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The importance of country-of-origin information and perceived product quality in Uzbekistan.

Introduction

The overthrow of the Communist regime in the former USSR has resulted in a struggle to establish free enterprise systems in the countries that comprise Eastern Europe and the Commonwealth of Independent States. This development has created opportunities and attracted many global firms to operate in this part of the world. To penetrate successfully in these newly opened markets, marketers must understand the varying needs and preferences of consumers. An assessment of consumers' product perceptions is pertinent to assess consumer demand. Consumer beliefs about the country of origin of the products can be an important factor influencing consumers' purchase decisions.

One of the former Soviet republics that proclaimed its independence in 1991 is the Republic of Uzbekistan. Located in Central Asia, with a population of about 22 million, Uzbekistan has a national economy which is highly diversified. It is rich with natural resources such as natural gas, oil, coal, iron ore and gold which led to the development of various sectors of industry such as mining, chemicals, engineering and energy. Besides the industrial sector, the agricultural sector is also being rapidly developed in Uzbekistan and the main agricultural exports of the Republic are cotton, fruit and vegetables.

Positive changes in the political and economic life of Uzbekistan, as well as peace, provide much potential for foreign investors. In fact, Uzbekistan's long-range development plans by way of social and economic reforms and the democratization of its society help to generate more significant foreign investment in its economy. Furthermore, the country is moving towards a free market system. At present, a great number of joint-venture projects between Uzbekistan and several other countries are taking place. As a state with much economic potential, more bilateral relations in the economic field are expected to take place in the near future.

Numerous studies have been conducted on consumer perceptions of products based on the country of origin, mostly in western, developed countries. Such studies, conducted in Central Asia and particularly in the former Soviet republics, are limited, with no empirical research addressing this issue in Uzbekistan.

The objective of the research reported here is to determine the importance that the Uzbeks, in Tashkent, place on country-of-origin information and how they perceive the quality of products made in specific countries.

Literature review

A great deal of research has documented the effects of country-of-origin information on consumers' product evaluation. Some major studies indicate that the "Made in..." label has a significant effect on consumers' attitudes and product evaluations (Bilkey and Nes, 1982; Gaedeke, 1973; Johansson, 1989; Nagashima, 1970, 1977). Consumers evaluate a product on the basis of information cues. Such cues can be both intrinsic (i.e. physical product attributes such as taste, design and performance) and extrinsic (i.e. non-physical product attributes such as price, brand name and warranties). Generally, the country of origin was considered as an extrinsic product cue (Bilkey and Nes, 1982; Cordell, 1992; Erickson et al. 1984; Han, 1989; Hong and Wyer, 1989, 1990; Thorelli et al. 1989).

In examining the role of country-of-origin information in product evaluation, certain studies indicate that the overall evaluation of products is influenced by country stereotyping - that is, the image that consumers have about a certain country will influence their perceptions of products from that country (Bilkey and Nes, 1982; Lillis and Narayana, 1974; Reierson, 1966; Schooler, 1965). Most of these previous studies indicate that country-of-origin information acts as a salient attribute in overall consumer information evaluation; others report that while country-of-origin information affects consumers' evaluation on certain attributes of products, in the presence of other product information, extrinsic cues, such as country-of-origin information may have a lesser impact (Erickson et al. 1984).

The knowledge the consumer has about the country in which the product is produced can influence consumer evaluation of a product. When making judgements about a foreign product, the consumer's knowledge about the country's reputation for producing good or inferior products may be used to predict the quality of a particular product (Kaynak and Cavusgil, 1983). In addition, there have been studies exploring the relationship between consumers' perceptions of product quality and the level of economic development of the sourcing country. Products produced in less developed countries tend to have a less positive image than products from more developed countries (Bilkey and Nes, 1982; Cordell, 1992; Delener, 1995; Han and Terpstra, 1988; Khachaturian and Morganosky, 1990).

Consumers' product evaluations depend on consumers' familiarity with the product. Familiarity with the product is high for established brands, resulting from experience with or marketing communications about the product. High familiarity reduces the impact that country-of-origin information may have on product evaluation. When consumers are not familiar with a country's product, they will use the country's image as a "halo" in product evaluation (Cordell, 1992; Erickson et al., 1984; Han, 1989). Conversely, when consumers are familiar with the product, country images serve as summary constructs.

Familiarity with a brand name may also influence consumers' perceptions of product quality. Han and Terpstra (1988) found that both the country of origin and the brand name affect consumer perceptions of product quality. In fact, they found that the sourcing country has a greater effect on consumer evaluation than does the brand name. A more recent study found out that the use of country-of-origin information helps to reduce dissonance in the purchase process (Lascu and Babb, 1995).

For certain products consumers may be less inclined to use country-of-origin information. Lascu and Babb (1995) discovered that Polish consumers are less interested in the country of origin if they are purchasing a less expensive item or a product that is accepted by family and friends. Consumers have different degrees of familiarity with products produced in different countries. Their confidence in the ability of different countries to design or produce quality products also differs. Kaynak et al. (1995) discovered, in their study in Azerbaijan, that Japanese and American products were perceived to be better in terms of design and technology compared to products from Russia, China and Hong Kong. Similarly, it has been found that products from China and India were rated inferior to those from the USA. In the case of hybrid products - that is, products that are designed, assembled and sold in different countries - Chao (1993) reported that price, country of design and country of assembly influenced consumer evaluations of product design and qualities. In examining the price-quality relationship, he suggested that highly priced products result in the perception of high design quality.

Thus, country images formed experientially or through other environmental cues may influence consumers' perceptions of quality and their inclinations to buy products from a country. As such, this study attempts to determine the extent of the influence of country-of-origin perspectives in a market such as Uzbekistan which has become more open to products from various countries and where consumer experience with foreign products has been limited.

Research methodology

Data collection

The data for the study were gathered in Tashkent, the capital city of Uzbekistan, from respondents selected through systematic random sampling of every three household units in residential areas around the city.

One hundred students from the Faculty of Business, Tashkent State Technical University, were used as interviewers, under the close supervision of the second author. The students were trained for one week prior to the data collection activities. A total of 615 questionnaires were distributed; of these, a total of 583 questionnaires (94.8 per cent) were returned.

Questionnaire

A structured questionnaire was developed to collect the data through face-to-face interviews at the respondents' homes. The questionnaire was first developed in English and then translated into Russian and Uzbek - the languages that are widely spoken in Uzbekistan. Four students did the translations while another four cross-checked meaning and consistency. These students were fluent in both languages as well as English.

Section A of the questionnaire consisted of 13 country-of-origin statements, drawn from Lascu and Babb's (1995) study, and attempted to seek the opinions of the Uzbekistanis on country-of-origin information of products. Lascu and Babb's (1995) study was conducted in Poland, a former Socialist state, and using their statements also allowed interesting comparisons on the findings of this study with theirs. A five-point Likert scale was used in the study (5 = strongly agree; 4 = agree; 3 = neither agree nor disagree; 2 = disagree; and 1 = strongly disagree).

Section B sought the respondents' evaluation on the quality of products made in specific countries. Based on the initial focus group discussions, eight products available in Tashkent were identified as relevant for the study. These were cars, dresses/shirts, pants, shoes, cameras, televisions, refrigerators and radios. The seven countries selected were: Russia, Turkey, USA, China, Japan, India and Uzbekistan because they are expected to be significant sources of imports of such products to Uzbekistan. A five-point Likert scale was used to gauge respondents' perceptions of quality on each product from respective countries (5 = high quality; 1 = low quality).

The final section of the questionnaire obtained demographic information about the respondents which included gender, marital status, age, education, monthly household income and occupation.

Results and discussions

The respondents

Of 583 respondents, 60.2 per cent were male, 45.5 per cent were single, 49.4 per cent were married and 5.1 per cent divorced. A majority of the respondents (60.6 per cent) were aged 18-34 years; the second largest group (27.3 per cent) was aged 35-51 years. The mean income of the respondents was $266 per month with a median of $200. Of the total respondents, 90.9 per cent had a monthly income of $400 or less. (At the time of conducting this research, the exchange rate was 45 cyms to $1.)

Respondents' use of country-of-origin information

Using the same approach as used by Lascu and Babb (1995), the average mean scores were calculated for opinions on each of the country-of-origin information statements rated on a scale from 1 to 5. Table I displays the comparative results of the mean scores for each of the country-of-origin statements used in the present study and in Lascu and Babb's research (1995). The statements in Table I have been arranged in order of the magnitude of the mean score.

[TABULAR DATA FOR TABLE I OMITTED]

From Table I, the highest mean score (4.35) was with regard to the purchase of relatively expensive items such as cars, TVs or refrigerators. This indicates that the Uzbeks regarded country-of-origin (information as important in buying expensive products. On the other hand, when purchasing inexpensive products, the Uzbek consumers consider country-of-origin information as less important. This is shown by a mean score of 3.91 and 3.08 (see statements 5 and 13 in Table I). In making a purchase decision, the Uzbeks felt that it is important to look for country-of-origin information (3.95), especially when buying the highest quality product or brand, shown by a strong mean score of 4.00. The importance of country-of-origin information is also indicated in buying clothing (3.94), products that have a high risk of malfunctioning (3.88), new products (3.74) and products that are accepted by family and friends (3.69).

Using the mean score to compare the present study with Lascu and Babb's (1995) study, it is evident that both the Polish and the Uzbeks perceived country-of-origin information as an important determinant in making their purchase decisions. This is particularly clear from the responses to statements that relate to buying expensive and high quality products as well as products that have a high risk of malfunctioning. However, as indicated in Table I, the mean scores of the present study are higher than that of Lascu and Babb's, which gives an implication that the Uzbeks put greater emphasis on country-of-origin information in their purchase decisions.

Contrary to Lascu and Babb's study, the present study indicates that Uzbek consumers placed importance on country-of-origin information when buying a new product or products that are acceptable to their friends and family. This is shown by mean scores for statements 9 and 10 which are 3.74 and 3.69 respectively for the present study, as compared to 2.95 and 2.98 respectively in Lascu and Babb's (1995) study. The low mean scores to these two statements indicate that, although Polish consumers need country-of-origin information in making their purchase decisions, it is, to a great extent, not a piece of information they seek first when considering the purchase of a new product or a product that is acceptable to family and friends.

Factor analysis was performed on the country-of-origin item measures to identify the salient items that measure the importance of country-of-origin information. Factor analysis produces hypothetical constructs, called factors, that represent sets of variables (Harman, 1967). The principal component method of factor analysis was used with a varimax rotation, and the items with a factor loading of 0.40 and above were accepted and included in subsequent analyses. The factor analysis produced three factors with an explained variance of 57.2 per cent. Based on the items in each group, factor 1 could be labelled social assurers, factor 2 security seekers, and factor 3 price vetters.

Cronbach's coefficient alpha was used in this study to assess the reliability of the measures. Nunnally (1976) suggests a reliability coefficient of 0.60 or larger as a basis for acceptance of the measure. Factor 1 consists of four items with internal consistency reliability of 0.71; factor 2 had three items and reliability of 0.65; and factor 3 consists of two items with reliability of 0.30. Even though reliability of factor 3 is low, the factor coefficients of the items are highly polarized (see Table II).

An interesting issue is whether there is a difference between more educated consumers and those with less education as regards the importance placed on country-of-origin information (Delener, 1995). To test this, the education category was recoded into two separate categories - the first category includes those respondents with education up to technical school, while the second category includes those with higher education, i.e. above technical school. An ANOVA was performed on the country-of-origin information dimensions with the education category. The results indicate that there was no significant difference between the more and less educated on any of the country-of-origin information importance dimensions. Thus, the results indicate that education was not significant in determining the level of importance placed on the country-of-origin information, which contradicts Delener's (1995) findings (refer to Table III).

The ANOVA was also performed on the country-of-origin information importance dimensions with gender and marital status variables. The results in Table III indicate that there was no significant difference between gender and marital status and these dimensions. The overall effect of these demographic variables on country-of-origin information importance dimensions was therefore very small (i.e. less than 2 per cent as measured by Roys largest root).

Perceived quality of products based on the country of origin

Table IV shows the mean scores of the respondents' perception of quality for each of the products from the seven producing countries. The rating scale used was from 1 = "low quality" to 5 = "high quality". Products such as cars, cameras, televisions, refrigerators and radios that were made in Japan were perceived to be of higher quality than those made in other countries included in the study. In the overall ranking, based on the calculated average of the perception scores by country, Japan was perceived as the country that produces high quality products, while the USA was placed second, followed by Russia. Interestingly, products from China, which has [TABULAR DATA FOR TABLE II OMITTED] a longer history and experience of producing many of these goods compared to Uzbekistan, has a lower overall rating. Products perceived to be produced by respondents' own country, Uzbekistan, were placed second to last in the rank in terms of quality.

One surprising piece of information revealed in the Table regards cars. To the best of our knowledge, Uzbekistan does not produce cars. The majority of cars available in Uzbekistan are those produced by Russia, yet the respondents [TABULAR DATA FOR TABLE III OMITTED] still provided their perceptions on the quality of the cars produced in Uzbekistan.

A probable explanation for this is the carryover effect of the country formerly being part of the Soviet Union. At the time, Soviet products, including cars, were distributed through member countries. Cars such as Lada and Zhiguli, made in Russia, were widely used and were regarded just as much to be Uzbekistan's product as Russia's. Another important issue here is the race factor. The questionnaire did [TABULAR DATA FOR TABLE IV OMITTED] not include information about the nationality of respondents; thus, the percentage of Russians in the study sample is unknown.

The study suggests, in general, that products from developed countries like Japan and the USA are perceived to be of high quality. On the other hand, products from less developed countries like India, Uzbekistan and China were perceived to be of low quality. This underscores the findings from past research (Bilkey and Nes, 1982) that there is a positive relationship between product evaluation and degree of economic development of the sourcing country.

Conclusion

The results of the present study support the findings of a similar study in the Azerbaijan market (Kaynak et al., 1995), and in the Polish market (Lascu and Babb, 1995). It was found that Uzbek consumers perceive products from advanced countries such as Japan and USA as having higher quality than products from less developed countries like India and China. Uzbeks consider country-of-origin information to be particularly pertinent when buying products that are new and expensive, and that have a high risk of malfunctioning.

The study also suggests that Uzbek consumers, irrespective of level of education, gender or marital status, consider the "Made in..." label as important information which they look for in making their purchase decision. Obviously, this is limited only to the products in this study. However, these are the same products that are considered to have varying, but increasing, potential as the Uzbekistan market gradually opens up to imports, and the standard of living improves.

Future studies on country of origin should extend to other products and other parts of the country, rather than being limited to an urban environment. If a similar questionnaire is used, more statements describing price vetters should be included to strengthen the reliability of this dimension.

References

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Osman M. Zain is Associate Professor in the Department of Marketing at Universiti Kebangsaan Malaysia, Bangi, Malaysia.

Norjaya M. Yasin in the Department of Marketing at University Kebangsaan Malaysia, Bangi, Malaysia.
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Author:Zain, Osman M.; Yasin, Norjaya M.
Publication:International Journal of Retail & Distribution Management
Date:Apr 1, 1997
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