Does locally made make the grade?
From the 100-mile diet to rooftop gardens, the local food movement is gaining momentum. As more information emerges about the benefits of eating locally produced food, more families are shopping at farmers’ markets, and more grocery stores are stocking and promoting local produce.
When it comes to more expensive products, such as furniture, the trends are not so clear. That’s why a researcher at Concordia University decided to take a closer look.
Mrugank Thakor, an associate professor in the Department of Marketing at Concordia’s John Molson School of Business, compared American consumers’ perceptions of products that were “made in the USA” with those made locally. The results were published in the February 2013 edition of Psychology and Marketing. Thakor’s study found that consumer concerns about quality need to be addressed in order for local identity to become an effective marketing strategy. Local means “fresher” and “tastier” when it comes to fruits and vegetables, but perceptions are mixed about manufactured items.
Thakor’s findings have important implications for small manufacturers seeking to target local markets. He explains that, “only when consumers are motivated to process information or when external assurances of quality are available” do products benefit from advertising their status as locally made.
In these situations, people were willing to pay more for a local product than they would for a comparable product stamped with the broad tag of “Made in USA,” and were more satisfied with the deal. “Consumers want to buy local,” Thakor emphasizes, “but marketers need to find ways to reassure them that the product is as good as or better than the national brand.”
Thakor and co-author Rajneesh Suri of Drexel University in Philadelphia conducted a series of studies to evaluate how a product’s origin influences consumer perception. The researchers’ initial study assessed participants’ general feelings about locally manufactured products, and confirmed that they have conflicting responses. It turns out that consumers want to support their local economy, but they are uncertain about the quality of locally made products. That’s because they assume that small manufacturers do not have the resources to assure consistent quality.
In a follow-up study, Thakor and Suri focused on one type of furniture: the filing cabinet. They provided participants with a description claiming good quality and indicating either a local origin or a national origin. Responses showed that motivated consumers are more unsure of the quality of the local filing cabinet than of the national one, and such consumers expect to pay more for the local furniture.
“Concerns about quality seem to have encouraged our hypothetical consumers to pay more for their locally made filing cabinet. They tried to reduce their uncertainty about quality by paying more, since higher price is often associated with better quality,” says Thakor.
Finally, the researchers assessed the impact of product ratings on the decision to buy locally produced goods using another type of furniture: an entertainment centre. Participants were much more likely to buy a locally manufactured entertainment centre than one with a national origin at the same price, when both the local and nationally made products had garnered good reviews. When locally made products are rated as high quality, that information is seen as “identity-consistent” or consistent with consumers’ own local identity and it plays a bigger role, making price a less important factor. Hence, consumers are willing to pay more for high-quality locally made products than for national products of the same quality.
Thakor’s research shows that, when it comes to locally made products that will last a little longer than a homegrown apple, consumers are willing to make the investment. It’s up to marketers to put their mouths where that money is.
• Cited study in Psychology and Marketing
• John Molson School of Business
• Mrugank Thakor's profile on Research @ Concordia