Country of origin: A competitive advantage?

Country of origin has been identified in the literature as an important cue that might be used by global marketers to influence consumers' valuation o f the brand. Its effect on consumer perceptions, affect and behavioral inte ntions has been widely documented, based on consumer surveys and laboratory experiments. Despite this empirical evidence, we argue that country of ori gin is only one extrinsic cue among many extrinsic and intrinsic cues avail able to the consumer in a real purchase situation. Furthermore, in real lif e, consumers are likely to engage in some level of information search, whic h would further dilute the country of origin effect in the marketplace. Bas ed on these arguments, we conclude that country of origin might not necessa rily lead to a competitive (dis)advantage in terms of a price premium or di scount. For a sample of products, we show that the objective product qualit y varies significantly by country of origin, and that these differences are consistent with extant research on country of origin effects on consumers' perceptions. After controlling for quality differences across brands, we d emonstrate that marketers from different countries charge prices that are j ustified by differences in product quality. Price premiums or discounts are therefore explained by differences in product quality rather than the imag e effect produced by the country of origin cue. (C) 1999 Elsevier Science B .V. All rights reserved.