The Appeal Of ‘Made In U.S.A.’ Can Push Consumers, Marketers To Action
Do the words “Made In the U.S.A.” imprinted on a product matter? A study produced by Marketing Science, a journal published by INFORMS, an international association for operations research and analytics professionals, and using research from the University of Chicago, reports that consumer demand declines when product packaging and marketing materials removed the claim, “Made in U.S.A.” and increased when the claim was featured. However, the impact on sales is insufficient to convince some companies to manufacture more products in the United States, but enough to incentivize companies to make deceptive “Made in U.S.A.” claims.
The U.S. Federal Trade Commission (FTC) requires that information indicating the country of origin for any imported product, but not for those products made in the United States. The words “Made in U.S.A.” on that product are there purely for marketing purposes. However, in order for a brand to make the “Made in U.S.A.” claim, the FTC requires that the product be “all or virtually all” made in the United States with no or negligible foreign content.
Since 2010, the FTC has investigated more than 150 cases of deceptive or misleading claims about products claimed to be made in the United States. Researchers focused on four of those cases that were found not to fit the FTC’s criteria for allowing claims of being made in the United States. This allowed them to examine and compare sales of the products before and after the information was removed from products, packaging, advertising, websites and other marketing channels.
“We focused our attention on four brands, which included Gorilla Glue, Loctite glue, Gorilla Tape and Tramontina cookware,” say the researchers. “For three of the four brands, the removal of the information had a negative impact on sales. Tramontina cookware saw a 19.5-percent decline in weekly store sales, Loctite glue experienced a 6.1-percent decline and Gorilla Glue suffered a 1.9-percent decline. The fourth brand we studied, Gorilla Tape, experienced a ‘trend decline’ following the FTC decision.”
In addition to the study of those four brands, researchers also ran a field experiment on eBay, where they were able to run more than 900 auctions over the course of three months, varying only whether a product was advertised with or without the “Made in U.S.A.” claim. This was done to learn more about whether the American-made claims provided significantly higher incentive to include that information.
It did. Auction transaction prices were 28 percent higher with the “Made in U.S.A.” claim, indicating that resellers and auctioneers have more incentive to display that information.
“In the field experiments, we chose a product category in which demand was already high on eBay,” the researchers report. “We then offered two variants of the product: one with the country-of-origin information and one without that information. The products we chose were screen protectors for handheld devices. We eventually sold 912 screen protectors using three-day auctions on eBay.”