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Muhammad Waqas Global Competitors Lecture 12. Muhammad Waqas Recap The Globalization of Competition Strategic Options for Local Firms Cultural Attitudes.

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Presentation on theme: "Muhammad Waqas Global Competitors Lecture 12. Muhammad Waqas Recap The Globalization of Competition Strategic Options for Local Firms Cultural Attitudes."— Presentation transcript:

1 Muhammad Waqas Global Competitors Lecture 12

2 Muhammad Waqas Recap The Globalization of Competition Strategic Options for Local Firms Cultural Attitudes toward Competition

3 Muhammad Waqas Competitors from Emerging Markets State-owned Enterprises Business Groups New Global Players

4 Muhammad Waqas Government Barriers to Competition Tariffs and restrictions on imports Restrictions on foreign ownership and investment Government control of inputs such as land, power, or water Permits to start a business

5 Muhammad Waqas Managing Country of Origin Perceptions Production may be moved to a country with a positive country-of-origin effect. Key parts can be sourced from such countries A channel that distributes already accepted complimentary products can be used A communications campaign designed to strengthen the association between product and country-of-origin can be developed

6 Muhammad Waqas Country of Origin Issues – Beyond Quality Consumer Ethnocentrism – Buyers are disinclined to purchase foreign products because they believe buying imported products results in job losses and hardship at home Consumer Animosity – Buyers harbor political objections to purchasing products from a specific foreign country

7 Muhammad Waqas COUNTRY OF ORIGIN Where a product or brand comes from often influences a consumer perception of the product. Country-of-origin effect Deals with quality perceptions of products. This effect differs by product category and quality level of the country of production Country-of-origin bias Customers tend to overstate the positive and negative of product attributes and this can cause a bias towards products from a given country 7

8 Muhammad Waqas Country of Origin “The picture, the reputation, the stereotype that businessmen and consumers attach to products of a specific country” (Nagashima, 1970). “Made in ‘places’ or geographic origins, which can be anything from a city to a state or province, a country, a region, a continent – or the world in the case of ‘global’ products. Farther, unless viewed in strictly legal terms, ‘made-in’ can mean manufactured-in but also assembled, designed- or invented-in, made by a producer whose domicile is in, and often, wanting to look like it is made-in …” (Kaynak and Cavusgil, 1983). “The overall perception consumers form of products from a particular country, based on their perceptions of that country’s production and marketing strengths and weaknesses” (Roth and Romeo, 1992). “The place in the world where a product is manufactured is the county of origin” (Liefeld, 2004) 8

9 Muhammad Waqas Which is their nationality?? 9

10 Muhammad Waqas Parma Ham 10

11 Muhammad Waqas Global Branding Country of Origin Country with which good/service is associated Country of Manufacture Country where the product is manufactured (for products) Country where the headquarters are located (for services) Country-of-design Country where the product is originally designed In the absence of other product information, country of origin impacts consumers’ product evaluations. 11

12 Muhammad Waqas Which is the country of origin? The country that the headquarters of the company is (the home-country of the company) or……... The country of manufacturing or assembly 12

13 Muhammad Waqas Depending on the image of the country companies say... Made in …. Or Positive image of the country Assembled in …. Negative image of the country

14 Muhammad Waqas Deciding the Production Site 14

15 Muhammad Waqas Stereotypes Product-country stereotypes Service stereotypes 15

16 Muhammad Waqas Country of Origin Effect Imagine you intend to buy a digital camera. Would you prefer a German camera or the exact same camera made in Poland? Professor Brett Martin (2011) found that the German camera receives much higher evaluations and purchase intentions than the Polish one because we tend to stereotype German products as being of good quality (and Polish ones as poor quality). Martin, Shyue Wai Lee & Lacey, Journal of Consumer Behaviour, Vol. 10: 80–92 (2011). “Countering negative country of origin effects using imagery processing”

17 Muhammad Waqas Country of Origin, Price, and Brand, as Evaluative Criteria Country of origin is used to signal product quality Use of price as criterion varies across product categories: Acceptable price range is determined by past purchases; perception of benefits vs. costs indicates value; and the buying situation. Brand reputation Brand may be viewed as an indicator of quality and/or consistency of satisfaction - lessening risk. 17

18 Muhammad Waqas Attitude towards the Country of Origin Stereotyped attitudes toward foreign products & services can favour or hinder marketing efforts If the quality is perceived to be low Foreign origin of the product can be disguised Foreign identification of the product can be continued & consumer attitudes towards the product can be changed In some market segments foreign products have a substantial advantage because they are foreign 18

19 Muhammad Waqas Country of Origin - Germany Of Interbrand’s Top 100 Global Brands in 2008, ten were German brands, valued at over US$ 98 billion. Brands in: Automobile industry (Audi, BMW, Mercedes-Benz, Porsche and Volkwagen) Technology (SAP and Siemens), Clothing (Adidas), Financial services (Allianz) and Cosmetics (Nivea). Germany was second only to the United States in the number of brands making the Top 100 list. What are the key associations with “Germany”? discipline and quality

20 Muhammad Waqas Play… Client Eastwood- Its half time- Video Chrysler Detroit-Video 20

21 Muhammad Waqas “Our ‘Dutchness’ – our DNA if you line – plays an important role in how consumers perceive us, Cabin attendants combine traditional values such as openness and tolerance, with excellent educational and multilingual skills to efficiently operate in the global village in which they work” 21 Fatima de Gloria de Sousa, Director of Corporate Identity at KLM, 2007

22 Muhammad Waqas Giving a lot of emphasis on the country of origin 22

23 Muhammad Waqas Each of us have certain attributes/perceptions that come to mind when we think of different countries. France is “perfumes”. Italy is “fashion and design”. Sweden is “simple and functional design”. Germany is “great engineering”. India is “spices”. Argentina is “tango”. Switzerland is “watches”. China is “low cost manufacturing”.

24 Muhammad Waqas Two Things to Consider. 1.The importance of “country of origin” in the purchase decision varies by product category. 2.Country of origin play la lesser role when products can easily be differentiated through other elements.

25 Muhammad Waqas Ethnocentrism The belief that purchasing foreign products hurts the local economy by causing loss of jobs, and that it is morally wrong and unpatriotic Leads to the rejection of foreign products Example: US people tend to buy US products 25

26 Muhammad Waqas Under the strapline “You drink, we donate!” Purely Scottish Mineral Water have agreed to make a donation to the Scottish Football Association and Scottish Rugby for every litre of water they sell. 26

27 Muhammad Waqas Attitudes Toward Foreign Products High ethnocentric consumers: purchasing imported products is wrong because it hurts the domestic economy, causes loss of jobs, and is plainly unpatriotic. Low ethnocentric consumers: foreign products should be evaluated on their own merit, without regard for country-of-origin. 27

28 Muhammad Waqas What is the nationality of this brand? 28

29 Muhammad Waqas Summary Home Country Actions and Global Competitiveness Competitors from Emerging Markets The Country-of-Origin Advantage

30 Muhammad Waqas References Gillespie, K., Jeannet, J.P. and Hennessey, H.D. (2004), Global Marketing: An Interactive Approach, Houghton Mifflin, Boston, NY.

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