% Greek, Italian or Spain).
Other if they feel that customers will perceive the COO of their product as negative they will try to mask it. For example while I was in Italy I was looking to buy a Moka (cafetiere) so I was looking at the most well known brand Bialetti. On the package it was written in big characters “Designed in Italy” or “Italian design” and then on the back and in very small characters…”made in China” or “made in Romania”.
Sometime, however, it is difficult to establish the COO of one product especially if it is food.
It seems that many people accord a degree of importance to the COO but we can already see that some Companies abuse the system. Believing you are buying a product made in your country (lower carbon footprint, helping local economy…) and discovering (or not) that in the end the product has just been processed in the country.. If the idea to have local product seems to be good, we might need to put in place a tighter legislation. What do you think?
Products and Prejudice: Measuring Country-of-Origin Bias in U.S. Wine Imports, Eileen L. Brooks, University of California, Santa Cruz – Department of Economics, June 2003,UC Santa Cruz Center for International Economics Working Paper No. 03-10. http://papers.ssrn.com/sol3/papers.cfm?abstract_id=421800 accessed on 21/12/2013.