Buy-national campaigns: congruence determines premiums for domestic products

Abstract

PurposeThe purpose of this paper is to investigate consumer willingness to pay a premium for domestically manufactured products in the context of a buy-national campaign and the role of congruity in determining that willingness.Design/methodology/approachA market-stall-like context was used to conduct a stated-preference choice modelling experiment in six major cities in Australia and New Zealand. Participants were asked to choose one of three country-source alternatives for each of three product categories on display (muesli bars, toilet paper and a merino wool garment) with and without “Buy Australian Made” or “Buy New Zealand Made” stickers. A total sample of 2,160 consumers participated.FindingsStrong evidence for the existence of buy-made-in effects for the muesli bar and toilet paper categories was found at the 95 per cent confidence level. Domestically made toilet paper attracted a premium in Australia (10 per cent) but a discount in New Zealand (5 per cent). Consumers in both countries indicated their willingness to pay a 14 per cent premium for domestically made muesli bars.Research limitations/implicationsThis research design, which aimed to achieve a high level of ecological validity, precluded direct quantitative measurement of product category-COO schema congruency in the same experiment, either before or after the choice experiments. Future studies in other countries and product categories would benefit from surveying a separate sample of the same populations to directly estimate cross-population differences in COO “extreme affect” and product-COO congruence to strengthen the untangling of possibly confounding effects.Practical implicationsBrand managers, retail sector organisations and governments may need to reconsider the rationale for participating in buy-national campaigns, given the lack of generalisability of buy-made-in price premiums.Originality/valueThis paper is a rare example of an experiment to test whether consumers are willing to pay a premium for domestically made products in the context of a buy-national campaign.