Effects of Country of Origin on Consumer Product Evaluations: Finnish clothing products in the minds of Russian tourists

Companies operating in today’s highly internationalized markets consider product differentiation the key priority in pursue to attain a constant competitive advantage in challenging global environment (Baker and Ballington 2002, 158). The main driver affecting companies’ differentiation actions was described as early as 1912 by one of the marketing pioneers A. W. Shaw (1912, 710) as meeting human wants more accurate than the competition, and thus increasing customers’ perceived value and satisfaction. Dickson and Ginter (1987, 2) point out in their study based on earlier research by Chamberlin (1965) and Porter (1976) that differentiation can be based on either tangible characteristics of a product such as design or intangible characteristics such as a brand name and country of origin (hereafter referred to as COO). The concept of COO and its impact on consumers’ evaluation of a product as an extrinsic product cue has been one of the most noteworthy topics in international marketing, having been voluminously examined by over 780 authors in more than 750 academic publications in the past 40 years (Papadopoulos and Heslop 2002, 294). Many of these studies accentuate the significant effect the COO has on consumers’ product attribute evaluations. People routinely associate country images with products and services in order to judge and categorize them based on perceived quality and risk levels; thereby COO can influence the likelihood of a purchase (Peterson and Jolibert 1995, 883-884; Verlegh and Steenkamp 1999, 523). Based on the vast research related to COO in the field of international business, it is widely recognized that the country associated with a product can act in a similar way as the name of a brand and even become a part of product’s total image. Thereby depending on customer’s values and perceptions, the product-country image can either increase or decrease perceived value.

Finnish buyers’ perceptions of Indian textile and clothing suppliers: Country of origin in focus

Choosing the right supplier is crucial for long-term business prospects and profitability. Thus organizational buyers are naturally very interested in how they can select the right supplier for their needs. Likewise, suppliers are interested in knowing how their customers make purchasing decisions in order to effectively sell and market to them. From the point of view of the textile and clothing (T&C) industry, regulatory changes and increasing low-cost and globalization pressures have led to the rise of low-cost production locations India and China as the world’s largest T&C producers. This thesis will examine T&C trade between Finland and India specifically in the context of non-industrial T&C products. Its main research problem asks: what perceptions do Finnish T&C industry buyers hold of India and Indian suppliers? B2B buyers use various supplier selection models and criteria in making their purchase decisions. A significant amount of research has been done into supplier selection practices, and in the context of international trade, country of origin (COO) perceptions specifically have garnered much attention. This thesis uses a mixed methods approach (online questionnaire and in-depth interviews) to evaluate Finnish T&C buyers’ supplier selection criteria, COO perceptions of India and experiences of Indian suppliers. It was found that the most important supplier selection criteria used by Finnish T&C buyers are quality, reliability and cost. COO perceptions were not found to be influential in purchasing process. Indian T&C suppliers’ strengths were found to be low cost, flexibility and a history of traditional T&C expertise. Their weaknesses include product quality and unreliable delivery times. Overall, the main challenges that need to be overcome by Indian T&C companies are logistical difficulties and the cost vs. quality trade-off. Despite positive perceptions of India for cost, the overall value offered by Indian T&C products was perceived to be low due to poor quality. Unreliable delivery time experiences also affected buyer’s reliability perceptions of Indian suppliers. The main limiting factors of this thesis relate to the small sample size used in the research. This limits the generalizability of results and the ability to evaluate the reliability and validity of some of the research instruments.

Rules of The National Library of Finland

Confirmed by the director of the National Library of Finland on 25 Nov 2013