The COO Effect

What is in a name? In the fashion industry it could mean the gain or loss of relevant customers. A simple thing like a country’s name has a complex connotation to it. Utter that one word and the listener has derived a multilevel understanding from it. With the rise of the global market, international marketing theory gave rise to the idea that the concept that the country-of-origin (COO) or the country of manufacture (COM) can have positive or negative influence on how consumers regard a product.

Put simply, consumers use a brand’s COO as an extrinsic cue to assess its quality and adequacy. It has the potential to strengthen a company’s market position by distinguishing the company’s products from competitors in the field, enabling company’s competitive advantage. Rational utilization of COO by the companies in that country can assist with the growth of the economic value of these brands. For example, studies have shown that the COO effect for countries such as France where consumers have favourable attitude towards their products, consumers are more likely to pay a higher price for their luxury products. This translates to notable and well-welcomed company profits.

The COO has such an impact on product assessment because it plays a major role in the formation of brand imagery. If the fashion brand is new to the markets or trying to break into a new market, consumers will refer to their immediate knowledge of the brand’s COO even before they’ve had a chance to see or experience the product’s attributes. Even if the brand is established, consumers will subconsciously pull up information about the brand and the country, relate both sets of information and finally derive their product evaluation. Some countries, such as Italy, are perceived and expected to have innate fashion capabilities and thus fashion companies from that country have a more competitive advantage in the market. They are also more likely to be successful as luxury brands, which has better sales volumes and growth potential. It would explain why some fashion companies chose to mitigate their COO’s negative impact by selecting names for their brands from these ‘favourable’ countries.

So how does this all impact Kenya? There’s no denying that the country has produced some outstanding designers or inspiring clothing and manufacturing companies, but that’s just a small section of the industry. Looking at the bigger picture, the country’s clothing industry has had its fair share of economic challenges. These include mismanagement, stiff competition from second hand products and imports, lack of investment in the industry and the termination of regional trade treaties. The government has made steps to try and improve the situation with sector revival techniques such as the African Growth and Opportunity Act (AGOA) initiative, as well as, the plan to commence the ‘Buy Kenyan Build Kenya’ initiative. This initiative looks to contribute to economic growth, employment creation and improved standards of living by persuading consumers to buy Kenyan products and services. However, there has yet to be significant results that could shift the current image of the industry. Looking at it from the external view of a foreign consumer, it can be argued that their opinion would be influenced by two things. That is, the apparent lack of a coherent conceptual framework on the construct and the public economic and managerial challenges. Locally, the view isn’t that rosy either.

Understating the COO dynamics in the fashion industry can help the country achieve its Kenya Vision 2030 goal of ‘attracting new retailers into the Kenyan market and increasing the market share of products sold through formal channels in order to contribute to GDP growth’.

In Nairobi, there is a strong and significantly positive relationship between COO and consumer behaviour to foreign clothing brands. According to a 2014 study Published by European Centre for Research Training and Development UK, 89.76 percent of Nairobi consumers purely wear imports. Many of the interviewees demonstrated a good understanding of their preferred COO and expressed the desire to be associated with them for prestige-purposes. The strong leaning of many Kenyans to foreign brands shows that the COO concept’s influence, based on where the brand is made, designed and sold has influenced the average consumer to prefer imports to the local produce.

This is also believed to be caused by the foreign brand effect, which suggests that consumers in developing nations, who admire the developed-countries’ lifestyle, are more likely to prefer foreign products to their own. The exception to this rule is when developing nations have a strong sense of national pride and patriotism or where the country has effective marketing strategies such as similar or better prices and quality of the locally made products.

[bctt tweet=”With the COO in mind, the industry can craft relevant marketing policies, business strategies and quality guidelines for the industry players.” username=”FashionKE”]

The current COO view does have some implications at policy level. With this consumer behaviour in mind, the country can begin to work on holistic solutions that go further than just fixing the economic and managerial challenges. Understating the COO dynamics in the fashion industry can help the country achieve its Kenya Vision 2030 goal of ‘attracting new retailers into the Kenyan market and increasing the market share of products sold through formal channels in order to contribute to GDP growth’. With the COO in mind, the industry can craft relevant marketing policies, business strategies and quality guidelines for the industry players.

Unless the country addresses its COO factor, it will be hindered in its quest of not only achieving global competitiveness but also promoting its ‘Buy Kenyan Build Kenya’ initiative that will see an increase of Kenyans actively seeking and preferring locally made products. When it comes to making a brand and therein a brand name, country of origin and country of manufacturing play a major role in purchasing intentions, that it’s any wonder why we as a country haven’t seriously invested in positive strategic marketing in the fashion industry sooner.