• by Tanya Gazdik , March 14, 2012

Consumers are willing to pay a premium for products made in countries with favorable reputations, according to an article published in the Journal of International Marketing.

The authors ran four experiments in which participants (college students in Germany) revealed how much they were willing to pay for branded products coming from different countries. 

One study, for example, compared Evian bottled water from France, a nation shown to have a more favorable reputation, and Evian bottled water from Turkey, a nation shown to have a less favorable reputation. On average, respondents showed they were willing to pay the equivalent of $1.28 for Evian coming from France versus $1.04 from Turkey. 

The study also looked at the U.S. shoe brand Nike. When participants were told the Nikes they were considering were made in America, they were willing to pay more for them than when they were told they were made in South Korea. Further experiments, however, showed that the price differential becomes less substantial the more familiar consumers are with the brand in question, regardless of where the brand originates.

The findings can help marketers in their pricing decisions, according to the authors, Nicole Koschate-Fischer, Katharina Oldenkotte and Adamantios Diamantopoulos.

Consumers not only prefer and assign a higher value to branded products from a country of origin with a favorable country image but also are willing to spend more money to obtain them. For example, if marketers are pricing a product that comes from a country with a favorable reputation, they may consider charging a premium for it. They may also want to highlight the product's country of origin in advertisements. 

Conversely, if marketers are promoting a product from a less favorable country, they may benefit from highlighting product attributes rather than its origin. The authors also suggest companies consider the impact on price and consumers' willingness to purchase if they are thinking of relocating manufacturing to a country with a less favorable image.