CONSUMER ATTITUDES TOWARD DOMESTIC AND FOREIGN PRODUCTS AND MARKETING PRACTICES

Nugzar Todua1 Professor of Marketing, Department of Marketing, Ivane Javakhishvili Tbilisi State University, Tbilisi, Georgia Ali Riza Apil2 Assistant Professor of Marketing, Department of Business Administration, International Black Sea University, Tbili

The present study contributes to consumer research by providing information about consumer preferences in a less researched geography.

Most of the countries of origin studies were conducted in western or developed countries. Studies in the less developed nations are still scarce, especially research conducted in the republics of former Soviet Union. Within a general perspective, the present article aims to determine Georgian consumers’ attitudes toward domestic products marketing practices in comparison to both developed and developing countries. The study focuses on consumers’ attitudes to different product dimensions. Study results are based on the analysis of the data obtained from 313 Georgian respondents indicating that products made in Georgia appreciated for their reasonable prices and their suitability to Georgia preferences in general. Georgian consumers state that generally they buy domestic products a lot. Georgian consumers rated domestic products as being technically inferior and unattractive designs. Most of the products made in Germany are perceived as high in technical superiority, good workmanship, design attractiveness and suitability to Georgian preferences. Findings support the previous research indicating that there is a positive relationship between product evaluation and degree of economic development of the sourcing country and COO effect. Partial demographic differences discovered among consumer segments. Research results were discussed and certain tentative conclusions were drawn.
INTRODUCTION
Dramatic increase in cross-border trade observed in the second half of last century brought the necessity of new research avenues in the field of international marketing. One of the research streams is the “Country of Origin” (COO) studies on the perceptions and evaluations of consumers and industrial products sourced both developed and developing countries. Starting with Scholar’s (1965), numerous valuable studies has documented the effect of country of origin information on product evaluation (Bhaskaran and Sukumaran, 2007; Kinra, 2006; Amine et al. 2005, Pharr, 2005; Laroche et al. 2005; Al-Sulaiti and Baker, 1998; Peterson and Jolibert, 1995; Kaynak and Cavusgil, 1983; Bilkey and Nes, 1982). As Tan and Farley (1987) stated that COO effect has become the “most researched international aspect of consumer behavior”.
Although, a great deal of research has conducted to uncover the mist over the field, Verlegh and Steenkamp (1999) and Amine et al. (2005) stated that COO effects were not understood well yet. When we sum up all the reasons stated above, it becomes a driving impulse to expand the COO studies in Georgia – one of the first Eastern Block Republics integrating to western world.
For many countries in the world, particularly the developed countries, most product categories have a domestically manufactured alternative; however, it is usual for consumers in Georgia to buy TVs or cars, which only have foreign manufactured products as alternatives. In such situations, the importance/relevance of the country of origin effect is completely unknown, despite the seriousness of its implications for marketing practitioners. In Georgian market, domestic alternative is not available or scare for many product classes.
Consequently, this research has an importance to observe country of origin evaluations of consumers for domestic and foreign product dimensions when domestic alternative is not available.
The past 17 years we have witnessed two important factors determining consumer attitudes toward domestic and foreign products dimensions. First, Georgia as being a transition country has been reestablishing its domestic industry after the ruins of former USSR. The second was the growth of foreign products’ existence in Georgian market and their intensive advertising and promotional efforts. Georgian consumers have established impressions and their own evaluation criteria of both domestic and foreign products originated from different countries and regions. In this context, determining consumers’ attitudes toward domestic and foreign product dimensions became an important research issue.
Despite scores of studies conducted on consumer perceptions of products based on the COO effect in western, developed countries, such studies are scarce in Eastern Europe and the former Soviet republics, with no empirical research addressing this issue in Georgia. Therefore, the current study was designed to explore consumers’ attitudes and perceptions of domestic and foreign product dimensions in Georgia.
The purpose of the present study is to fill these gaps in the COO literature by determining the attitudes and perceptions of Georgian consumers toward domestic and foreign products made in specific countries. Specifically, the undertaken study focuses on the following research questions:
1. Do the general attitudes of Georgian consumers toward product attributes differ across countries of origin and, if so, for which countries, and which attributes? What are the attitudes of Georgian consumers towards domestic products and products of the USA, Germany, Russia, and Turkey?
2. How does the socio-demographic profile of the Georgian consumer differentiate their attitudes toward domestic products and various countries products?
LITERATURE REVIEW
Elliott and Cameron (1994) defined COO effect as the positive or negative influence that a product’s country of manufacture may have on consumers’ decision processes or subsequent behavior. Johansson et al. (1985) and Ozsomer and Cavusgil (1991) define country of origin as the country where corporate headquarters of the company marketing the product or brand is located. Typically, this is the home country for a company. Bilkey and Nes (1982), Cattin et al., (1982), and Han and Terpstra (1988) define the product’s country of origin as “the country of manufacture or assembly”. It refers to the final point of manufacture, which can be the same as the headquarters for a company.
“Product Bias in the Central American Common Market”, Scholar’s (1965) article in the Journal of Marketing Research is the pioneering publication of long systematic research stream of Country-of-Origin (COO) effect studies. Afterwards COO effect became one of the most extensively studied phenomena (see Peterson and Jolibert, 1995). Consumer attitudes towards foreign products have been one of the more extensively studied topics in the “country-of-origin” literature (Pharr, 2005). Researchers generally reach consensus on the consumers’ evaluation of the products of different countries differently in terms of attitudes and purchase intentions (Han, 1989; Han and Terpstra, 1988; Johansson et al., 1985; Kaynak and Cavusgil, 1983). For example, Han and Terpstra (1988) reported that German products were rated high on prestige value, but low on economy. In the same study, Korean products were evaluated low on all product dimensions except on economy. Stratton et al., 1995 studied Russian consumers’ perceptions of domestic, German, Japanese and US products. Russian consumers’ perceptions of COO characteristics differed significantly on 13 perceptual dimensions. Sohail (2005) researched perception of German products in Malaysia. Malaysian consumers prefer German made products for their high quality.
Leonidou et al, (1999) researched Bulgarian consumers. Japanese products appeared to receive highest attribute ratings, while Indian products received the most negative comments. That confirms the results of earlier studies on Japanese goods (e.g. Han and Terpstra, 1988; Elliott and Cameron, 1994). Japanese products were rated higher in all dimensions examined, the only exception being price.
Kaynak and Kucukemiroglu (2001) researched product perceptions of consumers in Hong Kong. Consumers evaluated Chinese product prices more reasonable. German products were rated as technically superior. German, Japanese products received the highest ranking for product attractiveness. German and USA products were ranked the highest in product innovativeness. Japanese products received the highest evaluation in product design category. Design of UK products received the least favorable evaluation from the consumers.
Badri et al. (1995) surveyed consumers in Gulf States. Results show that USA and Japanese products are associated with being technically advanced, highly reliable and inventive. While German products are associated with prestige, performance and reliability, French products are associated with luxury and pride. On the other hand, English products are seen to be unreasonably priced and lagging behind German products with respect to most quality attributes such as workmanship, reliability, inventiveness and performance. Italian and Taiwanese products are rated poorly with respect to all attributes.
Bhuian (1997) examined consumer attitudes towards foreign products in Saudi Arabia. With respect to their individual product attributes – i.e. workmanship, quality and competitiveness – Japanese products were rated above all other countries followed by US and German products. Likewise, for technological advancement and availability of wide choice of sizes and models Saudi consumers rated Japanese goods above all others, followed by US products. The products of Italy, UK and France appeared to be at the same level as Saudi-produced goods and ranked fourth. Similarly, concerning the attribute of suitability, Japanese products received top rating by Saudis and French products received the lowest rating. German products were perceived as the most reliable.
Rising interest in such an attitude evaluation is imperative, since consumer attitudes towards foreign products, have been believed to be very important influences on purchasing behavior (Sammie, 1994; Bhuian, 1997). This perspective is important for managers in determining successful marketing strategies for Georgian market or former USSR markets. It is expected that Georgian consumers would have more confidence in the technology and workmanship of products of developed countries rather than those of developing countries. Georgian consumers may appreciate low prices of products sourced from developing countries. Different consumer demographics affect attitudes toward product attributes.
RESEARCH METHODOLOGY
The study was conducted among 313 consumers, from Tbilisi, Batumi, Kutaisi, and Rustavi in May and June of 2005. Respondents were selected by use of a convenience sampling method. Six hundred sixty-five questionnaires were distributed and 313 of them returned allowing a response rate of 40 percent. Graduate students from several universities took part in the survey and assisted in the survey administration. Before the questionnaires were administered to the selected respondents, interviewers were thoroughly trained in effective administration of the questionnaires. Drop-off and pick-up method was used for the collection of data. Interviewers visited the homes and work places of respondents. Questionnaires were dropped and a week later, they were personally retrieved. Eligible respondents were individuals aged 17 and above.
The questionnaire sought the respondents’ attitudes toward different dimensions of products made in Georgia and specific foreign countries. Fifteen semantic differential scales were used to measure the set of product attributes. Respondents were asked to rate each of the fifteen attribute objects on a five-point scale ranging from 1 to 5. Higher scores indicate positive attitudes and beliefs. Unipolar scales were used in this research where the mid-point is simply a step on the scale from ‘reasonable price’ to ‘unreasonable price’. In the research, the respondent chooses the end point only if that adjective is closely descriptive of that object. Questions asked in the survey are summarized in Table 1. Respondents rated the product attributes for each country, included in the survey (Georgia, Germany, Russia, Turkey, and USA).
The final section of the questionnaire obtained demographic information about the respondents that included gender, marital status, age, education, income level and occupation. Mann-Whitney tests were used to determine the demographic differences of consumers’ perception of various countries products and product attributes for different countries.
Means and standard deviations were calculated and presented on tables for consumers’ perception of various countries product attributes for different countries. Then, results were visualized with graphs. Waller-Duncan tests were run to determine the ranking orders.