Influence of Country-Of-Origin Effect on Russian Consumers Behaviour in Cosmetics Industry

Abstract

The country-of-origin effect (COE) has been an issue for study for almost 50 years and numerously proven to influence the customer’s product evaluation process and the intention to purchase. However, there is no authors that conducted a research based on Russian consumers and their preferences in choosing cosmetics products. This paper is intended to study the COE on the choice of cosmetics products made by customers and develop the recommendations for positioning foreign products on the Russian market. To complete the research the survey and factor analysis of collected data will be conducted.

Introduction

Background. For the past 5 years, the preferences of Russian consumers of cosmetics products significantly changed. If in 2015 women preferred buying European or American skin care products currently they would probably choose Asian face masks or moisturizer. In general, the Russian cosmetics market in 2018 was estimated $8.8 billion based on the information of Euro Monitor International, and this number was forecasted to rise even more in 2019-2021. Optimistic scenarios are also predicted to Korean, Japanese, and Chinese cosmetic brands. Annually about 20-30 Asian companies enter the Russian market. This makes it more of a topical problem to study consumer’s behaviour under the influence of COE when the shift in preferences is extremely evident.

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Problem statement. The issue of the research is the preference of Russian customers for foreign cosmetics products rather than domestic ones and its changes in favour of Asian skin-care brands. The overall purpose of the proposed project is to study the influence of COE on consumer behaviour and develop recommendations for positioning foreign cosmetics products on the Russian market. To achieve this goal, the following objectives will be met:

1. To examine the Country-of-Origin effect and different kinds of it
2. To review approaches to study the influence of COE on consumers’ product evaluation and decision making
3. To investigate the practical demonstration of COE in cosmetics industry and analyse the market as well as the peculiarities of its consumers’ behaviour
4. To conduct the survey among Russian customers and analyse its results
5. To develop recommendations for positioning foreign products on the Russian market

Delimitations. The first delimitation of the proposed research is geographical one as most of the respondents of the survey would be residents of Moscow or other major cities therefore the conclusions can be only applied to those specific customers and not to Russian consumers in general. The next delimitation is the choice of the industry and the product category (skin care). As the cosmetics industry is a highly competitive and innovative market, the findings will not be applicable for other industries as well as for other product categories because skin care products remain one of the biggest segments in cosmetics market. The last delimitation is the period of time for which the conclusions and recommendations are true and applicable. The survey will be conducted in a short time frame while the market is really dynamic and consumers are highly effected by the external factors.

Professional significance. There is a few of research focused on cosmetics industry, especially based on investigating Russian consumers’ preferences. The results may help managers with creating the brand image, managing the country image, positioning foreign brands’ products on the Russian market and developing the correct marketing strategy.

Definitions of key terms. There is still no common definition for Country-of-Origin effect as many researchers identified it in different ways. Samiee (1994) defined this effect as any influence that the country of manufacture could have on the process of choosing product, its purchase or related actions of consumers. It can be negative or positive. Ozsomer (1991) describes the country of origin as the location of firm’s headquarters while Papadopoulos (1993) presents it as the final site where the product was assembled or manufactured. In this work the first kind, of definition will be used as most of the cosmetics brands make their products in less developed countries while most of their customers associate them with the state where the headquarters are based (Kim et al., 2017).

Literature review

Throughout decades such researchers as Bilkey and Nes (1982), Erickson et al. (1984), Hong (1989), Papadopoulos (1992), Supanvanij and Amine (2000), and Usunier (2006) identified COO as a product-related cue or its external attribute or an image variable that has influence on consumer’s behaviour. In general, authors differentiate three separate ‘ways’ how COE can have an impact on product evaluation and intention to buy. They are cognitive, normative, and affective “routes”. Rashid (2017) advanced the theoretical framework focusing on those processes and described each of them thoroughly (Exhibit 1).

The first consumer’s route is based on being subjected to such product-relevant indicators as price and quality which leads him/her to the cognitive path of understanding the relative value of other product-related cues as opposed to the COO. In 2009 Roth and Diamantopoulos in their research proved the cognitive process is also connected to the perception of the country image by customers which means that they can see a nation as more or less desirable origin for certain goods depending on their knowledge or stereotypes about the country.

The other way for a consumer is to be persuaded by the favourable COB (Country of brand) or COD (Country of design) while following the affective route to product evaluation. Affective responses to country of origin of a product depend on specific positive or negative feelings towards foreign countries (Oberecker and Diamantopoulos, 2011).

The third normative process theory is built on ethical consumerism related to moral values. There is a tendency of customers putting more emphasis on ethical consumerism while being faced with socially responsible actions from firms, particularly on the stage of manufacturing product (e.g. labor conditions, following standards). Such consumers will value more the social responsibility of a company during their product evaluation process (Fischer & Zeugner-Roth, 2017). Moreover, they can be in favour of foreign products but still decide to buy the domestic ones as they find it immoral or unacceptable due to the normative reasons and willingness to support the national economy.

The approach of ‘Three processes’ would be useful for structuring the questionnaire based on different aspects of COE. Although many research were focused on it still none of them were conducted to study the Russian cosmetics market, its consumers, and their preferences.

Moving on to research focused on the cosmetics market, a lot of authors studied it using the described framework. In 2015 Yong-Mo Seo et al. proved that a country of origin image has a positive effect on the purchasing attitudes and intention of Chinese consumers to buy Korean cosmetic products. Indonesian women were proven to purchase the products made by Etude House brand because it is a Korean cosmetics brand because South Korea is renowned by customers for its advanced industry of beauty products (Augusta et al., 2019). Another research results demonstrated the COO associations of Polish consumers with price, quality, safety, effectiveness, naturalness, and other features of cosmetics products (Baran, 2018). For instance, German beauty items were considered as expensive but effective products while Polish ones as cheap and safe to use. Respondents made decisions based exclusively on the product COO. In contrast, it was verified that female European millennials have the negative attitude towards cosmetics manufactured in China because of a poor country image which was confirmed by the previous studies that viewed China as an unfavourable country of origin (Kudevičiūtė & Chau, 2017). Nevertheless, the findings showed no country except for France was seen by respondents as the nation with the superior level of expertise in cosmetics industry while it was the primary indicator for high quality.

To sum up, the issue of COE was widely studied across the globe as well as its influence on customers of the cosmetics market. However, there is still no work with focus on Russian consumers and effect the country of origin has on them in terms of their intention to purchase and cosmetics product evaluation.

Methodology

In order to study Russian consumers’ preferences, the quantitative research method will be used. It includes collecting data for later analysis and will be in a form of online questionnaire for customers who are older than 18 years old and living on the territory of Russian Federation. The survey will be divided into parts based on three mechanisms of COO effect. The questionnaire will be focused on relations between price, quality, and COO, stereotypes about the country image, and feelings towards different nations.

The technological tool to help with analysis of the results will be SPSS.

To conduct the survey, the hypotheses have been formulated:

1. Russian consumers pay attention to the cosmetics product’s country of origin.
2. The country of origin is associated with the quality of a product for Russian consumers.
3. Russian consumers prefer to purchase foreign cosmetics products rather than domestic ones.
4. Russian consumers are not ethnocentric.
5. Russian consumers’ intention to purchase is higher for Asian cosmetics products rather than European or American ones.

The hypotheses will be proved or rejected based on the factor analysis that will optimize the structure of data collected after conducting the survey and help with its classification and reduction of the number of variables. Based on this analysis, the managerial implications will be formulated.

Results anticipated

The results expected would be a description of features of country-of-origin effect on Russian consumers and a set of recommendations for positioning Asian, European, American, and possibly domestic cosmetics products on the Russian market. Depending on the accuracy and comprehensiveness of the findings recommendations for the marketing strategy of the Asian brands entering the market will be formulated.

All the finding got from the survey will be structured in one table.

Conclusion

To sum up, everything discussed in previous pages, all the theoretical and statistical aspects that need to be studied will be given full attention. This research will be an attempt to study such an interesting issue as Country-of-origin effect on consumers’ behaviour in Russian cosmetics industry which has not been done before. Results of the proposed project will help managers and marketers to create the brand value and use country-of-origin effect for their own benefit.

References:

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