Country-of-origin effect

The country-of-origin effect (COE), also known as the made-in image and the nationality bias, is a psychological effect describing how consumers' attitudes, perceptions and purchasing decisions are influenced by products' country of origin labeling. Since 1965, it has been extensively studied by researchers. The country-of-origin effect (COE), also known as the made-in image and the nationality bias, is a psychological effect describing how consumers' attitudes, perceptions and purchasing decisions are influenced by products' country of origin labeling. Since 1965, it has been extensively studied by researchers. Country of origin labelling originated in 1887 when the British government, in an effort to reduce sales of German and other non-English products to English consumers, passed a law requiring products manufactured outside England to be labeled with their country of origin. In the United States, the labeling of garments came into law under the Textile Fiber Products Identification Act (TFPIA). The act itself imposes regulations on the advertising and labeling of textile fiber products that are being imported and exported out of the United States. These products are defined in the act as, 'any fiber, yarn, or fabric used or intended for use in household textile articles'. Household textile articles include 'wearing apparel, costumes, draperies, floor coverings, furnishings, and bedding'. The goal of the Textile Fiber Product Identification Act is to protect producers and consumers against mislabeling or false advertising about the fiber content of textile fiber products. It wasn't until 1984 that the TFPIA was amended to include items made in The United States stating that they were 'Made in U.S.A'. Along with outlining each fiber used within the product, the manufacturer must label country-of-origin information. This information must be readily accessible on garments for quick examination. Garments that include a neck must adhere a label midway between the shoulder seams on the inside center of the neck. Garments or products that do not include a neck must incorporate a country-of-origin label on a visible area on the inner or outer parts of the product. From the time that the act was introduced, the importing of apparel increased drastically in the United States. While this helped the economy domestically and globally, it also hurt the clothing manufacturing industry in the US. Before the act, 95% of clothing purchased in the US was produced stateside. Now, less than 4% purchased is made within the United States. In some cases, manufacturing goods on a mass level can require many different suppliers and manufacturers to complete a finished product. More often than not, the tasks associated with completing a finished product do not take place in just one single manufacturer or country. In an article for the Business of Fashion, Solca states that, 'Made in disclosures are not required for products traded within the European Union. Even where required, 'Made in' criteria are easy to meet: cost thresholds can be reached with finishing, quality control and packaging, while manufacturing is kept offshore'. Research suggests that country of origin (COO) serves as a cue from which consumers make inferences about product and product attributes. The COO cue triggers a global evaluation of quality, performance, or specific product attributes. Consumers infer attributes to the product based on country stereotype and experiences with products from that country. Hence, a COO cue has become an important information cue for consumers who are exposed to far more internationalized product selection and multinational marketing than ever before. Thereby, the country of origin may even affect consumers' perceptions beyond their conscious control. Research into COO has focused on various issues linking COO with other marketing variables, including consumer nationalism, demographics, hybrid products, brand effects, product quality, price, consumer perceptions, technology sophistication, product features, advertising images, and country images, to measure consumer perceptions and purchasing behavior (Ahmed et al., 2004; Badri, Davis, & Davis, 1995; Hamzaoui & Merunka, 2006). It has been empirically demonstrated that the COO effect has significant price-related consequences and brands with favorable COO associations are able to charge price premiums, over and above those attributed to observed product differentiation (Saridakis & Baltas, 2016). The country of origin effect is strongest on older consumers and those who don't know much about the product or product type, and weakest on consumers who are well-informed. Sensitivity to country of origin varies by product category. It is strongest for durable goods and luxury goods and weakest for 'low involvement' product categories such as shampoo, candy, light bulbs, toilet paper and athletic shoes. When the countries of design, manufacture and the parent brand are different, research suggests all three matter to consumers, but the country of manufacture may matter most.