The Country-of-Origin Effect

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You’re thinking of buying a new pair of running shoes.

Usually, you go with Nike. But this time, you’re considering Umbro (a lesser-known brand).

Then you find out: Umbro makes their shoes in the UK.

Nice. It's always good to find locally made brands.

You’re willing to pay a decent price.

But the next day, you hear Umbro are moving production to South Korea.

Now, would you still pay the same?

Probably not.

That’s exactly what these researchers¹ found.

When Umbro was said to be made in the UK, people were happy to pay £81.

But when they heard the shoes were made in South Korea, it dropped to £61.

Same shoes. Different country. 18% drop.

That’s called the Country Image Effect.

Researchers ran a similar test with bottled water.

They told people the same brand came from either France or Austria.

People were willing to pay 33% more if it came from France.

Not because they liked the brand. They didn’t even know the brand.

It was purely about how they felt about the country.

France sounded premium. Austria, less so.

It's no surprise Perrier heavily promotes its French roots.

This is a form of framing.

Inside the Nudge Vaults you'll find 68 more insights specifically about this bias.

The Vaults was built right here in the UK. It contains insights from Oxford University and Imperial London*.

In fact, you can preview your first 50 insights for free →

I hope you enjoyed today's newsletter — "British Phill"

*Yep, that's me trying to nudge you—sorry.

¹Koschate-Fischer, N., Diamantopoulos, A., & Oldenkotte, K. (2012). Are consumers really willing to pay more for a favorable country image? A study of country-of-origin effects on willingness to pay. Journal of International Marketing, 20(1), 19–41

As a behavioural science practitioner, I believe in the peak-end rule.

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