Consumer ethnocentrism and the COO effect in Australian and German consumer evaluations of necessity vs. luxury products.

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International marketing researchers attach increasing importance to seeking an understanding on how consumers perceive and evaluate products from their own country as opposed to products from foreign countries. Country-of-origin (COO) is an important cue for consumers when evaluating and purchasing certain products, this is the so-called country-of-origin effect. Another concept that has been researched in relation to the COO effect is the concept of consumer ethnocentrism (CE), representing the beliefs held by consumers about the appropriateness of buying foreign products. Previous studies have found a positive link between CE and preference/ rejection of domestic/ foreign products, but findings in product-choice studies have been contradictory and there is little exploration of the COO effect and CE comparing countries and product types. This study aims to fill this gap in the existing research by linking the COO effect to different product types in an experimental study with Australian and German consumers, and shed light on the country-of-origin effect for necessity vs. luxury products. This study will also contribute to a better understanding of consumer ethnocentrism in the German and Australian market, by assessing differences between the nationalities in their level of CE, and whether a consumer’s level of ethnocentrism can predict their preference for domestic vs. foreign products in general and for domestic/ foreign necessity vs. luxury products specifically. The results gained from a series of ANOVA’s and regression analyses show that in general, Australian and Germans did not differentiate between domestic and foreign necessity products in their quality evaluations, purchase intentions and attitudes towards COO markers. However, both Australians and Germans displayed a higher quality evaluation for the luxury product “Made in Germany”. Australians also demonstrated higher attitudes towards COO markers for both product types. Additionally, Australians displayed significantly higher levels of CE than German consumers. It was found that the magnitude of the positive (negative) link between consumer ethnocentrism and preferences for domestic (foreign) products varied depending on the nationality and the specific product category involved.
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