Countryofmanufacture/assembly(COM/A)effectonfastfashion

hybridproductsinIndonesiasMarket

By
ClaudyaFriscaSusanna

UniversityofGroningen
FacultyofEconomicsandBusiness

BachelorThesis

NieuweEbbingestraat84a
9712NN
(06)639112369
claudya.frisca@gmail.com
Studentnumber:s2343800

ABSTRACT
Thepurposeofthisstudyistoanalyzewhetherornottheindicationofbeingahybridproductwith
COM/A in emerging countries affect Indonesian consumers quality perception by using fast
fashionproducts.Thestudyconsistofaliteraturereviewfollowedbyanempiricalresearchthrough
awebbasedsurvey.Thestudyrevealedthathybridproductindicationalonedoesnotleadtoa
lower quality perception, however, emerging countries COM/A negatively affects the quality
perceptionsignificantlyandthechangequalityperceptiondidnotdependontheproductsinitial
perception.

CONTENTS
INTRODUCTION

LITERATURE REVIEW 3
METHODOLOGY: EMPIRICAL STUDY
FINDINGS

Table I. Changes in quality perception

DISCUSSION

Conclusion 3
Implications

Limitations 3
Future Research 3
Reflection

REFERENCES 3

INTRODUCTION
Originally, the concept of country-of-origin (COO) was simply comparable to the term made-in.
As globalization push through and global supply chains become common practice amongst firms
worldwide, so does the perception of COO. It was first seen as having single-cue effect (Schooler,
1965; Nagashima, 1970), meaning that COO affects consumer product evaluation. It was then
argued that in the simultaneous presence of multiple information cues COO effect decreased (Wall
et al, 1991; Agrawal and Kamakura, 1999). Some scholars argue that COO effect varies according
to product type (Roth and Romeo, 1992; LeClerc 1994). Others focused on consumers perspective
and its effects on COO; consumer country and cultural orientation effect (Gurhan-Canli and
Maheswaran, 2000), consumer expertise effect (Han, 1989), and consumer ethnocentrism
(Balabanis et al., 2001). After years of development of the concept, many begins to questions the
significance of COO as an information cue for quality perception, product evaluation, and purchase
decisions. However, in situation where absence of other cues (price, brand, warranty) persists, COO
still stand as a significant information cue for both product evaluation and purchase decision.

Many concepts are derived from the COO, including ones such as country-of-design (COD), it
emerged with much credit given to Apple for their Designed in California, Assembled in China.
Another known concept is country-of-brand (COB), where global companies utilizes brand names
to suggest a specific region (Aiello et al., 2009). What most people perceived as COO is now
classified as country-of-manufacture or assembly (COM/A). In the early development of the
concept, the studies shows that COM/A had a larger effect on product evaluation than COB (Han
and Terpstra, 1988; Tse and Gorn, 1993). More recent work in the field have revealed otherwise
(Hui and Zhou, 2003), others even argued that it does not influence consumer behavior (Li, Murray,
and Scott, 2000; Usunier, 2011). However, the concept holds to be significant in consumer behavior,
in fact COM/A effect is found to be most powerful in developing countries (Hamzaoui-Essoussi and
Merunka, 2007).
4

These derived concepts are particularly important in the case of hybrid products. The proliferation
of hybrid products was the cause of the deconstruction of the COO concept to COD and COM/A
(Essoussi and Merunka, 2007). Globalization have encouraged firms to shift production overseas to
decrease cost and increase efficiency. In managing its global value chain activities, firms that once
was associated with a particular country may face changes (Funk, Arthurs, Trevio, and Joireman,
2010). Studies dedicated towards hybrid products have generally used cars (Funk et al., 2010;
Srinivasan, Jain, and Sikand, 2004), television (Li, Murray, and Scott, 2000; Chao, 2001; Insch and
McBride, 2002), both television and cars (Hamzaoui and Merunka, 2006; Essoussi and Merunka,
2010; Pappu, Quester, and Cooksey, 2007). However, both cars and television represent a narrow
segment of hybrid products that require medium to high consumer involvement, produced in
assembly line manufacturing, and requires sophisticated technology. There is a need to conduct a
more diverse (product-wise) studies in hybrid products. Acharya and Elliott (2001) used 3 product
categories (cars, jeans, and tinned pineapple) based on consumer involvement, to test the effect of
COM/A and COD cues. The use of jeans, categorized as medium-involvement, is interesting
because it reminds that most fashion products are hybrid products. Fashion is one of the application
of hybrid products and the use of it in the study will be incremental to the field, because it is a
medium-involvement product, however, it is also heavily affected by materialism and self-image
product-image congruence (OCass, 2004). Using fashion product in a study of hybrid products has
a high probability of yielding to a different and useful result.

One area of fashion products that might best contribute to the hybrid products literature is fast
fashion. It refers to a certain practice conducted by mass fashion retailers, in which they compresses
the lead time between the runway to the store in order to satisfy market demand (The Economist,
2005). In normal practice the styles are usually presented in designer runway shows twice a year
(spring/summer, autumn/winter). Having been informed of the latest trends, ready-to-wear
5

collection are made by the retailers and will be ready for the stores. To cut lead times, fast fashion
retailers takes inspiration from famous celebrity styles and to cut costs, it allocates the
manufacturing to low-cost countries. It includes countries such as Bangladesh, India, Mexico, China
and Indonesia. The practice, which improves efficiency, greatly affects the performance of the
companies owning the brands. Zara, one of the most famous fast fashion retailer, has expanded
globally and quickly outperforming more established retailers like Marks & Spencer (Pich, and
Van der Heyden; 2002; Hayes and Jones, 2006). However, the practice has been criticized for its
sweat-shop labor practices and consequently, selling low-quality garments (Dahan and Peltekoglu,
2011; Zarroli, 2013). The concern for the issue have significantly risen since the tragedy in
Bangladesh, where a garment factory collapsed due to unfit building structures and overcrowding.
Several popular fast fashion brands, including Primark and Topshop are forced to take
responsibilities for having parts of their clothes made in the factory (BBC, 2012).

The fast fashion retailers, including Zara, H&M, and Topshop have been able to expand globally
in a rapid manner, entering both developed and developing countries in vast regions. In regards to
the emerging market, the relationship it has with COO has been explored by many scholars. A
recent study states that consumers in both developed and emerging markets prefer products
imported from developed markets (Sharma, 2011). Others reach an agreement that consumers in
emerging markets has strong desire for foreign brands, particularly ones with hedonic characteristic
due to its status enhancing effect (Batra et al, 2000; Klein, Ettenson and Krishnan, 2006). It would
be interesting and beneficial to study the emerging markets consumers perception of fast fashion
hybrid products made in another emerging market. Will the knowledge of having a trendy clothing
made not in Spain but instead in Bangladesh changes the purchase decision and product evaluation?

The fast fashion retailers expansion in Indonesia is particularly rapid compared to other countries
in Asia. Akin to other emerging markets, Indonesians are excited for foreign brands and much
6

prefer it compared to local brands. Despite the enthusiasm, the expansion is still significantly faster
compared to other emerging markets in the region, retailers have the opportunity to reach up to 50
cities in Indonesia though franchising or retail marketing company. The most recent entry to
Indonesia was made by H&M (via franchising). Considering the size of the market and the
opportunities for a vast and rapid expansion, Indonesia should be an appropriate representation of
emerging markets in Asia. It would be incremental to the field to see the perception of Indonesian
consumers towards hybrid products made in other emerging markets and its effects towards product
evaluation. By using the fast-fashion retailers product, it would also provide another perspective
because it represents medium-involvement shopping goods that also represent important self-image.

Therefore, the research question for the thesis is... Does the indication of being a hybrid
product with COM/A in emerging markets affect Indonesian consumers quality
perception regarding fast-fashion products?

To answer the research question, first a literature review was done in order to develop a series of
hypothesis. Afterwards, the hypothesis will be tested through an empirical research using
Indonesian consumers by utilizing questionnaire as a method of survey. By following these
methods, the final goal is to answer the research question and also contribute to the field of study.

LITERATURE REVIEW
The research question are derived into three parts; consumers awareness of fast-fashion as hybrid
products, consumers quality perception of fast-fashion product, COM/A effect on consumers
quality perception. Are consumers aware of the hybrid status of fast-fashion products? What are the
consumers current perception of fast-fashion retailers products in terms of quality? Does the
COM/A cue affect consumers quality perception? The reason for the split into three question is to
provide the necessary steps to find the answer, by focusing on each one after another. The split also
helps with the construction of the empirical research, which will be shown in the next chapter. The
research stream that gives the necessary information includes; COO, hybrid products, fast fashion,
consumer behavior, marketing, and emerging markets. The literature review was conducted using
journals published between the year 2000 - 2013 to ensure relevancy and accuracy of the journals.
The literatures were collected through these databases; EBSCOHOST, Elsevier Emerald, JSTOR,
Science Direct, and Taylor & Francis. The journals used covers a range of subject from the COO
concepts, with a focus on COM/A, emerging markets, consumer behavior, and fashion industry,
particularly the practice of fast-fashion. Some of the journals used include; International Marketing
Review, Journal of International Business Studies, and Journals of Consumer Research. First, a
brief review of the COO literature, followed by hybrid products with focus on research in emerging
markets, and also fashion products literature.

The broad conclusion of over 50 years of COO effect research is that COO does affect product
evaluations (Pharr, 2005). According to Bloemer et al (2009), the primary theoretical clarification
for why COO affects product evaluation and purchase decision is that consumer decision making is
perceived as a cognitive process. Thus, consumers are faced with multiple information cues;
intrinsic and extrinsic, by definition the latter is much more reliable for consumers to form product
evaluation and make purchase decisions. In a research done by Kardes et al (2004), it was shown
that consumers consider extrinsic cues as consistent and credible predictors for value and quality.
8

However, the relevance of COO has been questioned by a lot of scholars, which argues that COO is
irrelevant to the consumer based on empirical research (Arndt, 2004; Liefeld 2004). The relevancy
of COO is also questioned because it is becoming very hard for the consumers to correctly identify
the COO information (Lim and OCass, 2001; Samiee et al., 2005; Balabanis and
Diamantopoulos, 2008). The reason for the rising difficulty of processing COO information is
caused by the increase of global sourcing, which results to proliferation of hybrid products.

The decomposition of the COO construct has significantly contributed to the study of its effects on
consumers quality perception (Insch and McBride, 2004). According to Li et al. (2000), COM/A
may affect consumer evaluation in

functional quality dimensions (performance, reliability,

conformity) and depending on the country COM/A, may affect the prestige image of a product.
Regarding their effect towards consumer behavior, several studies (Nijssen and Douglas, 2004;
Funk et al., 2010) have shown that national or cultural animosity does affect consumer attitudes
toward products associated with particular countries. Under circumstances of import discrimination
it proves to be necessary to emphasize the origins of the product (through COD and COM/A) in
order to avoid consequences of consumer animosity. Funk et al. (2010) focused on the effects of
production shifts towards consumers willingness to buy hybrid products and concluded in deciding
to shift COM to countries with potential for consumer animosity, managers should conduct
profitability assessments beforehand. Hui and Zhou (2003) argues COM/A information is
insignificant in congruity between brand origin and COM/A (e.g Sony products made in Japan),
and COM/A information is significant if incongruity exists (e.g Sony products made in Mexico).
Incongruity affects consumers product evaluation, and appears to be more damaging for low equity
brands.The importance of congruity between COM/A and COD in also expressed by Chao (2001),
he also argues that there is a possibility that COM/A information is the first to influence consumer
judgement and can be adjusted with presence of other cues (COD, COC, COP).

There are conflicting views regarding the effects of COM/A on consumer behavior. Thakor and
Lavack (2003) argues that COO and COM/A produces country stereotyping effect and tested
whether perceived location of manufacture affects perception of overall brand quality. COM/A was
found to not affect perception of brand quality, if the country of corporate ownership is also
provided, meaning that consumers wants to know where the brand is owned more than where the
product is manufactured. Usunier (2011) suggests that COM/A is irrelevant to the consumers, visual
cues are more important in conveying COO information to consumer. Hamzaoui-Essousi and
Merunka (2007) explains how brand image, COD, and COM/A jointly influence consumer
evaluation of hybrid product in an emerging country (Tunisia). COM/A was found to be the most
influential in consumers perceived product quality in the emerging market. Also, if the brand is
unknown to consumers the congruity between both cues become more relevant. Indonesian
consumer behavior, purchase decision, quality perception, and product evaluation, has been a
subject of many academic studies. Among those, Hamid and Elliot (2006) have examined the
concept of consumer ethnocentrism and its impacts on product evaluation and preferences among
Indonesian consumers. Indonesian consumers are found to have high ethnocentrism with a total
mean value of 74.50. This finding is contrary to what theories previously mentioned, that
consumers in emerging market tend to evaluate products from developed countries more favorably.
Indonesian consumers also ranked COM/A and COD as important cues for tangible cues. Thus, the
hypothesis was developed based on those factors:

Hypothesis

1.

Indonesian

consumers

awareness

of

incongruity

between COD and COM/A negatively affects their perceived quality of

the products.

Fashion clothing has both important economic and social significance in many societies and long
has been an area of interest in consumer research (OCass, 2004). Piron (2000) utilized fashion
product to investigate the impact of COO on consumers purchasing intention of products that are
10

consumed (un)conspicuously, and shown that the COO effect is more significant in publicly
consumed fashion products. Wang, Siu, and Hui (2004) have distinguished the consumer behavior
in buying fashion products in an emerging market (China). The importance of the COM/A cue in
consumer behavior towards fashion products has also been criticized. According to Magnusson et
al. (2011), majority consumers are unable to correctly identify COO of the products. Using fastfashion retailer H&M, it was found that only half of the respondents have correctly identified
Sweden. Having known the correct home country, consumers attitudes changed. A negative
attribute for the country resulted in a less favorable brand attitude, and a positive attribute resulted
in a more favorable brand attitude.

A lot COO studies which focused on consumer behavior in developed countries have concluded that
the process in which consumers evaluate product and make purchase decisions might differ from
those in emerging markets (Batra et al., 2000; Reardon et al., 2005). Research by Kaynak,
Kucukemiroglu, and Hyder (2000) examined Bangladeshi consumers quality perception of
products outsourced from nine foreign countries in comparison to domestic products. Bangladeshi
consumers showed overwhelming preference for western products and low-medium preference for
products from emerging market (India, Taiwan). Batra et al. (2000) argued that consumers in
emerging market (India) possess strong desire for foreign brands as it represent hedonistic
characteristics, functions as symbolic acquisition, giving social distinction, and seen as status
enhancing. Piron (2000) found that consumers purchasing intentions in emerging markets
(Singapore) are higher when COO information is excluded compared to when a moderate
impression exists. However, many of the COO studies in developing countries mainly only focused
on individual variables (e.g ethnocentrism) and are unable to address the distinction between COD
and COM/A.

11

The buying behavior of fashion consumers are also quite different from other products. In studying
consumer decision-making on domestic and imported fashion brands in an emerging market, Wang
et al.(2004) stated that consumers that prefer foreign brands possess more hedonistic attribute and
has the tendency of being brand loyal, younger and highly educated. Although these frequent
shopping consumers are fashion-,brand-, and quality-conscious, they are not necessarily from the
highest income group. They are not confused by overwhelming choices, the more the merrier. Most
of these fast fashion retailers (Zara, Topshop/Topman, Pull & Bear) entered Indonesia
through Mitra Adiperkasa (MAP), Indonesias top performing retail marketing company of premier
lifestyle brands and quality products. Through MAP these retailers may earn access to stores in
roughly up to 50 cities due to MAPs status as an anchor tenant in shopping malls in Indonesia.
Currently there are 1383 stores with over 90 retail concepts under MAP alone (MAP, 2012).

In regards to the relationship between fast fashion retailers and emerging markets, a number of
studies are focused on the impact that the retailers bring to these markets concerning fair trade and
labor practices (Shaw et al., 2006; Zarroli, 2013). Dahan and Peltekoglu (2011), investigated
Zaras and the fast-fashion effect on the small business enterprises (SME) of Turkish clothing
industry and it is found to have an enormous influence, even changing the business environment.
Most SMEs are forced to find new market, and upgrade their manufacturing process to compete
with the fast-fashion retailer giant. The presence of fast-fashion retailers also affects the business
climate of the emerging markets in more ways than through the consumers. Thus, the next
hypothesis was formulated:

Hypothesis

2.

Indonesian

consumers

awareness

of

emerging

countries as COM/A negatively affects their quality perception

COM/A cue does affect consumer evaluation in functional quality dimensions, but this is specific to
products that possess complex technology in its manufacturing or assembly. Quality in fashion
12

terms has a different meaning, products of high quality in fashion may refer how it contribute to the
consumers style, or how fashionable the product is, and also how up-to-date the products are to the
current trend (Lloyd and Luk, 2010). It is also found that depending on the country, COM/A may
affect the prestige image of the product. A production shift to low-cost country may create
consumer animosity, however, if the brand has a strong brand image it may be shielded from that
effect. Incongruity affects consumers quality perception, and appears to be more damaging for low
equity brands. In a separate study, Jo, Nakamoto, and Nelson (2003) suggest that low equity brands
should be more discreet than strong brands in revealing low quality COM/A information and that
strong brands could have a wider range of COM/A due to the brand shielding effect, providing more
cost advantage to them. Thus, the next hypothesis is presented below:

Hypothesis 3. The negative effect on the perceived quality of product

is stronger for brands that are perceived as having lower quality.

The hypotheses above focused on the changes of consumers quality perception, accounting the
effect of COM/A of fellow emerging countries, by using fast-fashion product. As consumers in
emerging market has strong desire for foreign brands, the information of those products are
produced in emerging markets or developing countries may negatively affect their quality
perception. The effect is proposed to be more negative if consumers are less familiar with the brand
and consequently perceiving the brands as having less quality.

13

METHODOLOGY: EMPIRICAL STUDY

To test the developed hypotheses, an empirical research is conducted. The literature review was also
done to help develop and administer a survey questionnaire to address the proposed research
question. The items in the questionnaire should be able to capture the respondents; awareness of
COO and COM/A concept, perception of foreign fast-fashion brands, and hybrid products. It is very
important to know the respondents quality perception of the fast-fashion retailer brand in order to
have a starting point of analysis. Next, it is crucial to examine if there are changes of quality
perception with presence of COM/A cues, and finally finding out if the changes are significant or
not.

Several studies regarding COO effect on fashion buying behavior have used the 5-point Likert scale
in their questionnaires (Wang et al., 2004; Aiello et al., 2009). In order to best capture and
measure the items, respondents were given a series of statement in which they must choose between
a 5-point Likert scale to indicate where they stand between strongly disagree (=1) and strongly
agree (=5) (Page-Bucci, 2003). The 5-point scale was chosen because the possibility of respondents
having neutral opinions are considered. To measure the familiarity of the respondents towards fast
fashion products, three brands were chosen; Zara, H&M, and Topshop. These retailers was
chosen because of their top performance in their field, having presence in Indonesia, and having
lines for both male and female customers of equal balance in terms of marketing efforts and sales.
Three countries were chosen to be the COM/A information cue; Bangladesh, China, and India. The
retailers; Zara, H&M, and Topshop have disclosed information to the public of having a factory
or sourcing their products from factories in these three countries (Inditex, 2010; Arcadia Group,
2012; H&M, 2013).

The questionnaire was distributed online through SurveyMonkey, a provided of web-based

survey solutions. The website was chosen because it allows practicality in constructing the
14

questionnaire and provided an attractive interface for the questionnaire. It was target web survey, in
which the researcher retains control over who is allowed to participate in the survey by sending a
survey in an email or sending a web link to a survey server (Blumberg, Cooper, and Schindler,
2011). The intended sample of this study is going to be Indonesian undergraduate students. The
respondents were reached through official group page of Indonesian undergraduate students
societies in 7 universities in multiple countries (Indonesia, Netherlands, Australia) on the social
networking website, Facebook. The target amount of sample is 100 respondents. The size of the
sample was determined by the margin of error ( 10%) and level of confidence (95%) as advised by
the survey platform and statistics websites (Hunter, 2010; SurveyMonkey, 2013). However, having
set the margin of error by 10% does have it consequences in interpreting the result.

The use of the student sample have been determined to be appropriate for the study as they
represent a segment of the population that in the next few years will be able to earn the financial
means to be the consumers of various consumer goods in the market (Lim and OCass, 2001). In
addition, previous research has concluded there are no differences between studies using students
and those using non-students, in COO studies (Verlegh and Steenkamp, 1999; Peterson, 2001).
Fashion products is found to be appealing to students, and also been identified as a significant
purchase for young (undergraduate students) consumers (Flynn and Goldsmith, 1999; OCass,
2000). Thus, a student sample should be able to represent the fast fashion consumers. The
questionnaire is in English, the process of translating the questionnaire to Bahasa Indonesia and
back to English was seen as unnecessary steps. The intended samples of undergraduate students in
Indonesia are capable of

understanding academic english. Chances of respondents giving

unintended answers from misunderstanding the questions are very slim.

In the first part of the questionnaire, the respondents were asked to indicate whether or not they are
familiar with Zara, H&M, and Topshop. The term familiarity was elaborated by adding the
15

statement I am aware of what kind of products they sell and also their price range. Next, the
respondents were asked to indicate whether or not they agree with products of this retailer are not
made where they are designed, to see their awareness fast-fashion products as hybrid products for
each of the retailers. The respondents that answered yes to both questions were grouped as
familiar, aware. Next, the respondents were asked to rate the quality of Zara, H&M, and
Topshop using the 5-point Likert scale (1= strongly disagree, 5=strongly agree), quality was
defined as up-to-date with current trend and is fashionable. The respondents were also asked
where each of the retailers originate from, and where each retailers products were manufactured. In
the second part of the questionnaire the respondents were given a text consisting of information.
The text informed respondents that all three retailers product are indeed hybrid and the correct
COO and COM/A of the retailers are also given. Next, the respondents were given this statement
My perception of this retailers quality would change knowing their products are partly made in
Bangladesh/China/India. for each Zara, H&M, and Topshop/Topman using the 5-point Likert
scale (1=very negative, 5= very positive). This part is intended to examine whether or not a change
in quality perception exist.

16

FINDINGS
In this section the findings and results of the survey is presented and further discussed. For the
samples, 128 participated in the survey and 100 completed the questionnaire. Indonesias current
population is 246.9 million, and the amount of college undergraduates in 2012 was 15.8 million
(BPS, 2012). The target size of the sample was 100, and considering the margin of error ( 10%),
level of confidence (95%) and size of the population, this is deemed as an appropriate sample of
Indonesian undergraduate students. The confidence interval was conducted for the questions for
quality perception, all the mean fell between the range. Two statistic tests are used to process the
data of the survey; independent sample t-test (t2 test), and paired sample t-test (tD test). The first
test was performed to test H1, whether or not hybrid product awareness (0=no, 1=yes) negatively
affects respondents perceived quality of fast-fashion retailers. The test was applied to all three
retailers; Zara, H&M, and Topshop. The second test was done to H2 and H3, which measured
changes in quality perception of the fast-fashion retailers after the emerging countries COM/A cue
was given to the respondents. The test was also applied to the three retailers along with the three
COM/A cue countries; Bangladesh, China, and India, in order to see which brand and country suffer
the most impact.

The respondents were made up of 55 female and 45 male, which presents a good balance genderwise for the sample. In order to analyze whether or not male and female differs regarding their
familiarity of the three fast fashion retailers and awareness of their hybrid product status, the cross
table with Chi-square was performed with gender, familiarity (0=no, 1=yes), and awareness (0=no,
1=yes). The Chi-square tests was not significant for familiarity (P > 0.05) and hybrid product
awareness (P> 0.05) of Zara, H&M, and Topshop. Thus, gender does not influence the
familiarity of the retailers and the hybrid product awareness.

17

The fast-fashion retailer that is most familiar to the respondents is Zara (98), followed by H&M
(95), and lastly Topshop (90). All of the respondents that are familiar with the retailers are also
aware of their hybrid product status. Those who are unfamiliar with the retailers are also unaware of
status as hybrid product. Then, Cronbachs alpha was performed for the variable familiarity and
awareness, to see if the two variables can be summed for each three retailers. The test revealed
that the two variables cannot be summed ( = 0.199). To check whether or not quality perception of
the fast-fashion retailers differ between those aware of the hybrid product status and those who do
not, the independent samples t-test was performed with hybrid product awareness and quality
perception. The independent sample t-test for Zara was not significant (t=(100) = -0.272, p =
0.787), also for Topshop (t=(100) = -1.150, p = 0.253, but was found to be significant for H&M
(t=(100) = -2.532, p < 0.05. This means that the average quality perception hybrid product
awareness group (Zara, M= 4.13, SD= 0.949 ; Topshop, M= 4.07, SD= 0.931) does not differ
from the average quality perception of those unaware of hybrid product status (Zara, M= 4.08 ,SD
= 0.796; Topshop, M= 3.83, SD= 0.986). In the case of H&M there is a difference of quality
perception between those aware (M= 3.91, SD = 0.917) and unaware (M= 3.33, SD = 0.989). The
result shows that hybrid product awareness do not lead to a lower quality perception for Zara and
Topshop, there are no significant difference between those who are aware and those who are not.
For H&M, there seem to be a significant difference between the two groups, however, those who
are aware appears to have a higher quality perception compare to those who are not. The difference
between H&Ms result compared to Zara and Topshop may be contributed to H&Ms relatively
new presence in the Indonesian market, less familiarity leads to a lower quality perception. Thus,
the result indicated that Indonesian consumers hybrid product awareness do not negatively affect
their perceived quality of the products, therefore rejecting H1.

Regarding the identification of the correct COO and COM/A of the three retailers, most of the
respondents are able to correctly identify the COO and COM/A for each one. Topshops COO and
18

COM/A is most identifiable (88, 81), followed by Zara (75, 75), and H&M (69, 74). For Zara and
Topshop, more respondents are able to identify the correct COO compared to the correct COM/A.
On the contrary, H&Ms COM/A appears to be more identifiable than its COO. According to
Usunier (2011), the absence of language cues for acronyms like H&M leads to lower level of
recognition and consequently, lower rates of correct origin identification. The result also show
similar result to Magnusson et als (2011) findings. Whereas, Topshop often include the UK flag
and recognizable British icons in their advertisements, which may contribute to its higher COO
identification. The relatively high rate of COM/A identification for all three brands can be attributed
to the made in xy in the clothing labels. The media is also a major contributor. The news
regarding garment factory collapse in Bangladesh and unethical labor practice in India and China
has been gaining a lot of attention through the media.

The respondents quality perception for the fast-fashion retailers prior to the COM/A information is
comparable for Zara (M= 4.13) and Topshop/Topman (M= 4.12). While H&M (M= 3.5) is
significantly lower. All three retailers were perceived as having above average quality in terms of
being up to date with current trend and fashionable. In order to analyze whether or not a change in
quality perception exists after the COM/A cue of emerging countries were given, the paired samples
t-test on the initial quality perception and the later quality perception after COM/A cue; Bangladesh,
China, and India, were given. The paired samples t-test was significant for all three retailers for
Bangladesh, China and India (p < .001).

19

Table I. Changes in quality perception

Initial

COM/A Cues

Bangladesh
Mean

China

India

Mean Differenc Mean Differenc

e
e
2.69
1.44
2.81
1.32

Zara

4.13

H&M

3.5

1.5

2.42

Topshop

4.12

2.64

1.48

2.82

Mean
2.77

Differenc
e
1.36

1.08

2.2

1.3

1.3

2.7

1.42

From the mean differences it is clearly shown that after the respondents were given the COM/A
information of Bangladesh, China, and India, their perception of quality appears to decline. Thus,
confirming H2. For all three brands, the most significant decline is for Bangladesh. As stated before
H&M has significantly lower initial quality perception compared to Zara and Topshop, therefore
it was predicted that H&M will be affected the most from the emerging countries COM/A cue. This
holds true for Bangladesh, although the result between the retailers is comparable. H&Ms quality
perception for China (M= 2.42) and India (M= 2.2) are also the lowest, however, compared to Zara
and Topshop, H&Ms mean difference appears to be less in China (1.08) and India (1.3). In China,
Zara declined the most, from M= 4.13 to M= 2.81. In India Topshop declined the most, from M=
4.12 to M= 2.7. Bangladesh is shown to have the most negative impact on quality perception of all
three retailers. However, the assumption that H&M will suffer the most impact from all three
countries regarding the change in quality perception did not hold. The retailer that is most
negatively affected by the emerging countries COM/A cue differs per country. The negative effect
on the perceived quality is not stronger for brands perceived as having lower quality, thus rejecting
H3.

20

DISCUSSION
The present study examined the relationship between hybrid product awareness and Indonesian
consumers quality perception regarding fast-fashion products. The study used COM/A in emerging
countries as a cue to measure changes in the quality perception of three fast fashion retailers; Zara,
H&M and Topshop. This research provides incremental findings for the literature and offers
support to some existing findings.

Conclusion
This study revealed that Indonesian consumers awareness of hybrid product alone does not lead to
a lower quality perception of fast-fashion retailer products. All three retailers; Zara, H&M, and
Topshop was rated relatively high in terms of being fashionable and up-to-date with current
trends. H1 was constructed under the assumption that Indonesian consumers might differ from
consumers from other emerging countries. Hamid and Elliot (2006) have pointed out that
Indonesian consumers have a relatively high consumer ethnocentrism, meaning that they favor
Indonesian products more than foreign ones. However the result revealed that Indonesian
consumers still favor foreign fast-fashion retailers. Similar findings was also found by Kaynak et
al.(2000) for Bangladeshi consumers, Piron (2000) for Singaporean consumers, and Wang et al.
(2004) for Chinese consumers. This could also be attributed to the nature of fast-fashion product
itself, since it has hedonistic attributes. Another explanation would be that COM/A effect is product
specific, as COM/A study has been known to use products such as cars and electronic gadgets (Hui
and Zhou, 2003; Pappu et al., 2007).

The present study provided a perspective from an emerging country (Indonesia) and the consumers
perception towards products made from other emerging countries (Bangladesh, India, and China).
The study also revealed that having emerging countries as COM/A does lead to a significantly
lower quality perception of fast-fashion retailer products. H2 was constructed under the assumption
21

that consumers in an emerging country like Indonesia, has lower perceived quality of products
made from fellow emerging countries like China and India, as previous studies has shown (Batra et
al., 2000; Kaynak et al., 2000). In addition, Funk et al. (2000) argued that the shifting
production to COM/A with potential consumer animosity will lead to significant decline in quality
perception and financial performance. The result differs from Thakor and Lavacks (2003) research,
which found that COM/A does not affect quality perception if COO is also given. The COO of each
three retailers was also given in the second part of the survey, and the result of the present study
shows a significantly lower change in quality perception.

After the emerging countries COM/A cue was given, H&M, with lower initial perceived quality did
not experience stronger effect in quality perception. The retailer that experienced most decline in
quality perception differs per COM/A cues. It could be interpreted as COM/A effect being either
product specific, country specific, or both. The result shows Zara, H&M, and Topshop was
affected the most for having Bangladesh as its COM/A cue. It may be contributed to the media
exposure given towards 2013s garment factory collapse in Bangladesh, which created consumer
animosity towards fashion brands associated with the tragedy, such as H&M and Primark (BBC,
2013). Explaining why the decline in quality perception of fast-fashion products made in
Bangladesh resulted most profoundly compared to China and India. Lower quality perception for
China as COM/A cue, the difference between the three retailers is comparable. The study revealed
that for India, Topshop suffers the most decline compared to the others. It could be explained by
Topshops strong association with United Kingdom in its advertisements, giving more advantage
in terms of authenticity for the retailer, resulting in drastic decline when the products was partially
made in its former colony of India. Similar findings was also found by Hui and Zhou (2003).
Referring to the research question of this study, does the indication of being a hybrid product with
COM/A in emerging countries affect Indonesian consumers quality perception regarding fastfashion products? The answer is yes, the indication of being hybrid product alone did not lead to a
lower quality perception for all three retailers, but after the emerging countries COM/A information
22

cue was given, it lead to lower quality perception. However, the strength effect was not determined
by lower initial quality perception. The effect on the quality perception differs per emerging
countries, with Bangladesh giving the most significant change of quality perception to all three
retailers.

Implications
The results indicated that COM/A cue significantly affect quality Indonesian consumers quality
perception of fast-fashion products. The findings suggest that consumers are already aware of the
hybrid product status of fast-fashion products, and it alone does not affect the perceived quality. The
implication for managers is to be cautious in incorporating COM/A cue for fast-fashion products.
With fair labor practice under scrutiny, it is best for managers to be more transparent regarding the
countries in which the products are manufactured. Consequences of doing the opposite may result
in consumer boycott and losing shareholders. The emerging countries COM/A cue has varying
effect per country, meaning that managers should not generalize the production locations. Since not
including COM/A cue is not a favorable option, managers must find a way to best incorporate the
cue. For example, emphasizing on fair-labor practice in the labels or joining a coalition supports it
(e.g Ethical Trading Initiative). Since the nature of fashion products are status enhancing, by
revealing emerging country COM/A in the right manner may affect the quality perception
positively. As consumers will feel that they are contributing for a better cause. The implication for
scientific research in the COO field is that the study provides the much needed emerging country
perspective towards another. By using fast-fashion retailer product as a medium-involvement
product, with status enhancing nature and hedonistic characteristic, the study gave a fresh
perspective to the field dominated by cars and electronic equipment.

23

Limitations
There are some limitations given the nature of the sample, however, researchers (Verlegh and
Steenkamp, 1999; Peterson, 2001) have noted that no difference exist between using student and
non-student sample in COO research. The present study used Indonesian undergraduates which also
studies abroad, which means that their quality perception was also affected by the retailers presence
in Australia and Netherlands. Most likely, their judgments are not purely based on their fast-fashion
experiences in Indonesia. The result of this study is still limited in its representativeness to the
whole population. The brands chosen to represent the fast-fashion industry varies in terms of
establishment in Indonesia (e.g H&M just entered in mid-2013), which may affect the respondents
answers. The study is also limited by its method of survey, problems encountered from using webbased survey include participants inability to complete an internet survey due to technological
problems, which may be caused by using different computer platforms, operating system, or
software (Blumberg et al, 2011), which resulted in incomplete and unusable responses. The
considerably high margin of error of 10% may also affect the interpretation of the result. In
addition, this study only focuses on quality perception, rather than also including purchase
intentions, which will add significant value to the study. The present study is also limited in its
scope, by using fast-fashion products the result may not apply to other products that have different
characteristics.

Future Research
A lot of research in COO focused on perception between consumers in emerging market towards
products from developed market and vice versa. Little has been done on consumer perception
between emerging markets. More COO studies should be done in Asia, as the field often seem
Eurocentric. Countries such as Vietnam, Thailand, and Myanmar should be included, as potential
production location for fast-fashion products. Future studies should use non-students to add more
value to the field of study. It would also be interesting find out consumers perspective in more
developed countries in Asia such as Hong Kong, Singapore, and Japan towards fast-fashion
24

products made in emerging markets. On top of that, future research should take into account factors
such as country image of the COM/A (Pappu et al., 2007), and the also the country attributes
(Aiello et al., 2009), not only will it add value to the study, it will give a significant contribution
towards COO studies in Asia. The present study was only able to focus on quality perception,
future studies should also tackle purchase intention, as will also contribute better managerial
implications in the future.

Reflection
The present study initially began with a different approach. Initially it was intended to do analyze
consumers product evaluation and purchase decision, as a lot of literatures in the research stream
has done so. Consequently, the study was also intended to analyze factors affecting the product
evaluation (price, brand). However, it was decided to focus on consumers quality perception as it
proves to be an equally important subject and far more simpler to survey compared to product
evaluation. The period of the survey in the empirical research was shorter than planned, if the
survey was better planned it may result in more participants in the survey. A number of topics have
been left out of the study, e.g the study was unable to find out factors affecting the quality
perception of the product. Nonetheless, the study was still able to give incremental contribution to
the field by giving emerging countrys perspective, using fast-fashion products, and proving that
COM/A is matters.

25

REFERENCES
Acharya, C., & Elliott, G. 2001. An examination of the effects of country-of-design and countryof-assembly on quality perceptions and purchase intentions. Australian Marketing Journal,
9(1): 61-75.
Agrawal, J., & Kamakura, W. K. 1999. Country of origin: a competitive advantage?.
International Journal of Research in Marketing, 16: 255-267.
Aiello, G., Donvito, R., Godey, B., Pederzoli, D., Wiedmann, K., Hennigs, N., Siebels, A., Chan, P.,
Tsuchiya, J., Rabino, S., Ivanova, S. I., Weitz, B., Oh, H., Singh, R. 2009. An international
perspective on luxury brand and country-of-origin effect. Journal of Brand Management,
16(5/6): 323-337.
Arcadia Group. 2012. Fashion footprint: our product, ethical trading. Arcadia Group.
https://www.arcadiagroup.co.uk/fashionfootprint/our-products/Ethical%20Trading
(accessed:
7/11/13 )
Batra,R.,Ramaswamy,V.,Alden,D.L.,Steenkamp,J.,&Ramachander,S.2000.Effectsofbrand
localandnonlocaloriginonconsumerattitudesindevelopingcountries. JournalofConsumer
Psychology,9:8395.
Balabanis, G., & Diamantopoulos, A. 2004. Domestic country bias, country-of-origin effect, and
consumer ethnocentrism: a multidimensional unfolding approach. Journal of the Academy of
Marketing Science, 32(1): 80-95.
BBC.
2012.
H&M
and
Zara
to
sign
Bangladesh
http://www.bbc.co.uk/news/business-22520415 (accessed: 7/11/13 )

safety

accord.

BBC.

Bloemer,J.,Brijs,K.&Kasper,H.2009. TheCooElmmodel:atheoreticalframeworkforthe
cognitiveprocessesunderlyingcountryoforigineffects.EuropeanJournalofMarketing,43(1/2):
6289.
Blumberg, B., Cooper, D. R., & Schindler, P. S. 2011. Business Research Methods.
Berkshire: McGraw-Hill.
BadanPusatStatistikIndonesia.2013.AngkaPartisipasiSekolahMenurutProvinsi.Jakarta,DKI
Jakarta:BadanPusatStatistikIndonesia.
Chao, P. 2001. The moderating effects of country of assembly, country of parts, and country of
design on hybrid product evaluations. Journal of Advertising, 30(4): 67-81.
Dahan, G. S., & Peltekoglu, F. B. 2011. The effects of Zara to the SMEs of an emerging market.
Journal of Global Fashion Marketing, 2(1), 1-10.
The Economist. 2005. Inditex: the future of fast
http://www.economist.com/node/4086117 (accessed: 7/11/13 )
26

fashion.

The

Economist.

Essoussi, L. H., & Merunka, D. 2007. Consumers product evaluations in emerging markets: does
country of design, country of manufacture, or brand image matter?. International Marketing
Review, 24(4): 409-426.
Flynn, L., & Goldsmith, R. 1993. A causal model of consumer involvement: Replication and
critique. Journal of Social Behavior and Personality, 8(6): 129-142.
Funk, C. A., Arthurs, J. D., Trevio, L. J., & Joireman, J. 2010. Consumer animosity in the global
value chain: The effect of international production shifts on willingness to purchase hybrid
products. Journal of International Business Studies, 41: 639651
GurhanCanli,Z.,&Maheswaran,D.2000.Determinantsofcountryoforiginevaluations.Journal
ofConsumerResearch,27:96108.
H&M. 2012. Annual Report 2011. H&M. Stockholm, Stockholm County.
H&M.
2013.
About
H&M:
Sustainability,
our
supplier
list.
http://about.hm.com/en/About/Sustainability/Commitments/Responsible-Partners/SupplyChain/SupplierList.html (accessed: 7/11/13 )

H&M.

Hamid., & Elliot, Greg. 2006. A less-developed country perspective of consumer ethnocentrism and
country of origin effects: Indonesian evidence. Asia Pacific Journal of Marketing, 18(2);
79-92.
Hamzaoui, L., & Merunka, D. 2006. The impact of country of design and country of manufacture
on consumer perceptions of bi-national products quality: an empirical model based on the concept
of fit. Journal of Consumer Marketing, 23(3): 145-155.
Hamzaoui-Essoussi, L. 2010. Technological complexity and country-of-origin effects on binational
product Evaluation: investigation in an emerging market. Journal of Global Marketing, 23(4):
306-320.
Hamzaoui-Essoussi, L., Merunka, D., & Bartikowski, B. 2011. Brand origin and country of
manufacture influences on brand equity and the moderating role of brand typicality. Journal of
Business Research, 64: 973-978.
Han, C.M., & Terpstra, V., 1988. Countryoforigin effects for uni national and binational
products.JournalofInternationalBusinessStudies,19:235255.
Hayes, S. G., & Jones, N. 2006. Fast fashion: a financial snapshot. Journal of Fashion
Marketing and Management, 10(3): 282-300.
Hui, M. K., & Zhou, L. 2003. Country-of-manufacture effects for known brands. European
Journal of Marketing, 37(1/2): 133-153.
Hunter, P. 2010. Margin of error and confidence level made simple. Six Sigma.
http://www.isixsigma.com/tools-templates/sampling-data/margin-error-and-confidence-levelsmade-simple/ (accessed: 20/12/13 )
Inditex. 2011. Corporate responsibility: Achieving the zero discharge. Inditex.
http://www.inditex.com/en/corporate_responsibility/social_dimension (accessed: 7/11/13 )
27

Insch, G. S., & McBride, J. B. 2002. Theimpactofcountryoforigincuesonconsumerperceptions

ofproductquality:abinationaltestofthedecomposedcountryoforiginconstruct. Journalof
BusinessResearch,57:256265
Jo, M.-S., Nakamoto, K., & Nelson, J. E. 2003. The shielding effects of brand image against lower
quality countries-of-origin in global manufacturing. Journal of Business Research, 56: 637646.
Kaynak, E., Kucukemiroglu, O., & Hyder, A. S. 2000. Consumers country-of-origin (COO)
perceptions of imported products in a homogenous less-developed country. European Journal of
Marketing, 34(9/10): 1221-1241.
Kardes, F. R., Cronley, M. L., Kellaris, J. J. and Posavac, S. S. 2004. The role of selective
informationprocessinginpricequalityinference.JournalofConsumerResearch,31(2):368374.
Klein, J. G., Ettenson, R., & Krishnan, B. C. 2006. Extending the Construct of Consumer
Ethnocentrism: When Foreign Products Are Preferred. International Marketing Review,
23(3):304-321.
Leclerc, F., Schmitt, B. H. & Dube, L. 1994. Foreign branding and its effects on product
perceptionsandattitudes.JournalofMarketingResearch,31(2):263270.
Liefeld,J.P.2004.Consumerknowledgeanduseofcountryoforigininformationatthepointof
purchase.JournalofConsumerBehaviour,4(2):8596.
Li, Z. G., Murray, L. W., & Scott, D. 2000. Global sourcing, multiple country-of-origin facets, and
consumer reactions. Journal of Business Research: 47: 121-133.
Lim, K., & O'Cass, A. 2001. Consumer brand classifications: an assessment of culture-of-origin
versus country-of-origin. Journal of Product Brand Management, 10(2):12036.
Lloyd, A. E., & Luk, S. T. K., 2010. The devil wears Prada or Zara: a revelation into customer
perceived value of luxury and mass fashion brands. Journal of Global Fashion Marketing,
1:3, 129-141.
Magnusson, P., Westjohn, S. A., Zdravkovic, Srdan. 2011. What? I thought Samsung was
Japanese: accurate or not, perceived country of origin matters. International Marketing
Review, 28(5): 454-472.
Mitra Adiperkasa. 2012. Annual Report 2011. MAP. Jakarta, DKI Jakarta.
Nagashima,A.1970.AcomparisonofJapaneseandUSattitudestowardforeignproducts.Journal
ofMarketing,34(1):6874.
OCass, A. 2000. An assessment of consumers product, purchase decision, advertising and
consumption involvement in fashion clothing. Journal of Economic Psychology, 21: 545576.
OCass, A. 2004. Fashion clothing consumption: antecedents and consequences of fashion clothing
involvement. European Journal of Marketing, 38(7): 869-882.
28

Page-Bucci, H. 2007. The value of Likert scales in measuring attitudes of online learners. HKA
Designs. http://www.hkadesigns.co.uk/websites/msc/reme/likert.htm (accessed: 11/11/13 )
Pappu, R., Quester. P. G. and Cooksey, R. W. 2007. Country image and consumer-based brand
equity: relationships and implications for International Marketing. Journal of International
Business Studies, 38(5): 726-745.
Peterson, R. A. 2001. On the use of college students in social science research: insights from a
secondorder metaanalysis. Journal of Consumer Research, 28(3): 450-461.
Pharr,J.M.2005.Synthesizingcountryoforiginresearchfromthelastdecade:istheconceptstill
salientinaneraofglobalbrands?.JournalofMarketingTheoryandPractice,13(4):3445.
Pich, M., and Van der Heyden, L. 2002. Lean, mean fashion machine- Marks & Spencer and Zara:
Process competition in the textile apparel industry. Management Today UK.
http://www.managementtoday.co.uk/news/549367/Lean-Mean-Fashion-Machine---Marks--ampSpencer-Zara-Process-Competition-Textile-Apparel-Industry/?DCMP=ILC-SEARCH
(accessed:
10/11/13)
Piron,F.2000.Consumersperceptionsofthecountryoforigineffectonpurchasingintentionsof
(in)conspicuousproducts.JournalofConsumerMarketing,17(4):308321.
Reardon,J.,Miller,C.,Vida,I.andKim,I.2005.Theeffectsofethnocentrismandeconomic
development on the formation of brand and ad attitudes in transitional economies. European
JournalofMarketing,39(7/8):73754.
Roth,M.S.,&Romeo,J.B.1992.Matchingproductcategoryandcountryimageperceptions:a
framework for managing countryoforigin effects. Journal of International Business Studies,
23(3):477497.
Samiee,S.,Shimp,T.A.&Sharma,S.2005.Brandoriginrecognitionaccuracy:itsantecedentsand
consumerscognitivelimitations.JournalofInternationalBusinessStudies,36(4):37997.
Schooler,R.1965.ProductbiasintheCentralAmericancommonmarket.JournalofMarketing
Research,2:3947.
Sharma, P. 2011. Country of origin effects in developed and emerging markets: exploring the
contrasting roles of materialism and value consciousness. Journal of International Business
Studies,42(2):285306.
Shaw, D., Hogg, G., Wilson, E., Shiu, E., & Hassan, L. 2006. Fashion victim: the impact of fair
trade concerns on clothing choice. Journal of Strategic Marketing, 14(4): 427-440.
Srinivasan, N., Jain, S. C., & Sikand, K. 2004. An experimental study of two dimensions of
countryoforigin(manufacturingcountryandbrandingcountry)usingintrinsicandextrinsiccues.
InternationalBusinessReview,13:6582.
SurveyMonkey. 2010. How many respondents do I need? SurveyMonkey.
http://help.surveymonkey.com/articles/en_US/kb/HowmanyrespondentsdoIneed(accessed:
20/12/13)
29

Thakor,M.V.,&Lavack,A.M.2003.Effectofperceivedbrandoriginassociationsonconsumer
perceptionsofquality.JournalofProductandBrandManagement,12:394407.
Tse,D.K.,&Gorn,G.J.1993.AnexperimentonthesalienceofCOOintheeraofglobalbrands.
JournalofInternationalMarketing,1(1),5776.
Usunier, J.-C. 2011. The shift from manufacturing to brand origin: suggestions for improving COO
relevance. International Marketing Review, 28(5): 486-496.
Verlegh,P.W.J.,&Steenkamp,J.B.E.M.1999.Areviewandmetaanalysisofcountryoforigin
research.JournalofEconomicPsychology,20(5):52146.
Wall, M., Liefeld, J., & Heslop, L.A. 1991. Impact of countryoforigin cues on consumer
judgmentsinmulticuesituations:acovarianceanalysis. JournaloftheAcademyofMarketing
Science,19(2):10513.
Wang, C. L., Siu, N., & Hui, A. 2004. Consumer decision-making styles on domestic and imported
brand clothing. European Journal of Marketing, 38(1/2): 239-252.
Zarroli, J. 2013. The fast world of fast fashion: in trendy world of fast-fashion, styles are not made
to last. NPR. http://www.npr.org/2013/03/11/174013774/in-trendy-world-of-fast-fashion-stylesarent-made-to-last (accessed: 12/11/13)

30