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Perception of the quality of products made in India by consumers from the United States: a longitudinal analysis.

Abstract

Although India's leaders began to gradually open up the country's economy in the 1980's it was not until 1991, in the wake of the Soviet Union's collapse, that major reforms were instituted. During 1991, as a result of the dismantling of industrial controls, reduction of trade protection, and a favorable attitude toward foreign investment, India's economy was opened. This resulted in a rapid increase in international trade, including trade with the United States. Increased trade between India and the United States, the importing into the United States of talented professionals from India, the outsourcing of services to India, Indian students studying in the United States, tourists from India, international news media and Prime Minister Dr. Manmohan Singh's recent visit to the United States have all contributed to increased exposure by U.S. citizens to India, its culture and its products.

In order to determine if increased exposure to products from India during the past decade has resulted in a change in perceptions of the quality of products from India on the part of U.S. consumers, a longitudinal analysis was conducted. Data for the study were collected in the years 1994 and 2005. This paper reports the results of that study. It should be noted that the results reported herein are only a portion of the larger research study conducted.

Introduction

Economic reform and opening to the outside world have become global trends, with international markets becoming important for trade throughout the world. Moreover, this trend is not limited to developed countries. In an effort to accommodate the movement toward an integrated world economy one sees socialist countries, and some of the developing countries, making an effort to restructure their economies while adopting an open door policy toward trade. As a result of the movement toward an integrated world economy, international trade, as well as the competition inherent in it, has dramatically increased.

Research has demonstrated that as consumer knowledge of international products improves, bias against foreign products tends to decrease (Damanpour 1985). Thus, as U.S. consumers increasingly come into contact with product offerings from other countries, and as domestic firms seek to expand their markets overseas, issues of national product images become ever more apparent. The primary research in this area of inquiry is termed country-of-origin or country image studies. The principal aspect of the country-of-origin effect is that consumers form an image of various countries and their products, which in turn, may affect purchase behavior. Research has demonstrated that a consumer's image of the country in which a product is made influences the evaluation and, in some cases, the purchase intention of products from a given country (Bilkey and Nes 1982; Erickson, Johansson, and Chao 1984; Johansson, Douglas and Nonaka 1985; Darling and Arnold 1988; Han and Terpstra 1988; Hong and Wyer 1989; Thorelli, Lim and Ye 1989; Papadopoulos, Heslop and Bamossy 1990; Roth and Romeo 1992; Baughn and Yaprak 1993; Chao 1993).

Country-of-Origin-Overview

Dichter (1962, p. 116) wrote that "the little phrase 'made-in ...' can have a tremendous influence on the acceptance and success of products," and Nagashima defined the "made-in" image as:
 The picture, the reputation, the stereotype that businesses and
 consumers attach to products of a specific country ... (having) a
 strong influence on consumer behavior in the international market
 as it is associated with mass communication, personal experience,
 and views of national opinion leaders. (Nagashima 1970, p.680).


Since Dichter made his observation, research in the area of country-of-origin effects on product perceptions has escalated. The issue has been addressed from various perspectives, beginning with Schooler's (1965) study which identified product-origin bias on the basis of evaluation differences of products that were identical except for made-in labels.

Cultural differences have been shown to exert a pervasive influence on the environment between countries and the result is what is termed the country-of-origin-effect (Schooler 1965; 1971; Reierson 1966; Nagashima 1970; 1977; Lillis and Narayana 1974; Wang and Lamb 1980; Bilkey and Nes 1982; Lumpkin, Kim and Crawford 1984; Johansson, Douglas and Nonaka 1985). More recently, the country-of-origin effect has been defined as "buyers" opinions regarding the relative qualities of goods and services produced in various countries (Bilkey 1993, p. xix). It is apparent, then, that it is the consumer's perception of the relative quality of goods and services produced in various countries that is the important factor to be considered.

Perceived Quality

Quality is a complex and multifaceted concept, with each product containing multidimensional aspects of quality. The extant literature has incorporated an apparent coexistence of several approaches within its definition of quality. Garvin (1987) notes that most businesses view quality from a business perspective, with most discussions attempting to define and measure it from a company perspective. However, it is the consumer's subjective perception of a given product that determines a product's popularity and, therefore, it is the concept of perceived quality, as defined from the consumer-based point of view that is important. Thus, quality may be viewed as the consumer's standard of performance for products or services (Garvin 1983; 1987).

Evaluations of perceived quality usually occur within a comparison context wherein a product's quality is evaluated as high or low depending upon its excellence or superiority versus its failings or inferiority relative to other products which are perceived by the consumer to be substitutes (Zeithaml 1988). Thus, consumer perception of the relative quality of goods and services produced in various countries is an important factor to be considered. For the purposes of this study, a definition by Castleberry and Resurreccion (with a few minor additions) is used to define perceived quality. Specifically, perceived quality may be understood to be:
 a belief[or a consumer's perception] about the degree of excellence
 of a good or service [from a given country-of-origin] that is
 derived by one's examining, consciously or unconsciously, relevant
 cues that are appropriate and available, and that is made within
 the context of prior experience, relevant alternatives, evaluative
 criteria, or expectations. (Castleberry and Resurreccion, 1989, p.
 23)


National Stereotyping of Product Quality

The country-of-origin of a product communicates information about a product (e.g., product quality). Prior research indicates that consumers may view products from a given country in a consistently positive or negative fashion (i.e., in a stereotypical manner). Furthermore, this phenomenon is not limited to consumer markets; research tends to indicate that even industrial customers hold stereotypical images of countries and/or a country's products. The term national stereotyping was developed to refer to consumers' tendencies to form images of imports from a designated country in a consistent manner. Research indicates that these stereotypes may affect purchase behavior.

Foundational studies related to research on stereotyping of products based on their origin originated over 40 years ago with Schooler's (1965) study. Since that time, several other studies (e.g., Schooler 1971; Barker 1987; Johnson and Thorelli 1985) have demonstrated differences in consumer attitudes toward foreign products attributable to knowledge of the country-of-origin. As the term implies, national stereotyping refers to consumers' tendencies to view products from a given country in a consistent fashion. According to Johansson and Thorelli (1985), stereotyping must be taken into consideration when determining an appropriate marketing strategy for imported goods, since the source country of an imported product will often be a salient factor in the consumer's evaluation process. They posit that the effect of a country stereotype will be to shift the position of the product within the consumer's perceptual space and, thereby, alter the overall evaluation of its merits. The final outcome of this process, according to Johansson and Thorelli (1985), is that the competitive strength of the product will be affected by country biases.

Specific Product vs. General Product Debate

Some debate exists about whether product quality images are global in nature or product-specific. Research conducted using the general image of a country's products usually use the approach of Nagashima (1977) which asks respondents to rate "products from Country--." Research conducted using the specific-product approach generally asks respondents to rate specific product categories, such as electronics, or specific products, such as television sets. According to Papadopoulos (1993), it is what the consumers perceive that is important. Country-of-origin studies have used various levels of extraction including: (1) brands, (2) companies, (3) product categories and, (4) general products. Consumers have been found to be able to differentiate between the levels and assess country images at the various levels of extraction (Papadopoulos 1983).

Domestic vs. Foreign Preference

Some early studies investigating the effect of country-of-origin on the perception of product quality tended to indicate that consumers had a preference for domestic products and, therefore, rated domestic products higher in quality relative to products from other countries (Darling and Kraft 1977; Baumgartner and Jolibert 1977; Gaedeke 1973; Lillis and Narayana 1974; Dickerson 1986). However, other studies reported that consumers do not always prefer domestic products over imports (Nagashima 1970; 1977; Bannister and Saunders 1978; Heslop and Wall 1985; 1986). Domestic preference may be nonexistent for a country and, when it does exist, is susceptible to change over time (Heslop and Papadopoulos 1993). Other researchers have found evidence that the preference for domestic products is not universal (Dornoff, Tankersley and White 1974; Czepiec and Gottko 1984; Lumpkin, Crawford and Kim 1985; Johansson, Douglas and Nonaka 1985; Sternquist and Tolbert 1986; Papadopoulos, Heslop and Beracs 1990).

The Dynamic Nature of Product-Origin Bias

It has been demonstrated that consumer preferences and other dynamic factors in the marketing environment, which influence one's assessment of product quality as well as willingness to purchase imported products, vary across time for both consumer and industrial goods. (Gluckman 1986; Darling 1987; Nagashima 1970; 1977; Cattin, Jolibert, and Lohne 1982).

Perceived Risk

Bauer (1960; 1967). introduced the concept of perceived risk into the Consumer Behavior literature. According to Bauer's conceptualization, risk is inherent in consumer behavior, since any action by a consumer produces consequences which cannot be anticipated with certainty. Moreover, not all of these consequences will be positive, and some may be quite negative. According to Bettman (1973), the amount of perceived risk is likely to be greater (1) when there is little information about the product category; (2) when the consumer has little experience with brands within a product category; (3) when the product is new; and/or (4) when the consumer has little self-confidence in his or her ability to evaluate the quality of a product.

According to Cunningham (1967), consumers are able to recognize explicitly that there is risk involved in the purchase of products and that such risk varies by product category. Risk perception has been found to be greater when the product is relatively expensive, important, and technologically complex and when the consumer has limited information about the product category (Bettman 1973). Research indicates that the consumer's perception of risk is greater when the purchase consideration involves products made in a country which he or she perceives as having a low image (Gaedeke 1973; Nagashima 1970; 1977; White 1979; Bilkey and Nes1982; Cattin, Jolibert and Lohnes 1982). Product evaluation has been shown to decrease when the perception of risk increases (Bauer 1960) and, moreover, the willingness to purchase a product has been found to be inversely related to the perception of risk in a given purchase situation (Bauer 1960).

The implications of the foregoing should be apparent: in a given purchase or consumption situation, U.S. consumers often evaluate products from a country with economic, political, and social orientations which may be significantly divergent from those of the domestic market. Furthermore, consumers may evaluate imported products in a manner quite different from the way they look at domestic products. Thus, in a given purchase or consumption situation, consumers will evaluate a product based on the information that is available. During the time frame of this study, there has been an increased amount of information available to U.S. consumers about India, its culture and its products. For examples, as presented in Figure 1, during the past decade US imports of Indian products have increased by 300% (from 5.3 billion U.S. dollars to 15.6 billion U.S. dollars).

The number of Indian students enrolled in U.S. colleges and universities has also increased during the time frame of the current study (i.e., 1994-2005). As Figure 2 indicates, there were 34,000 Indian students studying in the U.S. in 1995 and 75,000 studying here in 2003. Interactions between students from the U.S. and India both inside and outside of the classroom provide information about the two cultures and their products. At least part of the information can be assumed to be related to products and, therefore, the perception of risk on the part of the U.S. consumer is minimized.

Another opportunity for U.S. consumers to acquire information about India's products is through interaction with, and/or observation of tourists. As presented in Figure 3, visitors from India increased from 75,000 in 1995 to 151,000 in 2002 (down from 253,000 in 2000).

As indicated above, in addition to the increase in imports from India between 1994-2005, there have been an increased number of students from India studying in the U.S. as well as an increase in the number of tourists from India. These factors have resulted in more exposure to products from India and increased the potential for interaction with people from India, thereby increasing the potential to learn more about India and its products. Also, during the time frame of this study, there has been an increase in coverage of India by the international news media. As a result, even though U.S. consumers may not know about the intricacies of India or its culture, they are exposed to general news of the country and its products. This increased information may decrease the perception of risk with products made-in- India.

Design of The Study

A convenience sampling method was employed for the data collection. For the 1994 sample, n = 99 and for the 2005 sample n = 87. The research instrument consisted of a self-explanatory, self-administered questionnaire. The questionnaire contained several sections related to the various components of the research. The focus of one part of the questionnaire utilized a general product approach to ask respondents their impression of various aspects of the marketing mix for products made in India. Respondents were asked their impressions on the following characteristics of products made in India: domestic distribution/worldwide distribution; expensive/ inexpensive; technically backward/technically advanced; heavy industry product/ light manufactured product; reasonably priced/ unreasonably priced; luxury items / necessary items; reliable / unreliable; exclusive / common; modern design/ conservative design; handmade/mass produced; high quality/low quality; more concerned with appearance/more concerned with performance; inventive/imitative; lower class/ upper class; recognizable brand names/unrecognizable brand names; good value/poor value. Using a seven point scale, semantic differential anchor points were randomly assigned to the left and right sides of the scale in order to prevent potential sequence bias and routinization of responses.

Another section of the survey instrument utilized a specific-product approach using specific product categories. Respondents were presented with a five point scale (very high to very low) asking them to rate the quality of products (i.e., products in general) made in India as well as the quality of mechanical products, food products, fashion products and electronic products made in India.

Results

In order to determine the variables that show statistically significant differences between the two years, the data were analyzed using ANOVA. Table 1 presents the results of the ANOVA for respondents' impressions of various aspects of the marketing mix for products made in India.

As indicated in Table 1, the respondents in the year 2005, as compared to the respondents from the year 1994, found products from India to: be technically less advanced; be more reliable; have a more common than exclusive image; be more handmade than mass produced; be more for the middle and lower class than for the upper class; have more recognizable brand names and have good value.

Consumers judge a product's attributes relative to another product's attributes. During the time frame of this study, U.S. consumers were exposed to products from a number of nations that are more industrialized than India. Several research studies have reported that U.S. consumers perceive products developed by industrialized countries to be superior to products developed by less industrialized countries (Erogul and Machleit 1989; Johansson 1989; Papadopolous, Heslop, and Bamossy 1989; Papadopolous et. al.., 1990). Moreover, this finding is not limited to consumers from the U.S. (Schweiger, Habul, and Friederes, 1995). Another aspect to be considered is that India is better known for producing professionals (especially academicians, medical doctors, and computer software engineers) than producing industrial goods.

The increased number of imports from India (please refer to Figure 1) during the time frame of this study has resulted in increased exposure to India's products. There is a wider range of products than in past years. The products available-from India in U.S. markets today include items such as fashion merchandise, shoes, decorations, etc. These products are found in larger quantities and in more outlets than a decade ago. Greater availability and increasing competition has led to a decline in price. As a result, it appears that U.S. consumers view these products as having a more common (i.e., rather than exclusive) image and, therefore, are available to all consumers. Although in the past consumers may have viewed handmade products as being expensive, the availability of handicrafts from India in retail stores such as Pier1 and Penney's has led to the realization that handmade products are not necessarily expensive.

Increased exposure to products from India over the past decade has resulted in more brand recognition for Indian products. A study by Gaedeke (1973) reported that consumers' preference differed between branded products and non-branded products made in the U.S. and made in less developed countries. Brand recognition is important since it has been found to decrease the perception of risk in a purchase decision (Cordell 1993; Ettenson, 1993; Howard 1994).

According to Dodds (1991), a consumer's perception of value is based on their overall assessment of the product in terms of what is received (i.e., benefits) and what is given up (i.e., including, but not limited to, money). A greater number of respondents in 2005, compared to respondents in 1994, view products from India as having good value.

Table 2 shows respondents' perceptions of products in general as well as the perception of mechanical products, food products, fashion products, and electronic products. It is noted that in all categories, the respondents from the year 2005 rated quality higher than did the respondents from year 2004.

V. MANAGERIAL CONTRIBUTIONS

The results of the longitudinal survey reported in this paper have allowed us to examine the perceptions of the quality of products made in India over an l 1-year period (1994-2005). These results have strategic implications for managers from the U.S. as well as managers from India.

Given that consumption is fast becoming a global phenomenon, local suppliers are no longer guaranteed special status. Domestic preference is not universal, nor can it be counted on to be resistant to marketplace changes. For example, Americans' views of their own products have been found to fluctuate, being quite negative at times (ASQC 1980; Seaton and Vogel 1981; Sternquist and Tolbert 1986).

As a result, the uncertainty, and therefore the risk, surrounding marketing decisions regarding the effective allocation of marketing expenditure, tends to increase when potential trade partners consist of countries with different economic, cultural, and political environments. In addition, the prediction of change within a given industry becomes more difficult. Furthermore, given the dynamic nature of the competitive environment, an efficient and effective marketing strategy at one particular time may not be efficient and effective at another point in time.

Thus, the results of this study will be beneficial to managers in their strategic planning process. Managers from U.S. firms want to import products from a country with a reputation for having good quality products. Managers from India, who are exporting to the United States, would also want to know consumer perceptions of their product(s). The strategic window of opportunity provided by favorable product quality perceptions must be taken advantage of while it exists. For negative product perceptions, strategies must be implemented to change the negative perception. Furthermore, since competitors in the domestic market are often subsidiaries of a foreign firm, the issue is relevant not only for firms competing in international markets but also for firms choosing not to compete internationally.

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Ruth Lumb, School of Business, Minnesota State University Moorhead, Moorhead, MN 56563, Phone: (218) 477-4652, e-mail: lumb@mnstate.edu

Vinod Lall, School of Business, Minnesota State University Moorhead, Moorhead, MN 56563, Phone: (218) 477-4648, e-mail: lall@mnstate.edu
Table 1

ANOVA Year 1994 and Year 2005

Variables F df prob

Technically Advanced (1) 32.3655 1,174 0.0000
 Backward (7)
Reliability Reliable (1) 4.6366 1,170 0.0327
 Unreliable (7)
Image Common (1) 6.5912 1,171 0.0111
 Exclusive (7)
Production Mass (1) 22.8596 1,177 0.0000
 Handmade (7)
Economic Class Lower (1) 93.2279 1,172 0.0000
 Upper (7)
Brand Recognizable (1) 8.3057 1,170 0.0045
 Unrecognized (7)
Value Good (1) 5.2380 1,170 0.0233
 Poor (7)
 Group means

Variables India 1994 India 2005

Technically Advanced (1) 3.0435 4.1786
 Backward (7)
Reliability Reliable (1) 4.5287 4.0824
 Unreliable (7)
Image Common (1) 4.1364 3.4118
 Exclusive (7)
Production Mass (1) 2.9362 4.3647
 Handmade (7)
Economic Class Lower (1) 5.1798 3.0000
 Upper (7)
Brand Recognizable (1) 5.5402 4.8363
 Unrecognized (7)
Value Good (1) 4.4023 3.8706
 Poor (7)

Table 2

ANOVA Year 1994 and Year 2005
 Group means

 India India
Variables F df prob 1994 2005

Product Quality 10.9191 1,179 0.0011 3.4737 3.1163
Mechanical Products 18.9694 1,175 0.0000 3.7582 3.2093
Food Products 21.5302 1,175 0.0000 3.6264 2.9884
Fashion Products 19.2436 1,176 0.0000 3.7736 3.1264
Electronic Products 24.1163 1,176 0.0000 3.9341 3.1839

1=very high, 2=high, 3=medium, 4=low, 5=very low

Figure 1

Imports to U.S. From India

 Number of
 visitors to US Year

11 15,752.00
10 13,055.30
9 11,818.40
8 9,737.30
7 10,686.60
6 9,070.80
5 8,237.20
4 7,322.50
3 6,169.50
2 5,726.30
1 5,309.60

Source: U.S. Department of Commerce.

Note: Table made from bar graph.

Figure 2

Students from India enrolled in US College/Universities

 Number of
 visitors to US Year

8 75000
7 67000
6 55000
5 42000
4 31000
3 34000
2 36000
1 26000

Note: Table made from bar graph.

Source: Statistical Abstract of the US: 04-05 National Data Book

Figure 3

Visitors from India to US

 Number of
 visitors to US Year

4 151000 2002
3 253000 2000
2 75000 1995
1 75000 1990

Source: Statistical Abstract of the US: 04-05 National Data Book

Note: Table made from bar graph.
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Author:Lumb, Ruth; Lall, Vinod
Publication:Indian Journal of Economics and Business
Geographic Code:9INDI
Date:Mar 1, 2006
Words:5321
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