Evaluation of foreign products by US international industrial buyers.

Introduction and objective

Introduction and review of the literature

Considerable numbers of studies have been conducted since the 1960s, focussing on the US buyers' perception of foreign suppliers and their products. The bulk of research has focussed on evaluating the attributes of consumer goods made in the developed countries of Europe, Japan, and North America (Chiesl and Knight, 1985; Gaedeke, 1973; Kincaid, 1970; Lilis and Narayana, 1974; Reirson, 1966; 1967; Schooler and Wilt, 1968). A number of researchers have looked at the evaluation by US consumers of products manufactured in the developing nations (Crawford and Lamb, Garland and Crawford, 1984; Han and Qualls, 1985; 1981; Schooler and Sunoo, 1969; Tongberg, 1972; Wang, 1978; White and Cundiff, 1978). Although limited, research has also measured the perception of industrial buyers of foreign products and exporters (Crawford and Lamb, 1981; Kaynak and Kuckkemiroglu, 1992; Saghafi et al., 1991; White, 1977).

This literature, in general, confirms the importance of the country of origin on consumer product quality evaluation, product risk perception, product image and price expectation (Ahmed and Astous, 1993; Elliott and Cameron, 1994; Eroglu and Machleit, 1989; Han, 1989; Han and Qualls, 1985; Hong and Wyer, 1989; Johansson, 1989; Johansson and Thorelli, 1985; Johansson et al., 1985; Lillis and Narayana, 1974; Lim et al., 1989; White and Cundiff, 1978). White (1977), Saghafi et al. (1991), Kaynak and Kuckkemiroglu (1992) reached the same conclusion and reported that even the industrial purchasers put a strong emphasis on the country of manufacturing when evaluating the quality, price and other product attributes. A direct link has also been established between the country of manufacturing and the buyers' willingness to buy the product and their propensity to pay for it (Garland and Crawford, 1984; Lawrence et al., 1992; Schooler and Wild, 1968; Yaprak, 1978). Furthermore, the literature confirms that the country of origin affects the way consumers and professional buyers perceive the export distributors.

Overall, less developed countries (LDCs) are perceived as less attractive and less reliable sources of manufactured goods. Even industrial buyers, who should theoretically be less biassed and more objective, are influenced by the "made in" cue against LDC-manufactured industrial products. Product attributes such as price, perceived quality, risk, brand name and non-marketing factors such as patriotism, attitude toward a particular country, and the congruency of the country's political, economic or social system vis-a-vis the buyers' country, have been found to impact the importance of "made in" cue and the willingness to buy foreign products. Several factors warrant a continuous monitoring of how the perceptions of international buyers change over time:

(1) Nationally, the importance of trade has significantly risen in the past three decades. For example, approximately one in every six US jobs, mostly in manufacturing, are currently linked to the export-import sector. This number is even higher for Japan and Germany. Developing countries in particular have become heavily dependent on foreign sales and are not likely to expand their manufacturing capabilities without accessing the markets in the advanced industrialized countries of North America, Europe and Japan.

(2) Regionally, agreements in North America, Europe and the Pacific have created internal tariff-free environments and have reduced or eliminated the non-tariff barriers for trade of manufactured products within their respective regions.

(3) Countries have become aware of the need for developing core competences, not only at product and supplier levels, but at the country level as well.

(4) Finally, search for cost-competitiveness has forced manufacturers to look beyond their borders toward other nations, continuously seeking international outsourcing opportunities. Various countries are privatizing their government-run industries (e.g. telecommunications), opening them to global competition. This will only increase the need for manufacturing efficiency and international presence.

To develop distinctive competences, manufacturers in both advanced economies and in the developing nations must constantly evaluate their strengths and weaknesses and to understand those products and supplier attributes that are important and differentiable for potential buyers.

Objective

The objective of this study is fourfold. First, to evaluate the perceived core competency of manufacturers in advanced countries and the developing nations as viewed by the US industrial buyers, the following question will be addressed: What are the perceived attributes of products made in developed and developing countries and are the differences in attribute perceptions statistically significant?

Next, to determine those factors that are important in the purchase decisions of the US industrial buyers, the following questions will be discussed: Which product attributes influence the purchase decisions of the US industrial managers in their choice between the developed and the developing nations?

Finally, to determine if the perception of the US industrial purchasing managers about the products of the developing nations is indeed based on experience or is due to bias, the following question will be investigated: Do the US industrial buyers perceive product made in developing nations as inferior to those manufactured in advanced countries and is their perception based on reality?

Answers to these questions will assist industrial buyers to understand the perceived distinctive competency of their products and distributors compared to competitors and the relative importance of various product attributes in the purchase decisions of their peers. The final question to answer deals with the implementation of the relevant findings of this study: How can the industrial manufacturers exploit the perceived positive attributes of their products and how should they camouflage their perceived obscurities?

Methodology

Country selection

Among the industrialized nations, Germany, Japan and the USA were chosen to represent Europe, Asia and North America. Mexico, Brazil and Argentina were selected to represent Latin America. Reasons for choosing these six countries are multifold. First, Germany, Japan and the USA are the largest economies in their respective regions and in the world with over $12 trillion of combined gross national product and are the three largest exporters of manufactured goods with approximately $2.5 trillion in international trade.

Second, Latin America's economic success in directly linked to its trade with the USA. Its geographic proximity to the USA makes the region more accessible to US industrial buyers. The North American Free Trade Area and other regional agreements have made trade with Latin America more desirable.

Third, trade between the advanced countries and Africa, Middle East and the rest of the developing world is …