PRODUCT COUNTRY-OF-ORIGIN PERCEPTIONS OF CONSUMERS IN PAKISTAN

Soumava Bandyopadhyay, Lamar University Syed Tariq Anwar, West Texas A&M University

ABSTRACT

In this paper, Pakistani consumers' perceptions regarding electronic and electrical products made in Pakistan, the United States, Japan, South Korea, China and Germany are compared. Consumers in Pakistan are observed to hold distinctly different views of products from different countries in terms of quality, value, image and promotion.

INTRODUCTION

The attractiveness of Pakistan as a market in the global arena is on the rise. Although often eclipsed by the neighboring "big emerging markets" of China and India, Pakistan nevertheless offers many opportunities to international marketers. From 1950 to 1992, Pakistan grew by 700 percent, ranking it the 27th fastest growing economy in the world (Zonis 1997). Even after a slowdown due to domestic political turmoil and international economic sanctions following nuclear weapons testing, the real annual GNP growth rate is estimated at 3.1% (Information Please Almanac 1999). The relatively low per capita GNP (adjusted for purchasing power parity) of $2,600 (Information Please Almanac 1999) does not fully reveal the attractiveness of the Pakistani market. Only 30 percent of Pakistan's 135 million population would be considered economically "comfortable" by Western standards (Jutkins 1997), but even that puts the number of Pakistani middle-class consumers with good purchasing power at a sizable 40 million. In fact, a recent article has rated Pakistan as one of the four choices of emerging markets (along with India, Egypt, and Israel) for international marketers that are likely to have robust economic growth in the coming decade (Zonis 1997).

This paper presents an exploratory study of Pakistani consumers' relative attitudes towards domestically-made products and products imported from five major trading partners-the United States, Japan, China, South Korea, and Germany. Essentially, this is a product country-of-origin (COO) study where consumer attitudes toward various product- and marketing-related dimensions such as quality, value, image, and promotion are linked with the products' countries of origin. The results of the study provide a view of the relative competitive positions of manufacturers from other countries and domestic manufacturers in the Pakistani market in terms of various marketing variables as perceived by the consumers' themselves. Exporters to the Pakistani market are likely to be interested in learning about any biases that middle-class consumers in Pakistan may have toward imported products from various countries. Pakistani manufacturers will benefit from learning how "Made in Pakistan" products are evaluated relative to imports by consumers.

A brief review of the relevant background country-of-origin research is presented in the next section. This is followed by an explanation of the research design and the presentation of the results. Finally, in discussing the managerial implications, prescriptions are made to marketers from different countries for improving their competitiveness in the Pakistani market given the present perceptions of the consumers.

BACKGROUND LITERATURE REVIEW

A product's COO is an informational cue which, like other informational cues such as price, brand name, etc., helps consumers evaluate products and develop attitudes towards them (Papadopoulos 1993). The most direct way in which this cue can be given is through the product's "made in" label. In spite of the current proliferation of global brands, COO remains an important factor in consumer product evaluation (Tse and Gorn 1993). Consumers tend to exhibit "national stereotyping," which is a biased way of thinking about people and products from a country (Johansson and Thorelli 1985). Consumers' perceptions of a foreign country (economic prosperity, technological advances, etc.) are often translated into consistent perceptions regarding the quality of products from that country (Bilkey and Nes 1982). Liefeld (1993) reviewed the results of experimental research on COO effects through a meta-analysis, and observed that, in most field studies, there was a significant statistical relationship between COO and consumer product evaluations and choices.

The vast majority of COO studies to date have been reported from developed country markets such as the United States (cf. Nes and Bilkey 1993), Canada (Hung 1989), France (Baumgartner and Jolibert 1977), the United Kingdom (Hooley, Shipley, and Krieger 1988), and Japan (Nagashima 1977). More recently, some COO studies have been reported from emerging markets such as China (Klein, Ettenson, and Morris 1998), Korea (Sharma, Shimp, and Shin 1995), Russia, Poland, and Hungary (Ettenson 1993). There is, however, no comprehensive COO study reported to date from Pakistan. Given Pakistan's increasing importance as a viable emerging market, this study, therefore, is expected to fill a void in the literature and provide managerial directions to international competitors expanding into the Pakistani market.

RESEARCH DESIGN

The study investigated COO perceptions of Pakistani consumers regarding products made in Pakistan and those originating from five of its major trading partnersthe United States, Japan, China, South Korea, and Germany. It was necessary to select an appropriate product category in view of the previously documented relationship between the strength of COO effects and the nature of the product (Liefeld 1993). The household electronic and electrical product category was selected because Products in this category are generally regarded as coveted durable possessions by the Pakistani middle class and are often seen as status symbols. Examples of products within this category include television sets, VCRs, stereos, radios, telephones, calculators, autofocus still cameras, personal computers, kitchen appliances, etc.

Research Questions

The following research questions were addressed in the exploratory study:

1. How do Pakistani consumers rank products from the United States, Japan, China, South Korea, Germany, and Pakistan in terms of perceived quality, value, image, and promotion?

2. How are Pakistani consumers' general attitudes toward the six countries (in terms of economic, educational, and technological factors) reflected in the evaluation of products from these countries?

The first research question sought to find out the competitive rankings of the six countries in terms of the quality, value, image, and promotion of products from these countries, as perceived by Pakistani consumers. The second research question tested the previously suggested (Bilkey and Nes 1982) correlation between consumers' perceptions of a country and their perceptions of products from that country.

Sampling Frame

The sampling frame for the study comprised business students at four premier colleges in Pakistan. Surveying these students was deemed appropriate as business graduates are considered to be among the elite professionals in Pakistan. They are the cream of the emerging middle-class and are more likely to be able to afford expensive foreign products. Hence, they are the target market for most foreign manufacturers expanding into the Pakistani market.

The survey was distributed among 350 graduate business students at four institutions. A total of 180 usable responses were received, corresponding to a response rate of 51.4 percent. Of the 180 respondents, 119 (66.1%) were male and 61 (33.9%) were female. The average age of the respondents was 23.1 years. Only six of the 180 respondents (3.3%) had just completed their master's degrees, while the rest (174, or 96.7%) were enrolled in master's degree programs after completing their bachelor's degrees.

Measures of Constructs

The subjects in the sample were given selfadministered questionnaires that included scales to measure their perceptions regarding the quality (QUALITY, 4 items), value (i.e., price relative to quality, VALUE, 2 items), image (IMAGE, 2 items), and promotion (PROMOTION, 2 items) of household electronic and electrical goods made in the United States, Japan, China, South Korea, Germany, and Pakistan, and scales to measure their general attitudes toward the six countries in terms of economic, educational, and technological factors (COUNTRY, 4 items). The scales were adapted from the established COO measure by Pisharodi and Parameswaran (1991). The respondents were asked on a 7-point Likert scale (1 = strongly disagree, 7 = strongly agree) their extent of agreement with statements on quality, value, image, and promotion of products associated with the six countries as well as general characteristics of the six countries. A respondent's score on each measure was obtained by computing the means across the items in the relevant scale.

RESULTS

Product Quality

The mean ratings for product quality (QUALITY) for the six countries were compared by means of paired t-tests between all pairs of countries. The results are shown in Table 1. Japanese products were rated the best in quality by Pakistani consumers. American and German products were tied for the second place (with no statistical difference found between them from the paired t-test), followed by products from South Korea and China. The quality of domestically made products were rated behind that of products from all five foreign countries.

Table 1 Comparison of Product Quality Perceptions (measure: QUALITY)

Rank* 1 2 2 4 5 6 Country Japan United States Germany S. Korea China Pakistan Mean Rating 6.211 5.482 5.476 4.203 3.969 2.603 S.D. .971 .980 1.142 1.080 1.312 1.087

* Same ranking for two countries indicates no statistically significant difference in rating at the p < .05 level

Product Value

Product value was operationalized as perceived product quality relative to the price charged. The mean ratings for product value (VALUE) for the six countries were compared by means of paired t-tests between all pairs of countries. The results appear in Table 2. Pakistani consumers ranked Chinese, Japanese, and South Korean products at the top in terms of value offered (with no significant difference among the three). German and Pakistani products tied for the fourth place. American products were perceived to offer the least value and were ranked last.

Table 2 Comparison of Product Value Perceptions (measure: VALUE)

Rank* 1 1 1 4 4 6 Country China Japan S. Korea Germany Pakistan United States Mean Rating 4.956 4.769 4.742 3.958 3.814 3.547 S.D. 1.106 1.347 1.039 1.107 1.404 1.158

* Same ranking for two countries indicates no statistically significant difference in rating at the p < .05 level

Product Image

Product image was operationalized in terms of perceived attractiveness and prestigiousness. Again, paired t-tests between all pairs of countries were conducted to compare the mean ratings, this time of the product image (IMAGE) measure. The results, presented in Table 3, indicate that the image of Japanese products was rated to be the best. The image of Japanese products was followed by that of products from the United States, Germany, South Korea, China, and Pakistan, in that order.

Table 3 Comparison of Product Image Perceptions (measure: IMAGE)

Rank* 1 2 3 4 5 6 Country Japan United States Germany S. Korea China Pakistan Mean Rating 5.842 5.550 5.250 4.292 3.989 3.014 S.D. 1.300 1.139 1.128 1.196 1.309 1.461

* Same ranking for two countries indicates no statistically significant difference in rating at the p < .05 level

Promotion

he measurement of promotion was made in terms of perceived advertising intensity and availability of productrelated information. Table 4 shows the rankings of the six countries on the promotional dimension, obtained by means of paired t-tests between all pairs of countries for the mean ratings of product promotion (measure: PROMOTION). Japan was ranked at the top in terms of product promotion, and the United States was ranked second. No statistically significant difference was found for the product promotion ratings for the other four countries (South Korea, Germany, Pakistan, and China) that followed Japan and the United States.

Table 4 Comparison of Product Promotion Perceptions (measure: PROMOTION)

Rank* 1 2 3 3 3 3 Country Japan United States S. Korea Germany Pakistan China Mean Rating 6.008 5.158 4.311 4.147 4.142 4.120 S.D. 1.221 1.622 1.359 1.487 1.758 1.388

* Same ranking for two countries indicates no statistically significance in rating at the p < .05 level

Relationship of Country Image and Product Evaluation

he relationship between the perceived image of a country and the evaluation of products from that country was examined by computing the correlation coefficients between the image of each country (mean score of the measure COUNTRY) and the measures for quality, value, and image of products from that country. Only these three variables were considered for the correlation analysis as these variables (quality, value, and image) were considered to be perceptual measures, whereas the product promotion measure was based more on objective information (how intensely are products advertised, and how easily is product-related information available in the market?) than perception. The correlations are presented in Table 5. It is observed that all but three of the correlations are statistically significant and positive. This, in general, confirms that when consumers have a positive attitude toward a country, they usually also have a favorable attitude towards products (in terms of quality, value, and image) from that country as well.

Table 5 Relationship of Country Image with Product Evaluation

Country Correlation of coun image (COUNTRY) with: Product Quality Product Value Product Image United States .538a -.116 .342a Japan .453a -.096 .291a South Korea .542a .191b .494a China .620a .255b .540a Germany .530a .135 .376a Pakistan .548a .250a .525a

a Significant at p < .01, b Significant at p < .05

MANAGERIAL IMPLICATIONS

The competitive rankings of products from the six countries in terms of the various attributes are summarized from Tables 1 through 4, and are shown in Table 6 below. Pakistani consumers seem to have a more favorable attitude toward imported products compared to domestic products along most dimensions. This general preference for imported products is consistent with previous studies in other countries, which indicated that products from more developed countries were evaluated more positively by consumers than products from less-developed countries (Gaedeke 1973).

Table 6 Competitive Positions of Countries along Various Product-Related Dimensions

Country Rank along dimension: Quality Value Image Promotion Japan 1 1 1 1 United States 2 6 2 2 Germany 2 4 3 3 South Korea 4 1 4 3 China 5 1 5 3 Pakistan 6 4 6 3

Japanese products appear to have the best overall perceptions among consumers in Pakistan. They are rated at the top in terms of all the attributes--product quality, value, image, and promotion. One can conclude, therefore, that Japanese electronic and electrical products are currently quite some way ahead of the competition in the Pakistani market.

For American products, the major competition is quite well-defined--the Japanese, American products lag only Japanese products on three dimensions--quality, image, and promotion, in the Pakistani market. However, American products are ranked dead last in terms of perceived product value, i.e., they are perceived to be too expensive despite the relatively high quality. This is potentially troubling news for American marketers because, when consumers in an emerging market must make a trade off between quality and value, the majority of them are likely to choose value over quality due to affordability concerns (Cateora 1996). Therefore, American marketers need to reduce prices in the Pakistani market to more reasonable (as perceived by consumers) levels.

German marketers also appear to suffer from a comparatively low value image. Besides, German products are tied for the second place on the quality dimension, but lag both Japanese and American products in terms of image and promotion. German marketers may be able to get more mileage from the high quality perceptions if they could use more promotion to project a better value image for their products.

South Korean and Chinese marketers need to take advantage of the high value perceptions (Table 6) of their products. The promotional intensity of South Korean and Chinese products lag that of Japanese products, and the quality and image perceptions lag those of Japanese, American, and German products. Even with the relatively low quality and image perceptions, South Korean and Chinese products should have good potential in the Pakistani market, considering the value focus of consumers in emerging markets as mentioned before (Cateora 1996). South Korean and Chinese marketers may also want to increase their promotional intensity to improve the perceived quality and image of their products, to supplement the already high perception of value.

Pakistani products lag the imports from all five countries in terms of perceived quality and image. However, Pakistani products are thought by consumers to have better value than American products and about the same value as German products. It should be relatively easier for Pakistani manufacturers to increase the intensity of promotion in their own domestic market, and that may eventually result in an enhanced image for domesticallymade products.

CONCLUSION

This exploratory study provides some initial insights into product COO perceptions of consumers in Pakistan. Household electronic and electrical goods were considered as the product category in this study as this product category appeared to be very important to middle-class Pakistani consumers. Caution should be exercised in generalizing the results across all product categories, as the product category is a salient factor in product COO evaluations (Wall, Liefeld, and Heslop 1989). Marketers from Japan, the United States, Germany, South Korea, and China can assess their current competitive situation in terms of various marketing-related dimensions (product quality, value, image, and promotional effectiveness) in the promising Pakistani market. Future research should include countries other than the five featured in the present study, as the increasingly affluent middle-class population in the emerging Pakistani market is able to attract product marketers from many different countries.

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