Country of Origin Effect on Dutch car market

Although many studies have been conducted in order to estimate country of origin (COO) effects for a variety of countries, products, and situations, no consensus is found in the literature on its importance. Some researchers are skeptical about the COO effect and reported that they did not find significant effects of COO on consumer’s product evaluations. Others did find significant results for the influence of COO on product evaluations. The suggestion arises that the COO effect is context dependent and varies between different situations. This research estimates the COO effect in the Dutch passenger car market for six countries (e.g., USA, Germany, Japan, Mexico, Romania, and China) in and between three different segments of passenger cars (e.g., economy, electrical, and luxury). Thereby this research extends the existing literature concerning COO research. Based on the results, obtained through an online questionnaire with 383 Dutch respondents, the effect of COO on quality perception, price perception, and purchase intention was confirmed. On average, Dutch consumers evaluated cars originating from Germany (+25%) the best, followed by cars originating from USA (+7%), Japan (-1%), Mexico (-3%), China (-10%), and Romania (-20%). The results also revealed a significant interaction effect of segments in the relationship between COO and consumer’s product evaluations. In other words, the COO effect differed when it is tested in several segments. For example, a car originating from China was perceived relatively high in terms of price and quality in the electrical segment, while cars originating from China are perceived relatively low in terms of price and quality in the economy and luxury segment. A deviation between more developed countries and less developed countries showed that Dutch consumers evaluate cars originating from more developed countries better than cars originating from less developed countries in terms of quality perception, price perception, and purchase intentions. For car manufacturers planning to become active on the Dutch passenger car market, it is advisable to consider COO information when positioning and pricing decisions are made. Furthermore, if the COO is positive, it should be used in marketing communications since it can increase perceptions of intrinsic product attributes. On the other hand, if the COO is negative, one should emphasize marketing communications on intrinsic product attributes, and should not emphasize the COO. For manufacturers already present on the Dutch market, the COO effect can be used, if positive, to differentiate their product from others. The COO label, other aspects being equal, lead to better perceptions of price and quality and is therefore an opportunity to differentiate the car from similar cars originating from less favorable countries. Overall, the COO effect has proven that it significantly influences consumer’s quality perception, price perception, and purchase intention of cars in different segments of the Dutch passenger car market. As mentioned before, the COO effect is considered to be context dependent; therefore one should be careful with generalizations of the results. However, the presented results provide valuable insights of the COO effect of passenger cars from a Dutch consumer perspective.